Slovenia Business Week no 44, October 25th, 2004 Table of Contents:

Slovenia Business Week no 44, October 25th, 2004 Table of Contents: HEADLINES ............................................................................................................................. 3 Another Foreign Bank Entering Slovenian Market ................................................................ 3 Slovenia and Hessen Exploring Business Opportunities ....................................................... 3 Seaway Launches Mega-Yacht .............................................................................................. 4 INTERNATIONAL COOPERATION ...................................................................................... 5 Hessen Premier Visits Slovenia ............................................................................................. 5 Slovenia, Italy Propose Tighter Rules on Date Mussels Trade .............................................. 5 Slovenia for Signing Accession Treaty with Bulgaria in Early 2005 .................................... 6 Conference to Discuss Security and Stability in Western Balkans ........................................ 6 Business Clubs Promote International Cooperation ............................................................... 7 Labus Calls for Greater Slovenian Investment in Serbia ....................................................... 8 New Bulgarian Ambassador Presents Credentials to Drnovsek ............................................ 9 Austria and Slovenia Officially Launch Cooperation in Research ........................................ 9 Chambers of Commerce Aim to Improve Business Environment in the CEI ..................... 10 EUROPEAN UNION ............................................................................................................... 11 Slovenia Only Meets Two of the Four Convergence Criteria .............................................. 11 Government Debates Slovenia's Bid for EU Border Agency Seat ....................................... 12 President Discusses Future Challenges with EU Ambassadors ........................................... 12 Gaspari Has no Complaints on Convergence Report ........................................................... 13 STATISTICS/FORECASTS .................................................................................................... 14 August Unemployment at 10.3 Percent ................................................................................ 14 Number of Foreign Tourists Jumps by 9% .......................................................................... 14 Average Monthly Labour Costs per Employee at EUR 1,559 in 2003 ................................ 14 FINANCE................................................................................................................................. 16 No Raise in Pensions in October .......................................................................................... 16 Slovenia's Budget Deficit Below EU Average, Says Mramor ............................................. 16 Zavarovalnica Maribor Issues Profit Warning ..................................................................... 17 Slovenia Can Ill Afford to Delay Euro Adoption, Gaspari Says ......................................... 17 Insurer Triglav Publishes Bid for Two Financial Firms ...................................................... 18 Petrol Prices Expected to Reach New Highs ....................................................................... 18 IMAD Says Price Increases Announced by Petrol too High ............................................... 18 Ljubljana Stock Exchange .................................................................................................... 19 Foreign Exchange ................................................................................................................. 19 REGIONAL INFORMATION ................................................................................................ 20 New Chairlift to Secure Kranjska Gora's Place in World Cup Skiing ................................. 20 Zasavje the Only Region With No Growth, According to Government Report .................. 20 BRANCH INFORMATION .................................................................................................... 22 Government Amends Regulation on Payment of Rural Development Projects .................. 22 Agriculture Agency Becomes Fully Registered for EU Subsidies....................................... 22 Road Management Discussed at 7th Congress on Roads..................................................... 23 COMPANIES ........................................................................................................................... 24 Ljubljana's Biggest Mall Gets Bigger .................................................................................. 24 Honey Specialist Medex Celebrates 50th Anniversary ........................................................ 24 Mercator Extends Offer for Department Store Maximarket ................................................ 24 Iskra Avtoelektrika on the Stock Exchange as of 26 October .............................................. 25 Hella Lux Suffers Shortfall of EUR 450,000 Due to Opel Strike ........................................ 25 Ljubljana Gets New Four-Star Hotel ................................................................................... 25 Mercator Threatens to Sue Serbia ........................................................................................ 26 Mobitel Becomes Second Mobile Operator in Kosovo, but UNMIK Annuls Tender ......... 26 FAIRS, CONGRESSES ........................................................................................................... 28 Medilab Fair to Acquaint Medical Profession with Latest Trends ...................................... 28 SLOVENIA IN BRIEF ............................................................................................................ 29 Forum Agrees Modern Technology Key to Efficient Border Control ................................. 29 Vajgl Congratulates New Austrian Colleague ..................................................................... 29 Minority Info Point Opens at Trieste ................................................................................... 29 US Official Briefed on Slovenia's OSCE Presidency Preparations ..................................... 29 Parliament Inaugurated ........................................................................................................ 29 Vajgl Calls for OSCE Reform .............................................................................................. 29 Seminar Discusses Promotion of the Employment of Graduates ........................................ 29 2 HEADLINES Another Foreign Bank Entering Slovenian Market An Austrian bank is entering the Slovenian banking market with a branch office to be opened in Ljubljana on 10 November An Austrian bank is entering the Slovenian banking market with a branch office to be opened in Ljubljana on 10 November. A universal bank for households and companies, Bank fuer Kaernten und Steiermark (BKS Bank) is a regional bank which was established in 1922 by industrialists from the Austrian province of Carinthia. Its major shareholders are two banks, namely Oberbank and Bank fuer Tirol in Voralerberg, which jointly hold a 37 percent stake in BKS Bank. The three form group "3 Banken Gruppe", a seventh largest Austrian bank. The group is present in Austria and its neighbours. Each of the three banks operates under its own name, a news conference in Klagenfurt was told by Heimo Penker, a member of the board. By using the synergy resulting from cooperation, however, they can operate on the market as one large bank. BKS Bank's total assets amounted to EUR 4.2bn at the end of 2003, which gave the bank a 10 percent market share in Carinthia. In terms of loans to businesses, on the other hand, the bank held a 15 percent share. Its 2003 revenues were EUR 107.1m and profit EUR 41.2m. The bank, which has 54 branch offices and employs 742 workers, has been present in Slovenia since 1998 through BKS Leasing, a company whose annual revenues are around EUR 50m. The bank's new branch office in Ljubljana will first focus on loans; companies will be offered long-term and short-term investment loans as well as loans for current assets and guarantees. Its retail banking, on the other hand, is expected to be centred on long-term mortgage loans, and short-repayment consumer loans. BKS Bank expects the volume of loans in Slovenia to reach EUR 30m in the first year. The bank would then examine in 2005 the possibility for introducing savings accounts, investments and investments to funds; some of the services could be introduced in 2006. When Slovenia introduces the euro, the Austrian bank is planning to undertake payment transactions. After 2007, another branch office could be opened in Slovenia. Slovenia and Hessen Exploring Business Opportunities A business conference was held at the Chamber of Commerce and Industry of Slovenia Slovenia and Hessen are two competitive economies, but they can also be partners, particularly since they have similar plans, Roland Koch, the premier of the German state Hessen, said during his visit to Slovenia. Speaking at a business conference at the Chamber of Commerce and Industry of Slovenia (CCIS) on Tuesday, 19 October, Koch said there are many cooperation opportunities for Slovenia and Hessen, adding that his role as a politician is mainly to establish connections. Still, Koch named some sectors where cooperation could be improved. He named financial services as one of the sector offering cooperation potential, particularly with Hessen's capital Frankfurt being one of the leading financial centres. 