Slovenia Business Week no. 19, May 9th 2005 Table of Contents:
Slovenia Business Week no. 19, May 9th 2005
Table of Contents:
Government Adopts Agreement on Visa Issuing Cooperation with Austria ......................... 5
Survey Shows Workers in New EU Members Work Longer Hours ...................................... 8
HEADLINES
Merged Food Company Launches Operations
The company was entered in the register of companies following the merger a month ago
Droga Kolinska, the product of a merger between food companies Droga and Kolinska, officially began operations as a merged company on Tuesday, 3 May.
The company was entered in the register of companies following the merger a month ago.
Droga and Kolinska have also ceased to exist as separate entities, Droga Kolinska said in a press release.
The registration of the new company also marks the beginning of the share swap - the ratio had been set at 1 Droga share per 14.25 Kolinska shares.
The issue of new shares is expected to be wrapped up by 16 May, which will be followed by the listing of the new shares on the Ljubljana Stock Exchange.
The united company, which will be based in Ljubljana, will have about 1,900 employees and revenues of nearly SIT 50bn (EUR 200m).
The biggest single owner of the merged company is energy and tourism group Istrabenz, which officially owns 45%. However, unofficially its stake is reported to be as high as 55%.
CCIS: Business Officials Want to Take Part in Creation of Strategy
According to CCIS vice-president Mateja Mesl, the chamber has already sent the government a set of measures for making Slovenia's economy more competitive
Slovenian business officials would like to take part in the creation of Slovenia's new development strategy and the drafting of a Lisbon Strategy action plan, an official of the
Chamber of Commerce and Industry (CCIS) told the press on Wednesday, 4 May.
According to CCIS vice-president Mateja Mesl, the chamber has already sent the government a set of measures for making Slovenia's economy more competitive.
"We intend to tell the government how, where and why we must make changes that are needed the most - I'm talking about the tax system, labour legislation and education system,"
Mesl said.
The set of proposals for the government was put together during the recent Business Week.
According to Mesl, the Lisbon Strategy is not something that could be implementing with one measure or by one minister.
Achieving economic growth and employment growth requires a set of measures and structural reforms in at least five fields: business framework, investment in R&D, labour market flexibility, bolstering the internal market and ensuring sustainable development, Mesl said.
"The Lisbon Strategy is not merely a political campaign and cannot succeed merely with political efforts," she stressed. This was echoed by another CCIS vice-president, Cveto
Stantic, who stressed the reformed development agenda must not be turned into a political stunt.
The Lisbon Strategy contains very general goals, such as higher economic growth and better jobs, Stantic claimed. "Brussels will not tell us what to do. It is up to us to ensure that we make the most of it," he said.
Stantic stressed that the state must provide better support for Slovenian companies wanting to go global, especially for those looking to do business in Brazil, Russia, India and China.
At its last session, the CCIS administrative board took a decision to spend an extra SIT 130m
(EUR 580,000) on bolstering investment in research and development, helping companies go global and promoting public-private partnership, Mesl said.
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According to Mesl, the chamber has also undertaken analysis into how the government should be spending in order to promote the economy.
IMAD Spring Report Sets 2005 Inflation at 2.5%
According to the latest "Economic Mirror" report, Slovenia's inflation rate in the coming years will be slightly higher than the EU average as the country will have to catch up its EU counterparts in economic terms
The government Institute for Macroeconomic Analysis and Development (IMAD) forecasts in its spring report that Slovenia would report an inflation rate of 2.5% this year and that of 2.3% next year. According to the latest "Economic Mirror" report, Slovenia's inflation rate in the coming years will be slightly higher than the EU average as the country will have to catch up its EU counterparts in economic terms.
Given that Slovenia's productivity growth is expected to be higher than in its major EU business partners and given some remaining structural imbalances in the Slovenian economy, the country's inflation is predicted to be 1 to 1.5 percentage points higher than the average inflation in its main business partners.
Inflation could be curbed further, according to the report, by concluding structural reforms, especially in the sectors where prices are still regulated by the state, in the financial market and in the labour market.
Since the inflation rate has more than halved in the last two years, the IMAD expects the rate to continue falling so that Slovenia could meet the Maastricht criteria for the euro adoption by mid 2006.
The IMAD report also predicts a 3.8% economic growth this year and a 4.1% growth next year. Compared to the autumn report, the forecasts of the GDP growth structure in 2005 have been changed: import figures were upgraded, while domestic demand forecasts were lowered.
According to the report, the exports to EU countries would continue to grow in 2005 and
2006, while there will be not much increase in the exports to Croatia, Serbia-Montenegro and
Russia, for which export figures were particularly high last year.
The rate of private investment and government spending is to stay at the same level in 2005 and 2006 as it was in the previous two years. The private spending is expected to report a growth above 3% in the coming two years.
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INTERNATIONAL COOPERATION
President Decorates US Senator for Supporting Slovenia
Presenting him with a Golden Order at a ceremony at Brdo Mansion on 3 May, Drnovsek described Voinovich as a "long-term friend of Slovenia...whom all Slovenian statesmen ever travelling to the US have met and with whom we have always had very cordial and open discussions"
President Janez Drnovsek has decorated George Voinovich, a US senator of Slovenian-
Serbian descent, for his merits in Slovenia's international affirmation and in the promotion of friendship between Slovenia and the United States.
Presenting him with a Golden Order at a ceremony at Brdo Mansion on Tuesday, 3 May,
Drnovsek described Voinovich as a "long-term friend of Slovenia...whom all Slovenian statesmen ever travelling to the US have met and with whom we have always had very cordial and open discussions".
