Slovenia Business Week no. 28, July 11th, 2005
HEADLINES ............................................................................................................................. 3
Vizjak and Eurochambers Chief Discuss Chamber System Reform ..................................... 3
Yugoslav Successors Reach Agreement on Bank Deposits ................................................... 3
Unior-DaimlerChrysler Joint Venture Inaugurated ................................................................ 4
INTERNATIONAL COOPERATION ...................................................................................... 5
Gasparovic and Drnovsek Stress Key Role of New Members in EU Crisis .......................... 5
Slovakia Seeks Investments in Car Industry, Banks .............................................................. 5
Drnovsek Receives Credentials from Three Ambassadors .................................................... 6
Seat of Sava Basin Commission Opens in Zagreb ................................................................. 6
Rupel Welcomes Agenda of British EU Presidency .............................................................. 6
Rupel and Busek Discuss Situation in Western Balkans ....................................................... 7
Nova Gorica, Gorizia Mayors Discuss Life at the Border with Rupel................................... 7
EUROPEAN UNION ................................................................................................................. 8
Zagar Insists Division to Two Regions the Only Realistic Option ........................................ 8
Slovenia to Launch Full Preparations for EU Presidency, Say MPs ..................................... 8
EU Serves Warning about Telecoms Competition Regulations ............................................ 9
Drnovsek Receives French European Affairs Minister.......................................................... 9
Rupel: EU Citizens Bought 656 Real Estate Items in Slovenia ............................................. 9
EU Warns Slovenia for Delay in Biofuel Directive Again .................................................. 10
Ministry Says Regulation on Biofuels Ready ...................................................................... 10
Telco Watchdog Promises Rapid Remedies to Address EU Warnings ............................... 11
Farmers Oppose Reform of EU Farm Subsidies .................................................................. 11
LEGISLATION ........................................................................................................................ 12
Small Companies Welcome Rejection of EU Software Patent Directive ............................ 12
Amendments to Clarify Procedures for Foreigners' Work Permits...................................... 12
Govt Moves to Relax Job Protection in Public Sector ......................................................... 12
STATISTICS/FORECASTS .................................................................................................... 14
Investments Down, Consumer Debt Soaring, Says IMAD .................................................. 14
Factory-Gate Prices Up 2.4% Year-on-Year........................................................................ 14
Parliament's Reputation Down, Survey Shows .................................................................... 14
Industrial Output Growth Slows to 1.3% ............................................................................. 15
Exports Jump 16% in May Y/Y ........................................................................................... 15
Petrol Prices Reach New Record ......................................................................................... 15
FINANCE................................................................................................................................. 16
Government Confirms Guidelines for 2006, 2007 Budgets ................................................. 16
Slovenian Banks in TARGET Settlement System as of 4 July ............................................ 16
NLB Draws EUR 25m from EIB ......................................................................................... 16
NLB to Finance Construction in Russia Worth US$ 23.3m ................................................ 17
Finance Minister: No Flat Tax Rate This Year .................................................................... 17
Bosnian Pensioners Threaten to Sue Slovenia ..................................................................... 17
BRANCH INFORMATION .................................................................................................... 19
Transport Minister Proposes New Crossing at Hotiza ......................................................... 19
Government Adopts Resolution on Transport Policy .......................................................... 19
Farmers and Food Producers Fail to Reach Agreement on Wheat Price ............................. 19
Energy Firms Cautioned Against Complacency Despite Record Results ............................ 20
COMPANIES ........................................................................................................................... 21
Companies Seek to Postpone Double Pricing until July 2006 ............................................. 21
Petrol CEO Stays on, Supervisors Happy with Explanations .............................................. 21
Krka Beats Sales Forecasts .................................................................................................. 22
NBL New Owner of Continental Banka .............................................................................. 22
Trimo Trebnje Steadily Increasing Sales ............................................................................. 22
Luka Koper Shareholders Name New Supervisors .............................................................. 22
Tus Group Plans EUR 61m Investments in Macedonia ....................................................... 23
Cimos Opens New Factory in Srebrenica ............................................................................ 23
Clothes Maker Jutranjka Files for Bankruptcy .................................................................... 24
MLM Enters Partnership with Multinational Grohe ............................................................ 24
Speculations Abound about Resignation of Abanka Chief Exec ......................................... 25
Gorenje to Hand Out Dividends ........................................................................................... 25
Droga Kolinska to Lay Off 140 Workers ............................................................................. 26
New Director of Jozef Stefan Institute Presents His Plans .................................................. 26
Convicted Hit CeO Checks in Psychiatric Hospital ............................................................. 27
SLOVENIA IN BRIEF ............................................................................................................ 28
Conference on Violence against Children Begins Today .................................................... 28
Drnovsek Condemns London Attacks, Urges Fight against Terrorism ............................... 28
Prime Minister Condemns London Terrorist Attack ............................................................ 28
Valentin Hajdinjak Appointed New Govt Spokesperson ..................................................... 28
Government Confirms Defence Plan until 2010 .................................................................. 28
2
HEADLINES
Vizjak and Eurochambers Chief Discuss Chamber System Reform
Ways of reforming the Slovenian Chamber of Commerce (GZS) topped the agenda of talks
between Economics Minister Andrej Vizjak and Christoph Leitl, the head of both the Austrian
Chamber of Commerce and Eurochambers, in Ljubljana on Tuesday, 05 July
The meeting comes after Leitl has recently sent a letter to Prime Minister Janez Jansa in
which he voiced concern over the government's plans to reform the GZS by abolishing
mandatory membership.
A reform of the chamber system is planned by the Economics Ministry, which maintains that
chamber membership should become voluntary. The GZS opposes the proposal.
Holding a news conference after today's meeting, Leitl voiced support for the Economics
Ministry's efforts for a strong and efficient chamber, whose organisation, however, should be
agreed upon in dialogue.
While addressing the GZS assembly earlier in the day, Leitl refused to give advice on the way
the chamber should be reformed. He though highlighted that the Austrian model, which is
based on mandatory membership, has proved to be very successful.
Commenting on the Austrian chamber, Vizjak said it could be hardly compared to the
Slovenian one since it is much stronger, boasting over 100 business offices abroad and a very
substantial support for companies.
Vizjak also announced that a bill on chambers of commerce will be drafted within a month
and voiced hope for dialogue with the GZS on the issue.
Vizjak and Leitl also discussed the organisation of other Eurochambers members, of which
one half practice voluntary membership and the rest mandatory.
Eurochambers represents 44 national associations of chambers of commerce and industry, a
European network of 2,000 regional and local chambers with over 18 million member
enterprises in Europe.
Yugoslav Successors Reach Agreement on Bank Deposits
The financial committee of the successors to the former Yugoslavia reached an agreement on
Thursday, 07 July on how to divide the once common assets deposited with foreign
commercial banks
The meeting in Ljubljana was successful as the representatives of the five successor states
finally agreed on how to divide the US$ 221m, Slovenian representative France Arhar has
told STA.
In line with the agreement, Slovenia is to come into 16% of the common money.
According to Arhar, the committee was able to reach an agreement today after concluding that
the issue of deposits has nothing to do with a question of guarantees issued for former
Yugoslav companies in third countries.
At the committee's previous meeting in Skopje last May, the Serbian side insisted that the
money deposited with commercial banks should be used for settling liabilities stemming from
guarantees issued for the companies in third countries.
The committee established, according to Arhar, that the question of guarantees is of
commercial nature, while the succession agreement only deals with operations of the once
common state institutions.
The successors' representatives also discussed the commercial operations that the Yugoslav
National Bank conducted with the Yugoslav Army, adopting a decision on the distribution of
funds deposited with foreign banks.
3
The committee decided that the army's deposits, which amount to US$ 84m, should be
returned to companies conducting the business for the army. Slovenia is to be entitled to US$
400,000.
Arhar estimated that the committee reached a major breakthrough today, with the successor
states willing to make compromise in order to actually implement the 2001 succession
agreement.
The committee agreed on the next meeting in autumn in Belgrade, when it is due to discuss
the clearing debt of former Czechoslovakia and Libya, contributions to the UN, monetary
gold and other open issues, according to Arhar.
Unior-DaimlerChrysler Joint Venture Inaugurated
Unior, the Zrece-based tooling company, and German car maker DaimlerChrysler on
Thursday, 08 July officially inaugurated in Maribor an EUR 4.5m production facility which
will manufacture steering mechanisms and certain spare parts for Mercedes S and E models
Starkom, as the joint venture is called, is expected to create 80 jobs over the next two years
and generate sales of EUR 10m, Unior chairman Gorazd Korosec told the press on Friday, 08
July.
