Slovenia Business Week no. 26, June 27th, 2005
HEADLINES ............................................................................................................................. 3
Slovenia Has Justified its Independence, Drnovsek Says ...................................................... 3
Finance Survey: Mercator Biggest, Krka Best Slovenian Company ..................................... 3
Fuel Trader Looking to Boost Presence in SE Europe ........................................................... 4
INTERNATIONAL COOPERATION ...................................................................................... 6
Cukjati Bids Farewell to Irish, Spanish, Hungarian Ambassadors ........................................ 6
Rupel Discusses Tourism Cooperation with Monaco Officials ............................................. 6
Slovenian and British Ministers Discuss Transport Priorities ............................................... 6
Slovenia Opens Consulate in Macedonia's Bitola .................................................................. 7
UNIDO and Slovenia Sign Agreement on Financial Support ................................................ 7
FM Pledges Ongoing Assistance to Iraq ................................................................................ 7
EUROPEAN UNION ................................................................................................................. 9
PM Says Supplementary Budget Keeps in Mind Euro Goal ................................................. 9
Common Values Needed to Overcome EU Crisis, Sturm Says ............................................. 9
Govt Proposes Division in Two Cohesion Regions ............................................................. 10
Govt Adopts Development Strategy; Aim to Exceed EU Average by 2015........................ 10
Fiscal Changes Needed Ahead of Euro Adoption, Study Suggests ..................................... 11
European Commission Team Visits Slovenia Over Lisbon Plan ......................................... 12
Zagar Convinced of Success of Division into Regions ........................................................ 12
EU Endorses New Rural Development Policy Regulations ................................................. 13
No Panic Due to Failure to Adopt Budget, PM Says ........................................................... 13
Gaspari Upbeat about the Euro ............................................................................................ 14
PM Reiterates Slovenia Would not Concede to Net Payer Status ....................................... 14
Ministry Official Says Proposed EU Sugar Reform Is too Liberal ...................................... 15
LEGISLATION ........................................................................................................................ 15
Companies Act to Be Overhauled ........................................................................................ 15
Parliament Ratifies Six Agreements and Treaties ................................................................ 16
STATISTICS/FORECASTS .................................................................................................... 17
More Fathers Taking Paternity Leave, Statistics Show ....................................................... 17
Eurostat Projects Population Decline after 2014 .................................................................. 17
Business Sentiment Remains Unchanged ............................................................................ 18
FINANCE................................................................................................................................. 19
NLB Making Inroads into Russian Market .......................................................................... 19
Stock exchange ..................................................................................................................... 19
Foreign exchange ................................................................................................................. 19
Successor States Meet to Discuss Diplomatic Assets .......................................................... 19
Petrol Prices Follow World Oil Prices on the Way Up ........................................................ 20
Central Bank Says No Problems With Financial Stability ................................................... 20
Lawmakers Pass Supplementary Budget ............................................................................. 21
Petrol CEO Does Not Expect Oil Prices to Ease Off ........................................................... 21
BRANCH INFORMATION .................................................................................................... 23
Public Transportation Companies Point to Disorder in the Sector ...................................... 23
New Motorway Section Opens for Traffic ........................................................................... 23
COMPANIES ........................................................................................................................... 24
Economist Doubts Voluntary Chamber Membership Smart Decision ................................ 24
Govt Confirms Miklavcic as New Director of Klinicni Center ........................................... 24
Triglav Steber 1 Becomes Biggest Mutual Fund ................................................................. 24
Retailer Engrotus to Expand to Macedonia .......................................................................... 25
Telecoms Watchdog Urges National Telco to Draft New ADSL Offer .............................. 25
Protej Publishes Takeover Bid for Autocommerce .............................................................. 25
SLOVENIA IN BRIEF ............................................................................................................ 27
Elan Subsidiary Files for Bankruptcy .................................................................................. 27
Parliament Elects Slovenian Eurojust Representative.......................................................... 27
RTV Slovenija Bill Passed ................................................................................................... 27
Oil Spill in Port of Koper Causing Severe Pollution ........................................................... 27
Lawmakers Endorse Bill on Protection of Displaced Persons ............................................. 27
Rupel Conferred Crans Montana Forum Award .................................................................. 27
Podobnik Proposes Establishing Mercury Centre in Idrija .................................................. 27
Former President to Attend World Leaders Summit ............................................................ 28
Strel Completes Swim of Vltava .......................................................................................... 28
Germany Gives Demining Fund EUR 1.85M ...................................................................... 28
France Makes Another Demining Donation to IFT ............................................................. 28
2
HEADLINES
Slovenia Has Justified its Independence, Drnovsek Says
Holding a speech at the central ceremony on the eve of National Day, 24 June President
Janez Drnovsek said that Slovenians have justified the existence of their country over the 14
years of its independence
The country has achieved above-average economic growth and is widely believed to have
been the most successful in a transition from socialist regime to a market economy while
preserving social balance at the same time, Drnovsek told the crowd in Republic Square.
He went on to say that the Slovenian nation knew how to fight for its place on the world map,
an objective in which many bigger and more-developed countries and regions have failed.
Slovenia, according to the president, has been very cooperative on the international scene: it is
active in the United Nations, is presiding over the OSCE this year, and is deploying its troops
in international peace-keeping operations.
Moreover, the country is devoting its efforts to European integration, in which it sees an
opportunity for lasting peace, economic progress and better life in Europe.
Touching on the recent referendum rejections of the EU constitution, Drnovsek said that EU
citizens, although they now live better than ever before, want stronger guarantees for the
future than those offered by politicians.
However, leaving in peace for six decades, Europeans seem to have started taking peace for
granted. In truth though, peace can be preserved by values of European integration, which are
all stated in the EU constitutional treaty, Drnovsek said.
Ahead of the 14th anniversary of Slovenia's independence, President Janez Drnovsek received
congratulations from statesmen such as UN Secretary General Kofi Annan, Pope Benedict
XVI, German President Horst Koehler, Russia's Vladimir Putin, Czech Vaclav Klaus and
Serbian President Svetozar Marovic, the president's office said in a press release on Friday, 24
June.
Finance Survey: Mercator Biggest, Krka Best Slovenian Company
Business daily Finance has ranked grocer Mercator as the biggest Slovenian company, while
rating drug maker Krka as the best Slovenian company in its survey "101 Biggest and Best
Slovenian Companies"
Business daily Finance has ranked grocer Mercator as the biggest Slovenian company, while
rating drug maker Krka as the best Slovenian company in its survey "101 Biggest and Best
Slovenian Companies".
Using weighted data on shifts in company results and size according to different factors
(revenues, profit, number of employees), the paper concluded that Mercator was the biggest
Slovenian company last year.
Generating the second-highest revenue of all Slovenian companies, Mercator was also second
in terms of the number of employees, the paper points out, adding that the company
commands the greatest influence on the Slovenian market.
Meanwhile, Krka was the best Slovenian company of 2004 due to its return on equity and
double-digit growth in profit, revenues, and value added per employee. Krka's growth shows
that the biggest companies can be the fastest-growing, Finance writes.
Second place on the list of the biggest Slovenian companies went to drug maker Lek, which is
followed by Krka in third. Although both pharmaceutical companies generated a bigger profit,
Mercator edged them for top spot because of higher revenues and more employees.
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Meanwhile, gaming chain Hit took second place among the best Slovenian companies,
according to the survey. The Nova Gorica-based company saw its profit soar, while its capital
returns were well above the average, the paper wrote on Monday, 20 June.
Third place among the best companies went to car maker Revoz, which upped revenues by
20% and tripled its operating profit last year.