According to a press release from his office, Drnovsek highlighted how Slovenia had benefited from Voinovich's advice on how the young country should act on the international scene, in particular in relation towards the US and NATO.
The president thanked the senator for the support in Slovenia's accession to NATO, as well as for his contributions to the promotion of its relations with the US, and with the Slovenian community in Ohio, the state Voinovich comes from.
Voinovich, who paid a two-day visit to Slovenia, has lobbied for Slovenia as a member of the
Senate and as the mayor of Cleveland, Ohio, which is considered to be the capital of
Slovenian expat community in the US.
He was one of the key promoters of NATO's expansion and Slovenia's membership of the alliance. The president's office in particular highlighted his role in the formation of the
Slovenian-run International Trust Fund for Demining and Mine Victims Assistance (ITF).
Voinovich, a moderate Republican who was born in Cleveland in 1936, also met Foreign
Minister Dimitrij Rupel and Defence Minister Karl Erjavec, both of whom thanked the senator for his support in Slovenia's bid to join NATO.
Developments in SE Europe, in particular Kosovo, topped the agenda of both meetings, while
FM Rupel also briefed the senator on Slovenia's activity at the helm of the OSCE and on the situation in Kyrgyzstan.
The meeting with Defence Minister Erjavec focused on NATO peacekeeping operations in
Kosovo, Afghanistan and the training of Iraqi security forces, with Voinovich thanking
Slovenia for its contribution.
US Senator George Voinovich on Wednesday, 4 May visited the headquarters of the
Slovenian-run International Trust Fund for Demining and Mine Victims Assistance (ITF), an institution he has been actively supporting since its founding in 1998.
According to a press release from the ITF, Voinovich's support of the fund in the US Congress has contributed to the US government financially supporting the ITF each year following the system of matching contributions.
The US administration has so far contributed more than US$ 72m for the fund, and an additional US$ 9.92m for 2005. Voinovich is also the proponent of a proposal to earmark a further US$ 10m for the fund in the 2006 budget, the ITF said in the press release.
The fund raised more than US$ 162m by April 2005. The funds have been allocated for demining projects and rehabilitation of mine victims in SE Europe. About half of the funds has been earmarked for Bosnia-Herzegovina as the most mine-infested country in the region.
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The US senator talked to ITF director Dorijan Marsic, who presented the past achievements and plans until 2010. He also thanked Voinovich for supporting the fund.
Voinovich also met Speaker of Parliament France Cukjati, who thanked him for his support in
Slovenia's accession to NATO. The pair also debated parliamentary cooperation with Serbia-
Montenegro and Macedonia, and the potential to increase US investment in Slovenia, according to a press release from parliament.
The speaker briefed the senator on his recent visits to Serbia, Montenegro and Macedonia, noting that the countries showed interest in joining NATO. According to him, their membership of the alliance would be the most important factor of peace in SE Europe.
Cukjati also presented the 4th regional meeting of speakers from Poland, Slovakia, the Czech
Republic, Austria, Hungary, Slovenia and countries of Western Balkans, to be held at Bled in
June.
Slovenian Minister Simoniti Opens Prague Book Fair
Culture Minister Vasko Simoniti highlighted the close cultural ties binding Slovenia and the
Czech Republic throughout history
Culture Minister Vasko Simoniti highlighted the close cultural ties binding Slovenia and the
Czech Republic throughout history as he opened the 11th international book fair in Prague on
Thursday, 5 May. Slovenia was in the spotlight of the event this year.
The exhibition of Slovenian books in Prague is not something coincidental, Simoniti said, but the result of the two nations' common interest in each other's cultures.
The Slovenian exhibition ground was opened by Slovenia's Ambassador Drago Mirosic in the presence of a number of guests and reporters. Later on, Minister Simoniti was due to meet
Czech Deputy Culture Minister Petra Videnova.
In his opening address, Simoniti noted that through centuries, Slovenian students and authors sought education and inspiration in the Czech cultural milieu.
Even today, many Czech authors and artists are still regarded as models in various forms of art, this being manifested in the numerous translations, exhibitions, concerts and other events,
Simoniti said as quoted by the Ministry of Culture.
The minister said that Czech authors and artists offered much more to Slovenians than
Slovenians did to Czech audiences, but that those too were interested in Slovenian culture.
Speaking about frequent guest appearances by authors in particular, Simoniti noted that a number of outstanding Czech dissident writers took part in the international literary festival in
Vilenica, in the Slovenian region of Kras, in the late 1980s.
The international book fair in Prague ran until 8 May, with 20 Slovenian authors taking part in readings and debates, among them Evald Flisar, Drago Jancar, Milan Jesih, Svetlana
Makarovic, Mojca Kumerdej and Maja Vidmar.
Government Adopts Agreement on Visa Issuing Cooperation with Austria
The government adopted on 5 May a bill ratifying an agreement between Slovenia and
Austria on mutual representation at embassies in third countries in issuing transit and shortterm visas
The government adopted Thursday, 5 May a bill ratifying an agreement between Slovenia and
Austria on mutual representation at embassies in third countries in issuing transit and shortterm visas. According to the government PR and Media Office, the government adopted the agreement since the existing network of Slovenian embassies and consulates is modest in terms of number as well as geographical coverage.
Also adopted at the cabinet weekly session was a decree ratifying an agreement on cooperation between the Slovenian Ministry of Labour, Family and Social Affairs and the
Moldovan Ministry of Labour and Social Protection.
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Signed by the two ministries in April 2003, the agreement envisages an exchange of knowhow and experts in social affairs.