In the next three to four years production will expand so the company is expected to employ
up to 200 people, Starkom director Harald Neff said.
According to Volker Stauck, a member of the DaimlerChrysler management board, Maribor
was selected as the site of the production facility because of good infrastructure and human
resources potential.
DaimlerChrysler considered dozens of locations in Central and Eastern Europe and shortlisted
five, with Unior's proposal ultimately selected as the best option.
Stauch also said the state and the local community have helped the best they could. His words
were echoed by the keynote speaker, Economics Minister Andrej Vizjak, who said the
government will continue to support foreign direct investment.
The new facility is located on the site of the former automotive giant TAM, where Unior
already has two subsidiaries.
Unior and DaimlerChrysler, owning 49% and 51% of Starkom respectively, have been
partners for years, as Unior has been manufacturing custom tools for the German car maker.
4
INTERNATIONAL COOPERATION
Gasparovic and Drnovsek Stress Key Role of New Members in EU Crisis
New member states will play a key role in the resolution of the current EU crisis, Slovak
President Ivan Gasparovic said after talks on Thursday, 07 July with Slovenian President
Janez Drnovsek, who shared the view that they can contribute better solutions than the old
member states
"New member states will be much more progressive and modern in their proposals, and the
crisis will be overcome," Gasparovic told the press. Meanwhile, Drnovsek though that the
reason why they can come up with better solutions is because old members must first resolve
internal issues and overcome the identity crisis.
Talking about the EU budget talks, Gasparovic and Drnovsek were not keen on the Hungarian
proposal for a three-year transitional budget. "Time will tell whether a transitional period is
necessary," Gasparovic said.
"We first have to try and reach agreement on the entire financial perspective. There is enough
time, although agreement will not come easy," said Drnovsek, adding that he was keener on
the tackling of the future funding of the Union's Common Agriculture Policy.
Slovakia Seeks Investments in Car Industry, Banks
Slovakia is interested in attracting investments in banking, cooperation in the car industry
and joint ventures on third markets, State Secretary at the Slovak Economics Ministry, Eva
Simkova, told Friday's, 08 July business conference in Ljubljana
The conference was held as part of a visit by President Ivan Gasparovic, who said it might not
be good that Slovakia has specialised in car making so much, but it currently needs these
investments.
According to him, the economies of Slovenia and Slovakia are complementary, but both want
more products with higher value added and joint ventures in construction. Since both are
small countries, cooperation is an opportunity as well as a duty, he thought.
In 2004 Slovenian investments in Slovakia amounted to EUR 9m, but Simkova said their
structure was not in line with the country's needs: they were directed at business rather than
banking.
Jozko Cuk, the president of the Chamber of Commerce (GZS), meanwhile underlined
opportunities in the car industry. He said the car cluster has already started cooperating with
the Slovak car manufacturers.
According to Cuk, Slovenian companies could be suppliers of parts for the car industry.
Tomas Golan, the head of the Trade and Investment Agency at the Slovak Economics
Ministry, agreed, saying that demands for suppliers will be great.
Trade was almost balanced last year, Cuk also noted, with imports from Slovakia at EUR
171m and exports at 169m.
Gasparovic also met Parliament Speaker France Cukjati. They said Slovenian and Slovak
parliaments should forge closer cooperation, and underlined that national parliaments may not
be sidelined in the EU, the parliament said in a press release.
Gasparovic also met with FM Dimitrij Rupel for talks that revolved around EU issues, the
Foreign Ministry has said. The two officials stressed that despite the current crisis EU
enlargement must continue.
While Rupel said countries of the Western Balkans should become candidates for
membership, Gasparovic stressed that the Union should expand to Romania and Bulgaria as
soon as possible.
5
Drnovsek Receives Credentials from Three Ambassadors
President Janez Drnovsek on Tuesday, 05 July received credentials from Thai Ambassador to
Slovenia Adisak Panupong, Spanish Ambassador Carmen Fontes Munoz and Dutch
Ambassador John C. M. Groffen, the president's office said in a press release
In his talks with the Thai ambassador, who is based in Vienna, Drnovsek was interested in
Thailand's recovery from last year's tsunami catastrophe. He also stressed that both countries
play a role in promoting peace and stability on their continents.
In talks with the new Spanish ambassador, Drnovsek called for more intense cooperation with
Spain, which he says agrees with Slovenia on the need to strengthen the EU and continue with
enlargement despite the recent crisis.
Spain and Slovenia already have good relations and a lot of common interests, especially
since Slovenia joined the EU, according to the Spanish ambassador.
The Dutch ambassador, meanwhile, explained to Drnovsek the reason behind his country
rejection of the EU constitution, according to the president's office.
Groffen nevertheless underscored Netherlands loyalty to the EU's principles and the country's
interest in not only bilateral, but also multilateral cooperation.
Seat of Sava Basin Commission Opens in Zagreb
Croatian Prime Minister Ivo Sanader on Tuesday, 05 July inaugurated the permanent seat of
the international commission for the Sava River basin in Zagreb. Attending the opening
ceremony, Slovenian Transport Minister Janez Bozic said that the Sava basin agreement was
the first example of development cooperation among former Yugoslav countries.
Bozic said the agreement was based on the Sava basin countries' care for the environment and
natural riches. Slovenia, Croatia, Bosnia-Herzegovina and Serbia and Montenegro signed the
agreement to carry into effect the water management projects in the Danube basin.
The water riches of the Sava basin have a special economic potential in the Western Balkans.
In addition, the Sava River is an important transport route. Incorporating it into the European
system of navigable waterways would enable economic development and thus attract foreign
investors, the commission is convinced.
The international commission, which was formed on 27 June, will be headed by BosniaHerzegovina for the first three years, with Kemal Karkin as chairman.
Rupel Welcomes Agenda of British EU Presidency
Foreign Minister Dimitrij Rupel welcomed the agenda of the British EU presidency as he met
on Tuesday, 05 July British Ambassador to Slovenia Tim Simmons
"We are especially pleased that the enlargement tops the agenda of the presidency. The issue
is of vital importance to Slovenia," Rupel said according to the ministry's press release.
Rupel underscored that the enlargement process must not slow down in view of the recent
events concerning the EU constitution and the new financial perspective.
"Enlargement must continue at the same rate. A delay in the process would lead to another
destabilisation of the Western Balkan countries," Rupel said, expressing hope that Croatia's
accession talks would start during the British presidency.
In reference to the EU financial perspective for 2007-2013, Rupel told Simmons he expects
the British presidency to focus on the issue in the future, the ministry said.
Great Britain took over as EU president from Luxembourg on 1 July.
6
Rupel and Busek Discuss Situation in Western Balkans
Foreign Minister Dimitrij Rupel held talks on Tuesday, 05 July with Erhard Busek, special
coordinator of the Stability Pact for Southeastern Europe, with the pair focusing on the
situation in the Western Balkans, the Foreign Ministry said in a press release
Rupel briefed Busek about Slovenia's stance on the future enlargement of the EU. Slovenia,
according to Rupel, is convinced that further enlargement would give new strength to the
Union, and particularly welcomes the accession of the Western Balkan countries.
Busek meanwhile informed the Slovenian minister about the activities of the Bucharest-based
centre for fighting organised crime, which has been established within the Southeast Europe
Cooperative Initiative (SECI). Busek thanked Slovenia for its donations in the project.
The two officials also touched on the operations of the Ljubljana-based Centre of Support for
Accession to EU and the activities of the international commission for the Sava River basin,
which also operates in the framework of the Stability Pact.
Nova Gorica, Gorizia Mayors Discuss Life at the Border with Rupel
Foreign Minister Dimitrij Rupel met on Tuesday, 05 July the mayors of Nova Gorica and
Italy's Gorizia, Mirko Brulc and Vittorio Brancati, to discuss the problems people living
along the border face
Rupel said Slovenia supports all projects to improve the everyday life of people living along
the border, adding the constructive dialogue between Nova gorica and Gorizia is a symbol of
unison in the area regardless of historical divisions, according to the ministry's press release.
Rupel said Slovenia backs a bottom-up approach in the formation of Euro-regions in
accordance with European policy guidelines. Therefore, the extension, contents, organising
structure and relation to the present associations should be taken into account.