3 Potential also lies in research and development, automobile industry, medical industry and information technology, according to Koch. He said there were also opportunities for higher forms of cooperation, namely investment both Hessen's investment in Slovenia and joint investment of Slovenian and Hessen companies on third markets. Backing the idea of joint investment, particularly on markets such as India and China, was the CCIS vice-president Mateja Mesl. She expressed an interest of the Slovenian economy in expertise and new technologies from Hessen, while offering Hessen businessmen Slovenian experience in the markets of SE Europe. Slovenia's exports to Germany last year totalled EUR 928.5m and imports stood at EUR 825.05, with only five percent of the figures applying to Hessen. Because of this modest exchange, opportunities should be identified as Hessen is one of best developed German states, according to Koch. Seaway Launches Mega-Yacht Seaway is expected to produce ten Skagen 50 yachts this year Slovenian boating company Seaway has launched the most expensive mass produced boat in Slovenia, a 50-foot yacht featuring all the latest gadgets money can buy. The 800,000 euro Skagen 50 yacht was launched on Thursday, 21 October in the coastal resort town of Portoroz in a ceremony attended by famous Slovenians from all walks of life. Among other things, Skagen 50 is the world's first boat to feature a fully integrated mobile office, made using technology by American IT firm Cisco. Speaking at the ceremony, Japec Jakopin, one of the two owners of the family-controlled boat producer, said the boating industry in Slovenia is small compared to those in other developed countries. Jakopin said Slovenia could tap into a niche market by producing high-end boats and offering services for owners of such boats. He called on Janez Jansa, the man most likely to become Slovenia's next prime minister, who attended the ceremony, and other Slovenian politicians and key business officials to work on improving the business environment in Slovenia. Meanwhile, Jansa used the opportunity to criticise the Slovenian business environment, saying it fails to promote the development of small and medium-sized companies. Despite being a member of the EU, Slovenia has not created a business environment that promotes entrepreneurship, Jansa said. According to Jansa, Slovenia needs to change several things, including its mode of thinking, if it is to produce an environment conducive to entrepreneurship. Seaway is expected to produce ten Skagen 50 yachts this year, with buyers expected to come from around the world. Seaway says it is the world's leading boat development company. In the past 20 years it has worked for 34 boat-builders from 17 countries. Seaway projects have received 20 Boat of the Year awards in the EU, France, Germany, England and the US. Seaway has annual revenues of EUR 9m, which it hopes to double in the next two years. Its sailing yacht the Shipman 50 was last year awarded the European Sailing Yacht of the Year award at the Duesseldorf "Boot 2004" show. 4 INTERNATIONAL COOPERATION Hessen Premier Visits Slovenia Koch was accompanied by a 40-strong business delegation, which included vice-chairman of the German central bank Hans Reckers, president of the Hessen state parliament Norbert Kartmann, chairman of the Frankfurt Chamber of Commerce Joachim von Harbou The premier of the German federal state Hessen, Roland Koch, visited Slovenia on Tuesday, 19 October as part of a tour of EU newcomers. Koch was accompanied by a 40-strong business delegation, which included vice-chairman of the German central bank Hans Reckers, president of the Hessen state parliament Norbert Kartmann, chairman of the Frankfurt Chamber of Commerce Joachim von Harbou and other businessmen. The talks between Slovenian Foreign Minister Ivo Vajgl and the premier of the German state of Hessen, Roland Koch, focused on bilateral relations and the Balkans. The pair used their meeting to debate all facets of cooperation. Agreeing that cooperation between Slovenia and Hessen, as well as the whole of Germany, was intense, Vajgl and Koch said both countries should look for ways to advance ties. According to the two officials, the efforts to strengthen ties between Slovenia and Hessen should focus particularly on the economy, technology and science. The pair also examined economic trends in Germany, which is Slovenia's most important trading partner, a press release from the Foreign Ministry said. Vajgl also took the opportunity to outline the current developments in SE Europe, especially in the Western Balkans, where Slovenia is working to help countries establish stable and transparent economic conditions. Vajgl and Koch also touched on the future of the EU, including future rounds of enlargement and the challenges associated with the efforts to integrate new countries into the bloc. The premier of the German state of Hessen, Roland Koch, wrapped up his working visit to Slovenia on Tuesday, 19 October after he held talks with President Janez Drnovsek and Janez Jansa, the likeliest new prime minister. Drnovsek and Koch discussed bilateral relations, but they also debated the future of the EU and further rounds of enlargement, according to a press release. Koch was later received by Jansa, the president of the Slovenian Democrats (SDS) and the most likely new prime minister. According to SDS, Jansa and Koch discussed the post-election situation in Slovenia and bilateral cooperation. They stressed that Hessen and Slovenia should improve trade. They also expressed the expectation that cooperation between Koch's Christian Democratic Union (CDU) and Jansa's SDS would improve. Both are members of the European People's Party (EPP-ED), the largest deputy faction in the European Parliament. Slovenia, Italy Propose Tighter Rules on Date Mussels Trade According to the Slovenian Environment Agency, the fact that the species will now be protected under the CITES means that international trade will be subject to a uniform regime while traffickers will be prosecuted in all signatories of the convention Delegates from 166 countries that signed the Convention on International Trade in Endangered Species have accepted the proposal of Italy and Slovenia to impose stricter regulations on trade in date mussels (Lithophaga lithophaga). 5 Signatories were joined by representatives of over 150 NGOs at the 13th conference on the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) in Bangkok between 2 and 14 October. The date mussel, common in the Mediterranean, is considered a crucial part of shallow coastal ecosystems: it is a pioneer species inhabiting bare rocks, thereby paving the way for the arrival of other organisms. They are considered a delicacy in many countries and therefore widely harvested. Yet it is almost impossible to grow them on farms, as they only grow by about 1 centimetre every three to five years. The date mussels fetch a price of about 60 euros per kilo on the black market. Slovenian customs guards have confiscated over 700 kilo of the mussel in the recent years, while Italian border guards discovered at least 4 tonnes. According to the Slovenian Environment Agency, the fact that the species will now be protected under the CITES means that international trade will be subject to a uniform regime while traffickers will be prosecuted in all signatories of the convention. Slovenia for Signing Accession Treaty with Bulgaria in Early 2005 The European Commission in its latest report on 6 October assessed that Bulgaria meets the political criteria for membership and expressed the expectation that it would also meet economic criteria and adopt EU legislation so as to be able to join the EU on 1 January 2007 Slovenia backs the efforts of the Dutch EU presidency to wrap up the preparations for the signing of the accession treaty with Bulgaria by the end of the year so as to open the way to the signing of the document in early 2005. This is what Europe Minister Milan M. Cvikl said while paying a working visit to Sofia on Tuesday, 19 October. The European Commission in its latest report on 6 October assessed that Bulgaria meets the political criteria for membership and expressed the expectation that it would also meet economic criteria and adopt EU legislation so as to be able to join the EU on 1 January 2007. Cvikl discussed the issue with his Bulgarian counterpart Meglena Kuneva. He also presented Slovenia's experience after six months of EU membership as well as those from the accession period. As Cvikl told STA, he particularly highlighted the role of the Government Office for European Affairs, the key coordinator of EU affairs in Slovenia. Cvikl also met Finance Minister Milen Velchev, presenting to him Slovenian experience in drawing pre-accession aid. The pair also exchanged experience in the reform of justice. Cvikl's talks focused on further EU enlargement, with the Bulgarian officials agreeing with him that the countries of the Western Balkans should follow the EU-bound path of Romania and Bulgaria. Slovenia would like to offer assistance to these countries, which is why it established an EU accession assistance centre, according to Cvikl. He said Bulgaria could receive assistance from the centre as well until it joins the EU, and could later offer its experience to other EU aspirants through the centre. Conference to Discuss Security and Stability in Western Balkans The integration of the Western Balkans will be debated as over 150 participants from the region convene for the 12th Regional Business Meeting Point in Slovenia on 27 October The integration of the Western Balkans will be debated as over 150 participants from the region convene for the 12th Regional Business Meeting Point in Slovenia on 27 October. The 6 first part of the event will focus on business relations with the Western Balkans, while the afternoon plenary will look into stability and security of the region. Security and stability in the region has been chosen as the central topic of the event - which traditionally gathers leading business people, government officials and representatives of international institutions from Central and SE Europe - because Slovenia is taking over from Bulgaria the OSCE presidency in 2005. The meeting will therefore be opened by the two heads of state, Slovenia's Janez Drnovsek and Bulgaria's Georgi Parvanov, according to Miran Mejak of the business association Pharos, one