The government moreover named the new president of the national commission for
UNESCO. Milan Orozen-Adamic was appointed for a period of four years to succeed Darko
Strajn, whose term has ended. Orozen-Adamic is employed with the Geographic Institute of the Slovenian Academy for Sciences and Arts (SAZU) and lectures at the Koper-based
Faculty of Humanities.
North Adriatic Countries on Joint Management of Ballast Water
The commission also adopted a common plan on pollution management that is scheduled to be signed by environment ministers of the three countries at the Mediterranean Action
Programme meeting, due in Portoroz in November
The Adriatic Sea needs a common programme of ballast water management, established a
Slovenian-Croatian-Italian commission as it concluded its two-day session in Portoroz on
Thursday, 5 May. Tasked to draft the joint programme was a sub-commission set up in 2004 to keep records of ballast water, representatives of the Slovenia-Croatia-Italy commission for the protection of the Adriatic told the press yesterday.
The commission also adopted a common plan on pollution management that is scheduled to be signed by environment ministers of the three countries at the Mediterranean Action
Programme meeting, due in Portoroz in November.
The three countries moreover took a decision on establishing a common eco region, which would fall in line with the recommendations of the European Commission for a coordinated regional action.
The Slovenian Environment Ministry meanwhile briefed the commission about its coastal zone management project dubbed "Camp Slovenia", which comprises eight municipalities from the Slovenian coastal region.
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EUROPEAN UNION
EU17 for Sufficient Regional Aid in Next Financial Perspective
Representatives of 17 members of the EU, among them Slovenia, have come to a conclusion that an agreement on the Union's financial arrangements for the 2007-2013 period must be reached in June, i.e. still under the Luxembourg presidency
Representatives of 17 members of the EU, among them Slovenia, have come to a conclusion that an agreement on the Union's financial arrangements for the 2007-2013 period must be reached in June, i.e. still under the Luxembourg presidency.
Slovenia's representative attending an informal meeting on the issue in Lisbon on Wednesday,
4 May, also said that the participants agreed that the level of cohesion funds as put forward by the European Commission was adequate.
"If Europe wants to be efficient, it needs adequate financial resources and, above all, a consistent cohesion policy," deputy director of the Government Office for European Affairs
Rado Genorio summed up the findings of the meeting.
Speaking to the STA after the meeting, Genorio reiterated the well-known saying that "we cannot have more Europe for less money".
The informal meeting was also attended by European Commissioner for Regional Policy
Danuta Huebner, who said that "June is a very important date".
European cohesion policy needs a critical mass of funds in order to be able to respond to the challenges of the enlarged EU, representatives of the 17 countries wrote in the joint statement issued at the conclusion of their meeting.
According to Genorio, the participants thought 0.41% of the EU's GNP was a sufficient framework for cohesion policy in negotiations on the next financial perspective. If there is not enough money for cohesion policy, it will be clearly harder to achieve Lisbon goals, Genorio said.
He and his counterparts agreed that the EU's financial arrangements should secure adequate financial resources to satisfy the needs of new entrants, while also stressing the need to safeguard convergence processes in the EU as a whole and in its individual members.
Considering correction mechanisms, the 17 countries thought the next financial perspective should provide a framework for simple and transparent funding without rebates. They referred to the notorious British rebate in particular, Genorio said.
The informal meetings, such as the latest in Lisbon, are attended by representatives of ten newcomers plus Spain, Portugal and Greece, as well as four active observers: Italy, Belgium,
Ireland and Finland. The next meeting is planned to be held in Malta before the EU's June summit.
Slovenia Gets EUR 2.5m for Transport Network
The EU has given Slovenia EUR 2.49m for two projects in the framework of the Trans-
European Transport Network (TEN)
The EU has given Slovenia EUR 2.49m for two projects in the framework of the Trans-
European Transport Network (TEN). A total of nine projects were awarded EUR 14.8m.
Slovenia received EUR 747,000 for studies on the introduction and testing of satellite-based electronic tolling, a project estimated at EUR 1.49m.
EUR 5m of the EU's handouts has been granted for similar studies in other countries.
Additionally, Slovenia got EUR 1.74m for improvements to the information system on the
European corridors.
The system is estimated to cost the country a total of EUR 17.4m.
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Both projects are already being carried out and have to be completed by 31 December, the
European Commission has said.
Survey Shows Workers in New EU Members Work Longer Hours
Workers in the new EU member states work on average three working weeks more per year than their counterparts in the old member states, according to a survey carried out by the
European Industrial Relations Observatory (EIRO)
Workers in the new EU member states work on average three working weeks more per year than their counterparts in the old member states, according to a survey carried out by the
European Industrial Relations Observatory (EIRO). Workers in Sweden, for example, had 44 days off from work last year - more than double the collectively agreed annual leave and public holidays for workers in Estonia, Lithuania, Poland and Slovenia, the EIRO survey showed.
While collectively agreed working time in EU members is 38.6 hours a week on average, workers had an average paid annual leave of 26 days last year. In the 15 old members and
Norway, the agreed weekly working time is 37.9 hours on average, while it is 39.5 hours in the newcomers. Slovenian workers have to work 40 hours a week.
In most EU members daily working time must not exceed eight or nine hours, while in
Slovenia, France, Austria and Luxembourg the upper level is ten hours, and in Cyprus,
Denmark, Ireland, Italy and the UK 13 hours.
The actual working time (including paid or unpaid overtime) is longest in Latvia (43.3 hours a week), followed by Britain (43.1 hours), while Slovenia placed sixth with 41.4 hours a week.