Both mayors presented their views and suggestions for the establishment of the Gorizia crossborder Euro-region. They also presented plans to set up a park of peace on the Sabotin hill
and establish a European university in the region.
The mayors backed the expansion of the free movement area in Nova Gorica and extending
working hours on some border crossings for local border traffic between Slovenia and Italy.
They also underscored the significance of bilateral cooperation in developing transport
infrastructure.
7
EUROPEAN UNION
Zagar Insists Division to Two Regions the Only Realistic Option
Ivan Zagar, the minister of local government and regional policy, insists that the
government's decision to divide Slovenia to two cohesion regions is "the only realistic
proposal". Due to time constraints, the opposition's proposal to divide the country based on
constitutional changes is unfeasible, he said on Tuesday, 05 July
After the government announced its intention to seek a division to two regions for the
purposes of the EU's structural and cohesion funds, the opposition insisted that the
government should push for a division to three regions based on changes to the Constitution.
According to Zagar, the difference in funding would be almost negligible and would actually
level off in the long run. Yet if Slovenia does not succeed at all and is treated as one region, it
could lose up to 40% of the money.
Noting that all attempts to divide Slovenia into regions have failed so far, Zagar labelled as a
breakthrough the very fact that the European Commission is willing to talk about NUTS 2level cohesion regions at all.
According to him, in the talks so far Slovenia has been receiving signals that the government's
proposal is appropriate.
Yet to achieve this, the division must be implemented this year. Even this, however, is no
guarantee that negotiations with the EU will succeed. "Even if the law is passed, we have no
guarantees that we will be successful," he said.
Zagar was presenting the proposal today alongside Marcel Koprol, the head of the
Government Office for European Affairs SVEZ), who outlined the history of Slovenia's
efforts to be treated as more than one cohesion region.
Slovenia to Launch Full Preparations for EU Presidency, Say MPs
Members of the parliamentary EU affairs committee and Slovenian members of the European
Parliament met on Friday, 08 July to discuss Slovenia's future challenges, among them the
country's EU presidency in the first half of 2008
Chair of the parliamentary EU affairs committee Anton Kokalj maintained that time has come
for parliament to launch thorough preparations for the presidency and start observing work of
parliaments in other members gearing up for the task.
MEP Alojz Peterle also highlighted that Slovenia should begin intensive preparations for the
presidency and should consider this to be a "national project" rather than just a project of the
incumbent government.
As to other current priorities, Slovenia should continue defending EU enlargement towards
Southeastern Europe, which is crucial for Slovenia as well as the entire Europe, maintained
Peterle of the NSi/EPP.
Kokalj meanwhile highlighted that Slovenia should prove it was able to react fast in the
aftermath of the failed negotiations on the next EU budget by adopting a bill on the division
into cohesion regions on time.
The committee's chairman also insisted that the country should become more active and
cooperative in EU-related affairs, which also includes a better cooperation between
parliamentary bodies.
Also attending the session, the head of the European Commission Representation Office in
Slovenia Erwan Fouere voiced expectations that Slovenia would continue to act as a bridge
between the EU and SE Europe.
8
EU Serves Warning about Telecoms Competition Regulations
The European Commission has formally warned Slovenia that it must ensure the
transferability of telephone numbers for mobile and land-line phones, and extend
commitments for the promotion of competitiveness until analyses show the need for new
measures. None of this has happened so far, the Commission said on Thursday, 07 July
Most EU newcomers have problems with the transferability of phone numbers between
operators, although they should have implemented the appropriate system by 1 May 2004.
"Slovenia has not succeeded in doing that," the Commission has said.
The second warning was labelled by the Commission as the "black hole problem", as Slovenia
cancelled a number of competition-boosting commitments operators had under old rules,
although the regulator had not examined the situation on the market and proposed new
solutions.
The situation is quite "uncertain" and "changeable", the Commission said. The commitments
that have disappeared include prices of voice services, price of inter-network connections, as
well as the general principles of transparency and non-discrimination.
The EU systematically monitors the implementation of regulations on telecommunications.
This is the fourth set of warnings in the past six months, but it is the first time that Slovenia
received a warning as well.
Slovenia has about two months to provide explanations or take appropriate measures. The
warning is the first stage in a procedure that can end at the Court of Justice of the European
Communities if a country continues to fail to respect the acquis.
Slovenia has found itself in a company of a total of eleven EU members warned by the
Commission this time. Some have received a second-stage warning, a qualified opinion.
Drnovsek Receives French European Affairs Minister
President Janez Drnovsek received Thursday, 07 July French Minister for European Affairs
Catherine Colonna. The officials discussed the future of the EU after the referendums in
France and Netherlands, the president's office said in a press release
Colonna said that France wants the process of ratification of the EU constitution to continue
in other states and hopes for further strengthening of the European integration.
She added that it is realistic to expect the requests for respecting the accession conditions set
for future EU members to become even more consistent. The member states will expect the
European Commission to deliver objective evaluations of the candidates' readiness, Colonna
said.
Drnovsek underlined Slovenia's interest to preserve the European perspective for Southeastern
Europe, even though it is obvious that the rejection of the EU constitution and inability to
reach compromise regarding the next financial perspective shed different light on further
enlargement.
The president also said progress in the negotiations on the new financial perspective was not
possible without readiness for compromise that regards both, the British EU rebate and the
common agricultural policy.
Rupel: EU Citizens Bought 656 Real Estate Items in Slovenia
EU citizens have bought 656 pieces of property in Slovenia since the country's EU entry.
British buyers are leading in real estate purchases, 145 of which took place at the tax office of
Murska Sobota, in the northeastern region of Prekmurje
Following the British are Austrians with 124 purchases, Foreign Minister Dimitrij Rupel told
the parliamentary foreign policy committee on Wednesday, 06 July in reference to a deputy
question by MP Zmago Jelincic (SNS).
9
Since Slovenia joined the EU, EU citizens have been able to buy property here under the same
conditions as Slovenian nationals. Before 1 May 2004, they were able to purchase it only
under the condition of reciprocity.
Unlike the majority of EU newcomers, Slovenia had failed to negotiate a transition period
which would enable it to protect its property market from foreigners. Still, it had managed to
negotiate safety mechanisms, which could be used if property prices soared due to great
demand.
Another committee member asked Rupel whether a June session of the standing SlovenianHungarian commission was put off because Hungary had pegged it to a Hungarian
construction company getting a deal in Slovenia.
Answering the question posed by Joze Ficko (SDS), Rupel said he knew nothing about
pegging business deals to the assistance for the Slovenian minority in Hungary.
He stressed, however, that in 1992 Slovenia and Hungary agreed on a mutual approach to
minority issues, yet Hungary's support for the Slovenian minority is ten times below what
Slovenia earmarks for the Hungarian minority in Slovenia.
Rupel also told the committee a Euro-region was discussed yesterday with the mayors of
Slovenia's Nova Gorica and Italy's Gorizia. He reiterated Slovenia was not interested in a
Euro-region that would divide the country, whereas the Gorizia mayor's concept is
"narrower".
Asked by committee chairman Jozef Jerovsek (SDS) about the current situation in the OSCE,
Rupel said the organisation was in a good shape, which he believes Slovenia can largely be
credited with.
"All countries except Uzbekistan stand behind us," said the OSCE chairman, adding that
sanctions against this country, which is rejecting an international investigation into the May
bloodshed in Andijan, would soon be debated.
In addition, the committee gave the go-ahead on the conclusion of an interstate adoptions
agreement with Macedonia, and an agreement on the protection of information between the
Slovenian and Norwegian governments. They also backed the establishment of groups of
friendship with Azerbaijan and Belgium.
EU Warns Slovenia for Delay in Biofuel Directive Again
The European Commission has issued a second warning to Slovenia about its delay to adopt
an EU directive on biofuel and to provide a report on its target shares for biofuels in 2005
Slovenia was supposed to adopt the directive by last December and should have sent a report
on biofuel shares to Brussels one year ago, the Commission said on Wednesday, 06 July.
Should the country fail to take immediate action, the Commission will take it to the
Luxembourg-based Court of Justice of the European Communities.
Slovenia is one of the nine countries that received warnings from Brussels today, with four
being reprimanded for failing to adopt both the directive and the report.
A total of 19 members received the first warning, issued in March.
According to EU regulations, the share of biofuels in oil derivatives should increase
progressively to 2% this year and reach 5.75% by 2010.