of the co-organisers of the one-day forum. OSCE presidency will probably be the most difficult foreign policy task Slovenia has ever taken on, believes Dusan Snoj of the publisher GV Revije, another co-organiser. Snoj told the press on Wednesday, 20 October that the Regional Business Meeting Point has always tried to achieve what the EU has been expecting of Slovenia: to make the country a bridge, or business meeting point, with the Balkans. The introductory speech of Europe Minister Milan M. Cvikl will focus on trade relations with the Western Balkans, to be followed by two round-table debates examining challenges of strategic relations and development, and the competitive ability of EU newcomers and Western Balkans countries. Stability and security in the region will be discussed by a plenary featuring Sulejman Tihic, the chairman of the three-member Bosnia-Herzegovina presidium, Serbian Deputy PM Miroljub Labus, the former Slovenian FM Dimitrij Rupel, and Bernard Snoy, director of the SE Europe Stability Pact. Attendance is expected by over 150 participants from Croatia, Hungary, Bulgaria, Romania, Serbia-Montenegro and Macedonia. Business Clubs Promote International Cooperation International business networking was stressed as the most effective way of cooperation and affirmation of interests by Peter Kraljic of the consultancy McKinsey Executives and politicians debated the pitfalls and advantages of increasing internationalisation at an international conference of business clubs at Bled on Thursday, 21 October. International business networking was stressed as the most effective way of cooperation and affirmation of interests by Peter Kraljic of the consultancy McKinsey. According to Kraljic, successful companies are already aware of the importance of networking, so they are often a part or even the centre of such networks. Good networks are based on the exchange of experience and knowledge, as well as respect and trust, he said. One of the most common forms of networking, the internationalisation of management and supervisory boards, was presented by Florian Schilling, chair of the human resources specialist, Heidrick&Struggles. Schilling noted that companies sometimes simply have to resort to foreign professionals to fill board positions. Although this brings many challenges, internationalisation mainly leads to better governance and flexibility, he is convinced. A special guest of the conference, Serbian Deputy PM Miroljub Labus, talked about opportunities in Serbia. He stressed that one of the country's greatest advantages is the high number of highly trained and experienced professionals. Moreover, Serbia has been cracking down on the grey economy and corruption. Labus discussed privatisation and the arrival of foreign enterprises extensively. Acknowledging that the political situation is deterring foreigners from investing, he nevertheless stressed that doing business in Serbia is no riskier than it is in Bulgaria or Romania. He therefore expects more foreign investment in the coming 7 years. The Serbian deputy PM also touched on the sale of Serbian grocer C Market, which Slovenia's largest retailer Mercator wants to acquire. Participants of the business conference have also said Slovenia's lack of interest in foreign capital and the lack of foreign business interest in Slovenia are the main reason that there are few foreign managers running Slovenian companies. According to the participants of the conference, Slovenia is not overly inclined to foreigners and foreign investment as it fears it will lose its business independence. On the other hand, foreign executives are not keen about coming to Slovenia because of a lack of business opportunities, a shortage of challenges and low wages, the participants of the conference in Bled said. Florian Schilling, vice-president of Frankfurt-based executive search firm Heindrick&Struggles, said the internationalisation of management boards is an increasingly popular way of building international business cooperation. Schilling underscored that the main advantage of having international boards is greater internal and external flexibility. The debate on ways to attract foreign managers to Slovenia was the final act of the one-day event. Labus Calls for Greater Slovenian Investment in Serbia Increasing Slovenian investment in Serbia is the only way to reduce the budget deficit Serbia has in trade with Slovenia, Serbian Deputy Prime Minister Miroslav Labus has told an interview with STA Increasing Slovenian investment in Serbia is the only way to reduce the budget deficit Serbia has in trade with Slovenia, Serbian Deputy Prime Minister Miroslav Labus has told an interview with STA. According to Labus, it is up to Slovenian business officials to decide whether investing in Serbia is in their interest, although there should be no question about that since Serbia has a well qualified workforce and free trade agreements with SE European countries and Russia. Calling for increased Slovenian investment, Labus highlighted that there have been many cases of successful Slovenian investment in Serbia, including that of auto maker Cimos and chemical companies Impol and Jub. Stumbling blocks have arisen only with Slovenian retailer Mercator's current takeover bid for Serbia grocer C Market, which Labus says has nothing to do with the state since it involves two private companies. According to Labus, Mercator is experiencing problems because every takeover is hostile to some extent, particularly as concerns the management of the company that is being acquired. The management of C Market is using Mercator's policy in dealing with employees and suppliers at its Belgrade shopping centre to stir opposition to its bid for C Market, Labus told STA. According to the Serbian deputy prime minister, the state has no intention of getting involved in this issue as a minority shareholder in C Market for now. "We will wait until Mercator's bid runs out and then we'll see if we will seek consolidation of ownership with small shareholders." Mercator's bid represents some uncertainty for Serbia, Labus said, as the Slovenian group is not only buying a company but also its market share. "The main question is whether Mercator would improve or worsen Serbia's balance of payments," he said. He said that Serbia has had a number of bad experiences with foreign investment before, especially in the privatisation of the cement and tobacco industries, where foreign investors bought companies which are now importing more than they are exporting. 8 Labus highlighted that the privatisation process in Serbia is by no means nearing its end, as one-third of the economy must still be transferred into private hands. This means that there is still much potential for investment from abroad. Apart from helping on the economic front, Slovenia can also assist Serbia on the political front, Labus said. According to him, Slovenia can keep promoting the integration of the Western Balkans into the European Union. We are aware that there are no short-cuts to EU membership, but the ten new members that joined the EU in May could not have done it without the financial and logistical support of the EU, Labus said. It is paramount that the Western Balkan countries are offered support in their efforts to join the EU, especially as most of these countries are still recovering from conflicts in the region, Labus said. As an EU member, Slovenia is an important partner for Serbia, since it can make a good assessment of the real extent of change and progress in Serbia. "Slovenia can increase its political role in the EU" by playing this part, Labus told STA. Asked whether Serbia-Montenegro will enter the EU as two separate states, he said the current two-tier system is temporary. "We could sign the EU stabilisation and accession agreement in 2005 on the basis of this two-tier system, however, this would be followed by a referendum in 2006 to decide on the future of Serbia-Montenegro," he said. New Bulgarian Ambassador Presents Credentials to Drnovsek Drnovsek took this opportunity to praise Bulgaria's decision to open an embassy in Ljubljana The first resident Bulgarian ambassador to Slovenia presented his credentials to President Janez Drnovsek on Friday, 22 October. Drnovsek took this opportunity to praise Bulgaria's decision to open an embassy in Ljubljana. The president is convinced that this would enable further strengthening of the excellent relations between Slovenia and Bulgaria, the president's office said. Echoing Drnovsek's opinion, Ambassador Vladimir Atanasov estimated the relations were exemplary, especially in the region of Southeastern Europe. Given that a series of bilateral agreements have already been signed, Atanasov said the solid relations between the two countries could be a foundation for further development of cooperation. Good cooperation was mentioned also in connection with the OSCE, currently under the presidency of Bulgaria and due to be taken over by Slovenia in 2005. The ambassador mentioned the development of economic cooperation, especially trade, and cultural cooperation as his priorities. Drnovsek said he was looking forward to next week's official visit of Bulgarian President Georgy Parvanov to Slovenia, which he considers an opportunity to continue political dialogue. He expressed an interest in upgrading economic relations as well as developing other forms of cooperation. The president was of the opinion that the two countries have achieved a lot in their bilateral relations and also at the multilateral level. Happy with Bulgaria's progress on its way towards the EU, he said Slovenia was looking forward to seeing Bulgaria a full-fledged member, according to the same press release. Austria and Slovenia Officially Launch Cooperation in Research Common interests and potential research projects of Slovenian and Austrian experts were discussed at a meeting in Vienna, which officially opened the cooperation between Austrian and Slovenian research institutions 9 Common interests and potential research projects of Slovenian and Austrian experts were discussed at a two-day meeting in Vienna, which officially