Slovenia Business Week no. 31, October 9th, 2006
Table of Contents:
HEADLINES
More and More Households Have Broadband Internet
In the first quarter of 2006, 54% of all households in Slovenia had Internet access, 6
percentage points more than in the same period last year
In the first quarter of 2006, 54% of all households in Slovenia had Internet access, 6
percentage points more than in the same period last year. This means that just under 350,000
households had Internet access, which was used by more than 900,000 people. <BR><BR>
The proportion of households with broadband access (ADSL, VDSL, cable) increased by 15%
to reach 34%, according to the National Statistical Office. <BR><BR>
It is the presence of children in a household which most of all decides whether the household
has Internet access. Some 75% of such households had Internet access, as opposed to only
47% childless households. <BR><BR>
There are more and more people who use the Internet every day: 37% of those between 10
and 74 use it every day, which is 9% more than in the same period last year. <BR><BR>
Internet use has increased in all age groups but still remains highest in younger age groups.
Some 81% of those aged between 16 and 34 had used the Internet in the past three months
while only half as many aged between 35 and 54 had used it in the same period. <BR><BR>
The level of education of a person also strongly influences Internet use. Only 39% of those
with a lower level of education logged on in the first quarter while 90% of those with a
university degree accessed the Internet. <BR><BR>
About 42% of Internet users use the service to gather information about a product prior to
purchase, while 21% use it to search for health-related information. 43% of those aged
between 10 and 74 use email. <BR><BR>
A little less than a third accessed government web pages, 26% visited forums, chat rooms and
blogs. 15% of people between 10 and 74 have bought something on the Internet while in the
past three months 8% had bought something. <BR><BR>
Virtually all the companies with 10 employees or more had access to the Internet in the first
half of 2006. Three quarters had broadband. Most of them, 89%, used the Internet for banking
and financial services while 73% used it to follow market conditions. <BR><BR>
About 62% of companies with 10 employees or more had their own website in the first
quarter of this year, which is 3% more than in the same period last year. Most company
websites featured their products, while half of them also offered catalogues and prices.
Prime Minister Satisfied Two Years After Elections
Jansa believes that the results reached in the economy, in particular inflation and
unemployment, show that the situation has improved exceptionally under the current
governing coalition
Slovenia is in a much better position than it was two years ago when the current government
took over, Prime Minister Janez Jansa told the press on Tuesday, 3 October, exactly two years
after the current government parties won the general election. <BR><BR>
Jansa believes that the results reached in the economy, in particular inflation and
unemployment, show that the situation has improved exceptionally under the current
governing coalition. <BR><BR>
Slovenia is also in a good position internationally, in the EU as well as NATO. It will be the
first of the new EU members to adopt the euro on 1 January 2007 and it will hold the EU
presidency in the first half of 2008, he noted. <BR><BR>
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Jansa also stressed that the budget deficit and taxes are decreasing. "For the first time in
Slovenia's history the citizens will be paying lower taxes. At the same time the companies will
also be less burdened," he pointed out. <BR><BR>
Jansa also rejected the opposition's accusations that the government has been interfering in
business and media. <BR><BR>
"Slovenia's business is doing extremely well. The shares of companies in which the
government has been said to be interfering, now reach higher prices than two years ago," he
added. <BR><BR>
Jansa also assured that the state would withdraw from most of the companies in which it owns
shares in the following years. <BR><BR>
The eighth Slovenian government is a coalition of the Slovenian Democrats (SDS), New
Slovenia (NSi), People's Party (SLS) and Pensioners' Party (DeSUS). The parties hold 49
seats in the 90-member legislature.
Government Increases Work Permit Quota for Foreigners
The government increased the quota of work permits for foreigners from 17,350 to 18,500
The government on Thursday, 5 October increased the quota of work permits for foreigners
from 17,350 to 18,500, as almost all work permits for the year have been used up and there is
demand in particular for additional construction workers and posted workers. <BR><BR>
A total of 17,350 work permits had been determined in the relevant government decree, but
only 224 were left unused at the end of August, Labour, Family and Social Affairs Minister
Janez Drobnic told the press after the cabinet session. <BR><BR>
According to him, the additional permits would be granted for seasonal construction work
(500), new jobs (350) and the rest for posted workers. <BR><BR>
The proposal for an increase in the work permit quota was endorsed in June by the Economic
and Social Council, the industrial relations forum of trade unions, employers and the
government.