Roth: EIB to Give More Loans to New EU Members
Interview with Wolfgang Roth, EIB vice-president
The European Investment Bank (EIB) anticipates the level of its lending in the new EU member states to increase. The reason is that development needs in these countries are much higher than in the EU15, which has benefited from almost 90% of all EIB lending in the
EU25, Wolfgang Roth, EIB vice-president, explained in an interview with STA. "For example in 2004 the EIB invested EUR 39.7bn in the EU25, however, in the new member states EIB lending amounted to EUR 3.8bn," Roth wrote in his answers to STA questions on the first anniversary of the EU's enlargement.
"If we consider that in the new member states the need to develop communication infrastructure, improve the environment and modernise economies is much higher than in the
EU15, we anticipate an increasing trend of EIB lending in these countries."
Talks on new projects are under way with Slovenia, confirmed Roth, one of the eight EIB vice-presidents, who is also responsible for Slovenia. The bank is currently considering backing the construction of a new motorway connection between Maribor and the Hungarian border.
The new motorway sections are estimated to be 67 km long and are divided in a western section Maribor - Vucja Vas (36.2 km) and an eastern section Beltinci - Pince (30.8 km). "The bank currently considers co-financing the western section. In this case the EIB financing is proposed to reach up to EUR 250m," Roth said.
The bank has approved an environmental sector loan of EUR 40m to co-finance projects in water supply, wastewater collection, wastewater treatment and solid waste management in smaller municipalities.
It also appraises a project of the construction of two run-the-river hydro power plants of 42.5
MW and 39.5 MW on the river Sava in the east of Slovenia, and a 178 MW pump storage power plant at the Soca river in the west. "EIB financing is proposed to reach up to EUR
130m out of the total costs of EUR 260m," according to Roth.
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Total EIB lending in Slovenia since 1991 amounts to EUR 1,514m. To date, EUR 1,245m has been disbursed and EUR 500m has already been repaid, Roth said. The bulk of lending has focused on the transport infrastructure sector (58%), while only some 2% has gone to the environment and water sectors.
The most important partner is the government. Out of the total of EUR 1.514bn as on 31
January 2005, the government and its ministries hired EUR 904m; of this amount, guarantees have been provided for EUR 794m, according to Roth.
Roth specified that the EIB provided loans for the construction of the new motorways between Blagovica and Vransko (EUR 175m) and between Kozina and Srmin (EUR 160m) and rehabilitation of the main east-west railway lines (EUR 60m).
According to EIB official, 40% of EIB loans targeted projects in the private sector: 25% in telecommunications, with the most important projects focusing on the upgrading and extension of telecoms networks.
Approximately 15% of EIB loans are being implemented by EIB partner banks via the EIB global loans that are used mostly for financing smaller projects in the small and medium-sized sector with total costs from EUR 40,000 up to EUR 25m.
Roth underscored that EIB lending as well as spending of EIB funds in Slovenia had been fully in accordance with EIB priorities.
The bank's main objective in the case of Slovenia and other newcomers is to back their deeper integration into the EU, while transport projects, especially development of transport corridors, as well as projects related to the Lisbon Strategy represent its main priorities.
"However, EIB financing is project linked and it depends on the quality of the individual projects submitted for financing," Roth underscored in his written answers to STA questions.
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LEGISLATION
Government Moves to Streamline Public Procurement
The government has amended the regulation on procedures for awarding joint public contracts for the purposes of administrative authorities, and drafted a list of goods that will be purchased jointly in a bid to curb public procurement spending
The government has amended the regulation on procedures for awarding joint public contracts for the purposes of administrative authorities, and drafted a list of goods that will be purchased jointly in a bid to curb public procurement spending. This will streamline procedures since contracts for the whole public administration will be managed from one place, while it also gives the state greater leverage in negotiating discounts, according to
Gregor Virant, the minister of public administration.
The goods that will be purchased jointly for all public administration bodies include vehicles, petrol, electricity, Ljubljana-Brussels air tickets, real estate insurance, fax machines, photocopiers, paper shredders, mobile phones and services, and lease of business jets.
The contracts will be made for 2005 and 2006, except for mobile telephony where contracts will cover the 2006-2008 period.
Virant promised that all bidders will have equal conditions and access to the contracts. The main criteria for selection will be price.
According to him, experience from abroad indicates that joint public contracts produce savings of about 15 percent.
While the previous government only used the 2003 regulation once, Virant noted that the current administration has already signed a joint contract for state authorities' web pages where savings are estimated at SIT 100m (EUR 0.4m).
Moreover, a contract for Ljubljana-Brussels flights was recently signed with flag carrier Adria
Airways, which is expected to produce savings of SIT 55m (EUR 0.2m) over six months.
According to Virant, the amended regulation now provides for the appropriate framework for an international tender for the flights.
Government Gets Tougher on Prices of Public Utility Services
The new regulation replaced the existing regulation which expires on 11 May
The government has tightened the conditions for increases in prices of utility services with a regulation on preliminary notice of prices. According to the regulation, passed on Thursday, 5
May, price increases will be allowed only with approval of the Economics Ministry, which will only allow the increase of the proportion of the respective price which is intended for investment.
Moreover, the increase will be permitted only if the relevant investment is set out in environment protection implementation programmes and local development programmes until
2008.
Additionally, the increase will not be allowed to exceed the cumulative accrual of producer prices from January 2004 until the month of request for increase.
In case the price hike would exceed 2.5% together with VAT and other duties, the applicant would also need permission from the Finance Ministry.
The Economics Ministry has taken this step after it established that the objectives of the administered prices policy were not achieved in 2004.
Prices of public utility services increased by 11.7% last year while overall consumer price growth was 3.2%.