opened the cooperation between Austrian and Slovenian research institutions. The joint work is expected to receive a boost in the wake of Slovenia's EU accession. Members of the Austrian Cooperative Research, an umbrella research institution, have expressed interest in encouraging research between the two countries with joint projects that will particularly benefit small and medium-sized companies. The main focus is on projects of applied research and innovations in small and medium-sized enterprises. Unlike Austria, Slovenia is yet to establish an umbrella research institution, according to Ales Mihelic of the Economics Ministry, who said the project was planned. There are a total of 29 research institutions in Slovenia conducting research for small and mid-sized companies that could cooperate with their partner institutions in Austria. The Slovenian institutions are doing research in textile, material technology, food and welding techniques. The cooperation between research institutions is expected to focus on the transfer of technologies between institutions and the promotion of research to the benefit of small and mid-sized companies. Research institutions in both countries are operating in similar environments, as small and mid-sized companies are dominant in both Austria and Slovenia, which is why jobs and growth depend greatly on innovations of these companies. Slovenia allocated 1.6 percent of GDP for research in 2004, while Austria secured 2.27 percent GDP for research. Chambers of Commerce Aim to Improve Business Environment in the CEI The chambers of commerce from the Central European Initiative (CEI) have signed a declaration calling for a better dialogue with the governments in a bid to secure a more efficient representation of the economy's interests The chambers of commerce from the Central European Initiative (CEI) have signed a declaration calling for a better dialogue with the governments in a bid to secure a more efficient representation of the economy's interests, according to the Chamber of Commerce and Industry of Slovenia (CCIS). The chambers, associated in the Central European Chambers of Commerce Initiative (CECCI), support in the declaration the concept of public-private partnership for the realisation of common projects. They would like to continue to play a major role in the economic and social dialogue in order to provide long-term and balanced economic growth, according to the declaration, passed in Vienna on Friday, 22 October. The CECCI will encourage the integration and internationalisation of companies, the CCIS says in a press release. CCIS president Jozko Cuk will present the declaration to the CEI summit, which is scheduled to gather prime and economics minister at Portoroz between 24 and 26 November. The CECCI associates the chambers from Albania, Austria, Belorussia, Bosnia-Herzegovina, Bulgaria, the Czech Republic, Croatia, Italy, Hungary, Macedonia, Moldova, Poland, Romania, Slovakia, Slovenia, Serbia-Montenegro and the Ukraine. 10 EUROPEAN UNION Slovenia Only Meets Two of the Four Convergence Criteria The two criteria that Slovenia does meet are the government budgetary position and the criterion on the convergence of long-term interest rates Slovenia only meets two of the four convergence criteria that a country must fulfil to introduce the euro, according to a report released by the European Commission on Wednesday, 20 October. Inflation is still too high and the country has been in the ERM II exchange rate mechanism less than the required two years. The average inflation rate in Slovenia during the 12 months to August 2004 was 4.1 percent, according to the report, which exceeds the ceiling value permitted by the Maastricht criteria. Since 28 June 2004, the Slovenian tolar has participated in ERM II and has been trading close to its central parity since that date, yet Slovenia has simply not been part of ERM II for long enough. The two criteria that Slovenia does meet are the government budgetary position and the criterion on the convergence of long-term interest rates. According to the report, the general government deficit was 2.0 percent of GDP in 2003 and government debt was 29.4 percent of GDP. The average long-term interest rate in the year to August 2004 was 5.2 percent, the report explains. Since mid-2002, long-term interest rates have declined sharply toward the euro area level with differentials narrowing to 0.6 percentage points in the January-August period. The European Commission convergence report is completely realistic and in line with expectations, Finance Minister Dusan Mramor commented on the document. Central bank vice-governor Andrej Rant meanwhile told STA the document highlighted some incompatibilities which the bank knows must be dealt with. Minister Mramor pointed out that the report failed to state that Slovenia, unlike other countries, passed a pension reform as early as 1999, which guarantees stable public finance until 2028. Mramor though agreed that Slovenia will have to lead the policy of healthy fiscal consolidation and moderate wages, and continue structural reform, as stated in the report. Greater market flexibility and further liberalisation of the economy will be the main contributors to the creation of a favourable environment for price stability and greater potential growth, according to him. The situation must be maintained in which wage growth will lag behind productivity growth, according to Mramor. He also said liberalisation was required in areas where it is possible to create competition. Mramor said that inflation was dropping in Slovenia unlike in most other countries. If oil prices had not increased by 70 percent this year, Slovenia could practically have met the relevant Maastricht criterion, according to Mramor. The report says that Slovenia has had a moderate process of curbing inflation, while drawing attention to sluggish implementation of the goals of the stability and growth pact, i.e. the need to do away with the budget deficit in the mid term. Central bank vice-governor Rant said that certain corrections will have to be made in aligning the Bank of Slovenia act with the EU legislation. 11 "The next such report can be expected in two years when Slovenia should meet all criteria according to our expectations and be fit to adopt the euro," he added. The European Commission also noted in its report that the Bank of Slovenia act is not fully compatible with Article 109 of the Treaty and with the statute of the European Central Bank (ECB). According to the report, the formulation of the central bank's objectives will have to be changed to state that it supports the general economic policy and will make efforts to protect financial stability. The second objective - safeguarding financial stability - must be subordinated to the first one. "Slovenia must align this legislation by the time it adopts the euro. Procedures will be started in time," said Rant. Government Debates Slovenia's Bid for EU Border Agency Seat The cabinet also endorsed the country's negotiating positions The government on Thursday, 21 October debated preparations for Slovenia's bid to host the headquarters of the Agency to manage the EU's external borders, which is to launch its operations on 1 May 2005. The cabinet also endorsed the country's negotiating positions. In line with the European Commission's proposal, the agency will initially employ some 30 people, while additional staff could be hired after 2006, when a first assessment of its operations is to be made. According to the government, Slovenia can initially, for the first 12 to 24 months, offer adequate premises in the size of 600 square meters in Ljubljana or its vicinity. Two possible locations are the customs service offices in Ljubljana's commercial district BTC, and offices in Siska, NW part of Ljubljana. An independent facility can meanwhile not be made available until later on. Considering the rent for the premises of 600 square metres, the costs are estimated at EUR 144,000 annually. The rent includes the costs of information infrastructure and security. While the European Commission's proposal does not mention any financial support to cover the costs of the agency's operation, the Foreign Ministry does not think financial support is ruled out. According to the government, Slovenia will leave this option open in the negotiations, in case financial support turns out to be needed. In that case the government would determine the amount of funding needed. If its candidacy is successful, Slovenia will adopt a special agreement to guarantee the agency and its staff adequate privileges and immunity. There is also a possibility for Slovenia to grant the staff residency status under different terms than those valid for the citizens of third countries or the member countries of the European Economic Area. President Discusses Future Challenges with EU Ambassadors The ambassadors highlighted the challenge of adoption of the constitutional treaty and the prospect for Turkey to join the EU in light of the recent recommendations by the European Commission Slovenian President Janez Drnovsek hosted a working lunch for the ambassadors of EU countries at Brdo Mansion on Thursday, 21 October with the debate focusing on the future challenges awaiting the European Union. According to a press release distributed by the president's office, the ambassadors highlighted the challenge of adoption of the constitutional treaty and the prospect for Turkey to join the EU in light of the recent recommendations by the European Commission. 