3
INTERNATIONAL COOPERATION
Slovenia, Italy, Croatia, Hungary Mull Future Cooperation
Bozo Cerar believes that the future of the partnership above all lies in the cooperation in the
areas of energy, infrastructure, transport and ecology, however, the partners should also
exchange their opinions on the political situation in the region
State secretaries of Slovenian, Italian, Hungarian and Croatian foreign ministries agreed at
their meeting in Rome on Monday, 2 October that cooperation between the countries should
continue to develop within the 1996-established partnership of the four states. <BR><BR>
While Croatia's Hido Biscevic and Hungary's Laszlo Szoke called for the preservation of the
partnership, Italy's Famiano Crucianelli stressed that it should be transformed, but not buried.
<BR><BR>
Slovenia's Bozo Cerar believes that the future of the partnership above all lies in the
cooperation in the areas of energy, infrastructure, transport and ecology, however, the partners
should also exchange their opinions on the political situation in the region. <BR><BR>
One of the main issues at the discussion was the situation in Southeastern Europe after the
elections in Bosnia-Herzegovina. They were also of the opinion that an agreement between
Kosovo and Serbia on the future status of the Serbian province seems impossible. <BR><BR>
The state secretaries also agreed that the main aim of the partnership - Slovenia and Hungary's
EU and NATO membership - has been achieved. <BR><BR>
Cerar also held bilateral talks with Crucianelli, where they discussed most of the open issues
between the countries, including the Slovenian minority protection act. <BR><BR>
Cerar expressed Slovenia's hope that Italy will as soon as possible confirm the list of the
municipalities, where the act will be implemented and also contribute to the forming of the
Parity Board that supervises the implementation of the act. <BR><BR>
Cerar also reminded Crucianelli that Slovenia expects to be involved in the evaluation of the
cross-border environment impact of the two gas terminals that Italy wants constructed in its
Gulf of Trieste. <BR><BR>
The pair also touched on the question of reconciliation between Slovenia, Croatia and Italy
regarding the events that took place during and after WWII and agreed that it is a sensitive
issue. <BR><BR>
At the meeting Croatia took over the one-year presidency from Italy. Croatia was initially not
a member of the partnership, but joined it in 2000.
German Ambassador Lauds Ties with Slovenia
German Ambassador Hans-Joachim Goetz has praised the relations his country has had with
Slovenia ever since diplomatic ties were established between the two 15 years ago
German Ambassador Hans-Joachim Goetz has praised the relations his country has had with
Slovenia ever since diplomatic ties were established between the two 15 years ago. Moreover,
economic ties can definitely be labelled a "success story", Goetz said addressing a reception
upon Day of German Unity at the embassy's residence just outside Ljubljana on Tuesday, 3
October. <BR><BR>
In support of this claim, the ambassador said that bilateral trade had surged by 64% since
1991. He also revealed plans to set up a German-Slovenian chamber of commerce in the
following months. <BR><BR>
Goetz pointed to the stint at the helm of the EU that Germany, Portugal and Slovenia would
hold in succession between January 2007 and June 2008. "This is a project of special
significance that will bring us closer together still." <BR><BR>
4
Germany played an important role in Slovenia's independence aspirations and efforts to win
the country's international recognition. Germany, joined by Sweden and Iceland, were in fact
the first West European countries to recognize Slovenia on 19 December 1991. <BR><BR>
What is more, Germany was among the first to establish diplomatic ties with Slovenia on 15
January 1992. On the same day, it abolished visas for Slovenian citizens, while its ambassador
was the first to assume diplomatic post here. <BR><BR>
As the name of the holiday suggests, the Day of German Unification celebrates German reunification on 3 October 1990.
FM Rupel Meets Assistant US Secretary of State
Receiving Kurt Volker, the US principal deputy assistant secretary of state for European and
Eurasian affairs, Foreign Minister Dimitrij Rupel presented Slovenia's view of the situation in
SE Europe
Receiving Kurt Volker, the US principal deputy assistant secretary of state for European and
Eurasian affairs, on Wednesday, 4 October, Foreign Minister Dimitrij Rupel presented
Slovenia's view of the situation in SE Europe, stressing that countries in the region need clear
European prospects. <BR><BR>
As the Foreign Ministry said in a press release, Rupel invited the American side to manage
joint projects as part of the Centre for European Perspective established by Slovenia.
<BR><BR>
Rupel moreover presented preparations for the country's stint as EU president in the first half
of 2008, highlighting the EU-US summit as a major event. <BR><BR>
The pair also exchanged views on the situation in Central Asia and the Caucasus and pointed
to the importance of both regions to Europe, the ministry said.
