Slovenia Business Week no. 44, November 2nd, 2005
Table of Contents
HEADLINES ............................................................................................................................. 3
Companies Express Support for Proposed Reforms .............................................................. 3
Government Reform Committee Releases Second Part of its Reform Document ................. 3
Inflation Edges Lower in October .......................................................................................... 4
International cooperation ............................................................................................................ 5
Britain Working on Reaching EU Budget Deal, Prescott Tells Jansa ................................... 5
Prescott Discusses EU Issues with Drnovsek and Rupel ....................................................... 5
Minorities Stress Importance of Economic Cooperation ....................................................... 6
Benedejcic Presents Credentials in Tajikistan ....................................................................... 7
FM Rupel Promoting Cross-Border Cooperation in Italy ...................................................... 7
Rupel and Liechtenstein Prince Alois Discuss OSCE ........................................................... 8
FM Claims Stability Key to Success of Financial Markets ................................................... 8
Frlec: OSCE Ministerial Biggest Political Event in Slovenia ................................................ 8
European union .......................................................................................................................... 9
Slovenia's Bird Flu Measures Assessed as Adequate............................................................. 9
Drnovsek Urges EU Leaders to Tackle Crucial Problems ..................................................... 9
Slovenia and Ten Other EU Members Oppose Radical Sugar Reform ............................... 10
Conference: Inclusion of Regions Key for Lisbon Strategy ................................................ 10
President Drnovsek Urges Breakthrough on EU Budget Talks ........................................... 11
PM Jansa Says Prospects of EU Budget Agreement Growing ............................................ 11
Government Adopts Lisbon Agenda Reform Programme ................................................... 12
Legislation ................................................................................................................................ 13
Bill on Double Pricing Goes Through Second Reading ...................................................... 13
Statistics/forecasts .................................................................................................................... 14
Business Sentiment Stays Put in October ............................................................................ 14
Slovenia the Least Fertile EU Country in 2004 ................................................................... 14
Foreign Debt Amounts to EUR 17.5bn in July .................................................................... 14
Tourist Visits and Overnight Stays Down This Summer ..................................................... 14
Slovenian Population Exceeds 2 Million Mark .................................................................... 15
Finance ..................................................................................................................................... 16
IMF Official Highlights Pitfalls of Flat Tax Rate ................................................................ 16
Ljubljana Stock Exchange .................................................................................................... 16
Foreign Exchange ................................................................................................................. 17
Branch information .................................................................................................................. 18
Slovenia Lags Behind in Efficient Energy Use .................................................................... 18
Vizjak Promises to Support Investment in Electricity Production ....................................... 18
Ban on Free-Range Poultry Expanded in Slovenia .............................................................. 19
Companies ................................................................................................................................ 20
Railways Take Short-Term Measures to Boost Operations ................................................. 20
Casar Appointed New Port Operator Boss ........................................................................... 20
Poultry Company Perutnina Ptuj on Highest Alert .............................................................. 21
Investors Keen on Motorway Company Bonds ................................................................... 21
Najdi.si Looking for Strategic Investor to Accelerate Expansion ........................................ 21
BBC to Drop its Slovenian Service ...................................................................................... 22
Trimo Chief Executive Named Most Influential Businesswoman ....................................... 22
Petrol Chief Executive Janez Lotric Resigns ....................................................................... 23
Petrol Posts Solid Sales and Profit Growth .......................................................................... 23
Watchdog Says Mobitel Has Significant Market Power ...................................................... 24
Grand Union Hotel Celebrates 100 Years ............................................................................ 24
Ljubljanske Mlekarne Concedes to Higher Milk Prices ...................................................... 25
Litostroj Says Deals with Iraq Not Part of Oil for Food ...................................................... 25
Chemistry Institute Upgrades with EU Funding .................................................................. 26
Slovenia in brief ....................................................................................................................... 27
Drnovsek Stands By His Kosovo Plan ................................................................................. 27
EU Says Drnovsek's Kosovo Proposal Different from EU's Stance .................................... 27
PM Convinced Unions Support Measures to Boost Competitiveness ................................. 27
Ministerial Calls for Cooperation to Fight Crime in SE Europe .......................................... 27
Government to Create Community Service Jobs for Unemployed ...................................... 27
Government Earmarks Additional Aid for Pakistan Earthquake Victims ........................... 27
Government Earmarks Aid for Flood Repairs ..................................................................... 27
Government Names Acting Director of Farmland Fund ...................................................... 28
Slovenian Minority Organisation in Hungary Celebrates 15 Years ..................................... 28
Clocks Turn Back One Hour ................................................................................................ 28
Caharija Receives Borstnik Ring ......................................................................................... 28
2
HEADLINES
Companies Express Support for Proposed Reforms
According to CCIS president Jozko Cuk, the measures for the most part include the demands
voiced by companies over the past decade
Members of the Chamber of Commerce and Industry of Slovenia (CCIS) support the
proposals of structural reforms put forward by the government reform committee, CCIS
officials told the press on Thursday, 27 October.
According to CCIS president Jozko Cuk, the measures for the most part include the demands
voiced by companies over the past decade.
His comments come after CCIS representatives met members of the government reform
committee to debate the planned measures.
Cuk said that it was now up to the government to adopt and implement the measures as soon
as possible.
Meanwhile, he admitted that the main problem at the moment was a lack of estimates on the
consequences of the planned measures.
Cuk explained that the chamber staged a number of in-depth debates about the proposed
reform package among its branch sections, regional branches and expert groups in recent
days.
"The CCIS is inclined to the proposed reforms," Cuk told the press in a summary of the
message delivered by CCIS officials to members of the reform committee at the meeting.
The main priority should be measures aimed at supporting companies and facilitating
economic growth, he said.
According to him, the key factors to improving the competitiveness of the Slovenian economy
include lifting the burden on labour, loosening employment legislation, creating a probusiness environment and promoting science and technology.
Moreover, Cuk claimed that the current debate about the reforms is overly focused on a single
proposal, the flat tax. Although simplification of the tax system is an important aspect of
reform, the main goal should be to streamline the state's operations.
The proposed flat tax has caused some concern among certain sections of the CCIS, especially
the tourism section, as a rise in the value added tax for food and beverages could make the
sector less competitive.
Instead of seeking to raise taxes, the reform committee should look to cut public spending,
Cuk said.
However, head of the reform committee Joze P. Damijan explained that the cut in tax
revenues related to the planned phasing out of payroll tax must be offset in other fields: either
Slovenia raises VAT rates or cuts 25% of the public administration.
Government Reform Committee Releases Second Part of its Reform Document
The government reform committee published the second part of its reform document, outlining
the reasons for the proposed measures and backing them up with concrete figures
The government reform committee on Monday, 24 October published the second part of its
reform document, outlining the reasons for the proposed measures and backing them up with
concrete figures.
The document has already been forwarded to relevant government committees, while the
government is expected to discuss the paper next week, Prime Minister Janez Jansa told the
press.
3
Speaking after meeting six of the biggest trade union associations in the country, Jansa said
that the government reform committee would hold a meeting with representatives of
parliamentary parties to outline the second part of the document.
The coalition parties are also expected to hold a meeting of their own to get acquainted with
the supplemented paper, he added.
According to Janez Sustersic, a member of the reform committee, the supplements include
measures to prevent shocks in the welfare state as a result of the reforms, especially the
proposed introduction of flat tax.
He added that the supplements also deal with efforts to establish a new wage system and new
wage policy. The reform committee proposes that an agreement on a new wage system be
sought in unison with the introduction of a flat tax and reforms of social security, Sustersic
said.
The document also addresses criticism aimed at the proposed flat tax, especially the proposal
to have only one VAT rate, meaning that the current 8.5% rate levied on food and beverages
would more than double, a measure that unions say would hit poor people the most.
According to a German study, which the committee cites in the 180-page document, different
levels of VAT are actually inefficient and expensive.
Moreover, Sustersic said the document also tweaks some of the proposed measures aimed at
boosting enterprise. "We got a number of complaints about a lack of substantive measures,"
he said, adding that the new document includes four measures aimed at boosting
technological development.
Inflation Edges Lower in October
Consumer prices grew by a modest 0.2% in October, pushing the annual inflation rate down
0.1 percentage points from a month earlier to 3.1%
Consumer prices grew by a modest 0.2% in October, pushing the annual inflation rate down
0.1 percentage points from a month earlier to 3.1%, suggest early figures released by the
Statistical Office on Friday, 28 October.
The inflation slowdown brings Slovenia closer to meeting the inflation criterion for euro
adoption: in October the 12-month average price growth measured with the EMU
convergence price index remained level at 2.7%, which means that inflation was only 0.3
percentage points too high.
This month's inflation was fuelled in particular by prices of goods, which were up on average
by 0.5%. Semi-durable goods again posted the highest increase (3.1%), while durables were
up 1.1% and non-durables 0.3%. Prices of services dropped by 0.5%.