- Biggest Slovenian companies:
1) Mercator
2) Lek
3) Krka
4) Telekom Slovenije
5) Gorenje (home appliance group)
6) Petrol (fuel retailer)
7) Merkur (hardware retailer)
8) Revoz
9) Sava Tires (tyre maker)
10) Mobitel (wireless provider)
- Best Slovenian companies
1) Krka
2) Hit
3) Revoz
4) Holding slovenske elektrarne (power group)
5) Mobitel
6) Telekom Slovenije
7) Merkur
8) Engrotus (grocer)
9) Helios (chemical group)
10) Sava Tires
* Source: business daily Finance, survey "101 Biggest and Best Companies"
Fuel Trader Looking to Boost Presence in SE Europe
Fuel retailer Petrol has plans to increase its presence in SE Europe, which is why it is buying
a storage facility in Croatia with capacity to cater for 80 to 100 petrol stations in this region
Fuel retailer Petrol has plans to increase its presence in SE Europe, which is why it is buying a
storage facility in Croatia with capacity to cater for 80 to 100 petrol stations in this region, the
head of the company told the press on Wednesday, 22 June.
Petrol currently generates 9.4% of its revenue on the markets of SE Europe. However, the aim
is to increase this in the future.
The company hopes to raise the number of its stations from 343 currently held in Slovenia,
Croatia, Bosnia-Herzegovina and Serbia-Montenegro to 500 that would stretch all the way to
the Black Sea.
Petrol plans to do this through the opening of 30 new petrol stations in Bosnia and
cooperation with Serbian fuel trader Naftna industrija Srbije (NIS).
Moreover, the company is also planning to expand its reach to Bulgaria and Romania,
chairman Janez Lotric said, adding that the plans for that are not finalised yet.
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According to him, the company has no plans to open petrol stations in the EU, as most of
these markets are saturated, which has forced the closure of pumps there.
"Until we find the right approach for the EU, we will focus on SE Europe, where it will be
easier for us to achieve our goals," Lotric said.
The construction of a EUR 15m storage facility on the outskirts of Croatia's capital Zagreb
would allow the realisation of Petrol's strategy in that country, he added.
Petrol currently has 18 petrol stations in Croatia, while its plan is to increase that to 50 by
2010, he announced.
Meanwhile, expansion in Serbia will depend on the partnership with NIS, which is about to be
privatised. According to Lotric, the partnership with the Serbian company does not have to be
tied to the privatisation of the company.
Petrol would like to invest into the construction and modernisation of petrol stations in Serbia
with NIS, Lotric explained.
Moreover, he said that Petrol continues to invest at home as well. According to him, at least
20 petrol stations will be fitted with around-the-clock electronic pumps that will allow
customers to fill up their cars at times the stations would otherwise be closed.
5
INTERNATIONAL COOPERATION
Cukjati Bids Farewell to Irish, Spanish, Hungarian Ambassadors
Bilateral issues and the latest developments in the EU topped the talks
Speaker of Parliament France Cukjati received separately the Irish, Spanish and Hungarian
ambassadors to Slovenia for farewell visits on Tuesday, 21 June. Bilateral issues and the latest
developments in the EU topped the talks.
Cukjati and Irish Ambassador Gary Ansbro agreed in their talks that the current crisis in the
EU is not destructive but foremost an opportunity for the EU to rethink its policies and make
the bloc more citizens-friendly, the parliament's press office said.
Meanwhile, discussing the EU with Spanish Ambassador Pablo Zaldivar Miquelarena,
Cukjati said he was convinced the Dutch and French rejections of the EU constitution would
not grind integration to a halt.
According to Cukjati, the scepticism demonstrated recently in some of the founding members
means that the attitude of the other EU member states, including Spain, is that much more
important.
Meanwhile, Cukjati and Hungarian Ambassador Gabor Bagi agreed that relations between the
two countries are excellent and that EU membership has helped boost bilateral business
cooperation.
The pair agreed that Slovenia and Hungary play an important role in promoting stability and
democracy in the Balkans, the press release from parliament added.
Rupel Discusses Tourism Cooperation with Monaco Officials
Foreign Minister Dimitrij Rupel raised the possibility for greater cooperation in tourism
between Slovenia and Monaco as he met Monaco officials on the margins of the Crans
Montana Forum on Friday, 24 June in Monaco
"We agreed that Slovenia and Monaco enjoy good and friendly relations," Rupel said after
meeting Monaco's Minister of State Jean-Paul Proust and external relations adviser Rainer
Imperiti.
"Slovenia would like to see the countries cooperate better in business, especially investment. I
pointed to cooperation in luxury tourism and hotels as one of the opportunities," Rupel said.
Earlier in the day, Rupel addressed the participants of the Crans Montana Forum in his
capacity as the OSCE chairman. He spoke about the threats and challenges of the modern
world, the Foreign Ministry said in a press release.
Slovenian and British Ministers Discuss Transport Priorities
Transport Minister Janez Bozic and British Minister of State for Transport Stephen Ladyman
concluded that the countries share similar priorities in transport
Transport Minister Janez Bozic and British Minister of State for Transport Stephen Ladyman
concluded that the countries share similar priorities in transport, as they met at Brdo pri
Kranju on Tuesday, 21 June.
Bozic and Ladyman, whose country is due to start the EU presidency next month, also agreed
that all transport-related EU directives should be adopted as soon as possible.
As Bozic told a news conference after the meeting, several questions remain to be tackled in
the common transport policy, including that of eurovignettes.
The Slovenian minister said he had proposed his British counterpart to develop a common
methodology on the basis of which eurovignettes would be calculated.
6
Bozic also informed Ladyman about the activities of Slovenia's Port of Koper, which
according to Bozic is an important European port that should get a priority treatment when an
EU project of sea motorways is drafted.
As to air and rail transport, Bozic maintained that numerous issues still need to be addressed
regarding traffic safety and passengers' rights.
Ladyman meanwhile promised Slovenia assistance in experts in regulating its transport
infrastructure, since Great Britain boasts a huge number of busy ports and airports as well as
extensive road network.
Ladyman visited Slovenia as part of his Central European tour before Great Britain assumes
the presidency of the EU on 1 July.
Slovenia Opens Consulate in Macedonia's Bitola
The consulate will be headed by honorary consul Mihajlo Mojsov
A Slovenian consulate was inaugurated in Bitola, southern Macedonia, on Tuesday, 21 June
in what Slovenian Ambassador Marjan Siftar labelled as confirmation of excellent all-round
cooperation. The consulate will be headed by honorary consul Mihajlo Mojsov.
According to Siftar, who said the idea for the Bitola consulate has been around for years,
Slovenia has had a lively cooperation with the Bitola region, in economy as well as culture.
Moreover, Bitola is an important economic, cultural and educational centre.
Slovenia has an embassy in Skopje, while Bitola is Slovenia's only consulate in the country.
UNIDO and Slovenia Sign Agreement on Financial Support
The country has thereby become one of the financiers of industrial development projects in SE
Europe
Slovenia signed an agreement on cooperation in industrial development with the UN
Industrial Development Organisation (UNIDO) in Vienna on Wednesday, 22 June. The
country has thereby become one of the financiers of industrial development projects in SE
Europe, the Slovenian Embassy in Vienna said in a press release.
According to the Slovenian Ambassador to Austria Ernest Petric, who headed the Slovenian
delegation, "UNIDO is an organisation with tradition and knowledge with which Slovenia,
with its experience and expertise, will be able to cooperate and help solve current issues".
UNIDO Director General Carlos Margarinos expressed his wishes for other EU newcomers to
follow Slovenia's example. He added that an agreement between Slovakia and UNIDO is to
be signed soon.
In addition to the countries of former Yugoslavia, Slovenia will help industrial development
in Bulgaria, Romania, Albania and Moldova. Slovenia will finance the incorporation and
development of companies, and environment protection, the emphasis being on the use of
renewable energy sources.
With its knowledge, Slovenia will also contribute to the development in the field of research
and technology. According to the agreement, the cooperation is to begin in the fall.
FM Pledges Ongoing Assistance to Iraq
Slovenia has been helping to rebuild Iraq on the bilateral and multilateral levels, and will
continue to do so
Slovenia has been helping to rebuild Iraq on the bilateral and multilateral levels, and will
continue to do so, FM Dimitrij Rupel said at the margins of an international conference on
Iraq, organised in Brussels by the EU and the US.