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Since the chief objective of Slovenia's macroeconomic policy is meeting criteria for euro adoption in 2007, additional measures must be taken to curb inflation, the Economics
Ministry explained its decision.
The new regulation replaced the existing regulation which expires on 11 May.
Employers and Unions Oppose Pension Reform
Social partners debated changes to pension insurance legislation on 6 May at a session of the
Economic and Social Council (ESS), but failed to conclude the debate
Representatives of employers and trade unions voiced opposition to certain solutions put forward by the government in the amended pension and disability insurance bill, in particular those referring to pension adjustment and the Pension and Disability Insurance Institute
(ZPIZ). Social partners debated changes to pension insurance legislation on Friday, 6 May at a session of the Economic and Social Council (ESS), but failed to conclude the debate. They agreed to resume dialogue to reach consensus on as many issues as possible.
They also agreed to debate the anticipated short- and long-term consequences of the pension reform at their next session, on 27 May.
According to Minister of Labour, Family and Social Affairs Janez Drobnic, the security of the retired persons would not be certain in the present manner of synchronisation of pensions with wage growth would be retained.
Instead of the incumbent ZPIZ management board and assembly, the changes envisage the formation of a 27-member ZPIZ board, in which the government would have 10 representatives and not a majority as initially proposed.
Head of the Association of Free Trade Unions Dusan Semolic said the government must not change retirement conditions and ZPIZ management without the consent of the social partners, as this would run contrary to the agreement trade unions and employers signed with the government in 1999.
Joze Smole of the Chamber of Commerce (CCIS) said the CCIS was against the proposed amendments, not because it opposes pension growth, but rather additional burdens on the economy that this would entail.
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STATISTICS/FORECASTS
Industrial Output Drops by 2.6% in First Quarter
Year-on-year, the production was only up in capital goods, rising by 0.4%
Slovenia's industrial output rose by 15.8% in March over February, while it dropped by 3.8% over March last year. In the first quarter of the year, the output was down 2.6% compared to the same period last year, the Statistics Office said on Friday, 6 May. The figures comparing
March 2005 to March 2004 suggest that the output in the manufacturing was down 3.3%, while electricity, gas and water production dropped by 2.8% and the output in mining and quarrying decreased by 3.4%.
Year-on-year, the production was only up in capital goods, rising by 0.4%.
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FINANCE
Central Bank Governor Expects Euro at Outset of 2007
Interview with Bank of Slovenia’s governor Mitja Gaspari
Slovenia's position in the exchange rate mechanism ERM II is stable, and so it is highly probable that despite unpredictable oil prices we will introduce the euro at the outset of 2007, the central bank governor believes.
"The situation could be worse if any additional risks emerge at home, but since euro changeover is a joint project strongly supported by the public, I don't think there is a reason for concern," Mitja Gaspari of Bank of Slovenia said in an interview for STA.
There has been very little fluctuation in the exchange rate after it was set at SIT 239.64 per euro upon the country's entry into the ERM II in late June 2004. "I couldn't say that at the time we expected only such minor fluctuations," said Gaspari.
With no great surprises, the central rate could remain the same when the euro-tolar rate is fixed, the governor told STA upon the first anniversary of Slovenia's EU entry. He expects a decision on rate fixing to be made in summer if the euro is to be adopted on 1 January 2007.
While the target date is very clear at the moment, any potential delays could be dangerous, according to the governor, who believes a failure to introduce the euro "would not be exactly good". "The next chance is not on the horizon," he stressed.
The greatest elements of risk are those which affect inflation, for instance wages, stressed the governor, but said he was encouraged by a recent accord between the government and public sector trade unions. Moreover, wage deindexation is one of the key steps that will have to be taken.
The situation in the European economy is not the brightest, and there is not much Europe can do to improve it in the short run, according to Gaspari, who has recently attended the spring meeting of the IMF and WB in Washington.
He believes that in this global race Europe will have to place much more importance on migration policies and scrutinise its social policies. "By closing borders, Europe is going away from Lisbon goals," the governor stressed.
Productivity cannot be boosted by financial investment alone, but by creating an environment in which people will want to research, work a lot, and take risks - "this is the fertile ground for what the Lisbon Strategy is all about", said the governor.
One could hardly say that the Slovenian banking sector is unstable, according to Gaspari. But while its competitive ability is increasing, there are also new problems stemming from ever stronger competition.
Asked if Slovenian banks are not expansive enough, Gaspari said it would be wrong to assume that good results can only be achieved in former Yugoslav markets. Here he mentioned other markets in SE Europe, such as Bulgaria, as well as Russia as rewarding.
He believes that Slovenia's No. 1 bank Nova Ljubljanska banka (NLB), around a third of which is owned by Belgium's KBC, "could play an interesting positive role as a link between the West and South".
"NLB is big enough for such activity, it probably has enough know-how, and I believe this is one of those potential niches Slovenia has in this area and should use it appropriately," Bank of Slovenia governor Mitja Gaspari said in the interview with STA.
Matjaz Kovacic Named NKBM Chairman
Talking about his plans for the bank, Kovacic said the important thing is whether "we will be able to carry out the ambitious plan that we will set together with the supervisory board"
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Matjaz Kovacic has been appointed the chairman of Nova Kreditna banka Maribor (NKBM), the country's No. 2 bank. The erstwhile board member succeeds Crtomir Mesaric, who stepped down the previous week. Kovacic, 37, had been asked by the supervisory board to submit a proposal for a new management after Mesaric left the bank. He nominated himself.