The highest prices were registered in clothing and footwear (4.8%), education (0.8%),
restaurants and hotels (0.5%), housing, water, electricity, gas and other (0.4%), and
furnishing, household equipment and maintenance (0.2%).
New lines in stores resulted in higher prices of clothing and footwear for the second month in
a row. Prices in the group education were propped up by the start of the new school year, with
higher prices of higher education and education non-defineable by level.
Higher prices in the group housing, water, electricity, gas and other were again caused by
fuels; solid fuels were 4.2% dearer, gas was up 1.9%, liquid fuels 1% and heat energy 0.6%.
Groups where prices were down include recreation and culture (1.9%), miscellaneous goods
and services (0.5%), food and non-alcoholic beverages (0.2%), alcoholic beverages and
tobacco, and transport (0.1%).
Lower prices of motor fuels (down 2.3%) and package holidays pushed down the total price
growth by 0.2 percentage point each.
4
INTERNATIONAL COOPERATION
Britain Working on Reaching EU Budget Deal, Prescott Tells Jansa
Prescott told the press in Ljubljana that his country was working on achieving a deal during
its stint as EU president
British Deputy PM John Prescott has told Slovenian PM Janez Jansa that his country is
determined to do everything to ensure that a deal on the EU budget framework for 2007-2013
is reached by the end of the year.
Prescott told the press in Ljubljana on Monday, 24 October that his country was working on
achieving a deal during its stint as EU president.
Prescott, who was on a tour of EU members ahead of the informal EU summit in Hampton
Court, would not go into the details of Britain's proposal for the EU budget. He said only that
London would strive to make the distribution of EU funds fairer.
According to him, Britain has no intention of copying the proposal put forward by
Luxembourg in June, which failed to produce an agreement.
He reiterated the British stance that the current spending plan, which allocates the most funds
to the common agriculture policy, is not a suitable answer to the challenges facing the bloc.
He announced that Britain intends to outline its proposal, produced on the basis of talks with
EU member states, to EU foreign ministers in November. It is then hoping to have a deal on
the proposal at December's EU summit.
Jansa stressed that Slovenia would like to see a deal on the budget reached by the end of this
year because it otherwise stands to lose its status as a net recipient of EU development aid.
The Slovenian Prime Minister stressed that Slovenia welcomes proposals to restructure the
European budget in a way that would ensure greater competitiveness.
The pair also examined globalisation with Jansa saying that the key quest is to convince the
European public that social schemes must be overhauled in order to allow the EU to become
globally competitive.
Reforms that are currently being drafted by the Slovenian government are part of its efforts to
deal with the challenges posed by globalisation, Jansa added.
Jansa also welcomed a set of proposals put forward last week by European Commission
President Jose Manuel Barroso, including that on the formation of a European fund for
dealing with the consequences of globalisation. However, Jansa feels that Barroso could have
come up with the proposals earlier.
Prescott and Jansa also discussed Slovenian preparations for the EU presidency in the first
half of 2008, with the British official promising that his country would offer assistance to
Slovenia.
Prescott also met Foreign Minister Dimitrij Rupel.
Prescott Discusses EU Issues with Drnovsek and Rupel
British Deputy PM John Prescott was received by President Janez Drnovsek and FM Dimitrij
Rupel respectively for talks on current EU issues
British Deputy PM John Prescott was received by President Janez Drnovsek and FM Dimitrij
Rupel respectively on Monday, 24 October for talks on current EU issues.
Prescott and Drnovsek welcomed the EU accession negotiations with Turkey and Croatia,
agreeing that the EU needs the constitution because of its further enlargements, the president's
office said in its press release.
5
President Drnovsek said that the ratification of the European constitution should continue in
the EU member states. Only then should the problem be tackled in the EU states where the
referendums were not successful, that is France and Netherlands, he added.
They also agreed that amendments to the EU financial perspectives for the 2007-2013 period
are necessary. President Drnovsek pointed out the reform of the Common Agricultural Policy
as one of the most important issues in the budget framework.
Drnovsek also informed Prescott about his plan for the future status of Kosovo, the press
release also reads.
Meanwhile, FM and OSCE chair Dimitrij Rupel told Prescott that Slovenia would like to see
the EU reach an agreement on the 2007-2013 budget soon, as that is important for Slovenia,
the ministry's press release said.
Prescott and Rupel were pleased with the recent agreement on further EU enlargement to the
SE Europe, and expressed their hopes that the talks on the European constitution will
continue.
The pair also talked about the main topics of the OSCE ministers conference which is to take
place in Ljubljana in December, and which is also to be attended by British Foreign Minister
Jack Straw, the ministry also said.
Minorities Stress Importance of Economic Cooperation
A conference on the economic role of minorities concluded with the adoption of a resolution
which calls on the Italian and Slovenian minorities to make an effort and bolster economic
cooperation
A conference on the economic role of minorities concluded on Monday, 24 October with the
adoption of a resolution which calls on the Italian and Slovenian minorities to make an effort
and bolster economic cooperation.
The Italian minority in Slovenia and the Slovenian minority in Italy share similar problems
and advantages because of their similar political roles, the participant agreed.
The countries should encourage the economy of the minorities, for these could represent a
"healthy" competition for other companies in the country, and at the same time allow better
access to the economy of the minorities' parent country.
The participants therefore called on the Italian region of Friuli-Venezia Giulia to enable, in
cooperation with the Slovenian government, a medium-term investment for the education of
minorities' businessmen. This could also help the two minorities enter the global markets
together.
Other proposals include the establishment of a minority economic forum and a common
development institute. They should also share a financial corporation as well as the legal and
financial aid for the minorities' economic basis.
FM and OSCE chairman Dimitrij Rupel, keynote speaker at the meeting, said the minorities
should protect their cultural particularities, one of the foundations of the EU. At the same
time, they should make an effort to enhance economic integration with the countries they live
in.
The two minorities should cooperate better in the field of economy and thus become
economically important regions in Europe, especially on the new markets of the SE Europe,
Rupel also said.
The first part of the conference was staged in Italy's Trieste on 17 October and focused on the
initiatives designed to bolster economic cooperation between the Italian and Slovenian
minorities.
6
Benedejcic Presents Credentials in Tajikistan
Benedejcic, who is currently serving as Slovenia's resident ambassador to Russia with nonresidential status in Belarus, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan
Slovenian Ambassador to Russia Andrej Benedejcic handed his credentials to Tajik President
Emomali Rakhmonov and Foreign Minister Talbak Nazarov on Tuesday, 25 October in
Dushanbe, thereby assuming the position of non-resident ambassador to the country.
Benedejcic, who had already visited Dushanbe in April this year accompanying OSCE
chairman Dimitrij Rupel, told STA that his visit represents a continuation of political dialogue
between the two countries.
His talks with Rakhmonov and Nazarov touched on bilateral ties between the two states, with
special emphasis on improving economic relations.
Benedejcic expressed Slovenian support for stronger cooperation between Tajikistan and the
OSCE, while also welcoming a proposal that the OSCE economic forum 2007 be held in the
Central Asian country.
Benedejcic, who is currently serving as Slovenia's resident ambassador to Russia with nonresidential status in Belarus, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, also met
head of OSCE mission in Tajikistan Alain Counanon.
FM Rupel Promoting Cross-Border Cooperation in Italy
Slovenian Foreign Minister Dimitrij Rupel was in Italy's Gorizia to promote cross-border
cooperation with neighbouring Nova Gorica in a meeting with the mayors of the two border
towns
Slovenian Foreign Minister Dimitrij Rupel was in Italy's Gorizia on Tuesday, 25 October to
promote cross-border cooperation with Italy's Friuli-Venezia Giulia region.
Speaking to the press after a meeting with mayors of Italy's Gorizia and Slovenia's Nova
Gorica, Vittorio Brancati and Mirko Brulc, Rupel said it was "no secret that good cooperation
can be improved further."
Rupel stressed that the talks were not a formal meeting between two countries, but said that
bilateral relations were improving, especially between Slovenia and Friuli-Venezia Giulia.
The mayors of the two bordering towns also handed to Rupel a memorandum containing
proposals for upgrades to current cross-border cooperation.
Meanwhile, following a meeting with president of the regional government of Friuli-Venezia
Giulia, Riccardo Illy, Rupel said that he came to Gorizia to promote neighbourly relations.
According to him, he has proposed that the Slovenian government put one of the members of
the cabinet in charge of developing close ties with Friuli-Venezia Giulia. Rupel said he had
already acquainted Slovenian Prime Minister Janez Jansa with the proposal.
Meanwhile, Rupel noted that there are still some problems regarding the position of the
Slovenian minority in Italy, but not so much in Gorizia as in Trieste.
However, he was confident that the two countries would resolve these issues in mutual
agreement. "I am an optimist; we are resolving problems as they come, in a friendly
atmosphere".