Having gone through the period of transition, Slovenia speaks from experience so its desire to
help is even greater, he told the press on Wednesday, 22 June.
7
However, he said, at a certain point the international community's assistance will become a
hurdle to democratic processes, so Iraq must take on as many powers as possible in the
shortest possible time.
Experience from the Balkans has taught us that people loose the impetuous if international
assistance is too long, and they get used to dependence. Rupel said that this argument of his
resounded at the conference.
In his speech to the conference, Rupel noted the three stages in the creation of a 21st century
modern state: interactive security, system transparency, and unit integration.
Iraq by many accounts is still in the first stage, he said, adding that the priority must be to
"provide the political good of security."
According to him, Iraq's case is specific due to the insurgency problem. However, this does
not diminish the need to develop a broad security structure that will above all guarantee the
territorial integrity of Iraq.
Rupel said Slovenia was willing to continue to provide assistance in the training of police
forces. It will also participate in the EU training mission for judges, prosecutors and police
and prison directors, which is taking place in Italy.
Slovenia, which established diplomatic relations with Iraq on 29 April, has claims to Iraq
dating back to the former Yugoslavia in the amount of about US$ 200m. According to the
agreement with the Paris Club, only about 20% of the claims will be repaid. "This too is our
contribution," Rupel noted.
8
EUROPEAN UNION
PM Says Supplementary Budget Keeps in Mind Euro Goal
Prime Minister Janez Jansa has told lawmakers that the government-sponsored
supplementary budget for 2005 attempts to patch-up public spending while keeping in mind
Slovenia's goal to adopt the euro
Prime Minister Janez Jansa has told lawmakers that the government-sponsored supplementary
budget for 2005 attempts to patch-up public spending while keeping in mind Slovenia's goal
to adopt the euro.
This document confirms the government's commitment to eurozone membership in 2007,
Jansa said in parliament on Monday, 20 June as he presented the supplementary budget.
According to him, the budget deficit would stand at 1.4% of GDP, while the structural deficit
is to fall to 1.3% of GDP in line with the document.
"By 2007, the deficit is expected to drop to 1.2% of GDP," he added. He also pledged that the
government would overhaul public spending and revenues in order to bolster economic
growth.
The PM also told parliament that speedy adoption of the supplementary budget was needed in
order to boost Slovenia's capacity to phase funds from the EU.
According to him, the supplementary budget has to be passed in order to pay items that were
not planned.
Under the proposal, budget revenues will amount to SIT 1683.045bn (EUR 7.023bn), or SIT
63.9bn (EUR 266.65m) more than in the original budget, while budget expenditures are to
increase by SIT 41.7bn (EUR 174.01m) to SIT 1774.985bn (EUR 7.407bn).
Moreover, the PM claimed that the supplementary budget would see spending on investment
rise by 23% to SIT 32bn (EUR 133.5m), which would be a "sizeable increase" over last year.
Common Values Needed to Overcome EU Crisis, Sturm Says
Justice Minister Lovro Sturm has stressed that the EU must build on common values in order
to overcome its current crisis
Addressing the Crans Montana Forum on Saturday, 25 June in Monaco, Sturm said the
current crisis was mainly cultural and spiritual rather than political and economic.
Sturm made his comments as he chaired a debate on EU enlargement and the role of judicial
cooperation at the Crans Montana Forum.
According to Sturm, the fundamental principle of integration is maintaining variety while
building unity.
Moreover, he said EU enlargement did not necessarily mean that the bloc had achieved
greater integration. In fact the opposite is true: the broadest enlargement to date, he said, has
led to a serious crisis.
The Slovenian minister also claimed that the European constitution was a step forward that
would provide the enlarged EU with a basis for integration.
He said the future of the bloc and subsequently future enlargements would depend on
willingness to integrate further.
Slovenia will do everything in its power to ensure that it is "an integrated member" rather than
just another member of the EU, he said.
9
Govt Proposes Division in Two Cohesion Regions
The government on Thursday, 23 June passed the bill on the promotion of balanced regional
development that envisages the country's division into two cohesion regions in order to
facilitate the phasing of EU funds. Ivan Zagar, the minister of local government and regional
policy, hopes the bill will be passed in parliament in July
According to the proposal, the country would be divided into the more developed northwest
and the larger, less prosperous southeast, which encompasses the eastern and southeastern
regions.
Slovenia is yet to start negotiating with the EU on division into two regions: it has so far been
treated by the EU as one region, and it was not until March that it managed to convince the
EU to start talks on the division to multiple regions.
The relevant EU directive sets the minimum criterion of 800,000 people per cohesion region.
From this point of view, the proposal is an acceptable compromise between the mulled
division to two or three regions, Zagar believes.
According to the minister, this solution is essential and necessary for negotiations on the EU's
budget framework in the 2007-2013 period.
The bill states that both cohesion regions will have their development councils which will act
as overseers in the implementation of EU programmes.
Meanwhile, there is to be only one management body for the EU programmes - the Office for
Local Government and Regional Policy, joined by the Agency for Regional Development.
The bill furthermore determines the scope of regional aid, which is to increase from 1% to
1.5% of GDP in the next programming period.
Moreover, regional initiatives are explicitly defined as state funding for the co-financing of
regional projects from the regional development programmes.
The proposal comes after PM Janez Jansa said that Slovenia would immediately launch
negotiations with Brussels on the country's division into several statistical regions given the
failed negotiations on the next financial period 2007-2013.
Speaking to the press today, Jansa noted that unless Slovenia passes the law and is formally
split to two cohesion regions, talks with the EU cannot begin.
Meanwhile, the government-sponsored bill has already drawn criticism as the Development
Council of the Gorenjsko region voiced opposition to its planned division of regions.
According to the body, the northern Slovenian region of Gorenjsko - it is included in the
northwestern cohesion region in the government plan - stands to lose out on European
regional aid which it ought to get given its current level of development.
Govt Adopts Development Strategy; Aim to Exceed EU Average by 2015
The Slovenian cabinet adopted Thursday, 23 June a development strategy for the country
which focuses on a socially-based market economy and whose aim is to see Slovenia exceed
the average development of the EU by 2015. According to Prime Minister Janez Jansa, this
will require ambitious but attainable economic growth of 5% per year
The strategy, which is based on ensuring the prosperity of all citizens, sets four fundamental
goals. Apart from the economic goal, another aim is to improve the quality of life and the
welfare of Slovenian citizens.
Moreover, the document sets sustainable development and increasing Slovenia's global
standing as primary goals.
In order for Slovenia to surpass the average GDP in the EU 15 in ten years, its economy will
have to grow 3 percentage points faster than that of the EU. With forecasts predicting 2%
growth in the EU 15, this means the Slovenian economy will have to expand at over 5%,
Jansa said.
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Jansa is convinced that this goal is ambitious but attainable provided that developmentoriented measures are made.
Moreover, Jansa said that the document puts great emphasis on sustainable development and
is based on the estimate that Slovenia is at a crossroads where it will have to find a new
development impetus.
"The document is balanced and sets down the goals and measures needed to achieve these
goals," he said.
The strategy lists a competitive economy, the promotion of a knowledge-based society, a
more effective public administration, a modern welfare state and greater employment
opportunities as priorities needed to be implemented in order to realise the set goals.
The document will serve as the basis for all other documents and national programmes in this
field, Jansa stressed. The government is now expected to propose the creation of a task force
to prepare the basis for long-term reforms.
According to Jansa, the government is set to draft its standpoints for negotiations on the social
agreement on the strategy. "The government will maintain that the social agreement
incorporates the goals of the development strategy," he said.
A detailed programme of measures and financial estimates that will accompany the strategy is
scheduled to be adopted by the cabinet by September.
The strategy will also serve as the basis for Slovenia's action plan for the implementation of
the Lisbon Strategy, Jansa said.
The work on the blueprint for the strategy was launched by the previous government. The
final copy of the document was drafted by the Institute for Macroeconomic Development and
Analysis (IMAD) and underwent an extensive debate in the government.