"Members of the supervisory board assessed him (Kovacic) as ambitious enough," the chief supervisor Bogomir Spiletic said as he justified the supervisors' selection on Thursday, 5
May.
Talking about his plans for the bank, Kovacic said the important thing is whether "we will be able to carry out the ambitious plan that we will set together with the supervisory board".
"The bank and the whole financial group have potential for development and I hope that we will agree, as we have so far, that knowhow is the top priority, and agree on what is good for us in the future," he said.
"Only this way can our financial group continue to be one of the pillars of banking and financial development in Slovenia," Kovacic added.
He said his first move would be to outline a development concept. More concretely, Kovacic said the group would reinforce all three core businesses.
The group wants to add other insurance companies to the insurance business managed by
Zavarovalnica Maribor; expand asset management; and boost organic growth of the banking business.
Kovacic was reluctant to reveal what his human resources policy would be, and noted that he knows of no company which has precisely the number of employees it needs.
"We will certainly deal with this field, but how and what effect this would have is another question. I want the management to be able to ensure such development that we will need more rather than fewer employees," he explained.
The supervisors also named Manja Skernisak, the head of the bank's investment department, as a new board member.
Kovacic has been at NKBM since 1995, when he was named director of risk management.
Between 1992 and 1995, he held various managerial posts at household appliance maker
Gorenje.
April Sees Lack of Action on LJSE
Brokers closed only SIT 9.6bn (EUR 40m) in deals discounting block trades, down 53.4% over April 2004 and 42.2% under last year's monthly average
The SBI 20 benchmark index on the Ljubljana Stock Exchange fell 2.5% in April as blue chips were hit by a two-week selling spree only to recover late in the month in lacklustre trading. April was one of the slowest months on record in terms of volumes on the Ljubljana
Stock Exchange. Brokers closed only SIT 9.6bn (EUR 40m) in deals discounting block trades, down 53.4% over April 2004 and 42.2% under last year's monthly average.
Blue chips were not the only stocks to lose ground, as the PIX investment fund index finished the month 0.5% lower.
Bonds made up for a large share of the volumes. In the end, the BIO bond index gained 0.1%.
The most popular shares in April were those of the big four companies: Novo mesto-based pharmaceuticals company Krka, retailer Mercator, fuel retailer Petrol and home appliance maker Gorenje.
The total market capitalisation of securities on the LJSE amounted to SIT 3,131bn (EUR
13.1bn), up 2% over March.
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Successors Fail to Reach Agreement on Assets and Guarantees
In the first day of the meeting, the committee managed to hammer out an agreement on the division of US$ 118m in gold held by the former Yugoslavia at the French central bank and
Switzerland's Credit Suisse bank
The financial committee of the successors to the former Yugoslavia has failed to reach an agreement on assets deposited by the federation at commercial bank accounts, the head of the
Slovenian delegation has told STA. The main sticking point is the claim by Serbian officials that the US$ 221m in former Yugoslav assets deposited at commercial banks should be used to cover US$ 324m in guarantees given to companies of the former Yugoslavia operating abroad, France Arhar said.
According to Arhar, it was agreed in Skopje on Friday, 6 May - the second and final day of the meeting - that the five successors would check individually the amount of guarantees given to companies in their countries.
On the basis of this information, a breakdown of guarantees would be made so that the committee could ascertain what each country owns in guarantees compared to how much it stands to get from the common assets, he said.
The debate on the issue would be reopened at the next meeting of the financial committee, which is expected to take place in Ljubljana in late June, he added.
Arhar also claimed data shows that most of the guarantees were given to Serbian companies.
Slovenian guarantees are said to amount to only US$ 13m, he added.
The long debate on guarantees meant that the committee failed to address other issues on its agenda, including former Yugoslavia's clearing debt to the former Czechoslovakia and fees owed by the former Yugoslavia to the UN, Arhar said.
In the first day of the meeting, the committee managed to hammer out an agreement on the division of US$ 118m in gold held by the former Yugoslavia at the French central bank and
Switzerland's Credit Suisse bank.
Ljubljana Stock Exchange
In one of the slowest trading weeks in recent years, the SBI 20 benchmark index fell on all four trading days to end the week 0.69% lower at 4,704.03
Investors continued to shy away from big positions on the Ljubljana Stock Exchange this week. In one of the slowest trading weeks in recent years, the SBI 20 benchmark index fell on all four trading days to end the week 0.69% lower at 4,704.03. Analysts attribute the anaemic trading to a lack of directional leads for investors. Total volumes amounted to SIT 7.82bn
(EUR 32.62m), although 80% of that was in block trade.
Drug maker Krka was the only big name blue chip to register gains in the paltry action. It gained 0.39% to SIT 79,815 (EUR 332.91).
Mercator, Slovenia's No. 1 retailer, kept up its recent retreat, tumbling 1.6% to SIT 37,547
(EUR 156.61).
Among the other actively traded shares, brewer Pivovarna Lasko fell 0.42% to SIT 7,372
(EUR 30.75) and home appliance group Gorenje dropped 0.87% to SIT 5,828 (EUR 24.31).
The action on the free market slowed to a near halt this week. A number of popular investment funds staged a recovery this week to push the PIX investment fund 0.38% higher to 4,435.78 points.
Meanwhile, the BIO bond index fell 0.27% to 122 points despite some large block deals involving bonds.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.65 (-0.02)
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U.S. dollar (USD) - SIT 184.95 (-0.04)
Swiss franc (CHF) - SIT 154.81(-1.08)
British pound (GBP) - SIT 351.09 (-2.61)
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BRANCH INFORMATION
Marinas Took in Almost 7,000 Vessels Last Year
While 1,631 were registered permanently at the marinas, over 5,100 used them for temporary shelter
Slovenian marinas, which have among them 1,365 berths, took in 6,737 vessels last year, according to the national Statistics Office.