Moreover, he said that the Slovenian minority in Italy and the Italian minority in Slovenia
made for "excellent opportunities...to bolster cooperation between the countries".
Illy used the occasion to outline a plan for the establishment of an Euroregion involving
Friuli-Venezia Giulia and Slovenia, among others.
Rupel said that he supports the idea, but that Slovenian participation would be conditioned on
the full inclusion of the country into such a region.
Illy also called for greater cooperation between the Slovenia's port of Koper and Italy's port of
Trieste, as well as better cooperation in other areas, including tourism and research.
7
Rupel and Liechtenstein Prince Alois Discuss OSCE
They focused on the Slovenian OSCE chairmanship and the future status of Kosovo
FM and OSCE chairman Dimitrij Rupel and Hereditary Prince Alois of Liechtenstein talked
about the OSCE as they met in Liechtenstein capital Vaduz on Wednesday, 26 October.
They focused on the Slovenian OSCE chairmanship and the future status of Kosovo, the
Slovenian delegation told STA.
Minister Rupel thanked Liechtenstein for its help in several humanitarian projects, especially
for its donation of US$ 37,000 to the International Trust Fund For Demining and Mine
Victims Assistance (ITF).
Furthermore, Rupel thanked his host for the aid Slovenia is to receive from Liechtenstein
through projects financed by the European Economic Area in the 2004-2009 period.
FM Claims Stability Key to Success of Financial Markets
Slovenian FM and OSCE chairman Dimitrij Rupel stressed that political stability is a
prerequisite for the success of financial markets, as he addressed the "Liechtenstein Dialogue
2005" conference
Slovenian FM and OSCE chairman Dimitrij Rupel stressed that political stability is a
prerequisite for the success of financial markets, as he addressed the "Liechtenstein Dialogue
2005" conference on the last day of his two-day visit to Vaduz, the Foreign Ministry said on
Thursday, 27 October.
At the conference, which focused on the future of financial markets, Rupel gave the situation
in the Western Balkans as an example. He said that the region, which is on the doorstep of the
EU, is economically less successful due to its political instability, the press release reads.
While SE European countries are getting ready for a European future, European companies
can contribute to the region's development by overcoming their fears and starting to invest in
this region, Rupel said.
"Economic development is one of the key factors of stability. If political stabilisation and
economic development go hand in hand in this region, we cannot doubt its success," Rupel is
convinced, the press release also reads.
Frlec: OSCE Ministerial Biggest Political Event in Slovenia
51 of 55 OSCE participating states have already confirmed their attendance, as have four
partner states
This year's OSCE summit, to be held in Ljubljana in December, will be the biggest political
event in Slovenia since its independence, said Boris Frlec of the Slovenian Foreign Ministry.
He added that 51 of 55 OSCE participating states have already confirmed their attendance, as
have four partner states.
Attendance has been confirmed by as many as 873 officials, including 36 foreign ministers,
said the head of the OSCE task force at the ministry.
However, he could not yet confirm whether US Secretary of State Condoleezza Rice and
Russian FM Sergey Lavrov would attend, mainly due to safety precautions.
The ministerial meeting will pass a declaration, which Frlec does not expect to be passed
without difficulty in view of opposing interests of the 55 participating countries.
The declaration, which is still in the making, avoids mentioning any areas of conflict, he
explained at a press conference in Ljubljana on Friday, 28 October. While he was as yet
unable to state the number of conclusions it would contain, he does hope for a "short, clear
and general declaration".
8
EUROPEAN UNION
Slovenia's Bird Flu Measures Assessed as Adequate
Measures that Slovenia has taken to fight the spread of avian influenza have been assessed by
EU agriculture ministers as adequate, even stricter than in several other member states
Measures that Slovenia has taken to fight the spread of avian influenza have been assessed by
EU agriculture ministers as adequate, even stricter than in several other member states.
"We are making resolute efforts to reduce the risk of the virus appearing (in Slovenia),
although this possibility cannot be fully excluded," Franci But, state secretary at the
Agriculture Ministry, told the press after a meeting on Monday, 24 October.
After the avian flu virus was detected in Croatia, the National Veterinary Administration
ordered that poultry be kept indoors in high-risk areas in the northeast and southwest of the
country.
But, who represented Agriculture Minister Marija Lukacic, could not confirm if any
additional measures would have to be taken at the national level.
Yet, he noted that the European Commission is also considering the vaccination of pets and
poultry; the latter had not proved efficient in the past.
"We agreed in particular on one thing: that the fight against avian flu calls for global
cooperation, and that this is still an animal disease, which the public must be made aware of,"
But stressed.
Drnovsek Urges EU Leaders to Tackle Crucial Problems
President Janez Drnovsek has addressed a letter to EU heads of state and government in
which he calls for the ratification of the EU constitution, cuts in farm subsidies, the
elimination of the British rebate and increased funding for Lisbon Strategy objectives
President Janez Drnovsek has addressed a letter to EU heads of state and government in
which he calls for the ratification of the EU constitution, cuts in farm subsidies, the
elimination of the British rebate and increased funding for Lisbon Strategy objectives.
In a letter sent two days before the informal EU summit in Great Britain, Drnovsek said that
"too much energy and good will has been invested in the EU constitution to simply abandon
the project."
In the light of further rounds of EU enlargement, the EU needs an institutional framework, so
the heads of state and government should tackle this project with a fresh impetus, Drnovsek
was quoted as saying by his office on Tuesday, 25 October.
Drnovsek is also convinced that the Common Agriculture Policy (CAP) is a key factor in
negotiations on the 2007-2013 budget framework. It has to be reformed, he said, proposing a
reduction of tier-one farm subsidies from 100% to 75%.
At the same time, Drnovsek would like to see an increase in funding for rural development, in
particular the growing of biological produce. This should become the main priority of
European agriculture, he said.
The president moreover backed the formation of a globalisation fund, an idea proposed by
European Commission President Jose Manuel Barroso, who also received Drnovsek's letter.
According to Drnovsek, such a fund would support those European regions which have been
hit especially hard by layoffs that are a consequence of global competition.
At the same time, Drnovsek believes that the EU should put more pressure on countries
worldwide to adjust their labour, social and environmental standards to "levels which ensure a
dignified life."
9
Drnovsek also called for increased funding for research, education and development in the
2007-2013 budget, and the gradual elimination of the British budget rebate until 2013, which
would free up money for the Lisbon Strategy objectives.
Slovenia and Ten Other EU Members Oppose Radical Sugar Reform
The letter by agriculture ministers from Italy, Spain, Greece, Poland, Hungary, Ireland,
Latvia, Lithuania, Portugal, Finland and Slovenia also called for a gradual reform with a
slower reduction in sugar prices
A radical sugar reform is unacceptable for 11 EU countries, including Slovenia, as it will
"destroy sugar production in some and increase it in other regions", the member states wrote
in a letter to the EU Agriculture Commissioner Mariann Fischer Boel on Tuesday, 25
October.
The letter by agriculture ministers from Italy, Spain, Greece, Poland, Hungary, Ireland,
Latvia, Lithuania, Portugal, Finland and Slovenia also called for a gradual reform with a
slower reduction in sugar prices.
The Commission-proposed 39% drop in sugar and 42.6% drop in sugar-beet prices over the
next two years is too much too soon, the Agriculture Ministry said.
The restructuring process should last from four to five years, whereas the price reduction
should be only half that proposed by the Commission, said Agriculture Minister Marija
Lukacic.
She was not entirely critical of the reform, however. She hailed some of the measures, such as
establishing a restructure fund and regulating sugar imports from developing countries.
She especially stressed the need to regulate imports of sugar from the Balkans as the
asymmetrical agreements between EU and states in the area enabled Croatia to export much
more sugar this year than last.
The state also wishes to retain its right, given by the accession agreement, to process sugar in
its only sugar factory in Ormoz.
Despite the letter, Fischer Boel said that the sugar reform is urgent as the commodity's price in
the EU is three times higher than on the world markets.
She said, however, that she will study the letter, and proposed a meeting of high-level
officials from the 11 dissenting states to discuss the issues in the first half of November.
Brussels wants to reach an agreement on the reform at the next meeting of agriculture
ministers, which is to take place from 22 to 24 November.
Conference: Inclusion of Regions Key for Lisbon Strategy
A two-day European Regional Forum was organised by the city of Nova Gorica and the
Brussels-based Slovenian Business and Research Association
Participants of a meeting dedicated to a debate on the implementation of the Lisbon Strategy
at the regional level have stressed the importance of the role of regions for the successful
implementation of the strategy.
The message was delivered at an outset of the two-day European Regional Forum, an event
organised by the city of Nova Gorica and the Brussels-based Slovenian Business and
Research Association on Thursday, 27 October.