12 The officials also exchanged views on the EU prospects for the Western Balkans, and touched on the relations between Slovenia and Croatia, while Drnovsek spoke about Slovenia's presidency over the Organisation for Security and Cooperation in Europe next year. Gaspari Has no Complaints on Convergence Report The general opinion is that Slovenia is doing a good job in meeting the criteria, with the exception of inflation Bank of Slovenian Governor Mitja Gaspari has said he has no complaints about the latest report of the European Commission on Slovenia's readiness to adopt the euro. The general opinion is that Slovenia is doing a good job in meeting the criteria, with the exception of inflation, Gaspari said as he commented on the Convergence Report that was released on Wednesday, 20 October. Slovenia, he said, expects to meet the inflation criterion sometime between June 2005 and June 2006. In line with the Maastricht criteria, the standards a country must meet to be able to join the euro zone, a country's inflation cannot exceed the average of the three euro zone members with the lowest inflation rate by more than 1.5 percentage points. From the five convergence criteria, Slovenia does not meet three at the moment: apart from price stability, it also hasn't been a member of the ERM II mechanism (the waiting room for the euro) for at least two years, nor have its laws been harmonised with all the euro zone regulations. As far as the Commission's grievances about legislation go, Gaspari said Slovenia received the fewest complaints among all EU countries that are not members of the euro zone. Most of the complaints concerning legislative matters are of a technical nature, Gaspari said. The latest two-yearly convergence report will not change the Slovenian central bank's monetary policy, Gaspari said. "There is no need to change the fundamental concept of the Slovenian monetary policy...and data show that the stability of the tolar is being maintained without the need for special intervention". The two criteria that Slovenia does meet are the government budgetary position and the criterion on the convergence of long-term interest rates. 13 STATISTICS/FORECASTS August Unemployment at 10.3 Percent The registered unemployment rate was 8.6 percent among men and 12.4 percent among women Slovenia's registered unemployment rate for August stood at 10.3 percent, which is level with the July figure, according to the National Statistics Office. The country had a labour force of 872,684 in August, 782,370 out of whom were employed, while 90,314 were registered as unemployed, down 8 percent year-on-year. The registered unemployment rate was 8.6 percent among men and 12.4 percent among women. The rate for the first eight months stood at 10.7 percent (9.2% among men and 12.5% among women). Number of Foreign Tourists Jumps by 9% Slovenia has seen a four-percent increase in tourists' numbers in the first nine months of the year Slovenia has seen a four-percent increase in tourists' numbers in the first nine months of the year, with the number of foreign tourists soaring by as much as 9 percent, the Slovenian Tourist Board (STO) revealed on Friday, 22 October. In what the STO sees as the most encouraging figures, Italian tourists were up by 7 percent year-on-year, the Spanish by between 30 and 40 percent, the British by between 30 to 50 percent, and the Americans by between 26 and 28 percent. The figures for the first three quarters suggest that the summer season is no longer crucial, as tourists are visiting Slovenia throughout the year, the STO officials explained at a news conference held as part of the annual tourism forum dubbed the Slovenian Incoming Workshop. In order to boost this trend, the STO will base its strategy next year on attracting foreign tourists by promoting no-frill airlines, on-line advertising and individualised packages, the STO director general Bojan Meden announced. He pointed out that the numbers of tourists flying in with budget airlines have risen considerably, although the lack of low-cost routes remains one of the biggest setbacks of the Slovenian tourism. The insufficient number of routes is particularly evident in the case of the Italian tourists. While around 770,000 Italians are expected to visit Slovenia this year, the STO would like to see the annual figure amount to one million, Boris Bajzelj of the STO office in Italy said. Moreover, the STO plans to strengthen its marketing next year on the French, Spanish, British and Scandinavian markets, and promote congress, business and wellness tourism. The Slovenia Incoming Workshop, the largest tourism exchange in Slovenia, gathered some 185 foreign tour operators, notably from Germany, Italy and Austria, in the seaside resort of Portoroz. Average Monthly Labour Costs per Employee at EUR 1,559 in 2003 Highest average monthly labour costs per person in paid employment was recorded in the section of financial intermediation Average monthly labour costs per person in paid employment amounted to SIT 373,835 (EUR 1,559) last year, according to the Statistics Office. Salaries and employer's social 14 contributions represented the bulk of it, as they amounted to SIT 355,122 (EUR 1,482). Vocational training costs averaged SIT 3,002 (EUR 13) a month per employee, while taxes amounted to SIT 14,419 (EUR 60) and other labour costs totalled SIT 1,909 (EIR 8). Employers meanwhile received an average SIT 616 (EUR 3) of monthly subsidies per employee, according to the Statistical Office. Highest average monthly labour costs per person in paid employment was recorded in the section of financial intermediation, where they totalled SIT 534,365 (EUR 2,228). Lowest costs (SIT 276,810/EUR 1,154) were meanwhile noted in the section of hotels and restaurants. 15 FINANCE No Raise in Pensions in October The average gross salary paid out between January and August was only 3.1 percent up compared to the average salary last year, while pensions rose by 3.7 percent in the period After pensions stayed put in September, the month they usually get adjusted to the increase in wages, there will be no raise for Slovenian pensioners this October either. The Pension and Disability Insurance Institute (ZPIZ) established on Tuesday, 19 October that wage increase had not topped growth in pensions in the comparable period. The average gross salary paid out between January and August was only 3.1 percent up compared to the average salary last year, while pensions rose by 3.7 percent in the period, according to Joze Kuhelj of the ZPIZ. Kuhelj said that pensions could be geared to wages every month by the end of the year, that is in November and December. Estimates indicate that growth in wages will be on a par with growth in pensions next month. If there is some surprise, indexation may be made in November, but it is more likely to happen in December, Kuhelj said at the session of the ZPIZ management board on Tuesday, 19 October. The average gross salary between January and August amounted to SIT 261,138 (EUR 1,089), while the average for the period between January and December 2003 was SIT 253,200 (EUR 1,056). The lowest pension base for the period between January and August 2004 averaged SIT 98,275 (EUR 410), while the comparable figure for the last year totalled SIT 93,838 (EUR 391). Slovenia's Budget Deficit Below EU Average, Says Mramor Member states' budgets and their deficit problems topped the agenda of the EU Economic and Financial Affairs Council Member states' budgets and their deficit problems topped the agenda of the EU Economic and Financial Affairs Council on Thursday, 21 October. Finance Minister Dusan Mramor said on the side of the meeting that the average EU budgetary deficit of 2.7 percent GDP this year was raising concerns given a relatively favourable economic growth. "Slovenia places below the EU average with a deficit of 2.1 percent," the minister observed. The country forecast an even lower deficit in spring, at 1.6 percent GDP. However, it had to correct it in the September fiscal report because of the alignment with the methodology of the EU statistical office, according to Mramor. The minister could not say whether 2.1 percent will be this year's end figure. The European Commission has forecast that Slovenia's deficit would be at 2.3 percent GDP this year, which is according to Mramor also possible. "Yet given the situation I think that 2.1 percent is more likely," he said. According to Mramor's assessment, 14 countries are experiencing a major budget deficit. European Commissioner for Economic and Monetary Affairs Joaquin Almunia particularly pointed out seven countries with very high budget deficits. These include the Netherlands, Germany, France, Italy, Poland, Hungary and Greece. "The case of Greece has raised much concern, as the country will have a deficit of 5.3 percent GDP this year instead of 1.2 percent," said Mramor. The council said it was expecting a detailed report on Greece's deficit and debt data back to 1997 to clarify the situation. 16 Also discussed were rising oil prices and their effect on the European economy. The prevailing opinion was that the member states should not respond to the trends with tax measures to keep the retail prices low. Other issues on the agenda included the EU's financial arrangements between 2007 and 2013 and the development of a common European methodology to measure the administrative burden of EU legislation and regulation on business. Zavarovalnica Maribor Issues Profit Warning The volume of damage payments had risen by 32 percent compared to last year Zavarovalnica Maribor, a Maribor-based insurance company, issued a profit warning on Thursday, 21 October, saying the volume of damage payments had risen by 32 percent compared to last year. Nevertheless, this year's profit will still be sufficient to reduce the transferred losses of the past, the company said. According to a member of the Zavarovalnica Maribor board, Darko Tolar, the insurer saw a 14 percent rise in collected premiums in the first nine months of the year. Nevertheless, the profit is expected to suffer and fall short of last year's SIT 2.2b (EUR 9.2m) as a result of significant rise in damage payments. Tolar highlighted that market indicators put Zavarovalnica Maribor as Slovenia's secondlargest insurer. The company collected premiums of SIT 32.5bn (EUR 135.4m) in the first nine months, including SIT 25bn (EUR 104.2m) from life insurance policies. Tolar revealed that the biggest contributor to the rise in damage payments was an increase in compensation claims by those injured in accidents, especially car crashes. The summer storms and July's earthquake in the northwestern Slovenian region of Poscoje also played their part in raising damage