Fiscal Changes Needed Ahead of Euro Adoption, Study Suggests
A study by the Institute for Macroeconomic Analysis and Development (IMAD) suggests
Slovenia should keep pursuing current economic policies and undertake fiscal changes in the
run-up to the adoption of the euro, expectedly in 2007
Slovenia, IMAD found, was doing a good job in working to meet the Maastricht criteria for
eurozone membership. Most of the energy has been invested in lowering inflation, Bostjan
Vasle of IMAD told the press on Thursday, 23 June.
Although current policies are good, fiscal changes will be needed to curb an increase in the
structural deficit, he said. According to Vasle, government expenditure will have to be made
more flexible.
Increasing flexibility of government spending would also facilitate the co-financing of EUsponsored projects in the country, he pointed out.
Moreover, the study has shown that the government must take measures to increase the
effectiveness of social transfers and to ensure that the pay policy in place for 2003-2005
would be preserved next year, Vasle said.
He added that the situation for most companies in Slovenia did not change drastically
following Slovenia's entry into the EU. The pessimistic forecasts about mass layoffs failed to
materialise, he said.
The food industry was the hardest hit because of the revocation of free trade arrangements
with Croatia, Bosnia-Herzegovina and Macedonia, which are all important markets for the
industry.
The EU had no major impact on the agriculture sector, as increased subsidies prevented a
drop in the income of farmers, the survey found.
According to economist Emil Erjavec, the difference between the agriculture sector and the
food industry was that the former "made adjustments" whereas the latter was overly protected
and failed to react in time.
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"The recent developments in the food industry suggest that it is making up for lost time," he
said, adding that Slovenia has extensive opportunities in the food industry if the consolidation
goes according to plan.
Meanwhile, the EU had a positive impact on the tourism sector and for hauliers, the study
found.
European Commission Team Visits Slovenia Over Lisbon Plan
A team from the European Commission has visited Slovenia to debate the drafting of the
national Lisbon Strategy action plan. The team has highlighted that Slovenia must focus on
frugal government spending, employment of young people and the effective education in its
programme
The visiting delegation met today with Anton Kokalj, chair of the parliament EU affairs
committee. According to him, the team recommended to him and other Slovenian officials it
met as part of its visit that Slovenia should take advantage of its current economic position to
give itself a head start in meeting Lisbon goals.
Kokalj said that Slovenian officials pointed out that the strategy of the new government is
based on promoting the development of small and medium-sized companies by ensuring a
suitable business environment.
"Slovenia is aware of the problems raised by the delegation and is carrying out the necessary
reforms," Kokalj told the press on Thursday, 23 June.
Slovenian officials told the visiting team that the Slovenian action plan will likely be based on
the comprehensive development strategy that the Slovenian cabinet adopted on Thursday, 23
June.
Kokalj said he was convinced Slovenia would file the plan on time and that a national
coordinator for the implementation of Lisbon goals would be appointed by October.
Apart from meeting members of the parliament EU affairs committee, the visiting officials
also met the social partners, the Institute for Macroeconomic Analysis and Development
(IMAD), which is hosting the team, said.
Zagar Convinced of Success of Division into Regions
Slovenia is now fully entitled to the funds which are earmarked for those EU regions with a
GDP lower than 75% of the EU average
Minister of Local Government and Regional Development Ivan Zagar is not worried that talks
on Slovenia's division into three regions could fail, he told STA on Monday, 20 June, as the
EU failed to reach an agreement on the next EU budget arrangements.
Slovenia is now fully entitled to the funds which are earmarked for those EU regions with a
GDP lower than 75% of the EU average.
However, in the talks on the new financial perspective the development of individual EU
members will be measured against the data from 2001-2003.
As a result, Slovenia as a single region would fail to meet the criteria, which is why the
government is making an effort to secure a division into several regions.
"I'm deeply convinced things will work out, given that the process is connected with the
development, the cohesion of the country, which is Slovenia's only chance," Zagar said.
Asked about Slovenia's chances to negotiate the division into three regions, Zagar said: "The
division will certainly be possible, I have discussed it with Regional Policy Commissioner
Danuta Huebner and Commissioner for Economic and Monetary Affairs Joaquin Almunia".
"They understood our problem , things are set in motion, but we must of course arrange
matters at home and present them to Brussels," Zagar explained, adding that the domestic
arrangements would be simultaneous with the division negotiations.
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According to him, regional matters have been neglected for the past decade. A bill on
balanced regional development is now being finalised according to Zagar, and should be sent
to the government in a week or two.
Its provisions are based on an older piece of legislation, he explained. They include a division
of statistical regions according to the NUTS2 level regional scenario, and the set up of
administration that is to increase the effectiveness of achieving development goals.
Another task in Slovenian regional policy, which is not directly connected to the division into
statistical regions, is based on the introduction of provinces.
"This will take some more time, the process will be somewhat longer and harder," Zagar
estimated, adding this would call for the completion of decentralisation.
EU Endorses New Rural Development Policy Regulations
Contrary to the situation now, rural development policy will be financed from one fund only
After a day-long negotiations, EU agriculture ministers unanimously passed a set of new
regulations of rural development policy in Luxembourg on Monday, 20 June. Contrary to the
situation now, rural development policy will be financed from one fund only.
The new fund will pursue three goals: to upgrade the competitive ability of agriculture and
forestry; to improve the quality of life and increase diversity; as well as the environment and
land management.
The first and second objectives will get 10% of all funds each, while 25% will be spent on the
third goal. The remaining 55% will be allocated by member states to whichever priority they
choose.
"Slovenia has advocated such a solution ever since the beginning," Agriculture Minister
Marija Lukacic told STA after the reform was backed. She moreover believes the agreement
is proof of rural development gaining in importance.
"Three days after the failure of the summit in Brussels the EU has proved it is functioning and
can take decisions," the Slovenian minister stressed, echoing the words of the EU presiding
Luxembourg agriculture minister and the European agriculture commissioner.
The sum the newly-established fund will have at its disposal should be clear only after the
Union has passed the 2007-2013 financial perspective. This is when the new fund will
become operational.
No Panic Due to Failure to Adopt Budget, PM Says
Addressing lawmakers, Jansa said an agreement was impossible to reach because there were
differences between the member states on the future structure of spending
The failure to agree on an EU spending plan for 2007-2013 at the recent EU summit is not a
reason for panic, Prime Minister Janez Jansa has told parliament.
Addressing lawmakers on Tuesday, 21 June, Jansa said an agreement was impossible to reach
because there were differences between the member states on the future structure of spending.
According to him, the members were divided among those who were already implementing
economic reforms in line with the goals of the Lisbon Strategy and those who were only
launching reforms.
These differences were reflected in the standpoints on the budget, causing insurmountable
differences between the net contributors and net recipients.
Jansa told lawmakers that he also favoured restructuring of the budget that would facilitate the
implementation of the Lisbon Strategy.
Slovenia will adapt to the new situation on the ground, continue preparing for the adoption of
the euro, and launch negotiations on reclassification as more than one statistical region in the
EU, he said.
13
He admitted that efforts for reclassification would involve difficult work. "We must achieve
this regardless of the fact that we do not fulfil all of the criteria," he said.
Moreover, Jansa said that there were still 18 months to adopt the EU spending plan for 20072013, which is why there is no reason for panic at the moment.
However, he said that an agreement at this time would have showed that the EU was capable
of working effectively despite the recent rejection of the EU constitution in France and the
Netherlands.
A speedy agreement would also have been good for the newcomers, who need more time to
set up effective fund-phasing mechanisms, he added.
Gaspari Upbeat about the Euro
Although EU members have not confirmed the budget or the constitution, the euro remains
stable
Although EU members have not confirmed the budget or the constitution, the euro remains
stable. This shows that things are not so dramatic, central bank governor Mitja Gaspari told
the press on Tuesday, 21 June.
"The scare about the euro is probably justified, but there will not be any major changes," said
Gaspari, who does not believe Slovenia is taking the wrong path.
It has transpired that the classical problem of most big European countries is their failure to
adjust to the economic environment, according to Gaspari.