Among those welcoming the 200 participants from 22 countries to the meeting was Slovenian
Minister of Local Government and Regional Policy Ivan Zagar, who outlined measures taken
by the Slovenian government aimed at ensuring balanced regional development and effective
use of EU development aid.
Meanwhile, Nova Gorica Mayor Mirko Brulc stressed that the fact that Slovenia has not yet
established provinces means that his municipality, and others like it, must act as carriers of
regional projects.
10
According to the head of the European Institute at the University of Edinburgh Andrew Scott,
Lisbon Strategy measures have been proven more effective if carried out at the regional level.
Measures that are brought closer to the people are more effective, he said.
The importance of cross-border cooperation was underscored by the Secretary General of the
European Association of Border Regions Jens Gabbe. He stressed that the European Union,
and not individual members, should be in charge of fostering cross-border regional
cooperation.
Cross-border cooperation creates value added in an economic, political and cultural sense,
Gabbe added.
President Drnovsek Urges Breakthrough on EU Budget Talks
The absence of a breakthrough would jeopardise the constitution which the Union urgently
needs if it is to function efficiently
President Janez Drnovsek has called for a breakthrough in negotiations on the EU's budget.
The absence of a breakthrough would jeopardise the constitution which the Union urgently
needs if it is to function efficiently, Drnovsek told the press on Thursday, 27 October, saying
it was "high time to act."
Drnovsek was speaking to the press in Ljubljana at the onset of an informal EU summit in
Great Britain to present a letter that he had addressed to EU leaders on Tuesday, 25 October.
The letter includes a series of proposals for the resolution of the most pressing issues.
The cornerstone of Drnovsek's proposal is a reform of the Common Agriculture Policy
(CAP). The president insists that as things stand, the CAP is misguided and not beneficial for
most EU farmers.
He proposes that tier-one farm subsidies be reduced from 100% to 75%, which would free up
10 billion euros. That way, Great Britain would also be more willing to renounce its EUR 5bn
budget rebate, which is currently financed by developed as well as less developed countries
such as Slovenia.
Drnovsek was optimistic about his proposals and said he consulted Prime Minister Janez
Jansa about the proposed measures.
PM Jansa Says Prospects of EU Budget Agreement Growing
Prime Minister Janez Jansa came out of the informal EU summit confident that the prospects
of agreement on the EU's 2007-2013 budget framework have increased
Prime Minister Janez Jansa came out of the informal EU summit on Thursday, 27 October
confident that the prospects of agreement on the EU's 2007-2013 budget framework have
increased.
"If you ask me whether today's debate improves the prospects of reaching agreement on the
EU budget at the December summit, my answer is yes," Jansa told the press.
British PM Tony Blair did not indicate what proposal he might submit in November, but
Jansa expects that the structure of spending will be tweaked.
"By blocking agreement in June, Great Britain has prompted an increase in the willingness of
member states to accept a more modern budget structure with more R&D funding and less
money for traditional payments that fail to achieve development effects," he said.
The Prime Minister expects changes in the direction of the proposals put forward by the
European Commission to kick-start the negotiations, most notably that 60% of the cohesion
funds be directed towards R&D in the long term.
In any case, Jansa thinks it is better to have a broad compromise in December than an ideal
solution too late. "Time is crucial for new member states; the first half of 2006 will be too late
for us," he said.
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The budget was not the main topic of the summit, as the leaders focused on coping with the
challenges of globalisation. Jansa was happy with the debate, but said that "our views were
not uniform, just as it is clear that there are no uniform solutions for all problems."
Nevertheless, the EU has certain features (such as quality of life and sustainable development)
that all agree should be preserved. "The EU is still a role model for many," he stressed.
Government Adopts Lisbon Agenda Reform Programme
According to head of the Institute for Macroeconomic Analysis and Development (IMAD)
Janez Sustersic, the document answers impending challenges faced by Slovenia with
measures that promote restructuring and liberalisation
The cabinet has adopted the Reform Programme for the Implementation of the Lisbon
Strategy in Slovenia. According to head of the Institute for Macroeconomic Analysis and
Development (IMAD) Janez Sustersic, the document answers impending challenges faced by
Slovenia with measures that promote restructuring and liberalisation.
Sustersic, who is the national coordinator for the Lisbon Strategy, told the press after the
cabinet session on Friday, 28 October that the main aims of the strategy are to promote
economic growth and job creation.
The three-year programme, which all EU member states must draft and submit to the
European Commission, is based on reform measures the government is getting ready to adopt.
Although the deadline for submitting the programme was 15 October, Slovenia asked that it
be given an extension in order to bring it in line with a reform document that was recently
drafted by the government reform committee.
The programme envisages efforts to make Slovenia more competitive and to make the state
administration more effective.
Its measures are aimed at implementing the Development Strategy that the government
adopted back in June and which puts emphasis on increasing overall prosperity in Slovenia.
"The structure of the Reform Programme is the same as the Development Strategy," Sustersic
said.
The measures aimed at implementing the Lisbon Strategy goals are broken down into five
groups that incorporate all the basic guidelines for growth and job creation recommended by
the EU.
"The emphasis is on bolstering competitiveness, promoting infrastructure-building activities,
attracting foreign investment, cutting red tape, boosting enterprise, advancing the role of
research and development and employment programmes, while there is also a mention of
greater transparency of the social security system," Sustersic told the press.
The programme points to government efforts related to phasing out payroll tax and
simplifying Slovenia's tax code, he added. "We have mentioned that we are mulling
introducing a flat tax," he said.
Slovenia will inform the European Commission that it intends to hold a public debate on the
Reform Programme in the next month.
A report will be drafted on the basis of the conclusions of the debates in parliament and
among social partners and then sent to the Commission, Sustersic said, adding that the
programme could also be supplemented if the need be.
Sustersic added that Slovenia expected to get feedback from the European Commission on its
programme by January.
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LEGISLATION
Bill on Double Pricing Goes Through Second Reading
The bill on double pricing, which stipulates that price tags in tolars and euros will become
mandatory on 1 March 2006 and remain in place for 12 months, went through second reading
in parliament
The bill on double pricing, which stipulates that price tags in tolars and euros will become
mandatory on 1 March 2006 and remain in place for 12 months, went through second reading
in parliament on Tuesday, 25 October.
Double price tags are designed to ease the transition to the common European currency for the
consumers. The desired result, the government says, is also to build up people's trust in the
currency, and keep in check price hikes that could raise inflation.
In the period between March 2006 and the actual changeover on 1 January 2007, the central
parity rate, currently at SIT 239.64 to the euro, will be used for the calculation.
After the arrival of the euro coins and notes, the actual changeover rate as determined by the
EU Council will be used for the calculation.
Companies will have to have double prices on all products, but there will be some exceptions
for companies selling their goods in a specific way, or if double price tags would be
technically unfeasible.
According to the bill, filling stations, vending machines, book sales, gaming, as well as the
sale of meat, fish, groceries and bread may be exempt from the mandatory provisions under
certain provisions.
In the debate preceding the vote, the opposition Liberal Democrats (LDS) and coalition
Pensioners' Party (DeSUS) reiterated the concerns of retailers that introducing mandatory
double pricing before the euro-tolar rate is fixed could cause unnecessary additional expenses.
They proposed that double pricing become mandatory only after the rate is fixed, whereby
DeSUS lawmaker Vili Rezman noted that the European Commission has made the same
recommendation. Their amendments were voted down by the coalition.
Matej Lahovnik of the LDS said retailers could face additional expenses "just because the
government extended the period without any sensible explanation."
He said the LDS supports the introduction of double pricing after 28 June 2006, when the
mandatory two-year period in the ERM II exchange rate mechanism expires and the exchange
rate will presumably be fixed.
Meanwhile, the coalition insisted the government wants to prevent retailers from carrying out
price hikes under the pretense of the new currency. They also quoted analysis by the Bank of
Slovenia which suggests that the exchange rate will probably not change before it is pegged.
13
STATISTICS/FORECASTS
Business Sentiment Stays Put in October
Preliminary data shows that the overall business sentiment has stayed on a par with that in
September, 4 percentage points down on October 2004, but 5 percentage points above last
year's monthly average
Business sentiment remains unchanged in October, despite small rises in confidence among
consumers and in the manufacturing sector.
Preliminary data from the Slovenian Statistical Office shows that the overall business
sentiment has stayed on a par with that in September, 4 percentage points down on October
2004, but 5 percentage points above last year's monthly average.
The unchanged overall sentiment this month comes despite a small rise in consumer
confidence and retail indices, which edged up 1 percentage point each.
The manufacturing sector index has meanwhile remained unchanged from September and is
currently 2 percentage points below last year's average.
Slovenia the Least Fertile EU Country in 2004
Slovenian women on average have only 1.22 children in their lifetime, compared to the most
fertile EU country, Ireland, with 1.99 children
Slovenia had the lowest fertility rate of all EU member states in 2004, according to a Eurostat
demographics study. Slovenian women on average have only 1.22 children in their lifetime,
compared to the most fertile EU country, Ireland, with 1.99 children.