Slovenia, Madagascar Establish Diplomatic Relations
The Slovenian Ambassador to the UN Roman Kirn and his Malagasy counterpart Zina
Andrianarivelo-Razafy, exchanged charters on the establishment of diplomatic relations
between the two countries
The Slovenian Ambassador to the UN Roman Kirn and his Malagasy counterpart Zina
Andrianarivelo-Razafy, exchanged charters on the establishment of diplomatic relations
between the two countries as they met at the Slovenian mission at the UN on Thursday, 5
October. <BR><BR>
The ambassadors stressed their interest in reviving economic cooperation between the two
countries and called for business representatives to be present at the first official visit in one
or the other state. <BR><BR>
Andrianarivelo-Razafy also mentioned that his country appreciates the activities of Slovenian
missionary Pedro Opeka, who helps the poor in Madagascar. <BR><BR>
Madagascar, previously an independent kingdom, was colonised by France in 1896. The
island regained independence in 1960. The state has a surface of 587,000 square kilometres
and 17.5 million inhabitants, with 41% of them Christians.
Official Praises Slovenian Companies' Knowledge of Western Balkans
Slovenian companies have many competitive advantages in the markets of the Western
Balkans, which is why foreign companies are increasingly treating them as important
partners for joint ventures there, Economy Ministry State Secretary Andrijana Starina Kosem
has told the participants of a business conference in New York
Slovenian companies have many competitive advantages in the markets of the Western
Balkans, which is why foreign companies are increasingly treating them as important partners
5
for joint ventures there, Economy Ministry State Secretary Andrijana Starina Kosem has told
the participants of a business conference in New York. <BR><BR>
Starina Kosem, speaking at the close of a two-day conference on investment in SE Europe,
organised by the Center for Strategic and International Studies, also stressed Slovenia's
favourable geo-strategic position for foreign investment. <BR><BR>
"I especially stressed Slovenia's joining the EU and NATO, which gives cooperation with
foreign companies a new dimension," she told STA on Friday, 6 October. <BR><BR>
In her speech, Starina Kosem moreover pointed out Slovenia's competitive edge in entering
Western Balkans markets, which are based on historical, economic and cultural reasons. She
also presented Slovenian endeavours for increasing the share of foreign direct investment in
the country. <BR><BR>
According to her, the participants agreed that progress in the Western Balkans depends on
cooperation between the countries in the region, the EU and the international community. The
conference also stressed the importance of Kosovo's future status, which influences the entire
region, she added. <BR><BR>
The aim of the conference was to speed-up public and private sector endeavours in
strengthening regional cooperation and economic development of SE European countries.
India to Open Embassy in Slovenia
Moreover, the ambassador has already been appointed, an Indian official revealed during
political consultations with Slovenia on 6 October
India has voiced its plans to open an embassy in Ljubljana shortly. Moreover, the ambassador
has already been appointed, an Indian official revealed during political consultations with
Slovenia on Friday, 6 October. <BR><BR>
State Secretary Bozo Cerar, who headed the Slovenian delegation in New Delhi, praised
India's decision as further impetus to stronger bilateral ties. <BR><BR>
According to a Foreign Ministry press release, Cerar and his Indian counterpart N Ravi voiced
interest in exchanging visits at the top political level and underscored the need to boost
bilateral ties, in particular in economy, science and technology. <BR><BR>
In what was the first such meeting after Slovenia opened its embassy in India in 2002, the two
sides established a common interest in signing an agreement to promote investment.
<BR><BR>
The Foreign Ministry reported further that Cerar and Ravi discussed the situation in South
Asia and Western Balkans, while they also touched on bilateral cooperation within
international organisations, fight against terrorism and dialogue between cultures and
religions. <BR><BR>
The Slovenian official was also reported to have briefed the Indian side on Slovenia's
preparations for its stint at the helm of the EU in the first half of 2008. He reportedly voiced
Slovenia's readiness to strengthen, as the EU president, political dialogue with India.
<BR><BR>
While in New Delhi, Cerar was also received by Minister of State for External Affairs Anand
Sharma, whom he invited to visit Slovenia as India opens its embassy in Ljubljana at the end
of this or early next year.