"Big countries in particular are very slow and the euro is a handy excuse for such problems,"
he said about recent doubts about the sensibility of the single European currency.
Gaspari said that Slovenia is "one of the few countries where all layers of the economy are
relatively well balanced.
He also recalled that the country had made the commitment to adopt the euro once it meets
the required criteria; staying halfway in ERM II would be a far worse option.
The central bank governor was unable to make a precise assessment of the supplementary
budget that the parliament confirmed today, but he said he was concerned about the growth in
revenues and expenditures significantly exceeding nominal GDP growth.
"This can probably not be sustainable for more then a few months or a year," he said, noting
that Slovenia must take steps towards a balanced budget in 2006 and 2007.
PM Reiterates Slovenia Would not Concede to Net Payer Status
He added though that the country is bound to become a net payer after 2013 even if it gets
split into statistical regions
PM Janez Jansa said in an interview for the weekly Mag that Slovenia will in no way concede
to become a net payer in the 2007-2013 financial period since this would be unfair. He added
though that the country is bound to become a net payer after 2013 even if it gets split into
statistical regions.
In the period up to 2013, Slovenia will though be making faster progress that other EU
members on average. Moreover, the structure of the European Parliament is likely to become
more favourable for Slovenia at that point, the prime minister was optimistic in the interview
published on Wednesday, 22 June.
Asked on the government's plans in coming months, Jansa said that a strategy of Slovenia's
development is about to be adopted, while first proposals for long-term reforms and the
budget draft for the next two years are expected to be ready by autumn.
As to foreign policy tasks, Jansa told Mag that Slovenia has huge responsibility in presiding
over the OSCE this year. The country is also gearing up for its presidency over the EU,
according to Jansa.
14
Asked to comment on the apparent crisis in the ruling coalition, Jansa responded that
compared to "troubles faced by his counterparts in most member states, for example in
Netherlands, the Czech Republic, Germany and Italy, our ruling coalition looks like a role
model".
"Unfortunately, we don't have a balanced media like other countries," Jansa added.
Commenting on the crisis in the EU after the double rejection of the EU constitution and the
failed budget negotiations, Jansa said that the situation is not critical yet since, in theory, the
Union still has a year and a half to pass the financial plan for the next period.
He added though that only the biggest optimists expect the financial agreement could be
reached in the next six months since Great Britain, the most fervent advocate of cutting the
common budget, would be chairing the EU in that period.
Ministry Official Says Proposed EU Sugar Reform Is too Liberal
The European Commission's proposal for a comprehensive reform of the sugar sector is too
liberal for Slovenia, according to Franci But, the Agriculture Ministry state secretary
The European Commission's proposal for a comprehensive reform of the sugar sector is too
liberal for Slovenia, according to Franci But, the Agriculture Ministry state secretary.
"The new solutions eliminate quota transfers between member states, which is good for
Slovenia. However, other elements are too liberal for us," he told STA on Wednesday, 22
June.
According to But, Slovenia will soon adopt an official position and assert in the EU Council.
The European Commission has proposed 39% cut in the sugar price guaranteed by the EU,
together with a compensation system for loss-making sugar producers who might be forced to
halt production because of the measure.
While But was not happy with the proposal, Emil Erjavec, a professor of agri-economics at
the Ljubljana Biotechnical Faculty, said the reform was essential, although it is too early to
speak about its actual effects.
"It is clear that the economic situation will worse, but not much more than it was in the period
leading up to EU entry," Erjavec told STA.
Erjavec also wondered how come that Slovenia has not made an analysis of the impact of the
reform, although the proposal has been on the table for over a year.
LEGISLATION
Companies Act to Be Overhauled
The Economics Ministry the proposal for a thoroughly amended companies act which is to
enter into force next year
The Economics Ministry on Monday, 20 June presented the proposal for a thoroughly
amended companies act which is to enter into force next year. The act will be passed in
regular legislative procedure to give stakeholders the opportunity to voice their comments,
according to Dusan Psenicnik, the head of the ministry's companies act task force.
The proposal deals with seven main aspects of the law: the European public company (SE);
adjustments required because of the euro changeover; transfer of certain provisions from the
takeover act; new regulations for sole proprietors and limited liability companies; single-tier
management system; and other provisions.
Provisions required due to the introduction of the euro envisage changes in share capital,
which will now be denominated in euros, and the introduction of a new class of shares
expressed as proportion of the share capital rather then in money terms.
15
According to Psenicnik, companies would make the required transition next year, while the
legislator will facilitate the process for example by simplifying the procedures for the
convocation of shareholder meetings.
Another major novelty is the optional one-tier management of joint-stock companies.
Shareholders will be allowed to choose the two-tier system with a management and a
supervisory board, or the one-tier system with the management board and executive directors,
whichever is best for the company.
There is a bundle of proposed changes for the incorporation of new companies, notably lower
start-up capital (from 8,760 euros to 7,500 euros for limited liability companies). Moreover,
the provision requiring that at least one-third of the capital must be monetary will be crossed
out.
Another novelty in this segment is the articles of association form that will be prescribed by
the economics minister. This will be optional, as stakeholders can provide for mutual relations
with the sample form or a document of their choice.
Moreover, it will be easier to transform a sole proprietor to a legal entity (limited liability
company). The sole proprietor will be able to become a limited liability company with a
decision on transformation which will also serve as the articles of association, while the new
company will be the automatic legal successor to the sole proprietor.
The European public company, a novelty in Slovenia, is a type of incorporation introduced in
the EU, designed to enable companies to do business throughout the Union without having to
establish subsidiaries.
The ministry has already published the proposal on its website and urges the stakeholders to
provide comment, remarks and proposals.
Parliament Ratifies Six Agreements and Treaties
The parliament ratified six bilateral agreements and international treaties, notably the 1996
Protocol to the 1972 Convention on the Prevention of Marine Pollution by Dumping of
Wastes and Other Matter
The parliament ratified six bilateral agreements and international treaties on Tuesday, 21
June, notably the 1996 Protocol to the 1972 Convention on the Prevention of Marine Pollution
by Dumping of Wastes and Other Matter.
The protocol, which replaces the convention, is crucial, according to the government, as is
signals a big change in the approach to sustainable protection of the sea and promotes the
conservation of maritime resources. It is also much more restrictive than the original
convention.
The protocol has not entered into force yet as it must be ratified by 26 countries; until 28
January this year, it was ratified by 21 countries.
The parliament moreover ratified the Chester Agreement of 1997 covering the introduction of
digital television in Europe; the 1997 Protocol to the 1973 International Convention for the
Prevention of Pollution from Ships; and the Protocol to the 1979 Convention on Long-Range
Transboundary Air Pollution.
The Slovenia-Poland agreement on cooperation in the prevention of natural disasters; the
Slovenia-Lithuania accord on cooperation in defence; and the Slovenia-Sweden agreement on
cooperation in fighting organised crime have also been ratified.
16
STATISTICS/FORECASTS
More Fathers Taking Paternity Leave, Statistics Show
Fathers, especially young ones, have increasingly taken part in the upbringing of their
children in recent years in Slovenia, data from the Ministry of Labour, Family and Social
Affairs shows
Fathers, especially young ones, have increasingly taken part in the upbringing of their
children in recent years in Slovenia, data from the Ministry of Labour, Family and Social
Affairs shows.
The traditional mother's role is therefore gradually changing. For instance, 12,667 fathers took
the paid paternity leave in 2004, which is more than 70% of all fathers. On average, they use 8
out a total of 15 days of the paid leave.
Moreover, the number of fathers who take the other form of paternity leave, the one without
compensation for their wages, increased from 130 in 2004 to 164 in the first half of 2005, the
ministry said.
A survey carried out by the Ljubljana Faculty of Social Sciences, however, shows that women
are still more involved in upbringing than men. "Parents Between Work and Family" points to
the unequal roles of both partners and to the need to encourage men to be more active parents.
Moreover, the research shows that a more parent-friendly employment policy should be
promoted as well, and that women take more leave to take care of their children when they are
ill.