Ministry Says Regulation on Biofuels Ready
The Ministry of the Environment has responded to the European Commission's warning about
the country's failure to transpose the EU directive on biofuels. The ministry claims the
relevant regulation has been drafted, but there are still some uncertainties which must be
resolved
10
The ministry in May asked the European Commission for a meeting to clarify the
uncertainties, but it has not received a reply yet, the ministry said in a press release Thursday,
07 July.
The regulation is now being coordinated with the Ministry of Finance, since it refers to the
regulation on excise duties, yet it is not in full compliance with it.
Slovenia was supposed to transpose the directive by last December and send a report on
biofuel shares to Brussels one year ago, the Commission said on Wednesday after it issued a
second warning about the country's delay.
Telco Watchdog Promises Rapid Remedies to Address EU Warnings
The Agency of Electronic Communications and Post (APEK) has responded to the European
Commission's warnings Thursday, 07 July about the shortcomings of the telecommunications
market, saying that appropriate measures are in the making and will be implemented shortly
The European Commission has formally warned Slovenia that it must ensure the
transferability of telephone numbers for mobile and land-line phones, and extend
commitments for the promotion of competitiveness until analyses show the need for new
measures.
The agency's acting director Tomaz Simonic told STA today that the transferability of phone
numbers would be fully implemented in the first half of 2006, as the agency is set to finalise
the relevant regulations by July this year.
According to him, all operators support the transferability of phone numbers. Yet since the
procedure is very complex, it will not be finished before the first half of 2006.
Responding to the second warning, Simonic said that regulations on operators with significant
market power were in place until 2004, and until April 2005 for leased lines.
Moreover, he noted Telekom Slovenije, the national fixed-line telco, has always been treated
as the operator with significant market power in all segments of the market.
He also said comprehensive analyses of most markets are finished, to be followed by public
scrutiny and notification of the European Commission. The agency expects that most
decisions on operators with significant market power will be issued in the autumn.
Farmers Oppose Reform of EU Farm Subsidies
The Chamber of Agriculture and Forestry (KGZS) is opposed to any changes to the EU's
Common Agriculture Policy (CAP), convinced that farm subsidies are the only source that
ensures Slovenia remains a net recipient of EU funds
"We were very surprised to hear FM Dimitrij Rupel say recently that he would personally
agree with a reduction of the Union's agriculture budget," KGZS president Peter Vrisk told
the press on Thursday, 07 July.
"I believe such statements are harmful, for only agriculture ensures that Slovenia is a net
recipient of EU funds," he added, stressing that the chamber will make efforts to preserve
farm subsidies.
Moreover, agriculture is the only area where Slovenia managed to negotiate a lot of positive
agreements. If this flow was interrupted other areas would not be able to ensure sufficient
fund phasing capacity to preserve the country's net recipient status, Vrisk explained.
"We expect that the government, parliament and foreign policy will support the efforts of the
agriculture sector. This is good not only for farmers, but also all other citizens," Vrisk
concluded.
11
LEGISLATION
Small Companies Welcome Rejection of EU Software Patent Directive
Small Slovenian software companies have welcomed the decision of the European Parliament
on Wednesday, 06 July to reject the software patent directive, which would have given
companies patent protections for computerised inventions
MEPs have decided to lend an ear to the experts, who have been saying all along that the
directive is unacceptable and would hurt the European IT industry, according to Jure Koren, a
representative of Software Patent Initiative, a pressure group combining small software firms
and the Lugos association of Linux users.
Speaking for STA, Koren also quoted a survey the group carried out among 257 Slovenian IT
companies. He said the survey has shown the directive would severely hamper the
competitive ability of small and mid-sized enterprises, and could increase their development
costs by up to 30%.
Amendments to Clarify Procedures for Foreigners' Work Permits
The government has adopted amendments to the employment of foreigners act, designed to
clarify the criteria for getting a work permit and taking into account critical comments from
businesses, Labour Ministry State Secretary Marjeta Cotman told a press conference on
Thursday, 07 July
The amendments set new criteria for acquiring work permits for self-employed foreigners.
They also introduce the possibility of supplementary education for foreign and Slovenian
workers if the company has capital or business ties with a foreign company.
In case of cross-border services employing posted workers or mobility of workers within
groups, a foreigner must work for the employer for a year before the latter can post them to
Slovenia, Cotman explained.
For foreign seasonal workers, the amendments provide the possibility of employment
immediately after the season working period runs out. They also shorten the intermediate
period for acquiring work permits in seasonal construction works.
For entrepreneurs employing up to ten workers, the amendments also set down the validity
period of the work permit and conditions for its admission.
Cotman also said that the Economic and Social Council discussed and backed the
amendments.
Govt Moves to Relax Job Protection in Public Sector
The government has adopted comprehensive amendments to the act on public servants, which,
according to Public Administration Minister Gregor Virant, will equalise the status of public
sector employees with those in the private sector
The amendments will equalise the status of both groups of employees in terms of dismissal
with cause, due to incompetence or due to business reasons.
"There is no reason for employees in the public sector to be better protected than those in the
private sector. Nor is there a reason to protect bad or underperforming employees," Virant
told the press on Thursday, 07 July.
Another change that the government proposes was dubbed by Virant as "measures in support
of a restrictive employment policy," notably to address situations where it can be expected
that the workload will ease off.
He mentioned as an example the police, where it can be reasonably expected that the
Schengen border will shift south. This is why, Virant said, there has to be a basis for
12
temporary employment of police officers so that the police is not all of a sudden faced with a
huge surplus of staff.
The amendments moreover introduce the option that public servants who meet the full
statutory pension requirements have their employment contract terminated. According to
Virant, this does not mean that they would be forced into retirement, as they can continue
working elsewhere.
Other proposed changes would make it easier to transfer employees to other departments in
line with the workload. Moreover, provisions of the act would be extended to state-controlled
institutions such as the Pension and Disability Insurance Institute (ZPIZ) and public agencies.
In line with the general overhaul of sickness benefits, police officers and prison guards will no
longer enjoy the privilege of 100% compensation for the first 30 days of sick leave. That way
they will be equal to all other public sector employees.
The act on lawmakers will also be changed to achieve the same goal. This will furthermore
apply to all officials whose wages are directly connected to those of the lawmakers, notably
ministers, the PM and others.
13
STATISTICS/FORECASTS
Investments Down, Consumer Debt Soaring, Says IMAD
The latest report of the government Institute for Macroeconomic Analysis and Development
(IMAD) suggests investments in fixed assets are dropping, while consumer debt has soared to
a four-year record
Investments in fixed assets dropped 0.5% year-on-year in the first half of the year, according
to Economic Mirror. IMAD says this is well below expectations, but it nevertheless expects
growth to pick up later this year.
Indeed, the main reason for the weak showing this year is the high comparative growth in the
same period last year, when investments were buoyed by the purchase of helicopters for the
army.
Meanwhile, consumer spending growth slowed to 2.7% in the first quarter of the year, the
slowest it has grown in two years.
This is no surprise, according to IMAD, as the debt indicator which measures the ratio
between loans and savings in banks reached its lowest point since 2001 in the first quarter.
Figures for current account balance of payments are more upbeat, as the surplus is at EUR
14.2m for the first four months of the year, as opposed to a deficit of EUR 42.4m a year
before.
According to IMAD, the surplus is a result of favourable trade flows.
Factory-Gate Prices Up 2.4% Year-on-Year
Factory gate prices remained level in June on a monthly comparison, but increased by 2.4%
compared to June 2004, according to data released by the national Statistics Office on
Thursday, 07 July
Year-on-year, prices increased most in manufacturing (3%), followed by electricity and water
supply (0.5%). Prices in forestry stayed put, while mining saw a drop of 0.4%.
At the monthly level, an increase in prices was recorded only in the electricity and water
supply sector (0.4%). While prices in forestry were level with those in May, those in mining
and manufacturing fell by 1.7% and 0.1% respectively.
Parliament's Reputation Down, Survey Shows
A survey has shown a remarkable downfall of the parliament's popularity from 33.7% support
in May to 25.4% this month. The rate of those who disaprove of its work has risen from 34.7%
to 50.3%, the daily Delo says on Monday, 04 July
According to the survey, the ruling Slovenian Democrats (SDS) are holding on to their 32%
support, while the support for the largest opposition party, the Liberal Democrats (LDS) fell
another 1.4% to stop at 12.6%.
The opposition Social Democrats (SD) are growing in popularity, reaching close to the LDS.
Also moving forward is the government coalition's New Slovenia (NSi), which replaced the
People's Party (SLS) as the fifth most popular party.