While 1,631 were registered permanently at the marinas, over 5,100 used them for temporary shelter, statistics show.
Of the 5,172 that used coast berths as opposed the dry docks, 27% sail under the Slovenian flag, while 26% were Italian, 20% German and 13% Austrian.
Survey Shows Slovenia Popular among Italian Tourists
The importance of the Italian market for Slovenia's tourist industry is also evident from the
2004 data of the national Statistics Office
Slovenia is one of the most popular destinations among Italian tourists, a survey of an Italian tourism and transport market research agency has shown. Slovenia places first in the business tourism sector, second in family tourism and 4th in traditional tourism, the Slovenian Tourist
Board (STO) said, quoting the results of the TMT Pragma survey.
According to the STO, Pragma carried out a comprehensive survey at most of Italy's road, rail, port and airport border crossings.
The results showed that in business tourism Slovenia was the preferred choice of most tourists, followed by Spain, the Czech Republic, Austria, Egypt, France and Croatia.
In family tourism, Slovenia placed after Mexico and ahead of Austria, Morocco and Spain.
In the category dubbed traditional tourism, Slovenia placed 4th after Mexico, Belgium and
Austria.
The importance of the Italian market for Slovenia's tourist industry is also evident from the
2004 data of the national Statistics Office.
Italians were the biggest group of tourists visiting the country with 786,130 overnights (up 8% on 2003 figures), and 313,296 arrivals (up 9%).
Italians accounted for 18% of the total of overnights by foreign visitors.
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COMPANIES
Austrian Companies Keen to Cooperate with Port of Koper
Transport Minister Janez Bozic held a meeting with his Austrian counterpart Hubert Gorbach
Transport Minister Janez Bozic held a meeting with his Austrian counterpart Hubert Gorbach on Tuesday, 3 May, discussing ways to boost cooperation between Austrian companies and the only Slovenian commercial port.
Speaking to the press after the meeting, Bozic said he and the visiting Austrian minister also reviewed cooperation in air transport - in particular in the Central European Air Traffic
Services (CEATS) project.
Gorbach voiced the Austrian economy's interest in cooperation with the port of Koper, which is only next to the Rotterdam port in the amount of cargo it transships for Austrian companies.
The Austrian minister was also keen to visit the port in person.
For the transhippment for Austrian companies to increase, Slovenia will have to complete its infrastructure projects first, Gorbach said, pointing to the need for setting up a better railway link between Koper and Austria.
The EU would like to divert as much cargo as possible from roads to railways, which is why
Slovenia and Austria should work towards this goal, the Austrian minister said.
He also called for closer cooperation between the two countries within the EU, and voiced the wish for cooperation to expand to telecommunications and the introduction of IT in transport.
Bozic briefed his Austrian opposite number on the course of construction of the Slovenian motorways and the modernisation of railway infrastructure.
Telekom Supervisors Want Telco to Be More Profitable
The low return on equity posted by the telco has often been highlighted also by the European
Commission
The new supervisory board of Slovenia's telco has urged the management of Telekom
Slovenije to take steps to make the company more profitable. The low return on equity posted by the telco has often been highlighted also by the European Commission.
The Telekom group made a big step towards the users in the past, the supervisory board assessed at its session on Tuesday, 3 May.
Nevertheless, the system will have to focus on developing new services to the satisfaction of its users so as to become even more comparable to its European counterparts, the supervisors established.
According to the company's press release, the supervisors also said the management faced a major challenge in transforming what used to be a monopolistic company into one competing in the market.
To do this, it will have to set up transparent data bases on the network, users and services, modernise IT and CRM (Customer Relationship Management) systems, improve maintenance and develop new services, the supervisory board recommended as quoted in the press release.
The supervisors presented their positions on the company's development to the management at its maiden session on 2 May, after appointing Miro Rozman, a former state secretary for post and telecommunications, the chief supervisor.
Matjaz Jansa, the head of the directorate for electronic communications at the Economics
Ministry, was appointed supervisory board vice-chair representing the shareholders and
Branko Sparavec vice-chair from the ranks of employees.
The supervisory board also said the company should go international as soon as possible, while it should also undergo through preparations in a bid to carry out quality privatisation.
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The supervisors expect the management, headed by Libor Voncina since March 2004, to keep control of its subsidiaries (Internet provider Siol and wireless operator Mobitel) and have a fair attitude towards competition. It said it would assess the management according to its results.
The new supervisory board of Telekom Slovenije was appointed at the shareholders' meeting on 26 April.
The state is the biggest single shareholder of the national telco, with a stake of 62.53%.
Indirectly, it holds another 10% through the state-owned Pension Management Fund (KAD) and Restitution Fund (SOD).
Easyjet Happy With 1st Year of Slovenia Operations
Since launching the London-Ljubljana route this time last year, Easyjet has carried more than
100,000 passengers
Europe's second-largest low-fare airline is happy with the first year of operations on the
Slovenian market. Since launching the London-Ljubljana route this time last year, Easyjet has carried more than 100,000 passengers, company officials told the press on Wednesday, 4
May.
According to Yannis Capodistrias, Easyjet's marketing director for Slovenia, the low-cost carrier flew 90,000 passengers on its Ljubljana-London route, while the rest travelled on the
Ljubljana-Berlin service that was introduced in November 2004.
Capodistrias said that Easyjet was pleased with last year's results in Slovenia, which is why it intends to introduce new routes this year. The airline hopes to carry 160,000 passengers in
2005.