The data on working hours proves that the roles of the parents are in fact divided traditionally.
Women are mostly taking care of children, whereas men spend more than 8 hours at work.
According to Slovenia's Statistics Office, 42% of men older than 15 are fathers. In March
2002, 338,621 fathers lived with their children. As many as 87% of them lived in a family
with their wives and children.
The statistics also show that 7% of fathers lived with their partner and children, whereas 4%
of them were single. The office stressed that biological fathers who do not live with their
children were not included in the statistics.
The parents of newborn babies are getting older by the year. In 2003, an average "new" father
was 33. Two thirds of all fathers in 2003 were 30 to 40 years old. Only 7% of them were
younger than 25.
Eurostat Projects Population Decline after 2014
Slovenia's population is set to grow until 2014, increasing from the current 1.99m to 2.02m.
However, it will start declining from this peak and is expected to drop to 1.89m by 2050,
according to Eurostat, the EU's statistical office
The trend for Slovenia roughly coincides with the projection for the EU, where population is
to increase steadily until 2025 and then start dropping. But like in most other EU newcomers,
the decline is to start earlier in Slovenia.
According to the data, life expectancy of Slovenians is to increase from 72.6 years to 79.8
years for men until 2050, and from 80.2 to 85.2 years for women.
Fertility rate is expected to increase until 2027, from 1.18 children per woman now to 1.5. Yet
the figure is to remain unchanged beyond that period.
The population increase will thus be sustained by immigration, as Slovenia is expected to take
in about 6,000 new arrivals each year, with the figure declining somewhat after 2015.
17
Business Sentiment Remains Unchanged
Business sentiment remained level for the fourth month running in June. Compared to June
2004 and last year's average it fell by 1 percentage point, according to the Statistics Office
The seasonally adjusted confidence indicators in manufacturing as well as in retail also stayed
flat, but they dropped by 4 and 1 percentage points year-on-year, respectively.
Meanwhile, the consumer confidence indicator plummeted 6 percentage points compared to
the previous month, mainly due to less optimistic estimations of the general economic
situation in the country over the next 12 months.
The business sentiment indicator is calculated as the weighted average of the confidence
indicators in manufacturing, retail and the consumer confidence indicator.
18
FINANCE
NLB Making Inroads into Russian Market
Slovenia's largest bank, Nova Ljubljanska banka (NLB), has sealed a deal for the acquisition
of 7.69% of Moscow-based Promsvyazbank
Slovenia's largest bank, Nova Ljubljanska banka (NLB), has sealed a deal for the acquisition
of 7.69% of Moscow-based Promsvyazbank. This is a portfolio investment confirming
existing cooperation and strengthening future collaboration, NLB said in a press release on
Wednesday, 22 June.
According to NLB, Russia is a growing market and the deal is a step towards expansion of
business there. This market is one of the strategic development markets, where NLB has a
successful representation, the bank said.
According to the Moscow Times, NLB will now consider increasing its share in
Promsvyazbank to a controlling stake. Meanwhile, the Kommersant reported that it found out
NLB's stake may increase by between 10% and 15% percent by this September through an
option.
The Moscow Times says Promsvyazbank is owned by two brothers, Alexei and Dmitry
Ananyev. It is Russia's 15th-largest bank, with net assets of 62.2 billion rubles ($2.2 billion)
as of April 1, according to the Interfax Center for Economic Analysis.
Promsvyazbank said the deal would help improve its international credibility, according to the
paper. "There is no doubt that this will help upgrade our image and strengthen our reputation,"
said Artyom Konstandian, director of the international business department at
Promsvyazbank.
Stock exchange
Ljubljana Stock Exchange: Still Negative and Poor
Low liquidity and the fall of stock rates marked the past week at the Ljubljana Stock
Exchange. The SBI 20 benchmark index sank to 11-month lows as the retreat by big name
blue chips regained its momentum. The index closed the week at 4,510.24 points, down 73.11
points (1.62%) on the week. The PIX investment fund index lost 86.19 points (2.05%) on the
week to hit 9-month lows of 4,203.48. Meanwhile, the BIO bond index edged down 0.05
points (0.04%) to close at 121.84 points. Total volumes amounted to EUR 52.4m.
Foreign exchange
Euro down
Euro (EUR)
SIT 239.57
-0.02
U.S. dollar (USD)
SIT 198.47
+1.62
Swiss franc (CHF)
SIT 155.54
+0.36
British pound (GBP) SIT 361.56
+2.20
Successor States Meet to Discuss Diplomatic Assets
The committee of successors to the former Yugoslavia dealing with the division of embassies
and consulates met in Belgrade on Friday, 24 June in what was its first session after two
years. Sources in the Slovenian delegation described the talks as successful and substantive
As Blanka Primec, member of the Slovenian delegation, told STA, the committee did not
adopt any decisions today, but drafted a proposal on how to divide some ten embassies and
consulates for which none of the five successor states has expressed particular interest.
19
Each country is now to examine the proposal before the committee meets for its next session,
due in September in Sarajevo.
The last time the committee met was in June 2003 in Ljubljana when it agreed on the
distribution of five diplomatic facilities.
Slovenia got the Washington embassy, Croatia the Paris embassy, Serbia-Montenegro the
residence in Paris, Macedonia the general consulate in Paris and Bosnia-Herzegovina the
London embassy.
A total of 100 buildings of embassies, consulates and other residences owned by the former
common state have to be distributed in line with the succession agreement. Slovenia is
entitled to 14% of the assets.
Petrol Prices Follow World Oil Prices on the Way Up
Petrol prices increased as a result of near-record prices of oil on the global markets, in line
with the pricing model which adjusts prices to global market conditions and the rate of the US
dollar every two weeks
Petrol prices increased in Slovenia on Tuesday, 21 June as a result of near-record prices of oil
on the global markets, in line with the pricing model which adjusts prices to global market
conditions and the rate of the US dollar every two weeks.
Regular petrol costs SIT 220.4 (EUR 0.92) per litre, SIT 6 (EUR 0.03) more than now. The
price of premium increased by the same amount to SIT 225 (EUR 0.94), while diesel soared
by SIT 11 (EUR 0.05) to SIT 222.5 (EUR 0.93).
Heating oil is SIT 12.2 (EUR 0.05) dearer at SIT 136.9 (EUR 0.57) per litre.
According to calculations by Petrol analysts, the prices of regular unleaded petrol were up
7.25% in the previous 14-day period, with diesel up 9.51% and heating oil 10.73%. At the
same time, the dollar added 2.21% against the tolar.
The price increase comes despite the government's move to curb excise duties to mitigate the
effect on retail prices.
Central Bank Says No Problems With Financial Stability
"The data shows that the banking sector and the capital and insurance markets are relatively
stable at the moment," Bank of Slovenia governor Mitja Gaspari told the press
The Bank of Slovenia has issued a report in which it claims that the financial stability in the
country remains stable following EU entry on 1 May last year.
"The data shows that the banking sector and the capital and insurance markets are relatively
stable at the moment," Bank of Slovenia governor Mitja Gaspari told the press in Ljubljana on
Tuesday, 21 June.
According to him, there are no foreseen reasons for concern in the near future unless there
was a major break with current economic trends.
However, Gaspari admitted that Slovenian banks were increasingly sensitive to external
shocks in the run-up to Slovenia's adoption of the euro.
"In the near future, when Slovenia adopts the euro, managers and owners of banks as well as
regulators should exercise a fair degree of caution," he said.
Slovenia must keep monitoring the exchange rate even though the danger of fluctuations is
remote, Gaspari said. "We are talking about a moderate risk that should not increase if
Slovenia adopts the euro," he added.
Among the major domestic risks, Gaspari pointed to credit risk. Banks have been generous in
offering credit to companies and individuals as they are optimistic about current trends. This
requires a certain degree of caution, especially if the current economic trends were to turn
around, he said.
20
According to him, there is also a risk associated with more risky investment abroad,
especially in SE Europe, by domestic financial institution. The important thing in this respect
is that institutions have sufficient capital and strong risk management, he said.