According to the survey, population across the EU25 increased by 2.3 million to 459.5
million, but the increase is the result of migration rather than birth rates.
Home to 1,997,600 people, Slovenia saw a 0.012% increase in population last year. Yet the
rate of natural increase was negative at -0.7 per 1,000 inhabitants. This is down from 5.8 per
1,000 inhabitants in 1980.
Interestingly, Slovenia is among the countries with the highest number of live births outside
marriage. With 43.5% births outside marriage, it trails only behind Estonia, Sweden,
Denmark, Latvia and France.
Foreign Debt Amounts to EUR 17.5bn in July
Slovenia's foreign exchange reserves topped EUR 8bn at the end of July
Slovenia's foreign exchange reserves topped EUR 8bn at the end of July, falling EUR 9.4bn
short of the overall foreign debt. This amounted to EUR 17.5bn, according to the latest issue
of the Bank of Slovenia Bulletin.
The bulk of foreign exchange reserves in July belonged to the central bank (EUR 6.6bn),
while the rest were the reserves of commercial banks.
Most of the overall foreign debt was in long-term debt (EUR 12.9bn). Short-term debt
amounted to EUR 3.4bn and liabilities to affiliated enterprises to EUR 1.1bn, the central bank
says.
While private debt topped EUR 13.8bn, public and publicly-guaranteed debt amounted to
EUR 3.6bn.
Tourist Visits and Overnight Stays Down This Summer
The Statistical Office recorded 906,000 tourist visits, down 1% from last summer, and
3,107,000 overnight stays, which is a drop of 2% year-on-year
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Tourist visits to Slovenia during the summer months have fallen slightly year-on-year. The
Statistical Office recorded 906,000 tourist visits, down 1% from last summer, and 3,107,000
overnight stays, which is a drop of 2% year-on-year.
Meanwhile, the number of visits in the first eight months of the year has increased by 1% to
1,697,000 year-on-year, while the number of overnight stays dropped by 1% to 5,539,000.
In line with the rising trend of foreign visitors since 2000, there were 1% less domestic guests
in the first eight months of 2005, while the number of foreign visitors went up 3%.
Furthermore, the share of domestic visits reached 35%, which is the lowest since Slovenia's
independence.
While 56% of foreign visits took place during summer season, most tourists came from Italy
(115,166 or up 2% up year-on-year), Germany (92,449 or down 11%) and Austria (54,671 or
down 8%). These guests also represented 44% of all overnight stays of foreigners.
The average number of tourist night during summer months has been slowly decreasing since
1991, when it was 3.4 nights. The number was highest in 1995, when it amounted to 5
overnight stays.
Tourism was most prosperous in mountain resorts, followed by the seaside and spa resorts.
There were less tourists than last year in all types of resorts except in spas and in Ljubljana,
where it was up 3%. Most overnight stays, namely 32%, were registered at the seaside.
Slovenian Population Exceeds 2 Million Mark
The Slovenian population surpassed the two million mark for the first time since
independence in 1991
The Slovenian population surpassed the two million mark for the first time since
independence in 1991, data from the National Statistics Office shows.
According to the figures, Slovenia's population grew 0.15% in the second quarter of this year
to stand at 2,001,114. The growth is largely a result of immigration and longer life
expectancy, the office said.
The Statistics Office highlighted that this is the second-highest population count for Slovenia;
the only time it was higher was at the time of independence in June of 1991.
Over the last 40 years, the average life expectancy has risen by 8.5 years on average, with
men now living 73.5 years on average and women 81.1 years.
The longer life expectancy and low fertility has led to a marked ageing of the population: in
1948, the average age of a Slovenian was 30.7 years; now it stands at around 40.
Moreover, the number of foreigners making up Slovenia's population has risen in the past
years to stand at 2%, while as many as 11% of Slovenia's population was born outside of the
country.
15
FINANCE
IMF Official Highlights Pitfalls of Flat Tax Rate
Speaking for the daily Delo, Biswajit Banerjee said that the flat tax may not be viewed solely
from the vantage point of neutrality of tax revenues, but instead seen through the prism of
fiscal policy as a whole
The outgoing head of the International Monetary Fund (IMF) mission for Slovenia has
welcomed the reform efforts of the Slovenian government, but noted that the proposed flat tax
rate must be embedded in the broader macroeconomic environment and a possible price and
wage hike averted.
Speaking for the daily Delo on Friday, 28 October, Biswajit Banerjee said that the flat tax
may not be viewed solely from the vantage point of neutrality of tax revenues, but instead
seen through the prism of fiscal policy as a whole.
Moreover, if the flat tax is introduced, people with the lowest income must get some sort of
social support; this in turn will affect the budget expenditures, in which case overall
expenditures will have to be adjusted to keep the budget deficit in check.
Banerjee moreover urged caution in the introduction of a single VAT rate and the resulting
one-off price hike. This may not lead to higher price expectations throughout the economy, or
else social partners and others will index wages accordingly, he said.
According to him, this would lead to a "dangerous price-wage spiral and inflationary
problems, which would ultimately lead to lower employment and economic growth."
Banerjee also reiterated his criticism of the new pension indexation system that the
government introduced at the beginning of its term in office, saying that problems are bound
to arise in the mid-term.
The new system adds 0.2 to 0.3 percentage points of GDP to pension expenditures per year.
The government could change the indexation, but "the decision will be political and
dependent on its objectives."
Overall, Banerjee sees Slovenia as well positioned for the adoption of the euro, although there
are some uncertain points.
Ljubljana Stock Exchange
The SBI 20 benchmark index lost only 12.37 points on the week to close at 4,515.85
The Ljubljana Stock Exchange (LJSE) lost some of the glee last week, as investors rushed to
cash in on profits they made over the first three weeks of October. Yet the profit taking eased
on Thursday, 27 October, and the curve turned up, so the SBI 20 benchmark index lost only
12.37 points on the week to close at 4,515.85.
Pharma company Krka once again accounted for the bulk of trading, with deals worth SIT
1.8bn (EUR 7.5m). After the profit taking of early week, Krka recovered towards the end of
the week and closed only 1.2% lower at SIT 95,407 (EUR 398.15).
Most other blue chips posted minor gains, with hardware trader Merkur up 0.45% to SIT
34,151 (EUR 142.52) and retailer Mercator edging up 0.19% to SIT 37,497 (EUR 156.48).
Mercator looks set to soar, as all those invited to take part in a crucial capital increase have
already started paying for fresh shares.
Oil company Petrol had a good week after the announcement of bumper profit for the first
three quarters, which was also accompanied by the resignation of CEO Janez Lotric, a sign for
investors that the leadership uncertainty was over. Petrol added 3% to SIT 61,039 (EUR
254.73).
16
The shares of companies on the free market mostly followed the blue chips, yet shares of
popular investment funds closed lower, sending the PIX investment fund index 1.52% lower
to 4,057.74. Bonds fared better, with the bond BIO index edging 0.05 points higher to 123.33.
Brokers wrapped up a total of 4,933 deals worth SIT 7.13bn (EUR 29.7m), with 64% of the
trading done in block transactions.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.63 (+0.06)
U.S. dollar (USD) - SIT 197.24 (-2.18)
Swiss franc (CHF) - SIT 154.97 (+0.04)
British pound (GBP) - SIT 351.46 (-2.35)
17
BRANCH INFORMATION
Slovenia Lags Behind in Efficient Energy Use
Slovenia lags behind the world's most developed in efficient use of energy resources, Milan
Medved, head of the Energy Association at the Chamber of Commerce and Industry of
Slovenia (CCIS), told the participants of an energy conference
Slovenia lags behind the world's most developed in efficient use of energy resources, Milan
Medved, head of the Energy Association at the Chamber of Commerce and Industry of
Slovenia (CCIS), told the participants of an energy conference on Monday, 24 October.
Addressing a strategic conference of energy companies, Medved said that Slovenia, like other
EU countries, is dependent on energy imports, which account for half of the country's
domestic demand.
He also stressed that the country's planned accelerated economic growth will increase energy
demand, so Slovenia should not place faith solely in more efficient energy usage.
Head of the Velenje coal mine Evgen Dervaric meanwhile said that coal accounts for around
20% of EU's energy output. As the imports of energy sources will rise from the current 50%
to 70% in 2030, the EU is not expected to cut down coal production, he added.
According to Dervaric, Slovenia should therefore retain the majority of its current production
in the mine, and find a compromise between respecting the Kyoto protocol and reaching
economic goals.
He believes that replacing coal with other energy sources would increase the country's
dependence on electricity imports.
Dervaric said that the mine contains enough coal for the next 40 years. Its coal is also to
become more competitively priced with a planned 15% reduction in production costs by 2014.