The results also show that the high government support after the election keeps falling slowly,
with the rate of unsatisfied respondents increasing by about 5% a month since March and
reaching 37% in June.
The telephone survey was conducted by Delo's agency Stik from 27 to 29 June and polled 721
respondents.
Meanwhile, the Delo popularity scale shows no changes among the most popular politicians.
The first place is reserved for President Janez Drnovsek with 3.92 on the scale from 1 to 5,
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followed by European Commissioner Janez Potocnik with 3.88, MEP and SD leader Borut
Pahor with 3.72, PM Janez Jansa with 3.63, and MEP Alojz Peterle with 3.36.
Industrial Output Growth Slows to 1.3%
Industrial output increased by 1.3% year-on-year in May, but annual growth slowed down
from 3.7% in April, according to the Statistics Office
Output increased 8.8% compared to April, but on an annual comparison it fell by 0.6% in the
first five months of the year.
Mining saw the biggest drop in production, 11.8% year-on-year, with electricity, gas and
water supply down 11.1%.
However, manufacturing increased output by 2.6% in the same period.
Producers of consumer goods saw their output soar by 18.2% year-on-year. Intermediate
goods, meanwhile, recorded a drop of 8.6%.
Exports Jump 16% in May Y/Y
Exports soared 16% to EUR 1.189bn in May year-on-year, while imports increased by 5.2%
to EUR 1.247bn, according to provisional data released by the Statistics Office
The trade gap thus amounted to EUR 58.4m, with the coverage of imports with exports at
95.3%.
On an annual comparison, exports increased 12.1% in the first five months of the year to EUR
5.660bn, with imports up 6.3% to EUR 5.962bn.
The trade gap accumulated between January and May stood at EUR 302.6m.
Petrol Prices Reach New Record
Petrol prices will increase in Slovenia on Tuesday, 05 July due to soaring oil prices on the
global markets and a stronger US dollar, with regular and premium reaching a new record
Regular petrol will cost SIT 224.2 (EUR 0.94) per litre, SIT 3.8 (EUR 0.02) more than now.
The price of premium will increase by SIT 4.2 (EUR 0.02) to SIT 229.2 (EUR 0.96).
Unadjusted for inflation, this is a record for regular and premium at least since the current
pricing model was introduced in 2001.
Diesel will remain level SIT 222.5 (EUR 0.93), while heating oil will be SIT 2.1 (EUR 0.01)
dearer at SIT 139 (EUR 0.58) per litre, according to Petrol and OMV Slovenija, the largest
petrol retailers.
In line with the government's pricing model, prices are adjusted to global market conditions
and the rate of the US dollar every two weeks.
According to calculations by Petrol analysts, the prices of regular unleaded petrol were up
5.56% in the previous 14-day period, with diesel up edging down 0.14% and heating oil up
1.29%.
At the same time, the dollar added 1.29% against the tolar.
The price increase comes despite the government's move today to curb excise duties to
mitigate the effect on retail prices.
15
FINANCE
Government Confirms Guidelines for 2006, 2007 Budgets
The government has adopted the guidelines for the budgets in 2006 and 2007. The budget
deficit is to be kept below 1.4% and 1.2% of the GDP respectively, Finance Minister Andrej
Bajuk told the press on Thursday, 07 July
According to him, the government has asked the Finance Ministry to prepare the draft budget
memorandums until the next budget session, in cooperation with the Institute for
Macroeconomic Analysis and Development (IMAD).
Until then, the ministry must also coordinate the proposed division of the total expenditures
with the ministries.
The guidelines are in line with the overall macroeconomic policy and the government's
approach to the euro changeover, said Bajuk.
The budgets are also in line with the coalition's commitment to cut general government
spending, as spending is to stand at 26.4% of GDP in 2006 and 26.1% in 2005, Bajuk
explained.
The guidelines will furthermore serve as the basis for tax reform. Bajuk noted that tax
revenues must be kept "neutral" to make the proposed budget feasible.
Tax reform proposals are undergoing inter-departmental coordination and will be sent to
parliament in the autumn, he said.
Bajuk refused to talk about exact figures for the budget, but he said the decision to keep the
deficit below 1.4% of GDP indicates what needs to be done with expenditures.
Slovenian Banks in TARGET Settlement System as of 4 July
Sixteen banks and one savings bank entered on Monday the Trans-European Automated Realtime Gross Settlement Express Transfer (TARGET) system as part of the banking sector's
preparations for the euro changeover, the Bank of Slovenia reported Tuesday, 05 July
The banks have thus become direct participants of the system which allows the settlement of
payments in euros between banks and with customers. Those banks that have not become
members yet will access the system indirectly.
The central bank, which itself joined TARGET in October 2004, decided to gradually bring
the commercial banks into the system. The first round was carried out in cooperation with the
German central bank based on its RTGSplus system.
TARGET is a payment system composed of one real-time gross settlement (RTGS) system in
each EU member state plus the European Central Bank payment mechanism. The national
RTGS systems and the EPM are interconnected by common procedures to allow cross-border
transfers throughout the EU to move from one system to another.
NLB Draws EUR 25m from EIB
Nova Ljubljanska banka (NLB), Slovenian largest bank, and the European Investment Bank
(EIB) on Monda, 04 July signed a credit contract worth EUR 25m, which represents the last
installment of an EUR 100m line of credit. The contract is to become effective in autumn,
when NLB gets the final approval from the European Commission
The new contract is mainly aimed at financing projects in energy saving, environment,
transport, tourism development and preserving cultural heritage, EIB President Wolfgang
Roth and NLB chief exec Marjan Kramar said on Monday, 04 July.
The NLB decided to include in the framework contract a special scheme for financing the
projects of small and medium size municipalities.
16
The NLB offer will also contain counseling services for the acquisition of grants from
European funds, with the loans approved on a case-by-case basis.
The NLB and the EIB signed the first contract of the EUR 100m line of credit, worth EUR
75m, last January. It enabled the NLB to expand its offer of long-term financing for small and
medium size companies.
Roth underscored the EIB was ready to approve more loans to the NLB, providing the money
would be used quickly for good projects, which the NLB should select and thoroughly verify.
According to Kramar, today's signing signified just one more step towards further cooperation
between the banks. Kramar said there were still many possibilities of strengthening that
cooperation, not only in Slovenia but the entire region.
NLB to Finance Construction in Russia Worth US$ 23.3m
Nova Ljubljanska banka (NLB), Slovenia's largest bank, has signed a credit agreement to
finance the construction of an office building in Russia's Novosibirsk, which will be built by
the Slovenian subsidiary of Zuerich-based Smelt Intag
The contract was signed in Ljubljana on Monday, 04 July by NLB board member Borut
Stanic, director of CJSC Stroitel Vadim V. Samojlov and financial director of JSC
Novosibirskenergo Denis V. Vershinin, the bank said today.
This is the biggest project ever on the Russian market for NLB, which expects the deal will
increase its footprint in Russia and forge closer ties with JSC Novosibirskenergo.
Finance Minister: No Flat Tax Rate This Year
Finance Minister Andrej Bajuk has said that a flat tax rate will not be among the tax changes
that are planned to be put forward later this year
Since budget deficit is one of the major Maastricht criteria, Slovenia "cannot afford such a
risky step as long as we are in the ERM II mechanism", Bajuk told the weekly Demokracija,
adding a flat tax rate implies risks for budget revenues.
Nevertheless, this does not mean that the government is against a debate on flat tax rate,
which has been under way for several months. The minister believes a flat tax rate is certainly
one of the options.
Convinced that tax legislation must be based on a broad political consensus, Bajuk does not
believe in "magic" solutions. He also told the right-leaning weekly that the group of experts
commissioned by the government to simplify the tax reform which entered into force this year
presented its proposal to the prime minister and him a few days ago.
The proposal will now be studied by Finance Ministry services in order "to send some key
changes to parliament on time", the finance minister also told Demokracija on Thursday, 07
July.
Bosnian Pensioners Threaten to Sue Slovenia
Bosnian citizens who receive Slovenian pensions have announced to file a lawsuit against
Slovenia, insisting they suffering damage due to Slovenia's new tax legislation
According to the association of pensioners, they have been stripped of around 100 euros every
month since the new legislation came into effect on 1 January this year.
With some 8,600 Bosnians receiving Slovenian pensions, Slovenia will come into 10 million
euros per year at the expense of its former workers, the association argues.