Slovenia has proven to be a successful destination, Capodistrias stressed. Presenting a break down of passenger numbers, he said 70 percent of passengers on the Ljubljana-London route were British, while Slovenians made up half of the passengers on the Ljubljana-Berlin flights.
Capodistrias also claimed that Easyjet had made an important contribution to Slovenian tourism with its flights, since the carrier did not take over customers from other carriers but attracted new ones.
Easyjet statistics show that half of its passengers spend two to four nights in a certain location, while there are quite a few passengers who stay for one or more weeks.
Moreover, tourism data shows that the number of British tourists in Slovenia soared 53% last year, with the number of overnight stays generated by them growing by 32%.
The operator of Ljubljana's airport is also happy with Easyjet's presence in Slovenia, the marketing director of Aerodrom Ljubljana Jure Meznarsic stressed. According to Meznarsic,
Aerodrom and Easyjet have joined forces in trying to launch new routes.
TCG Unitech LTH Reports EUR 4.5M in Profit
TCG Unitech LTH increased its net sales revenues by 17.2% to SIT 21.66bn (EUR 90.38m) in
2004
TCG Unitech LTH increased its net sales revenues by 17.2% to SIT 21.66bn (EUR 90.38m) in 2004. The subsidiary of the UK-based Trident Components Group (TCG), which produces castings in aluminium and magnesium alloys, also said on Thursday, 5 May its net profit almost doubled to SIT 1.07bn (EUR 4.46m). According to general manager Anton Papez, this year sales are expected to increase by 10% and profit by 60%. Speaking to the press, Papez also said that first quarter results were in line with targets.
The value added per employee almost doubled over the last three years to EUR 93,000, which is the average in western Europe, while productivity is rapidly approaching west European standards, the company's chief said.
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The company has plants in Ljubljana, Skofja Loka, Benkovec, in Croatia, and Ohrid, in
Macedonia. It supplies castings for automotive industry, gas and water system pipes and precision mechanics to customers in Germany, Denmark, Austria, Spain, Portugal, the UK,
Italy and Norway.
Its customers include leading companies in the automotive industry, such as Daimler
Chrysler, BMW, TRW, Wabco, Valeo, Dalphimetal. Papez complained of fierce competition on the market, mainly by rival companies from Spain.
According to Papez, TCG Unitech is thinking about outsourcing, and is planning to continue to expand to other markets. Next year it plans to build a plant in Russia.
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SLOVENIA IN BRIEF
NPT is Important for Slovenia, Says Cerar
The 7th review conference of the Nuclear Non-Proliferation Treaty (NPT) is of great significance for Slovenia, a Slovenian official attending the conference in New York told
STA on Tuesday, 3 May, a day after the almost four-week conference began.
One of the reasons is, according to Foreign Ministry State Secretary Bozo Cerar, the fact that the world of today is so intertwined that nobody can be indifferent to what is going on with nuclear energy.
Demining Fund Gets over US$ 4.6M from Norway
The International Trust Fund for Demining and Mine Victims Assistance (ITF) has received a donation of US$ 4.64m for 2005, the Slovenian-run ITF said in a press release on Tuesday, 3
May.
Made in line with a two-year agreement between Norway and the ITF, the donation will be largely used for demining in Croatia and Bosnia-Herzegovina, chiefly through the NGO
Norwegian People's Aid. treated at Slovenia's Rehabilitation Institute and similar centres in
Bosnia-Herzegovina.
E-Register of Births, Deaths and Marriages Launched
An e-registry of births, deaths and marriages was brought online on Monday, 2 May, which
Public Administration Minister Gregor Virant said would make public administration more efficient. According to him, all records will be managed electronically, which will make the work of administrative units easier and save citizens quite some time.
Culture Minister Satisfied with Cooperation with Czech Republic
Culture Minister Vasko Simoniti said Slovenia and the Czech Republic boast very good cooperation in culture as he held talks with Czech Deputy Culture Minister Petra Smolikova on Thursday, 5 May. As Simoniti told STA after the talks, the current three-year programme of bilateral cooperation in culture has proved to be excellent.
Jansa Congratulates Blair on Election Victory
Prime Minister Janez Jansa has sent a congratulatory cable to British counterpart Tony Blair on his party's win in a general election on Thursday, 5 May. Jansa also sent Blair his best wishes on his birthday. In the cable, Jansa said he was happy that bilateral relations between the countries were good, adding that he hoped they would be strengthened further in the future.
Drobnic Discusses Industrial Relations with ILO Official
Industrial relations, youth unemployment and restructuring topped talks held by Minister of
Labour, Family and Social Affairs Janez Drobnic with the International Labour Organisation's
(ILO) Regional Director for Europe and Central Asia Friedrich Buttler on Friday, 6 May in
Ljubljana. Drobnic and Buttler agreed that industrial relations in Slovenia were well developed. The Slovenian official also pledged that the government intended to continue promoting dialogue between the social partners.
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Cukjati Attends a Meeting of Speakers of Parliaments
Speaker of Parliament France Cukjati finds it hard to understand that the founding member states are the ones that are the most reluctant to endorse the EU's constitution, a document that combines the contents of the Community's past treaties. Addressing a meeting of speakers of parliaments from the EU in Budapest on Saturday, 7 May, Cukjati voiced the belief that the reasons for their scepticism were mainly ignorance, lack of understanding and internal political factors. Speaker Cukjati also held several bilateral meetings, among them with his
Croatian and Italian counterparts Vladimir Seks and Pierfernando Casini. In both meetings the sides agreed to hold bilateral meetings soon.
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