He also called for geological research into coal reserves in NE Slovenia, a project that would
cost SIT 1.5bn (EUR 6.26m).
European MEP Romana Jordana Cizelj said that the green paper on a European strategy for
the energy supply security includes coal as well as renewable energy sources and nuclear
power.
Nuclear power plants already cover a third of the total electricity demand in Europe, she
added, naming the recent report on the implementation of the green paper which said that EU
should continue to use all of its existing energy sources.
The director general of the Krsko nuclear power plant, Stane Rozman, agreed and said that
Slovenia's largest nuclear facility, if constantly upgraded, could operate for 20 years after its
due closing date in 2023.
According to Medved, Slovenia is expected to use 278 PJ (petajoules) of primary energy this
year (down 0,5% year-on-year) but increase its demand for the production output by 1.1% to
194.2 PJ.
He added that nuclear power presents 21.8% of the country's needs, 17.4% falls to solid fuels
and 4.6% is provided by hydro power; all the oil and gas it needs must be imported.
Vizjak Promises to Support Investment in Electricity Production
Economics Minister Andrej Vizjak has promised that the government will take measures to
build a framework conducive to investment in electricity production
Economics Minister Andrej Vizjak has promised that the government will take measures to
build a framework conducive to investment in electricity production.
Addressing a conference in Ljubljana on Monday, 24 October, Vizjak said that Slovenia must
look to boost its electricity production ahead of the planned liberalisation in 18 month's time.
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An analysis of the energy market indicates that it would be wise to put the majority of the
volume of electricity that must now be bought by national grid operator ELES under current
legislation on the electricity exchange, he said.
Moreover, he said that a part of the electricity imports and exports should be opened to
trading on the exchange.
In his opinion, it would make sense for the formation of a new market player to be built
around Eles Gen, the owner of the Slovenian half of the Krsko Nuclear Power Plant (the other
half is owned by Croatia).
Eles Gen would have a positive impact on the market in that it would promote competition,
allow for faster construction of power production facilities and could be the pillar of nuclear
power production in the country.
Ban on Free-Range Poultry Expanded in Slovenia
The National Veterinary Administration (VURS) ordered the extension of the ban on freerange poultry after it was confirmed that the bird flu virus discovered in neighbouring
Croatia was the lethal H5N1 strain
The National Veterinary Administration (VURS) on Wednesday, 26 October ordered the
extension of the ban on free-range poultry after it was confirmed that the bird flu virus
discovered in neighbouring Croatia was the lethal H5N1 strain.
On 22 October, the vets imposed mandatory confinement for free-range poultry in the
northeast and southwest corners of the country, which are considered as high-risk areas
because of extensive wetlands.
After the H5N1 strain was confirmed in Croatia, VURS wanted to extend the ban on the entire
country, but soon found that all the conditions for the measure have not been met and the EU
would not have approved the ban.
The vets therefore decided to confine poultry indoors in areas that are considered as risky,
VURS director Vida Cadonic Spelic told the press.
The ban now includes areas around major water systems and lowlands, such as the wider area
of the Vipavska Valley; a three-km zone along the river Krka; the Ljubljana basin; the area
along the Sava from Jesenice in the north downstream; and a similar zone around the Drava.
The areas excluded from the ban are the Karst, which has few water sources, and the
mountain ranges, where there is little water and few birds.
Yet even though there is no ban in these areas, the VURS still advises poultry farmers to keep
their animals indoors.
19
COMPANIES
Railways Take Short-Term Measures to Boost Operations
The supervisory board of the Slovenian Railways has adopted a plan of measures for 2005
and 2006 to bring the company back on track in the face of a looming loss of SIT 2.8bn (EUR
11.7m) this year
The supervisory board of the Slovenian Railways has adopted a plan of measures for 2005
and 2006 to bring the company back on track in the face of a looming loss of SIT 2.8bn (EUR
11.7m) this year.
The proposed measures include personnel restructuring, intensive marketing of cargo services
and changes to the contract with port operator Luka Koper, its biggest customer, supervisory
board chairman Peter Verlic told the press on Thursday, 27 October.
Despite the loss, Verlic was upbeat about the effects of the proposed measures considering
that cargo transport business grew by 4.5% so far this year and passenger transport posted a
2.5% increase in revenues.
Joze Jurkovic, the general manager of the Slovenian Railways, could not say when the
company would get out of the red. This is a long-term project, he said.
He said the management had ordered the cargo department to engage in active marketing and
boost volumes as much as possible, although "at this point we have more work than we can
handle."
Efforts will therefore also be directed at the elimination of bottlenecks which currently
hamper growth in cargo transport. Jurkovic said efforts are being made to improve
management, ensure faster turnover times and provide more engines.
Earlier in the day, the management announced it was entering into talks with the Railway
Transport Union in a bid to avoid a planned strike by the disgruntled union.
The company issued a press release saying that the company has adopted a stance on the
demands of the union - which represents about 15% of the 9,000 Railways workers - and
established a negotiating team.
Casar Appointed New Port Operator Boss
Casar, a former chairman of logistics company Fersped, replaces long-time Luka Koper
chairman Bruno Korelic, who resigned in the summer
The supervisory board of port operator Luka Koper appointed on Monday, 24 October Robert
Casar the new chairman of the management board.
Casar, a former chairman of logistics company Fersped, replaces long-time Luka Koper
chairman Bruno Korelic, who resigned in the summer amidst mounting speculations that he
would be replaced.
Commenting on the appointment, Casar said that his goal would be to strike a balance
between the interests of the port operator's owners, the state and the locals.
According to him, Luka Koper, the operator of Slovenia's lone maritime port, can only
become a global player through further expansion.
The port operator wants to build a third terminal, but plans for the project have run into fierce
opposition among locals in the town of Ankaran.
Apart from appointing Casar, the supervisors also appointed acting general manager Marjan
Babic to a place on the new management board.
Babic said he was happy with the appointments, adding that it was in the company's best
interest that the new board get down to work as soon as possible.
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The supervisory board of the company, which is majority owned by the state, is expected to
appoint another board member at its next session.
Poultry Company Perutnina Ptuj on Highest Alert
The most stringent security measures have been in place since 24 August, almost two months
before the EU and the National Veterinary Administration called for extra measures
Perutnina Ptuj, Slovenia's largest poultry company, is not concerned about the risk of bird flu,
as the most stringent security measures have been in place since 24 August, almost two
months before the EU and the National Veterinary Administration called for extra measures.
All facilities were closed and equipped with disinfecting carpets on 24 August, all cars
entering the facilities are disinfected and no unauthorised personnel are allowed access,
Perutnina Ptuj chairman Roman Glaser told STA on Monday, 24 October.
Moreover, he explained, all employees had to sign agreements pledging they would not keep
poultry at home; employees as well as subcontractors have also been sent to additional
training.
The company also has facilities for free-range chickens. According to Glaser, these animals
will be kept indoors as long as there is potential for infection with bird flu.
The confirmation of bird flu in the neighbouring Croatia has already started to affect
consumer behaviour, though. Retailer Mercator said that poultry sales have dropped
marginally.
Mercator spokeswoman Tanja Dodig Sodnik told STA that sales could drop further depending
on the news and how consumers respond to them.
Investors Keen on Motorway Company Bonds
Investors have bought the entire block of bonds, worth SIT 10.2bn (EUR 42.57m), issued by
the Slovenian Motorway Company (DARS) to finance the latest projects on the motorway
network
Investors have bought the entire block of bonds, worth SIT 10.2bn (EUR 42.57m), issued by
the Slovenian Motorway Company (DARS) to finance the latest projects on the motorway
network.
Demand outstripped supply at the recent auction and the average accepted price was 102.26%
of the nominal value, with the average accepted return of 3.8%, DARS said in a press release
on Tuesday, 25 October.
According to the company, the proceeds will be used to finance the construction of sections
on the motorway running from Slovenia's second largest city Maribor to the Hungarian
border, and sections in SW Slovenia near the port city of Koper.
The 15-year bonds with a fixed rate of 4% were offered to 50 potential financial investors in a
non-public offering, with 21 investors acquiring the debt securities.
This was the third series of bonds issued by DARS in the last 15 months: the company raised
SIT 13.43bn (EUR 56.1m) in its first issue in July of 2004, and then issued SIT 14.8bn (EUR
61.77m) worth of bonds in April of this year.
Najdi.si Looking for Strategic Investor to Accelerate Expansion
Noviforum, the company behind Slovenia's most popular search engine Najdi.si, is busy
looking for foreign and domestic strategic or portfolio investors to accelerate the second
round of expansion after it established a foothold in Serbia-Montenegro and Croatia
Noviforum, the company behind Slovenia's most popular search engine Najdi.si, is busy
looking for foreign and domestic strategic or portfolio investors to accelerate the second
round of expansion after it established a foothold in Serbia-Montenegro and Croatia.