In line with the new tax legislation, non-residents have to pay tax for every income
originating in Slovenia, including pensions which are not taxed otherwise.
In addition, Bosnian pensioners are being taxed at home, since Slovenia and BosniaHerzegovina have no bilateral agreement on avoiding double taxation.
17
A similar problem had been faced by Croatian pensioners, however the Croatian government
decided not to tax pensions coming from Slovenia.
18
BRANCH INFORMATION
Transport Minister Proposes New Crossing at Hotiza
Transport Minister Janez Bozic proposed the construction of a border crossing on both sides
of a new bridge over the Mura at Hotiza, the site of the last minor border incident between
Slovenia and Croatia
The proposal was voiced at Monday's, 04 July meeting with Croatian Transport Minister
Bozidar Kalmeta, who said Croatia would think about the proposal.
The pair also talked about road haulage. Bozic said the bilateral commission on transport
would meet in September to determine the quota of permits for hauliers.
Kalmeta added that Croatia wants to solve the road hauliage dispute with a new agreement on
road transport that the two countries would sign by September.
According to Bozic, Slovenia would like to see the elimination of all permits for transport to
third countries so that they would no longer cause problems for hauliers, and the elimination
of Croatian counter-measures.
Problems emerged in February when Slovenia started implementing an EU directive that
requires hauliers from third countries that transport goods between two EU member states to
pay customs for temporary import of their vehicle if they do not have the CEMT permit.
Croatia retaliated by introducing countervailing measures against Slovenian hauliers.
Government Adopts Resolution on Transport Policy
The government on Thursday, 07 July adopted a resolution on the country's transport policy,
which it promises is an umbrella document responding to the changed mobility and economic
conditions since it does not not separate individual forms of transport
"The period of division to individual transport systems has been surpassed, because users look
for integral and logistic services," Transport Minister Janez Bozic told a press conference
after the cabient session.
The document is based on the principles of sustainable development, care for the
environment, traffic security and development of transport infrastructure. Individual transport
systems are part of the entire system and must therefore become more harmonised and codependent, Bozic said.
The main goals of transport policy are the increase of traffic security, efficient use of energy,
care for the environment, as well as to extend and improve the quality of public road and
railway transport and harmonise the entire transport system.
Among other goals, the resolution also tackles the establishment of market economy, sale of
the state-owned shares and deregulation in all areas where private bidders could ensure more
competitive and quality services without lowering security standards.
Farmers and Food Producers Fail to Reach Agreement on Wheat Price
Representatives of farmers and the food-processing industry failed to reach agreement on the
purchase price for wheat as they ended talks on Wednesday, 06 July
It is now up to the farmers whether they will sell their produce at SIT 27 (EUR 0.11) per
kilogram as offered by the food producers.
Ivan Uranjek, a representative of food-processing companies, told the press after the talks that
agreement could not be reached because the farmers insisted on a very high price although
companies can purchase wheat for much less in neighbouring countries.
Slovenia consumes some 160,000 tonnes of wheat per year, of which two thirds are typically
imported, according to Uranjek.
19
Representing the farmers, Janko Rihtaric meanwhile explained that the farmers insisted on the
last year's prices plus inflation rate, and could in no way accept the industry's proposal.
Rihtaric said that it will now be up to individual farmers whether they would sell their
produce. He added though that farmers would gain more by feeding wheat to the stock.
Food companies were willing to pay 27 SIT (EUR 0.11) per kilogram for class A wheat and
25 SIT (EUR 0.10) for class B, while they paid last year 31 SIT (EUR 0.13) for class A and
27 SIT (EUR 0.11) for class B.
Energy Firms Cautioned Against Complacency Despite Record Results
The association of energy at the Chamber of Commerce (GZS) has urged energy companies
not to be complacent even though 2004 was an exceptionally successful year for the industry
The association's members generated revenues of SIT 1,054bn (EUR 4.4bn) last year, 7.91%
of all revenues in the economy. They generated an industry-wide profit (net profit minus net
loss) of SIT 39.1bn (EUR 163.2m).
Milan Medved, a manager at Holding Slovenske elektrarne (HSE) and member of the
association's management board, said on Wednesday that the association has been urging
shareholders to invest profits in the industry to ensure reliable and competitive energy supply.
Similarly, Janez Mozina, the chief exec of gas distributor Geoplin, said companies must
invest now that they are doing well. Investments in the industry are long-term, he added.
The energy sector last year employed 12,619 workers, or 2.75 of the country's workforce. The
number of employees has dropped by 6.9% compared to 2003 and over one-third since 1997,
according to data presented by the association on Wednesday, 06 July.
20
COMPANIES
Companies Seek to Postpone Double Pricing until July 2006
The association of retailers and wholesalers at the Chamber of Commerce (GZS) would like
to postpone mandatory double pricing from March 2006 to July 2006, after it learnt that the
central bank might cement the euro-tolar rate in June that year
Meeting with representatives of the Bank of Slovenia, the association got the information that
the exchange rate might be cemented at the end of June 2006, so prices could be fixed, not
merely given as information, on 1 July 2006, the association's chairman Stanislav Brodnjak
told the press on Tuesday, 05 July.
That way, he said, retailers and wholesalers could save some SIT 2.4bn (EUR 10m), or 20%
of the estimated costs of the double pricing, Brodnjak said today.
Peter Puhan, the acting head of the Economics Ministry's internal market directorate, agreed.
He said the government Institute for Macroeconomic Analysis and Development (IMAD)
calculated that delaying the mandatory double pricing could save companies two billion tolars
or more.
In light of the new information, Brodnjak said his association would ask the economics and
finance ministries to accept the reasoning that six months leading to the scheduled euro
changeover on 1 January 2007 is sufficient time for consumers to get used to new prices.
The association's management board today also looked into the proposed changes of the act
on trade, which would close most stores most Sundays of the year. They said they would ask
the Economics Ministry to look into the possibility of changing certain provisions of the act.
Puhan noted that in drawing up the amendments (required after the Constitutional Court
upheld the relevant referendum decision), the ministry has a problem with how to define the
size of stores that will be allowed to stay open on Sundays.
Moreover, it is unclear what to do with tourist resorts, which are not exempt from the opening
hours provisions. Puhan said there have been proposals to exempt tourist places: the ministry
does not want to bend the referendum decision, but something has to be done due to many
unclarities.
Petrol CEO Stays on, Supervisors Happy with Explanations
Countering speculations that the supervisory board of oil company Petrol might dismiss
chairman Janez Lotric, the supervisors on Tuesday, 05 July said they were happy with the
additional explanations that the management provided about its past business decisions and
operations
The supervisory board did not discuss any personnel issues, the chief supervisor, Joze
Zagozen, told STA after the session. He said he sees no reason why Lotric would not remain
the chief executive.
The new supervisory board, which was inaugurated in April, demanded explanations
regarding Petrol's business with its subsidiaries and other firms such as gas distributor
Geoplin and retailer Mercator.
The supervisors said that they wanted to get in-depth information about the company's
performance before the management gets the discharge for 2004 at the July annual general
meeting.
This immediately prompted speculations in the business press that Lotric's days at Petrol are
numbered.
21
Krka Beats Sales Forecasts
Krka, the Novo mesto-based drug maker, beat forecasts for the first six months of the year
with sales at SIT 65.8bn (EUR 274.65m), up 13% over the year before
Sales grew fastest in Central and Eastern Europe, which account for 24% and 26% of the
company's sales, respectively, Krka said in Monday's press release.
Slovenia accounts for 19% of the sales, followed by Southeast Europe (17%) and Western
Europe plus overseas markets (14%).
Prescription drugs contributed 80% of the revenue, followed by over-the-counter drugs with
10%, veterinary products with 4% and cosmetics with 1.6%.
Prescription drug sales increased by 15% year-on-year, with over-the-counter drugs soaring
by 23% and veterinary products up 8%.
The spa subsidiary Krka Zdravilisca saw revenues increase by 3% to SIT 2.8bn (EUR 11.7m).
NBL New Owner of Continental Banka
Nova Ljubljanska banka (NLB) on Wednesday, 06 July officially acquired a 98.43% stake in
Novi Sad-based Continental banka for an undisclosed sum. NLB was selected as the best
bidder in mid-May
The contract was signed in Belgrade today by NLB chairman Marjan Kramar, Serbian
Finance Minister Mladjan Dinkic and the head of the Serbian Agency for Bank Rehabilitation
Milorad Dzambic.