This is the second time that the Bank of Slovenia has issued a financial stability report. The
aim of the report is to single out "potential risks", Gaspari said, adding that he hoped
commercial institution would also be on the watch-out for potential risks.
Lawmakers Pass Supplementary Budget
No major amendments made
Lawmakers passed the government-drafted supplementary budget for 2005 on Tuesday, 21
June in a 40 to 19 vote. No major amendments were made to the document, as virtually all of
the opposition's proposal were turned down by the ruling coalition.
In line with the document, budget revenues will amount to SIT 1683.045bn (EUR 7.023bn),
or SIT 63.9bn (EUR 266.65m) more than in the original budget, while budget expenditures
are to increase by SIT 41.7bn (EUR 174.01m) to SIT 1774.985bn (EUR 7.407bn).
The bill sets the budget deficit at SIT 91.9bn (EUR 383.49m) or 1.4% of GDP. The original
2005 budget, passed by parliament in December 2003, anticipated a deficit of SIT 112bn
(EUR 467.37m) or 1.7% of GDP.
Today's vote on the document was split along party lines, as the coalition parties voted for and
the opposition against.
Out of 77 amendments put forward to the bill only three were adopted relating to a mere SIT
91.3m (EUR 381,000) in spending measures.
Petrol CEO Does Not Expect Oil Prices to Ease Off
Janez Lotric, the chief executive of oil company Petrol, believes the price of crude oil,
currently at about US$ 57 a barrel, will remain high rather than drop below US$ 40
Janez Lotric, the chief executive of oil company Petrol, believes the price of crude oil,
currently at about US$ 57 a barrel, will remain high rather than drop below US$ 40. A drop
cannot be expected until investments in refineries, which have been neglected for 10 or 20
years, wrap up, Lotric said on Wednesday, 22 June.
In the 20-year period of excess capacity, there were no investments in refineries, which now
represent a bottleneck. Nor have there been investments in oil fields, so the multinationals are
now unable to increase output, he told the press in Ljubljana.
The reason for the shortage of investments, says Lotric, is low return on equity in the period
when oil was at 20 dollars a barrel. Since the prices did not bring returns, companies refused
to commit to investment with cycles of at least five years.
According to him, it is difficult to predict the volatile price of oil. "The oil market is one of
the few markets that nobody controls," he said, adding that increases as well as drops can be
expected this year.
In the current circumstances, the Slovenian petrol pricing model is adequate, as it takes into
account global prices as well as the dollar exchange rate. The 14-day calculation period is also
appropriate, he said, as shorter periods would only agitate the market given the current
instability.
What is difficult for oil companies in Slovenia, though, is the mark-ups, which are very low
compared to other countries in the region. Lotric claims they are 40% lower than the average
in the EU.
Lotric believes that a similar picture might emerge in association with investments in the
electric power sector, where Europe has failed to make sufficient investments in the past 15 to
20 years and now relies on cheap imports from Russia.
21
Electricity prices will therefore grow until investments are concluded. But since coal and gas
are tied to oil prices, other energy sources will have to be used, including nuclear energy.
"Europe will have to build nuclear power plants," he said.
22
BRANCH INFORMATION
Public Transportation Companies Point to Disorder in the Sector
Meeting for a first annual conference in Nova Gorica, public transportation utilities pointed
to the absence of standards and rules that would enable them to operate normally
Public transportation companies have urged the Transport Ministry to provide concise rules
for public transportation services for 2005 and 2006 in order to tackle the disorder in the
sector.
Meeting for a first annual conference in Nova Gorica on Wednesday, 22 June, public
transportation utilities pointed to the absence of standards and rules that would enable them to
operate normally.
They notably highlighted poor implementation of licences' policy, deficient organisation of
service routes and timetables, as well as the ministry's failure to take into consideration real
costs of the services.
A reform of the fare policy, subsidies for certain categories of passengers, and other ways of
improving the quality of transportation services also topped the conference's agenda.
The meeting, organised by the chambers of commerce and trade, was attended by
representatives of all 50 public transportations companies in Slovenia, while no officials of
the Economics Ministry were present.
Angered by the ministry's non-attendance, the sector representatives accused the ministry in a
press release of "dodging its responsibilities and preventing constructive dialogue".
New Motorway Section Opens for Traffic
A 4.6 km stretch of the Smednik-Krska vas motorway section opened for traffic on Friday, 24
June signalling the completion of two-thirds of the southern section of the national motorway
network between Ljubljana and the Croatian border
The Smednik-Krska vas is the first motorway section in the country constructed with the help
of EU grants. With the total budget for the 17.6 km section at EUR 116.7m, the EU
contributed EUR 42.5m in cohesion funds.
It represents a part of the 104.8 km stretch between Ljubljana and Obrezje on the Croatian
border, of which 76.2 km have been completed to date. The motorway moreover represents a
part of the 10th pan-European transport route.
Transport Minister Janez Bozic, who cut the ribbon today, said that the completion of the
section also represents the completion of two-thirds of the National Motorway Construction
Programme, which envisages the construction of 348.2 km of motorways and expressways.
According to him, the northeastern section of the motorway network from Maribor to
Ljubljana will be completed this year, while the missing parts of the Ljubljana-Obrezje
section will open for traffic by 2008.
23
COMPANIES
Economist Doubts Voluntary Chamber Membership Smart Decision
A respected Slovenian economist doubts that forcing the Chamber of Commerce and Industry
(CCIS) into embracing voluntary membership rather than mandatory membership is the right
decision
A respected Slovenian economist doubts that forcing the Chamber of Commerce and Industry
(CCIS) into embracing voluntary membership rather than mandatory membership is the right
decision.
According to Marko Jaklic, if the chamber is operating poorly it must be forced to change its
ways. However, that does not mean it should adopt voluntary membership, he told business
daily Finance.
"Although making [an issue] of mandatory membership is acceptable from a populist point of
view, it is a big problem technically. It is true, though, that the CCIS is doing a bad job," the
professor at the Ljubljana Economics Faculty said.
He believes the government has failed to force the CCIS into conducting a survey on
membership. The survey should be conducted and paid for by the CCIS rather than the state,
he said.
Govt Confirms Miklavcic as New Director of Klinicni Center
The government has confirmed Darinka Miklavcic as the new head of Klinicni center,
Slovenia's leading hospital, after her candidacy was endorsed by the Klinicni center board on
14 June
Miklavcic, a 54-year old economist who has held several executive positions in
pharmaceutical company Krka, believes that the hospital needs restructuring in order to cut
costs and improve the quality of services.
She said two weeks ago that she would work towards decentraliziation to motivate all
employees in charge of decision-making to pay attention to financial consequences of their
decisions.
She is also convinced that Klinicni center could improve its financial position by offering its
research services on the market.
Triglav Steber 1 Becomes Biggest Mutual Fund
With its transformation from a listed investment fund, Triglav Steber 1 has become the biggest
mutual fund in Slovenia, the head of the Triglav DZU investment company has told the press
According to Triglav DZU chairwoman Tanja Miklavc Macek, Triglav Steber 1 has more
than 52,000 investors and manages more than SIT 62.2bn (EUR 259.59m) in assets.
Together with three mutual funds, Triglav DZU now manages over SIT 68bn (EUR
283.80m), giving it 23% of the Slovenian market, she said.
As part of the transformation, shareholders of Triglav Steber 1 will get one unit of the mutual
fund for each share they owned.
According to Macek, the company does not intend to change its investment policy for Triglav
Steber 1 following its transformation. The only novelty will be investment in blue chips in
other Central European countries.
Macek pointed out that the share gained 316% over the last five years. It was worth around
SIT 3,700 (EUR 15.44) at the time of the transformation.
24
Retailer Engrotus to Expand to Macedonia
The investment is to top EUR 60m
Engrotus, the third-largest retailer in Slovenia, is to open its first shop in Macedonia at the end
of 2006. The investment is to top EUR 60m, company's general manager Aleksander
Svetelsek told STA on Thursday, 23 June.