21
"This expansion is capital and resource intensive, so we decided to seek out an investor who
understands the potential of Najdi.si and is motivated by its success to enter other markets,"
Noviforum director for the development of new markets, Peter Brecl, told the press in
Ljubljana on Tuesday, 25 October.
The company has already set up shop in Serbia-Montenegro with the localised search engine
www.pogodak.co.yu; the Croatian version is called www.pogodak.hr. According to Brecl, the
sites are currently among the top 15 sites in their respective countries.
Localised search engines in Macedonia and Bosnia-Herzegovina are to open by the end of the
year, which will wrap up the first round of expansion. Moreover, a new company, Interseek,
will be incorporated and put in charge of the expansion of technology, know-how and brands.
In the second phase of expansion, the company wants to create a network of 12 localised
search engines in Central and Southeastern Europe until 2008. Brecl said the target markets
all have significant potential for growth, which will enable Noviforum to grow along with
them.
BBC to Drop its Slovenian Service
The Slovenian Service will stop broadcasting in March 2006 at the latest
After adopting a new long-term strategy, the management of BBC World Service decided to
drop several of its regional sections, including Slovenia's.
The Slovenian Service, which came on air in April 1941, said on Tuesday, 25 October that it
will stop broadcasting in March 2006 at the latest.
Currently, six employees prepare over 7 hours of programme in Slovenian a week, while its
13 shows are broadcast by 24 radio stations in Slovenia, one in Austria and one in
Switzerland.
Head of the BBC World Service Nigel Chapman said that the proposed BBC restructuring,
which will enable the UK broadcaster to launch a TV channel in Arabic, is expected to cost
the company some 30 million pounds (EUR 44.41m).
He added that the Slovenian Service played an important role in bringing Europe as well as
Great Britain to Slovenians, and helped in building democracy in Slovenia.
The BBC also said it will drop ten other language services, most of them Central and Eastern
European.
Trimo Chief Executive Named Most Influential Businesswoman
Tatjana Fink, the chief executive of Trimo Trebnje, a maker of pre-fabricated construction
panels, has been selected by readers of the magazine Manager the most influential
businesswoman in Slovenia
Tatjana Fink, the chief executive of Trimo Trebnje, a maker of pre-fabricated construction
panels, has been selected by readers of the magazine Manager the most influential
businesswoman in Slovenia.
In a statement for the magazine preceding the award ceremony on Tuesday, 25 October Fink
advised young women who are vying for top corporate positions to be courageous.
"The biggest mistake is not doing anything. Business is associated with risk and there is
always the possibility that you will be making mistakes, yet this does not mean you should
give up your managerial career," she said.
Fink is followed by Cvetka Selsek, the chairwoman of SKB Banka, and Alenka Znidarsic
Kranjc, the chairwoman of asset management firm Prva pokojninska druzba.
The Trimo boss has also been selected as the role model for the next generation of
businesswomen, and came in second as the most influential woman in Slovenia overall.
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First place in that category went to State Prosecutor General Barbara Brezigar. Fink was
second and Andrijana Starina Kosem, the state secretary at the Economics Ministry, came in
third.
Petrol Chief Executive Janez Lotric Resigns
Lotric, who has been Petrol chief exec since 1998, said in a written statement that he decided
to step down to "ensure a uniform vision of development and continued success at Petrol"
Janez Lotric, the chairman of fuel trader Petrol, tendered in his resignation at the session of
the company's supervisory board on Wednesday, 26 October, effective on 30 November.
Lotric, who has been Petrol chief exec since 1998, said in a written statement that he decided
to step down to "ensure a uniform vision of development and continued success at Petrol."
He stressed that the management has been professional and acted in line with the company's
strategy and the law, which is confirmed by all performance indicators.
Lotric was hopeful that his resignation would enable Petrol to remain a key energy player in
Southeast Europe.
Supervisory board chairman Joze Zagozen was reluctant to comment on the resignation,
saying that Lotric stepped down because of personal reasons.
Speaking for STA, Zagozen said that the supervisors have not talked about a successor yet,
for they were not sure whether Lotric would resign.
The supervisors will choose the new chairman. "There is not much time and it is difficult to
find a man for such an important post in a public call for applications," he explained.
According to Zagozen, the new chief executive has got to be someone who is "highly
skilled...has good managerial competencies...and is neutral as regards politics."
Lotric's resignation brings to an end months of uncertainty at one of Slovenia's biggest
companies: since the new government took power at the end of last year, pundits have been
saying that he would have to go.
The pressure on Lotric to resign culminated at the company's AGM in July, when the biggest
shareholders, the state-run Restitution Fund (SOD) and Pension Fund Management (KAD),
refused to give the management a discharge for 2004.
The KAD and SOD quoted poor results in 2004 and excessive costs of consulting services as
the reason for their opposition to a discharge.
The next day, the director of finance and energy Vladimir Jancic stepped down. His successor
is to be appointed by the end of the year.
Under Lotric, who came to Petrol in 1989 as legal adviser, the company designed a new
strategy, expanding as an energy company as well as an international trade company.
In 2004, the company had 293 service stations in Slovenia, Croatia and Bosnia-Herzegovina.
It has an estimated market share of 68% in Slovenia.
Petrol Posts Solid Sales and Profit Growth
Oil trader Petrol increased net sales revenues by 20% to SIT 305.6bn (EUR 1.28bn) in the
first nine months of the year
Oil trader Petrol increased net sales revenues by 20% to SIT 305.6bn (EUR 1.28bn) in the
first nine months of the year. Net profits soared by 38% in the same period to SIT 7bn (EUR
29.2m), the company said on Wednesday, 26 October.
Calculated in accordance with international accounting standards, net profit is even higher, at
SIT 7.5bn (EUR 31.3m), the company said after the supervisory board session, at which chief
executive Janez Lotric stepped down.
Petrol sold 1.45 million tonnes of oil derivatives in the July-September period, which is in line
with business plans. Sales of non-oil products were up 11% to SIT 33bn (EUR 137.7m), with
electricity sales up 9% and sales of gas increasing by 5%.
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Watchdog Says Mobitel Has Significant Market Power
In line with this decision, Mobitel has been assigned special obligations aimed at keeping in
check the exercise of its dominant market position
The telecommunications watchdog has designated Slovenia's leading mobile operator Mobitel
as a company with "significant market power", a move aimed at keeping in check the
operator's position on the market.
According to the Agency for Post and Electronic Communications, Mobitel is designated as
holding significant market power on the mobile market in line with Slovenian
telecommunications legislation (which is based on EU regulations).
In line with this decision, Mobitel has been assigned special obligations aimed at keeping in
check the exercise of its dominant market position.
"This is one of the measures with which Slovenia is answering a warning received in July
from the European Commission regarding competition in telecommunications," acting head
of the Agency Tomaz Simonic told STA on Wednesday, 26 October.
Among other things, Mobitel will have to allow access to a part of its network capacity in
order to facilitate competition on the market.
It will also have to form a "suitable" wholesale pricing policy that would allow fair access to
the market for other mobile operators.
Simonic said that he expects that the European Commission will now withdraw its warning
regarding Slovenia's commitments for the promotion of competition on the
telecommunications market.
The warning, issued by the Commission in July, concerned the "legal vacuum" caused by the
cancellation of a number of SMP designations in a time that new telecommunications
legislation was entering into force.
According to Simonic, SMP designations in line with new legislation are now being issued,
with the majority already in place for fixed operators, while mobile operators are currently in
the midst of being scrutinised.
Meanwhile, the decision by the Agency for Post and Electronic Communication has already
been welcomed by Simobil, Slovenia's second-largest mobile operator. According to it, the
designation will allow measures that would keep Mobitel's wholesale prices in check, thereby
promoting competition. Such measures will have long-term positive effects for end-users and
the state since they promote competition and the development of modern services, Simobil
said.
Grand Union Hotel Celebrates 100 Years
At the time of its construction, the hotel was considered to be among the most modern and
beautiful buildings in Southeastern Europe, boasting lifts, central heating and a telephone
The four-star Grand Hotel Union, one of the most beautiful examples of Art Nouveau in
Ljubljana, celebrated its centenary on Friday, 28 October.
The hotel, which has had the former US President Bill Clinton, Spanish King Juan Carlos I,
Swedish King Karl Gustav XVI and the Dalai Lama among its guests, staged an Art Nouveau
Dance on 29 October to mark the event.
At the time of its construction, the hotel was considered to be among the most modern and
beautiful buildings in Southeastern Europe, boasting lifts, central heating and a telephone.
It was designed by Croatian architect Josip Vancas, also remembered for his other landmarks
of Ljubljana, such as the St Stanislav Catholic Educational Institution, the City Savings Bank
and others.
The hotel, which opened in 1905, was the brainchild of doctor and traveller Vinko Gregoric,
who secured financial support from the church and businesses. They established the Union
Hotel and building joint stock company in 1902 and started with the construction in 1903.