Kramar stressed the importance of the Serbian market for the bank's strategy in Southeastern
Europe. He also said the price NLB paid reflects the expectations about the bank's potential,
according to the bank's press release.
NLB, Slovenia's largest bank, has been a strategic partner and shareholder of Continental
banka since 2001. Continental banka's total assets are estimated at EUR 108.8m. It has 71
branch offices in Serbia and about 154,000 clients.
NLB had said earlier that it would work on both key banking segments, retail and corporate
banking, with services tailored to the local markets.
Trimo Trebnje Steadily Increasing Sales
After increasing sales by 14% last year to SIT 23.1bn (EUR 96.5m), Trimo Trebnje, a maker
of pre-fabricated construction panels, saw revenues rise by 3.3% in the first six months of the
year to SIT 12.2bn (EUR 50.9m)
Business this year is characterised by the fulfillment of forecasts that economic activity will
slow down in Slovenia and Western Europe. Indeed, sales in Slovenia dropped by 28% this
year, Tatjana Fink, the chief executive, told the press on Thursday, 07 July.
However, she stressed, the company managed to make up for lost revenue on the export
markets. Exports increased by 18% so far this year and account for 77% of the revenues, Fink
stressed.
Countries of the former Yugoslavia and the Russian-Baltic area were the fastest growing
markets. Yet Western Europe remains the key market, accounting for 31% of overall sales.
However, competition is squeezing prices, Fink added.
As part of its R&D efforts, Trimo on 1 July opened the CBS Institute, a construction institute
whose main area of research will be innovative construction solutions.
Luka Koper Shareholders Name New Supervisors
Shareholders of port operator Luka Koper on Thursday, 07 July replaced five supervisory
board members. In addition to the government's proposal to replace three state
representatives, they endorsed the proposal of the Restitution Fund (SOD) and insurer
Zavarovalnica Triglav to replace another two.
22
Based on the proposal of the government, which holds a 51% share, Janez Pozar, Igor
Jakomin and Tomaz Moze were dismissed to make way for state secretaries at the transport
and environment ministries, Peter Verlic and Marko Starman, and construction inspector
Bojan Zadel.
Additionally, Borut Jamnik and Miha Kozinc were dismissed at the request of SOD and
Triglav. Marko Valentincic and Metod Mezko were appointed as their replacements.
The state-owned Pension Management Fund (KAD) and the City of Koper, which own 9.9%
and 13% of Luka Koper respectively did not show up for Thursday’s, 07 July shareholder
meeting, at which representatives of 69.5% of all capital were present.
KAD explained in a press release that the failure to attend was a mistake attributable to
human error. It said it would launch an appropriate internal procedure and sanction the
culprits.
Luka Koper general manager Bruno Korelic, who said again on Thursday, 07 July that he
might step down, presented the company's results for the first half of the year.
According to him, Luka Koper boosted sales by 21% to SIT 9.9bn (EUR 41.3m), with pre-tax
profit at SIT 2.6bn (EUR 10.9m), up 18 percent year-on-year.
Tus Group Plans EUR 61m Investments in Macedonia
The Tus Group plans to build around 20 supermarkets on 15 different locations in
Macedonia, and a logistics centre, in the next three years. The investments will total EUR
61m, the manager of the Celje-based grocery retailer Engrotus Aleksander Svetelsek told a
press conference on Wednesday, 06 July
According to Svetelsek, the company under the corporate name Tus Group can prove its
serious intentions with a bank warranty of EUR 5m. Supermarkets that are to be built all over
Macedonia would create 900 jobs, he said.
Svetelsek said the Tus Group intends to open supermarkets in all the big Macedonian centres,
as local market research has revealed the potential for a large modern retail chain there.
"Our goal on the Macedonian market is to build a network of around 40 supermarkets and
achieve at least a 25% market share, which we also wish to have in Slovenia by 2007,"
Svetelsek said, adding expansion to foreign markets is indispensable for the company's future
success.
The first shop in Macedonia is expected to open at the end of 2006, and all its Macedonian
profits would be re-invested in the local market. Engrotus has also established the company
GMT, in which it owns a majority share, in Macedonia.
According to Macedonian Ambassador to Slovenia Iljaz Sabriu, Engrotus is the biggest
foreign wholesaler in Macedonia. The construction of its supermarkets could give fresh
impetus to Macedonian production, and also encourage other Slovenian companies to invest
in Macedonia, Sabriu said.
The ambassador further explained that the Macedonian government had annulled a tender for
the construction of a large trade centre in Skopje due to procedural errors. One of the
tenderers was Slovenia's retailer Mercator.
Cimos Opens New Factory in Srebrenica
Slovenian Transport Minister Janez Bozic on Wednesday, 06 July opened a new Cimos car
parts production facility in Srebrenica, Bosnia-Herzegovina. The investment into a
production unit which extends on a surface area of 1,300 sq. metres is worth EUR 1m
The factory, which will produce engine, gear and car-body parts, will first employ 25
workers, with the number increasing to 200 in a few years.
23
Bozic congratulated the Slovenian company for courage and support, expressing the wish for
the new facility to become a successful member of Cimos which would send products from
Srebrenica to the world market.
Last weekend, the Koper-based Cimos opened an EUR 11m production facility in Kikinda,
Serbia. The Livnica Kikinda Cimos facility employs 100 people, producing hi-tech steel parts
for the automotive industry.
Cimos became the majority owner of Livnica Kikinda last September, when it bought a
67.7% stake in the company, which is one of Serbia's former industrial giants. Comos paid
EUR 100m for the deal.
Clothes Maker Jutranjka Files for Bankruptcy
The management of Jutranjka has filed for bankruptcy, chair of the board Tatjana Baloh told
STA on Thursday, 07 July. The reason is the company's failed attempt to reach an agreement
on capital injection with its major shareholder, Stanfin
Slavica Mirt of the company's trade union said today that only some of the 50 employees
received part of their May wages on Wednesday, 06 July. The rest are expected to receive
them in the next few days.
Bojan Vodopivec, the manager of the Ljubljana-based company Stanfin, rejected on Friday
the last bid of Jutranjka management board for a supply of fresh capital, suggesting the
children's clothes maker should file for bankruptcy.
One of the terms Stanfin had set in order to grant the capital injection was an appropriate audit
of Jutranjka's business operations, which the clothes company's management refused.
Jutranjka's basic share capital stands at SIT 656m (EUR 2.74m). In order to ensure capital
adequacy and liquidity, the company's management had estimated it should have been
increased by SIT 200m (EUR 835,000).
The supply of fresh capital would therefore have been the only chance for Jutranjka to
survive, preserving the core of its production with around 80 employees and keeping its own
brand.
Jutranjka was established in 1962, and employed around 1,500 workers in its most prosperous
period. The main programme of the company was always children's clothes, while it also
manufactured clothes for foreign partners.
A third bankruptcy protection for Jutranjka was introduced on 24 December 2004. Only a day
before, Stanfin voted against it, as they considered its restructuring plan inappropriate. After
the third bankruptcy protection the company kept only 50 workers.
MLM Enters Partnership with Multinational Grohe
Maribor's biggest industrial company Mariborska livarna (MLM) and the German
multinational Grohe signed a strategic partnership deal at the end of June in a move that
should enable MLM's tap maker Armal to double its output in the next three years
The deal should thus enable Armal to become the leading producer of single-lever mixers in
Central and SE Europe, the chair of the MLM management board Branko Zerdoner told the
press in Maribor on Tuesday, 05 July.
Armal, one of the MLM's three production programmes, has been cooperating with Grohe,
one of the major companies in water technology, for the last 25 years.
In order to carry out the strategic partnership agreement, MLM plans fresh investments. This
year, the Maribor based company with 1,100 employees is to invest EUR 1m in new
warehouse and assembly lines, Zerdoner explained.
Zerdoner added that the partnership with Grohe, which is already present in more than 130
countries worldwide, should come in full swing next year.
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The Slovenian company expects its profit to amount to SIT 216.1m (EUR 902,010) in 2005.
Last year when it launched restructuring the company was supplied with SIT 3bn (EUR
12.5m) of fresh capital.
In line with the restructuring, MLM will move part of Armal's production to former Yugoslav
countries, first to Serbia-Montenegro, where it plans to produce a million faucets in 2010.
Meanwhile, only a few more engineers are expected to be employed in Maribor as a result of
the new deal.