6
EUROPEAN UNION
Slovenia, Portugal Discuss EU Presidency Preparations
Slovenian Foreign Minister Dimitrij Rupel met his Portuguese counterpart Luis Amado
Slovenian Foreign Minister Dimitrij Rupel met his Portuguese counterpart Luis Amado on
Monday, 2 October for talks about joint preparations for EU presidency that Portugal and
Slovenia will hold in the first second of 2007 and first half of 2008 respectively. <BR><BR>
Slovenia asked Portugal for help in framing policies on relations with Latin America, whereas
Portugal was interested in Slovenia's know-how on the Western Balkans, Rupel told STA
after the meeting. <BR><BR>
Slovenia and Portugal make up a troika with Germany. The trio will chair the EU
independently, but they need to lay out an 18-month programme of activities from early 2007
to mid-2008. <BR><BR>
According to Rupel, the draft programme has been completed. "We got it last week. We will
now study it and submit our remarks," he said, adding that time was running out since
Germany's presidency starts in under three months. <BR><BR>
Rupel said that Portugal plans to highlight the debate on the EU's constitutional treaty during
their stint. "After elections in France Germany will have little time for a breakthrough, so
most of the work will have to be done by Portugal and Slovenia," he added. <BR><BR>
Rupel said that he and minister Amado also agreed that countries in the Western Balkans need
to join the EU. "Enlargement must continue, but we realise this is a difficult topic for the EU
right now," he said. <BR><BR>
Talks also touched on Russia, which Rupel said would be a big topic for both presidencies.
Relations with this big eastern neighbour must be maintained, which Portugal and Slovenia
will strive for, he said. <BR><BR>
Another major theme of both presidencies would be illegal migration. "In my opinion this is
an area that needs a bit more attention than envisaged in the 18-month presidency
programme," Rupel said. <BR><BR>
This visit constituted a formal establishment of working contacts for preparations for the
presidency. Rupel said it was agreed that regular meetings would be held and exchanges of
foreign ministry staff carried out. <BR><BR>
Rupel said cooperation between experts and diplomats from the three countries would be
provided for. "However, Portugal and Slovenia realise that Germany has the advantage of a
bigger staff," he noted. <BR><BR>
Minister Rupel also thanked Amado for Portugal's proposal that delays in the expansion of the
Schengen passport-free area could be overcome with the expansion of the Portuguese system.
This would be a favourable solution for Slovenia, he said.
Results of EU Innovation Coach Project Presented
The projects form the basis of a public-private partnership that would also be able to run for
EU funds in the bloc's 2007-2013 financial plan
Proposals to increase competitiveness, cohesion and employment in tourism, technology and
health care, and supported by the EU Innovation Coach project, were presented on
Wednesday, 4 October. <BR><BR>
The projects form the basis of a public-private partnership that would also be able to run for
EU funds in the bloc's 2007-2013 financial plan, explained Vanja Rangus, the head of
Ljubljana's Department for Economic Development and Tourism. <BR><BR>
7
In the area of tourism, a total of 13 projects, worth EUR 36m, are currently planned with
participants ranging from state institutions to NGOs. The aim of the projects is to develop
Slovenia's tourist potential, including establishing a new tourist innovation centre, Rangus
added. <BR><BR>
Proposals for technological projects mostly refer to technological parks, incubator and
innovation centres. The projects also provide for modernisation of services alongside various
scholarships, subsidies, easier access to venture capital and other benefits. <BR><BR>
Projects in health care are worth around EUR 25m and are aimed at more efficient use of the
existing human, space and infrastructure potentials, at market orientation of health care
services, the developing of the educational system aimed at prophylactic, and joining of
hospitals, institutes and businesses in a consortium, she revealed. <BR><BR>
The partners in the projects should prepare the financial plans by November, so they will be
able to acquire funds from the Ljubljana municipality, Rangus explained. <BR><BR>
The Innovation Coach project was designed by the European Commission to encourage and
carry out regional strategies in the fields of innovation, education and business. It also
provides for close cooperation between domestic and foreign experts. <BR><BR>
Ljubljana Mayor Danica Simsic and Marjan Hribar, the head of the tourism directorate at the
Ministry of the Economy, also signed a statement pledging their support for the projects.
Slovenia to Receive over EUR 19m from EU Fisheries Fund
The European Commission adopted a decision on allocating EUR 19.33m to Slovenia from
the European Fisheries Fund (EFF) for the 2007-2013 period
The European Commission on Wednesday, 4 October adopted a decision on allocating EUR
19.33m to Slovenia from the European Fisheries Fund (EFF) for the 2007-2013 period. The
total amount of money dished out by the fund stands at EUR 3.849bn in the period.
<BR><BR>
The bulk of the funds, EUR 2.6bn, will go to underdeveloped regions, among them Slovenia.