claims, Zavarovalnica Maribor chairman Drago Cotar said. Slovenia Can Ill Afford to Delay Euro Adoption, Gaspari Says In line with Slovenia's programme for the prompt euro zone membership, the country hopes to introduce the euro in 2007 Slovenia can ill afford to fail in its attempts to adopt the euro in 2007, Bank of Slovenian Governor Mitja Gaspari told the press on Friday, 22 October. In line with Slovenia's programme for the prompt euro zone membership, the country hopes to introduce the euro in 2007. According to Gaspari, this is possible if Slovenia makes no mistakes from now on. Given Slovenia's position, mistakes would prove very costly as they would be almost impossible to fix, Gaspari said, adding that "missing out on euro zone entry in 2007 would mean missing out on the euro for several years". Presenting the central bank's latest forecasts for inflation, Gaspari said that inflation is expected to stand at 3.5 percent in 2004, dropping to 2.5 percent next year. Economic growth is expected to amount to 3.8 percent this year and in 2005, rising to 4 percent in 2006. Touching on the rising price of oil, Gaspari said that Slovenia must react quickly to external factors so that it can reduce their impact on economic growth and inflation. Moreover, Gaspari reiterated his call for the harmonised economic, fiscal and monetary policies in Slovenia. Highlighting that the central bank is persisting with its policy of maintaining a stable tolareuro exchange rate, Gaspari said that this heightens the importance of making sure that all policies are harmonised. 17 If the policies were not harmonised, this would have negative implications for the business sector which would become less competitive, Gaspari stressed. Insurer Triglav Publishes Bid for Two Financial Firms Zavarovalnica Triglav, Slovenia's largest insurer, has published a takeover bid for two financial firms, Triglav Financne druzbe and Triglav Nalozbe Zavarovalnica Triglav, Slovenia's largest insurer, has published a takeover bid for two financial firms, Triglav Financne druzbe and Triglav Nalozbe. "We believe that the takeover will be successful and will reaffirm the financial stability and power of the insurance company," CEO Joze Lenic said on Friday, 22 October. Both financial firms are legal successors of one of the investment funds that Zavarovalnica Triglav created, the Triglav Steber 2. "In our opinion, they are historically part of Zavarovalnica Triglav," Lenic said. Lenic also noted that Zavarovalnica Triglav is bent on becoming the largest and most successful insurance company in Southeastern Europe, so it needs these financial sources. Triglav offers SIT 1,270 (EUR 5.30) per share for Triglav Financne druzbe and SIT 425 (EUR 1.77) per share for Triglav Nalozbe. Petrol Prices Expected to Reach New Highs 26 October will see petrol prices soar for the second time this month, which is expected to affect the October inflation rate figure The rise of oil prices on the global market is expected to push petrol prices in Slovenia to new highs this week. Diesel is to soar by at least SIT 12.50 (EUR 0.05) to SIT 205.80 (EUR 0.86) a litre, and heating oil is to jump by SIT 11.50 (EUR 0.05) to SIT 127.20 (EUR 0.53), according to initial calculations. The price of regular petrol is to increase by SIT 2.40 (EUR 0.01) to SIT 208.20 (EUR 0.87) on Tuesday, 26 October, while that of premium petrol will go up by SIT 2.30 (EUR 0.01) to SIT 212.80 (EUR 0.89). Petrol prices are set every fortnight in Slovenia in accordance with the government pricing model, depending on the average price of oil derivatives on the Mediterranean market and the dollar exchange rate. This is the first time that the government will be unable to influence retail prices as excise duties have hit the lowest levels permitted by EU law. 26 October will see petrol prices soar for the second time this month, which is expected to affect the October inflation rate figure. IMAD Says Price Increases Announced by Petrol too High After oil trader Petrol announced a considerable rise of petrol prices for next week due to global trends, the government Institute for Macroeconomic Analyses and Development (IMAD) insisted that the increase should not be so high After oil trader Petrol announced a considerable rise of petrol prices for next week due to global trends, the government Institute for Macroeconomic Analyses and Development (IMAD) insisted on Friday, 22 October that the increase should not be so high. Contradicting Petrol's figures, IMAD calculated that the price of premium petrol will go up by SIT 0.80 and not by SIT 2.30 (EUR 0.01) as suggested by Petrol, while regular petrol is to rise by SIT 0.70 and not by SIT 2.40 (EUR 0.01). The IMAD calculations moreover suggest that diesel is to soar by SIT 5.90 (EUR 0.02) and heating oil by SIT 5.30 (EUR 0.02). Petrol on the other hand announced increases of SIT 12.50 (EUR 0.05) and SIT 11.50 (EUR 0.05) respectively. 18 The IMAD director Janez Sustersic also said in a press release that the price increase would contribute 0.2 percentage point to November inflation rate and would not jeopardise the government's inflation curbing plan. Ljubljana Stock Exchange The trading week on the Ljubljana Stock exchange saw the benchmark SBI 20 index gain 19.64 points (0.41 percent) to close at 4,799.17 points A lacklustre trading week on the Ljubljana Stock exchange saw the benchmark SBI 20 index gain 19.64 points (0.41 percent) to close at 4,799.17 points on Friday. 22 October. The week's turnover amounted to SIT 6.1bn (EUR 25.4m), with block trades totalling SIT 3.3bn (EUR 13.7m). The investment fund index PIX was up 12.90 points (0.30 percent) and closed at 4,377.34 points, while the free market index IPT gained 44.33 points (1.11 percent) to stand at 4,030.42. The BIO bond index climbed 0.26 points (0.22 percent) to 119.33 points. Trading was rather lacklustre according to analysts from the stockbroking firm Ilirika, which is why most shares traded relatively stable. The hottest shares on the official market were those of retailer Mercator, which saw a turnover of SIT 676.4m/EUR 2.8m (down 0.55 percent to SIT 42,366/EUR 177). High turnovers were also recorded by shares of pharmaceutical company Krka (SIT 638.6m/EUR 2.7m; up 0.55 percent to SIT 80,903/EUR 337), those of petrol trader Petrol (SIT 334.2m/EUR 1.4m; up 1.05 percent to SIT 63,669/EUR 266), brewer Pivovarna Lasko (SIT 220.4m/EUR 0.9m; up 2.84 percent to SIT 7,496/EUR 31) and home appliance manufacturer Gorenje (SIT 192.2m/EUR 0.8m; up 1.40 percent to SIT 6,383/EUR 27). Dominating the trading among bonds were the state bonds of the 55th issue, which made a turnover of SIT 592.6m (EUR 2.5m). Slovenian Restitution Fund bonds of the 2nd issue meanwhile saw a turnover of SIT 330.8m (EUR 1.4m). Triglav Steber 1 made the highest turnover on the free market, as SIT 670.4m (EUR 2.8m) worth of deals were closed. Following were Zvon Ena Holding (SIT 469.4m/EUR 1.9m) and Vizija Holding (SIT 325.1m/EUR 1.4m). Foreign Exchange Mean exchange rate of the Bank of Slovenia Euro (EUR) - SIT 239.81 (-0.04) U.S. dollar (USD) - SIT 189.83 (-3.63) Swiss franc (CHF) - SIT 155.83 (+0.25) British pound (GBP) - SIT 346.59 (-1.32) 19 REGIONAL INFORMATION New Chairlift to Secure Kranjska Gora's Place in World Cup Skiing The new four-seat chairlift will be completed in time for the start of the new skiing season, scheduled for 17 December The Alpine resort of Kranjska Gora looks set to play host to the world's best skiers again next year, as it will fulfil the promise it made to the International Skiing Federation (FIS) that a new chairlift would be constructed at the Podkoren slope in time for the new season. The new four-seat chairlift will be completed in time for the start of the new skiing season, scheduled for 17 December. The 44th Vitranc Cup will take place on 26 and 27 February, according to Sandra Rakovec, the acting manager of LTO Kranjska Gora. The chair lift carries a price tag of SIT 800m (EUR 3.3m), with the bulk of the money coming from the EU's structural funds, Rakovec told the press on Monday, 18 October. According to a recent report by the Association of Slovenian Chairlift Operators, ski resort operators have invested SIT 2.3bn (about EUR 10m) into chair lifts and artificial snowmaking systems ahead of the new ski season in a bid to give the winter tourism industry a much-needed boost. Kranjska Gora is the only Slovenian resort that hosts men's World Cup events; the eastern resort of Pohorje hosts the traditional women's event, the Golden Fox. Zasavje the Only Region With No Growth, According to Government Report In a bid to boost the development of Zasavje, a programme of measures in 2005 was adopted The government adopted a report on the implementation of the 2004 regional policy on Thursday, 21 October establishing that all regions with the exception of Zasavje saw economic growth in real terms between 2000 and 2003. In a bid to boost the development of Zasavje, a programme of measures in 2005 was adopted. Regional policy is facing the problem of restructuring, which has particularly affected peripheral areas, according to Igor Strmsnik, deputy director of the Government Office for Regional Development and Structural Policy. Strmsnik told the press after the government session that the central Slovenian region had seen the highest, 9 percent growth between 2000 and 2003. It is followed by the NE Podravje region (8.1 percent), the NW Gorenjsko region (5.7 percent), SE Dolenjsko region (5.6 percent), the western Nova Gorica region (5.4 percent) and the northern Korosko region (1.7 percent). The eastern region of Zasavje can be found at the very bottom with negative growth, according to Strmsnik. In a bid to boost the development of this ailing region, the government passed a programme of measures to be taken in 2005. A report on the implementation of the programme of Zasavje restructuring in 2003, also adopted by the government, says that SIT 850m (EUR 3.5m) of budgetary funds were provided for the implementation of the programme last year. Next year, the programme will be supported by SIT 790m (EUR 3.3m) of budgetary funds. Strmsnik said that SIT 214m (EUR 0.9m) were allocated for public regional expenses in 2003, while SIT 9.5bn (EUR 39.6m) were allocated for direct regional incentives to least developed regions. SIT 63bn (EUR 263m) went for indirect regional incentives in the form of ministries' cofunding of regional development programmes. 