Speculations Abound about Resignation of Abanka Chief Exec
The resignation on Friday of Aljosa Tomaz, the chairman of Abanka, has triggered a series of
speculations, although the supervisory board insists that he stepped down due to "diverging
views on the concept of management"
Print media reported on Monday, 04 July that the direct cause of his resignation is the recent
move to offload a 44.4% stake in financial firm Nacionalna financna druzba (NFD), which
had been approved by old supervisory board in January.
However, the transaction was carried out on 29 June, just one day before the new supervisory
board was inaugurated.
Media have speculated that the sale ensured that the state would not be able to affect the
business operations of NFD through Abanka, Slovenia's third largest bank by assets.
Business daily Finance writes today that Abanka got SIT 5.8bn (EUR 24.2m) for the 44.4% of
NFD. The book value of the stake is said to be worth SIT 1.85bn (EUR 7.7m).
The daily Dnevnik, meanwhile, writes today that the bank sold the stake in order to ensure
capital adequacy. The deal raised its capital adequacy ratio from 9.8% to 10.3%, the daily
claims.
The bank said in a press release today that the reason for the change in management is
"diverging views on the concept of bank management in the future" between the supervisory
and the management boards.
While Tomaz resigned, the other two board members, Bogomir Kos and Vito Verstovsek,
have been dismissed effective on 1 October.
The supervisors have asked them to immediately issue a vacancy notice for the chief
executive, which will later nominate the new management board.
Tomaz was at the helm of Abanka since 1997 and his second term would run out in 2007. He
had previously been in charge of the London subsidiary of NLB, the country's largest bank.
Abanka is privately owned, but its biggest shareholder, with 22.9%, is the state-owned
insurance company Zavarovalnica Triglav, while its investment arm Triglav Steber 1 holds
another 7.3%.
Gorenje to Hand Out Dividends
Gorenje, the maker of household appliances, will pay dividends of SIT 100 (EUR 0.42) gross
per share, decided shareholders at Monday's, 04 July AGM. SIT 1.22bn (EUR 5.1m) will thus
be handed back to shareholders
The remaining distributable profit will be used for other reserves (SIT 1.5bn/EUR 6.3m) or
remain undistributed (SIT 1.25bn/EUR 5.2m), the company said in a press release today.
Moreover, the shareholders named Joze Zagozen as a new supervisory board member, to
replace Tomaz Kuntaric, who stepped down in April.
Zagozen, who is appointed for one year, is the chief supervisor of the oil company Petrol and
the general manager of Holding slovenske elektrarne, the biggest electricity producer in the
country.
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The Gorenje management also got the green light to buy own shares in the next 18 months. It
will be allowed to buy up to 10% of the share issue at a price that may not exceed the average
daily price on the Ljubljana Stock Exchange.
Gorenje closed level today at SIT 5,400 (EUR 22.54). It has shed almost 17% so far this year,
as compared to just under 10% that the SBI 20 benchmark index has lost since 1 January.
Droga Kolinska to Lay Off 140 Workers
Droga Kolinska, Slovenia's largest food company which was created with the merger of
Droga and Kolinska in May, will lay off about 140 workers as a result of streamlining and
restructuring
The first wave of redundancies will be taken care of with early retirement, to be followed by
workers willing to leave for a severance pay. Only then will there be actually layoffs, the
company's trade union representative Ljubo Berdajs told STA on Monday, 04 July.
Rumours about layoffs have been around for a while, especially since some of the company's
1,900 employees started complaining that they have to commute to work from Ljubljana to
Izola and vice versa, a journey which typically takes well over an hour each way.
They were forced into commuting when the management decided to join together the two
companies' departments and have some in Izola, the former seat of Droga, and others in
Ljubljana, the seat of Kolinska and now the official seat of the merged company.
While departments such as marketing, sales, sales support and PR are in Ljubljana,
accounting, finance, IT, R&D and other departments are based in Izola.
There are currently 28 commuters from Ljubljana to Izola or vice versa, the company
explained.
Droga Kolinska is the largest food company in the country, with revenues of nearly SIT 50bn
(EUR 200m). The biggest single owner is energy and tourism group Istrabenz.
New Director of Jozef Stefan Institute Presents His Plans
The new director of the Jozef Stefan Institute, Jadran Lenarcic, expressed his wish for the
institute to become an important part of Slovenia's development push when he delivered his
inaugural address on Wednesday, 06 July
Lenarcic, who succeeded Vito Turk on 3 July, believes the institute is crucial for the future of
Slovenia. As the new director, he feels responsible towards young generations as well as
business, which wants to use the institute's research potential for its development.
According to him, the country has not invested enough in research in the last 15 years. He is
aware of the responsibility of the researchers. However, he feels not everything is up to them
but a lot depends on the economy and the state.
With its postgraduate programme, the institute "produces" young experts, and helps them
integrate in research and development programmes, which Lenarcic sees as a special value of
the institute's mission.
Lenarcic also used this opportunity to meet Minister of Higher Education, Science and
Technology Jure Zupan, who said that the institute is renowned for the quality of its work at
home as well as abroad.
He also stressed that the one of the government's main priorities is top-level science, as
defined in the draft 2006 - 2010 national research and development programme.
The Jozef Stefan Institute, named after the distinguished 19th century physicist Jozef Stefan,
is the leading Slovenian research centre. It is involved in a wide variety of basic and applied
research in the fields of natural sciences and technology.
The 700-strong staff of the institute, founded in 1949, specialises in research in physics,
chemistry and biochemistry, electronics and information science, nuclear technology, energy
utilisation and environmental science.
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Convicted Hit CeO Checks in Psychiatric Hospital
The former chief executive of gaming company Hit who has been sentenced to almost four
years in prison for abuse of office and should have started his prison term last week, has
checked himself in a psychiatric hospital, the hospital authorities have confirmed for STA
Convicted of embezzlement by the Nova Gorica District Court in June 2000, Danilo Kovacic
should have started his prison term of three years and eight months last April.
He though asked for a postponement, arguing he had to take care of his disabled wife. Given a
permission to stay at home for a few more months, he was supposed to report to the prison
authorities on 1 July.
While the media was speculating about his whereabouts for a few days, the authorities of the
mental health hospital in Idrija have now confirmed that he is staying in the hospital while
undergoing examination.
Alongside Kovacic, Danilo Kodric, a former junior official at Hit, was sentenced to three
years and two months in 2000 for helping the chief executive. Kodric is already serving his
prison sentence.
The court ruled that Kovacic had tasked the main cashier to include Hit into funding the
gaming industry. A fake contract between Hit and a Panama company was signed in order to
pay commission fees to Kodric, who was not entitled to them.
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SLOVENIA IN BRIEF
Conference on Violence against Children Begins Today
Ways of preventing and fighting various forms of violence against children will be debated
from Tuesday, 05 July to Saturday, 08 July as Ljubljana hosts a high-profile UN-sponsored
conference on this burning issue. A three-day regional UN consultation for Europe and
Central Asia is starting on Tuesday. "Stop Violence Against Children: Act Now" is organised
by UNICEF, the UN Office of the High Commissioner for Human Rights, the Council of
Europe and the Slovenian government.
Drnovsek Condemns London Attacks, Urges Fight against Terrorism
President Janez Drnovsek has sent a cable of condolences to Queen Elizabeth II and the
people of Great Britain, expressing condolences and compassion with all innocent victims of
Thursday's, 07 July attacks in London and their families.
Prime Minister Condemns London Terrorist Attack
Prime Minister Janez Jansa condemned the "despicable" terrorist attack in London on
Thursday, 07 July. International terrorism is condemnable in general, all the more so when it
targets innocent passengers in city transport, Jansa underscored in a press release.
Such actions cannot be justified in any way, according to the prime minister. He also
confirmed there were no Slovenians among the victims of the attacks.
Valentin Hajdinjak Appointed New Govt Spokesperson
The government has appointed Valentin Hajdinjak its new spokesperson, to succeed Jernej
Pavlin, who resigned due to a media scandal last month.
Hajdinjak, 31, began his PR career in 1994, when he became spokesperson for the then
Christian Democrats. He was also a spokesperson in the government of Andrej Bajuk during
its six-month stint in 2000. Between 2002 and 2004, Hajdinjak worked as PR officer for the
then Agriculture Minister Franci But, and was appointed head of the labour minister's office
last year. He has a degree in economics.
Government Confirms Defence Plan until 2010
The government has adopted the medium-term defence plan until 2010, which envisages a
gradual increase in defence spending and is set to serve as a basis for developmental, financial
and other defence plans for the next two years.
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