According to Thursday's report in the daily Finance, the Celje-based company is to build
around 20 Tus shops in 15 Macedonian towns in the following years, five of which are to be
open in Skopje. The retailer also plans to build petrol stations and logistic centres.
Engrotus's general manager also told STA that the Macedonian government backed the
company's plan and promised to help find suitable locations for the shops.
At a press conference at the end of May, Svetelsek said Engrotus boosted revenues by 35%
last year to EUR 374.2m. Net profit was at EUR 11.2m, 16.6% more than the year before,
which makes Tus the largest domestic investor in the country.
According to Svetelsek, the company will reach a 25% market share in 2007, compared to the
present 18.3%. In 2007, the investment cycle will stop in Slovenia and the company will only
refurbish older shops in the country, but will expand to Serbia and Macedonia.
Nurturing a vision to become "the most successful European retailer", Engrotus is already
present on the Macedonian market, where it has several suppliers, but also produces its own
products. The company has therefore appointed a manager for the Macedonian market.
Svetelsek also said last month that the company has no further plans for Croatia (it has one
supermarket in the coastal city of Rijeka). The retail market is "inhumane" there and all
foreign retailers are making a loss, he added. Engrotus thus decided to sell the Rijeka shop to
a Croatian retailer.
Telecoms Watchdog Urges National Telco to Draft New ADSL Offer
The Agency for Post and Electronic Communications (APEK) has urged Telekom Slovenije to
prepare a new wholesale ADSL offer in order to facilitate the market entry of new operators
The Agency for Post and Electronic Communications (APEK) has urged Telekom Slovenije
to prepare a new wholesale ADSL offer in order to facilitate the market entry of new
operators.
The number of ADSL users has been growing faster than in the EU, but the market share of
alternative operators has not been increasing accordingly, APEK said in a press release on
Tuesday, 21 June.
According to the telecoms watchdog, the market share of new operators is a crucial part of the
assessment of competitiveness on the market, as ADSL is the most advanced and competitive
technology.
Practice in the EU has shown that in the early phases of market entry the best option for new
operators is to lease the network of the national telco, as this does not require large
investments.
APEK has examined Telekom's offer for the lease of its broadband network. It assessed the
telco's latest offer (the IP/MPLS network) as the best option for new operators, but the other
two are problematic as they are based on the lease of virtual channels.
The agency also examined the price aspect and compared it to the retail prices of Telekom's
ISP subsidiary, Siol. It concluded that Telekom's prices are inappropriate for the creation of a
viable business model, especially for smaller groups of users.
Protej Publishes Takeover Bid for Autocommerce
Protej, the biggest shareholder of Autocommerce, published a public bid to acquire all shares
of the car, tourism, IT and finance group Autocommerce, in which it already owns a 24.99%
stake
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Protej, the biggest shareholder of Autocommerce, published a public bid to acquire all shares
of the car, tourism, IT and finance group Autocommerce, in which it already owns a 24.99%
stake.
Protej offers SIT 6,100 (EUR 25.4) per share in the bid running out on 21 July. The company
does not state the threshold of shares to be purchased in order to consider its bid successful.
If succeeding in purchasing all Autocommerce shares, which are not floated on the official
market, Protej would have to pay a total of over SIT 13bn (EUR 54.2m).
The bid is considered to be a management buyout since Protej is owned by Branko
Sibanovski, the director of Autocommerce's brokerage AC BPH, and 26 other top officials at
Autocommerce.
In addition, 10% of Autocommerce is owned by the company Fins, which is in the majority
ownership of employees of Autocommerce's subsidiary Adria Mobil.
Other major shareholders include asset manager Infond holding (15.9%), Infond id and Infond
id 1 (6.7% combined) and Nova Ljubljanska banka (NLB) with 1.95%.
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SLOVENIA IN BRIEF
Elan Subsidiary Files for Bankruptcy
Sports equipment retailer A Sport, a subsidiary of the group Elan, filed for bankruptcy on
Monday, 20 June. A total of 50 people have been made jobless as the company closed down
its shops around the country. The company went bankrupt due to poor performance prompted
by inadequate strategy, shortage of capital and lack of know-how, Tevz Tavcar, chairman of
Skimar, the majority owner of Elan and Elan Ataca, said in a statement to the press.
Parliament Elects Slovenian Eurojust Representative
The parliament on Wednesday, 22 June endorsed the nomination of Higher State Prosecutor
Malci Gabrijelcic for Slovenia's representative in Eurojust, the EU body coordinating the
work of judicial authorities in member states.
RTV Slovenija Bill Passed
Parliament on Wednesday, 22 June confirmed the controversial government-sponsored bill on
RTV Slovenija, which promises an overhaul of the public broadcaster's management structure
and programming.
Oil Spill in Port of Koper Causing Severe Pollution
Inspectors are still trying to determine who is to blame for a spill of over 5 tonnes of oil in the
port of Koper, in what is estimated to be the most severe pollution of the Slovenian sea in
twenty years. According to preliminary estimates, between 5 to 10 tonnes of oil was spilled by
a yet unidentified ship in the port of Koper, with the cleanup expected to take up to three
weeks.
Lawmakers Endorse Bill on Protection of Displaced Persons
The National Assembly passed the government-drafted bill on protecting displaced persons on
Wednesday, 22 June. In accordance with the EU Council Directive, the document defines
minimum standards for giving temporary protection in the event of a mass influx of displaced
persons.
Rupel Conferred Crans Montana Forum Award
FM and OSCE chairman Dimitrij Rupel has received the Prix de la Fondation at the ongoing
Crans Montana Forum. The award is conferred for achievement in promoting peace, freedom,
democracy and international cooperation, the Foreign Ministry said in a press release on
Friday, 24 June.
Podobnik Proposes Establishing Mercury Centre in Idrija
Environment Minister Janez Podobnik proposed that an information and research centre
dealing with the issue of mercury be set up in the town of Idrija, home to what used to be the
second largest mercury mine in the world, as he took part in Friday's, 24 June session of the
EU Environment Council. "The centre would be accessible to all the member states and
would provide information and research of the consequences of mining," the minister
explained his initiative to STA.
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Former President to Attend World Leaders Summit
Former President Milan Kucan attended the World Leaders Summit, which took place in San
Francisco on Friday, 24 June and Saturday, 25 June Kucan's office said in Thursday's, 23 June
press release. On Sunday, 25 June the former president attended a ceremony marking the
60th anniversary of the UN, which was founded in San Francisco.
Strel Completes Swim of Vltava
Slovenian extreme swimmer Martin Strel has completed the 364 km swim of the Czech river
Vltava. Strel arrived in Melnik at 11 AM on Thursday, 23 June after seven days of intense
swimming. Reaching the Czech capital Prague on Wednesday, 22 June Strel was joined by
the mayor of Prague, Pavel Bem, in the cold water. In his 25-year career, Strel has taken on
the world's greatest rivers such as the Danube in 2000 and Mississippi in 2002. His most
recent swim was the Yangtze in 2004. The Vltava swim was meant to be a sign of friendship
between Slovenia and the Czech Republic.
Germany Gives Demining Fund EUR 1.85M
The International Trust Fund for Demining and Mine Victims Assistance (ITF) has received a
donation of EUR 1.85m from the German government for demining in Bosnia-Herzegovina
and Kosovo The agreement on the donation was signed on Thursday, 23 June at Ig by German
Ambassador to Slovenia Jochen Peters and the director of the Slovenian-run fund Dorijan
Marsic, the ITF said on 23 June.
France Makes Another Demining Donation to IFT
The French embassy in Ljubljana had donated EUR 95,000 to the International Trust Fund for
Demining and Mine Victims Assistance (ITF) for its demining activities in BosniaHerzegovina. This is France's sixth donation to the Slovenia-run fund, bringing its total
donations in the past six years to over EUR 420,000, the ITF said in Thursday's press release.
The donation agreement was signed today by the French defence attaché, Lieutenant Colonel
Patrice Spach, and deputy ITF director Goran Gacnik.
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