20 Strmsnik said that the pressure on the least developed regions had increased in the wake of Slovenia's EU accession. 21 BRANCH INFORMATION Government Amends Regulation on Payment of Rural Development Projects The amendments relate to changes in the amount of certain payments, and introduce additional measures for early retirement of farmers The government has adopted amendments to the regulation on payments for rural development measures for this year. The amendments relate to changes in the amount of certain payments, and introduce additional measures for early retirement of farmers. In line with EU requirements, the government has also changed support measures in the implementation of EU standards at farms; these needed to be adjusted to European Commission recommendations. The 2004-2006 rural development programme includes areas with limited farming potential, agri-environmental measures, early retirement, support for implementation of EU standards and technical assistance. The measures are funded to the tune of 80 percent by the European Agricultural Guidance and Guarantee Fund; the rest comes from the national budget. Agriculture Agency Becomes Fully Registered for EU Subsidies Following four years of preparations, the agency was granted accreditation as Slovenia's paying agency for funds from the European Agricultural Guidance and Guarantee Fund (EAGGF) on 19 October Slovenia's Agency for Agricultural Markets and Rural Development has become fully registered to pay out EU agricultural subsidies and other EU aid to Slovenian farmers. Following four years of preparations, the agency was granted accreditation as Slovenia's paying agency for funds from the European Agricultural Guidance and Guarantee Fund (EAGGF) on Tuesday, 19 October. "We have been cleared to carry out all measures in this respect. This will allow Slovenian farmers and the food industry to gain both European and national funds for the promotion of competition and efficiency," acting director of the agency Sonja Bukovec said. The accreditation documents were handed to Bukovec by Agriculture Minister Milan Pogacnik. Although the agency is now registered, Pogacnik highlighted that its work in preparing to assume payment duties is not fully over just yet. The agency must get ready for a check-up of its capacity to deal with various issues of EU aid in 2005, Pogacnik told the press, adding that another check-up will follow in 2006. Moreover, the Agriculture Ministry will have to adjust to the changes in the Common Agriculture Policy (CAP) as of 2007, at the onset of the new EU budget period. In line with the changes, the agency will have to acquire new accreditation. According to Pogacnik, the biggest problem faced by the agency in meeting future challenges is a shortage of staff and equipment. "We must ensure normal conditions if we want to have a stable agency," Pogacnik said, adding that this is the only way to ensure that Slovenia uses up fully the EU funds it is entitled to. In April, Slovenia was the first of the ten acceding countries to get temporary accreditation, which gave the agency the right to implement 90 CAP measures. 22 The EAGGF finances all measures of the first CAP pillar, namely direct payments, foreign trade measures and intervention and specific measures. Payments of this year's subsidies, totalling over SIT 40bn (EUR 166.8m), will begin after 15 November. The Slovenian agency, which employs 220 workers, was set up in 2000. The government had to establish it in order to adhere to the CAP in the field of implementation of market regulations, foreign trade policy, market intervention, payment system and structural measures, and implementation of the pre-accession aid of the Sapard programme. Road Management Discussed at 7th Congress on Roads Over 900 participants discussed transport policy from various aspects. The 7th Slovenian congress on roads and transport opened in Portoroz on Wednesday, 20 October, focusing on the maintenance and management of roads. Slovenian Transport Minister Marko Pavliha opened the congress. Pavliha, who stressed the importance of a comprehensive transport policy as he assumed office six months ago, was pleased that the government has passed a transport policy resolution, which now needs confirmation in parliament. Pavliha also stressed the responsibility of the profession in planning the road infrastructure, highlighting the recent failure of the profession which did not foresee an increase in transport in SE Slovenia after EU accession. Road construction and maintenance topped the agenda of a news conference held at the beginning of the congress. It was again highlighted that the national motorway network is to be completed by 2013 according to the national motorway construction plan. The programme foresees a total of 122 kilometres of motorways to be constructed by 2013. The value of all projects is estimated at EUR 3.5bn, which is to come from the state budget. Some funds are also expected to come from the European cohesion fund, according to Transport Ministry State Undersecretary Gregor Ficko. Vili Zavrlan of the National Road Directorate said there are a total of 37,000 kilometres of roads in Slovenia. The national programme of road maintenance, which foresees road maintenance works on 485 kilometres or roads of national importance is valued at SIT 170m (EUR 709,000), according to Zavrlan. He said the programme is to be discussed by parliament next year and is expected to be implemented in the next ten years. Also speaking at the congress was Juerg Sparmann of the regional authority for roads and traffic in the German state of Hessen. He said all European countries were facing similar road problems, mainly as a consequence of heavier traffic. The congress ended on Friday, 22 October with over 900 participants discussing transport policy from various aspects. 23 COMPANIES Ljubljana's Biggest Mall Gets Bigger The new premises include the first Marks & Spencer and Swarowski stores in Slovenia A new 5,000 sq. metre extension of the Ljubljana's biggest shopping mall Citypark was officially opened on Tuesday, 19 October. The new premises include the first Marks & Spencer and Swarowski stores in Slovenia, and the first H&M apparel store in the capital. A parking garage for 1,270 vehicles has also been built. The entire investment is worth EUR 31m, according to Igor Mervic, director of retailer Spar. Mervic announced that Spar, which is currently the country's second largest retailer, would expand rapidly in the next two years and secure a 25-percent market share. The extension will create 190 new jobs, bringing the total number of employees at Citypark to 600. The mall recorded 7.2 million purchases last year; the figure is expected to exceed 7.5 million this year despite extensive construction work. Mervic said that Spar's goal is to run the three largest shopping centres in the country - in Ljubljana, Maribor and Celje. While plans have already been made for an upgrade to the Celje mall, the brush-up of the Maribor centre, dubbed the Europark, is somewhat more remote. Honey Specialist Medex Celebrates 50th Anniversary Last year, the company posted revenues of EUR 9.4m, up 11 percent year-on-year, and a net profit of EUR 0.8m Medex, a company specialising in the sale and processing of honey and other bee products, celebrated the 50th anniversary on Tuesday, 19 October. The company has a 90 percent market share in Slovenia and a 60 percent share in Bosnia, where most of its exports are directed. The company was set up in 1954 merely to trade in honey (its name is an abbreviation of honey export). It was upgraded in the 1960s, when it started processing other bee products intended mainly for medicinal purposes. When Yugoslavia fell apart in 1991, it lost 70 percent of its market, so the company underwent extensive restructuring and started producing things other than pure bee products, such as cookies, according to Medex chairman Alesa Kandus. Last year, the company posted revenues of SIT 2.26bn (EUR 9.4m), up 11 percent year-onyear, and a net profit of SIT 187m (EUR 0.8m). They invested SIT 400m (EUR 1.7m) in upgrading production capacities. The company's biggest export item is still honey. Yet in August, they launched the production of propolis pills: an Italian buyer is expected to purchase two million pills a year. Medex cooperates with over 1,000 Slovenian beekeepers. Mercator Extends Offer for Department Store Maximarket Mercator has already acquired 49.4 percent of all shares Slovenia's leading grocer Mercator extended its bid for Maximarket, a top department store in the centre of Ljubljana, on Wednesday, 20 October by another 14 days. Mercator has already acquired 49.4 percent of all shares. Mercator offered SIT 2.6bn (10.8m) for all Emona Maximarket shares, which amounts to SIT 8,000 (EUR 33.3) a share. The grocer said in its bid it would acquire at least 25 percent of all shares, yet since this happened less then 14 days before the bid expired, it extended the offer. 