Around EUR 272m has also been set aside for Bulgaria and Romania. <BR><BR>
The largest chunk has meanwhile been awarded to Spain, which is to receive just over EUR
1bn. Poland can look forward to EUR 652 and Italy to EUR 377m. <BR><BR>
The EFF replaces the Financial Instrument for Fisheries Guidance (FIFG) as the EU's core
instrument for financial support to the fisheries sector and fishing communities. <BR><BR>
The total budget allocated for the FIFG for the 2000-2006 period was EUR 37bn for the 15
member states. An additional EUR 272m was earmarked for the 10 new members for the
period from 1 May 2004 to 31 December 2006.
Chamber of Commerce Welcomes EU's Anti-Dumping Measures
The Slovenian Chamber of Commerce and Industry (CCIS) has welcomed new anti-dumping
measures that the EU has slapped on imports of leather shoes from China and Vietnam, but
warned that they would not have a significant impact on prices
The Slovenian Chamber of Commerce and Industry (CCIS) has welcomed new anti-dumping
measures that the EU has slapped on imports of leather shoes from China and Vietnam, but
warned that they would not have a significant impact on prices. <BR><BR>
"The duty will not have a significant impact on the European markets, as the difference
between the import price of the shoes subject to the additional duty and the retail price is
negligible," Joze Smole, who heads the CCIS's association for textile, garment and footwear
industries, told STA on Thursday, 5 October. <BR><BR>
The measures were formally endorsed by the EU interior ministers on Thursday, 5 October, in
a bid to counter the influx of leather shoes from China and Vietnam. <BR><BR>
8
They involve imposing import duties of 16.5% on Chinese shoes with leather uppers, which
replaces the current temporary duty of 19.4%. The duty for shoes from Vietnam will be 10%
instead of the temporary 16.8%. <BR><BR>
China has said it would consider retaliatory measures, while Vietnam voiced the fear that
numerous jobs will be lost as a result.
Innovation Key to Success
European Science and Research Commissioner Janez Potocnik has urged Slovenian
managers to invest more in science and research, saying Europe needs innovation and
entrepreneurs who would up the currently low level of investment in R&D
European Science and Research Commissioner Janez Potocnik has urged Slovenian managers
to invest more in science and research, saying Europe needs innovation and entrepreneurs
who would up the currently low level of investment in R&D. <BR><BR>
Slovenia earmarks between 1.5 and 1.6% of its GDP for science and research, which places
the country just below the EU average, Potocnik told a panel in Maribor on Friday, 6 October,
organised as part of the Manager Association meeting. <BR><BR>
Potocnik said more attention should be paid to the issue, in particular as Europe's rivals, the
US and Japan, invest much more in R&D while emerging economies such as China, India and
Brazil could soon catch up with Europe given their growth rates. <BR><BR>
The Slovenian commissioner as well as other panelists agreed on the need for tighter
cooperation between business and academic sectors. He briefed the managers on national
reform programmes designed by the European Commission to bring Europe out of the
"limbo". <BR><BR>
The Commission is expecting reports from member states so as to issue a report on their
progress on 12 December. At the same time it is expected to make recommendations for each
individual country, which Potocnik believes could put some countries in a bad mood.
<BR><BR>
Potocnik encouraged Slovenia to make use of structural and cohesion funds, not just for road
and other infrastructure but also for knowhow. <BR><BR>
Referring to insufficient cooperation between companies and the academic sphere, Franjo
Bobinac, the CEO of Gorenje, said he would wish the company not only manufactured the
best household appliances, but also created new needs for consumers. <BR><BR>
This is the sense of being innovative, Bobinac said, adding that Gorenje was having great
expectations about its "smart table", a combination of a kitchen table and fridge. <BR><BR>
Like Gorenje, Trimo Trebnje, the prefabricated constructions maker, takes customers' needs
into account when developing a product. Moreover, Trimo Trebnje CEO Tatjana Fink
believes innovation should be looked for with individuals. <BR><BR>
Yet she also believes that the education system in Slovenia has failed to give young people
the sufficient chance to develop their creative potential. <BR><BR>
Hugo P. Tschirky of the Swiss Federal Institute of Technology proposed Slovenian companies
should set up a group of innovative companies to look for modern innovative practices so as
to contribute to more innovations.