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Apart from its fine stuccos and etched glass panels, the hotel's biggest attraction was the
concert hall, which could take 1,400 people, for a long time the largest in Ljubljana.
During the 1920s the building was thoroughly modernised, with in-room telephones, running
cold and hot water and bathrooms. The building's kitchen, then home to Swiss and Italian
chefs, was also renovated.
The hotel has been throughout its history home to concerts, dances, state ceremonies, protest
meetings and lectures, with the notable exceptions of the first and second world wars.
The last renovation to date took place in 1998 by Slovenian architect Miha Dobrin, who
closely followed Vancas's original plans. The hotel has 194 rooms and suites.
Ljubljanske Mlekarne Concedes to Higher Milk Prices
Ljubljanske mlekarne, Slovenia's largest dairy, has decided to offer farmers one tolar more
per litre of milk
Ljubljanske mlekarne, Slovenia's largest dairy, has decided to offer farmers one tolar more per
litre of milk, hoping this will bring to an end the month-long price dispute and dam the
outflux of milk to Italy.
Farmers will get SIT 68.2 (EUR 0.28) per litre of highest quality milk, but this does not mean,
according to Ljubljanske mlekarne chairman Matjaz Vehovec, that negotiations with
cooperatives will stop.
"We have tried to meet the cooperatives half-way, hence the one-tolar increase," he said,
adding that they would continue to meet with the cooperatives frequently and discuss prices,
like other successful dairies do.
It is hoped that the move will cut the number of farmers who are selling their milk to Italy.
Vehovec said the dairy lost 10% of the milk it would normally purchase to Italian dairies, but
they have been acquiring it in Bosnia-Herzegovina.
"We will try to reach agreement with the farmers to keep as much milk here (in Slovenia) as
possible. If necessary, however, we will get the milk elsewhere," Vehovec stressed.
Vehovec also thinks that the prices farmers get in Italy are a part of a "certain policy" by
Italian dairies, as farmers in Italy do not get as much.
It is unclear how the cooperatives will accept the proposal: at the last round of price
negotiations on 18 October, they demanded 2.5 tolars more per litre.
Litostroj Says Deals with Iraq Not Part of Oil for Food
Litostroj E.I., the company mentioned in the report on the UN Oil for Food programme, has
denied involvement in the programme, saying that the deals mentioned in the report were
formally no longer part of the scheme
Litostroj E.I., the company mentioned in the report on the UN Oil for Food programme, has
denied involvement in the programme, saying that the deals mentioned in the report were
formally no longer part of the scheme.
According to the report, which was released on Thursday, 27 October, the company registered
as part of the Jordanian mission and paid US$ 4,512 in "after sale service fees" (which can be
interpreted as bribes) to get a deal worth US$ 781,004.
The company told STA they initially conducted business through the Slovenian UN mission,
but when Iraq stopped awarding contracts to Slovenian companies they carried out the
transaction through a Jordanian firm.
Litostroj had been taking part in hydroelectric projects in Iraq and joined the Oil for Food
programme to supply spare parts. They say they received payment from their partner in
Jordan and had no direct contact with Iraqi buyers, so they did not pay any "after sale service
fees".
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The commission, led by former US Federal Reserve Chairman Paul Volcker, has not found
any proof of irregularities in the conduct of five Slovenian companies which registered 12
contracts as part of the programme. The list of the "clean" Slovenian companies is comprised
of Iskra Instruments, which executed a US$ 82,700 contract involving the sale of generator
system equipment, the company Iskraemeco, which sold counters worth US$ 126,700, Krka,
which had two contracts selling the antibiotic Gentamycin amounting to US$ 15,662,375,
Lerox, with a US$ 529,795 contract for electronics spare parts, and the turbine system
company Litostroj Tovarna turbin, which executed seven contracts worth US$ 1,436,708
altogether.
Chemistry Institute Upgrades with EU Funding
The most important new piece of equipment is an 800 MHz nuclear magnetic resonance
(NRM) spectrometer, the most advanced device of its kind in Slovenia
The National Institute of Chemistry in Ljubljana inaugurated a new, cutting-edge facility on
Saturday, 29 October, a EUR 3.5m project co-funded by the EU.
The most important new piece of equipment is an 800 MHz nuclear magnetic resonance
(NRM) spectrometer, the most advanced device of its kind in Slovenia.
The new facility was presented at the end of a two-day conference on food safety, a field that
the institute's director, Peter Venturini, said would benefit from the new technology.
According to him, NMR is the most important method for determining the chemical structure,
biological function and interaction of molecules. It is crucial in science, pharmacy, food and
the development of new materials.
European Commissioner for Science and Research Janez Pozocnik, who delivered the
keynote address, also stressed the importance of the new technology for food development, a
priority at the EU level.
The facility was built with funding from the EU, the institute, the Ministry of Higher
Education, Science and technology, the universities of Ljubljana and Maribor, drug
companies Lek and Krka and the Institute of Metals and Technology.
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SLOVENIA IN BRIEF
Drnovsek Stands By His Kosovo Plan
President Janez Drnovsek has spoken out in support of his beleaguered plan for Kosovo status
talks. The plan is "good, deliberated and to the benefit of both sides," he told the press on
Monday, 24 October.
EU Says Drnovsek's Kosovo Proposal Different from EU's Stance
A plan for a status of Kosovo as outlined by Slovenian President Janez Drnovsek last week is
not a stance of the EU's, a spokesperson for the EU foreign policy chief Javier Solana told
STA on Wednesday, 26 October.
PM Convinced Unions Support Measures to Boost Competitiveness
Prime Minister Janez Jansa has said he is pleased that Slovenian unions almost unanimously
support proposed measures to bolster the competitiveness of the Slovenian economy and
reduce the tax burden on labour. Speaking after a marathon meeting with six of Slovenia's
largest trade union associations on Tuesday, 25 October, Jansa said that the unions backed
efforts to boost economic competitiveness in Slovenia. He said that he was happy with the
support for these efforts, although he pointed out that the unions had differing views on the
proposed introduction of a flat tax.
Ministerial Calls for Cooperation to Fight Crime in SE Europe
The 5th regional ministerial on illegal migrations, organised crime, corruption and terrorism
in SE Europe concluded on Friday, 28 October at Brdo pri Kranju with the participants
agreeing that they must strengthen cooperation to tackle the pressing problems.
Government to Create Community Service Jobs for Unemployed
The cabinet has adopted a programme of community service jobs that will target groups of
people who find it particularly difficult to get a regular job. The programme will set aside SIT
5bn (EUR 21m) for the creation of 5,300 community service jobs in 2006, Minister of
Labour, Family and Social Affairs Janez Drobnic told the press after a cabinet session on
Friday, 28 October.
Government Earmarks Additional Aid for Pakistan Earthquake Victims
The government approved at its session on Friday, 28 October additional aid for victims of
the 8 October earthquake in Pakistan, the Government Media and PR Office said. Slovenia
has thus earmarked a total of SIT 37m (EUR 154,440) in aid for Pakistani earthquake victims.
According to latest figures, 54,000 people died and 77,000 were wounded in the 7.6
magnitude earthquake that was centred in Pakistan-controlled Kashmir.
Government Earmarks Aid for Flood Repairs
The cabinet has set aside SIT 500m (EUR 2.1m) for repairs following the flash-flooding that
hit eastern Slovenia in August. The money, which will come from the budget reserve, will be
distributed in line with a preliminary relief programme, Environment Minister Janez
Podobnik told the press after the government session on Friday, 28 October.
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Government Names Acting Director of Farmland Fund
The government proposed at its session on Friday, 28 October that the parliament appoint
Sergij Daolio as acting director of the National Farmland and Forest Fund. Daolio would
takeover from outgoing Marja Majer Cuk, government spokesman Valentin Hajdinjak told the
press after the session.
Slovenian Minority Organisation in Hungary Celebrates 15 Years
An organisation representing the Slovenian minority in Hungary has marked its 15th
anniversary with a call to the Hungarian government to step up efforts to protect members of
the community. The Association of Slovenians in Hungary marked the anniversary with a
ceremony in Szentgotthard on Friday, 28 October.
Clocks Turn Back One Hour
Clocks around Slovenia were turned back one hour at 3 AM on Sunday, 30 October, marking
the conclusion of daylight savings time. Slovenia will run on regular Central European Time
(CET) until the next shift to daylight savings time in March of next year.
Caharija Receives Borstnik Ring
Miranda Caharija, the long-time actor of the Slovenian Theatre House (SSG) in Trieste, was
conferred this year's Golden Borstnik Ring for lifetime achievement as the curtain was
lowered on the Borstnik Theatre Festival on Wednesday, 26 October. Caharija received the
highest award for stage performance in Slovenia for the numerous memorable leading and
side roles that she has created in the 40 years since she became a permanent member of the
Trieste theatre at the age of 18.
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