24 The offered price amounts to twice the current nominal value of shares and SIT 2,000 (EUR 8.33) more than a rival bid published on 5 August by financial company Maksima Holding that expired on 4 October. Iskra Avtoelektrika on the Stock Exchange as of 26 October Iskra Avtoelektrika is a manufacturer of electric motors for the car industry Iskra Avtoelektrika, a manufacturer of electric motors for the car industry, will be floated on the free market of the Ljubljana Stock Exchange (LJSE) on 26 October, the company reported on Thursday, 21 October. The company decided to enter the stock market at the initiative of several major shareholders, including the state-run Pension Fund Management (KAD) and investment fund Triglav Steber 1. One of the reasons for the listing is to ensure greater transparency; several small shareholders have made allegations about alleged irregularities in the company. A total of 1,608,313 ordinary shares, with a nominal value of SIT 2,000 (EUR 8.34) per share, will be traded on the free market under the symbol IALG. The shares will probably trade much higher as they were priced at SIT 7,000 (EUR 29.2) on the grey market at the end of last year. The management refused to make an assessment of the trading price, but it expects it will "adjust appropriately given the trend of growth and favourable performance". Nor does Iskra Avtoelektrika expect any major short-term changes to the ownership structure. The currently biggest shareholder is the manufacturer Iskra, which holds a 22 percent stake, and KAD with 14.2 percent. The company exports 90 percent of the output, and posted revenues of SIT 32.5bn (EUR 135.5m) last year. It has joint ventures in France, Spain, Italy, Germany, the UK and the US, and partiallyowned production facilities in Iran, Belarus, Bosnia-Herzegovina and China. Hella Lux Suffers Shortfall of EUR 450,000 Due to Opel Strike Hella Lux, a company owned by the German Hella KG, also supplies headlights for Fiat, another company part of the General Motors The Ljubljana-based company Hella Lux, the leading Slovenian supplier of headlights for Opel Astra, has noted a shortfall of EUR 300,000 because of a six-day strike of workers at General Motors' Opel plant in Germany's Bochum. Andrej Lazar, the general manager, said that the company is likely to make up for the shortfall in the coming days and months so that it should not affect this year's business figures. "We have meanwhile received new orders from Bochum today," Lazar told STA. Hella Lux, a company owned by the German Hella KG, also supplies headlights for Fiat, another company part of the General Motors. "Since Opel plant in Bochum did not supply the plant in Italy's Melfi, Fiat cut the orders from 2,700 to 700 a week," said Lazar. The company is expected to see a loss of EUR 150,000 from the Fiat deal, according to Lazar. "The question is whether we will manage to make up for that loss, as Lancia Ypsilon sales are poor," said Lazar, whose company supplies headlamps for that car make. The shortfall comes after workers at the Opel plant in Bochum went on wildcat strike, protesting plans announced by the General Motors to cut 12,000 jobs cuts in Europe - 10,000 in Germany. However, production resumed on Wednesday, 20 October. Ljubljana Gets New Four-Star Hotel According to the management of the hotel, the Mons, a 17 million euro investment, provides luxury accommodation, extensive conference facilities and a rich culinary offering 25 Visitors to the Slovenian capital have a new choice for their accommodation, as a new fourstar hotel opened its doors recently. Unlike the other Ljubljana hotels, which are mostly centrally-located, the Hotel Mons is located in the northwest of the city, close to the ring road. According to the management of the hotel, the Mons, a 17 million euro investment, provides luxury accommodation, extensive conference facilities and a rich culinary offering. The modern-looking building is located at Brdo, a green part of Ljubljana, and can be seen from the Ljubljana ring road. General Manager Andrej Bozic said the hotel is expected to start making a profit within three years, with the whole investment expected to be made up in ten years. According to Bozic, the initial visit numbers and customer satisfaction suggest that these goals are achievable. The Slovenian-owned hotel, which is a member of the Austrian hotel chain Stegenberger, has 111 double-bed rooms and three suites. It also has a conference hall with a capacity of up to 420 people and state-of-the-art equipment. The hotel also has a self-serve restaurant designed like a market in which customers can handpick the ingredients of their dish, which is prepared before them. To make up for its non-central position, the hotel provides free transport to the city centre for its customers. Mercator Threatens to Sue Serbia The CEO of retailer Mercator Zoran Jankovic told a Belgrade daily on 21 October, that he will seek compensation in court if the Serbian Securities Agency keeps preventing his company from filing a complaint over a trading ban on C Market shares, Serbia's grocer in for privatisation The CEO of retailer Mercator Zoran Jankovic told a Belgrade daily on Thursday, 21 October, that he will seek compensation in court if the Serbian Securities Agency keeps preventing his company from filing a complaint over a trading ban on C Market shares, Serbia's grocer in for privatisation. The statement comes after the Serbian Securities Agency suspended on 15 October the takeover procedure involving the leading Serbian grocer after it received a ruling from the Belgrade Commercial Court disputing the registration of C Market shares. Earlier that same day the agency gave a go-ahead to two rival takeover offers submitted by the British-based company Ashmore Investment Management and the recently established Belgrade company Primer C, which is headed by C Market manager Slobodan Radulovic. Mobitel Becomes Second Mobile Operator in Kosovo, but UNMIK Annuls Tender The head of the UN mission in Kosovo (UNMIK) annulled the tender process for Kosovo's second mobile phone company The head of the UN mission in Kosovo (UNMIK) annulled the tender process for Kosovo's second mobile phone company which was won by a Kosovo consortium affiliated with Slovenian company Mobitel, because of "serious flaws". However, UNMIK was not able to provide details on the alleged flaws. According to its press release, its head Soeren Jessen-Petersen signed an order to cancel the tender process on Wednesday, 20 October, in what UNMIK said was "in the best interests of Kosovo and its economic development". The announcement of the annulment came on Thursday, 21 October, shortly after Mobitel and its Kosovo partner Mobikos signed a EUR 6.5m license contract with the Kosovo 26 telecommunications authority. Surprised at the UNMIK move, Mobitel said it would "thoroughly examine" the new situation, taking legal action if necessary. 27 FAIRS, CONGRESSES Medilab Fair to Acquaint Medical Profession with Latest Trends The 3,000 square metre exhibition area at the Gospodarsko razstavisce fair grounds featured a total of 153 exhibitors from 20 countries The biennial fair of medical and laboratory equipment and services, Medilab, opened in Ljubljana on Wednesday, 20 October. The event will enable the medical profession to get acquainted with the global trends and technological novelties, the organisers said. The 3,000 square metre exhibition area at the Gospodarsko razstavisce fair grounds featured a total of 153 exhibitors from 20 countries. Half of them came from Slovenia. Rastko Ales, the manager of the Medilab fair, has told the press this will be the ninth medical fair in a row. One of leading specialised fairs in Slovenia, Medilab was put on the calendar of the Global Association of the Exhibition Industry UFI in 1996. Also to be credited for that is the section of medical equipment manufacturers - Medilab, which operates at the Chamber of Commerce and Industry of Slovenia (CCIS) Small Business Association. 28 SLOVENIA IN BRIEF Forum Agrees Modern Technology Key to Efficient Border Control Only the use of modern technology can secure an efficient and effective management of the EU's external borders. The questions of technological requirements, efficient border control and alignment of standards were the topic of a two-day workshop that opened in Ljubljana on Tuesday, 19 October. The workshop on research and technological challenges of the border control in the EU-25 area, brought together European Commission officials and representatives of border police from a number of EU countries. Vajgl Congratulates New Austrian Colleague The new Austrian Foreign Minister Ursula Plassnik, who was officially sworn in on Wednesday, 20 October, was congratulated by the Slovenian foreign minister. Ivo Vajgl wished her success in performing what he termed a demanding office, the Slovenian Foreign Ministry said in a press release. Minority Info Point Opens at Trieste A Slovenian minority information point was inaugurated in the Italian border city of Trieste on Wednesday, 20 October. It will offer information about the Slovenian ethnic minority in Italy, Slovenia, its language, culture and history as well as broader info on ethnic minorities in Europe. US Official Briefed on Slovenia's OSCE Presidency Preparations Representative of the US State Department Heather Conley held talks with officials of the Slovenian foreign and defence ministries on Thursday, 21 October to discuss Slovenia's preparations for presiding over the OSCE in 2005. Parliament Inaugurated The new Slovenian parliament has been inaugurated whereby the outgoing parliament and government have been dissolved. Until a new government is elected, the previous cabinet will only perform the caretaker function. France Cukjati of the largest parliamentary party, the Slovenian Democrats (SDS), has been elected the new speaker of the National Assembly. Vajgl Calls for OSCE Reform Slovenian Foreign Minister Ivo Vajgl called for a reform of the Organisation for Security and Cooperation (OSCE) as he addressed a conference in Vienna on Friday, 22 October. According to him, the organisation is now in an unenviable situation so a joint effort should be made for the countries east of Vienna to again accept the organisation as their own. Addressing the conference organised by the OSCE and the East-West Institute, Vajgl estimated that positive steps towards reforming the organisation should be made next year, the year Slovenia is due to assume the OSCE rotating presidency. Seminar Discusses Promotion of the Employment of Graduates The employment of graduates topped the agenda of a seminar on the Bologna process that opened at Bled on Friday, 22 October. This is particularly topical for Slovenia, which is now gearing up for institutional reform of universities after having passed fresh legislation for higher education. 29

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