9
LEGISLATION
Parliament Passes Law on Minimum Wage
The law states that the minimum wage - the lowest amount which the employer can pay the
employee for work carried out in full working time - from 1 August 2006 onwards amounts to
SIT 125,052 (EUR 522)
Prior to the end of extraordinary session, at which the lawmakers endorsed the package of tax
legislation in first reading, parliament unanimously passed the minimum wage act on
Wednesday, 4 October. <BR><BR>
The law was already becoming urgent, the state secretary at the Labour, Family and Social
Affairs Ministry Marjeta Cotman said. <BR><BR>
Employers and employees had already agreed on a wage increase, as of 1 August. They had
not yet, however, agreed on increasing the minimum wage. <BR><BR>
That is why for September, payments of the minimum wage cannot yet be increased to the
foreseen level of consumer price growth, she warned. <BR><BR>
The law states that the minimum wage - the lowest amount which the employer can pay the
employee for work carried out in full working time - from 1 August 2006 onwards amounts to
SIT 125,052 (EUR 522). <BR><BR>
In the coming years, the Labour Minister will increase the minimum wage according to the
expected growth in life necessities after having consulted the social partners.
10
STATISTICS/FORECASTS
September Turnover on LJSE Up 49% Y/Y
Turnover on the Ljubljana Stock Exchange (LJSE) amounted to SIT 21.4bn (EUR 89.48m) in
September
Turnover on the Ljubljana Stock Exchange (LJSE) amounted to SIT 21.4bn (EUR 89.48m) in
September, 49.15% more than in the same month last year, according to the monthly
statistical report from the LJSE. <BR><BR>
Shares of listed companies (excluding investment funds) accounted for 78.9% of the overall
turnover, followed by investment funds (14.6%) and bonds (6.5%). <BR><BR>
The market capitalisation of shares stood at SIT 2.017trn (EUR 8.43bn), of which shares
(excluding investment funds) represented 53.5%, bonds 41.9% and investment funds 4.6%.
<BR><BR>
Pharma company Krka remained the most coveted share in September, clocking up deals
worth SIT 8.1bn (EUR 33.87m). Fuel trader Petrol came in second with SIT 2.4bn (EUR
10.03m), followed by retailer Mercator with SIT 1.3bn (EUR 5.43m). <BR><BR>
The main market SBI 20 index ended the month at 5,603.19 points, a new all-time high and
up 24.8% year-on-year. <BR><BR>
The SBI TOP index of five blue chips meanwhile added 3.6% in September, reaching its
highest value on 29 September at 1,305.39 points. <BR><BR>
The PIX investment fund index also had a month in the black, gaining 3.8% (12.9% year-onyear), while the BIO bond index added 0.6% in September.
Energy Consumption Up 2.2% in 2005
Slovenians used 2.2% more energy in 2005 in comparison with 2004, with oil derivatives
accounting for 47% of the total use
Slovenians used 2.2% more energy in 2005 in comparison with 2004, with oil derivatives
accounting for 47% of the total use, according to data published by the National Statistics
Office on Friday, 6 October. <BR><BR>
Electricity figured as the second most important resource of energy with 21%, followed by
natural gas (17%). <BR><BR>
The share of renewable resources in the total energy consumption stood at 9% in 2005.
Slovenia's energy dependency rose by 0.2% in 2005 in comparison with 2004 and stood at
52.2%. <BR><BR>
Natural gas consumption rose by 3% and oil derivatives by 2.7%. Among oil derivatives,
diesel consumption went up almost 16%. <BR><BR>
The share of renewable electric energy from renewable sources in 2005 amounted to 23.7%,
4.9% less than in 2004. The drop was caused by lower output of Slovenia's hydro power
plants, which was 15.5% lower in 2005 year-on-year. <BR><BR>
The country's aim of getting 33.6% of power from renewable sources thus mainly depends on
hydrologic conditions in 2006, the office added. <BR><BR>
Meanwhile, domestic power output rose by 1% in 2005 over 2004, with imports rising by
3.1%.
11
FINANCE
New Banking Bill Does Not Change Guarantee Schemes
The banking bill that the government adopted the previous week does not change the system
of deposit guarantee schemes
The banking bill that the government adopted the previous week does not change the system
of deposit guarantee schemes. However, it does raise the guarantee sum marginally, by 3% to
EUR 22,000, a Finance Ministry official told the press as she presented the new bill on
Monday, 2 October. <BR><BR>
According to Katja Bozic, the head of the ministry's directorate for the financial system, the
bill also determines rules on banking operations and supervision in accordance with the Basel
II standards. <BR><BR>
"The purpose of Basel II is to set less stringent criteria for capital adequacy for credit risk and
determine additional capital adequacy requirements for operational risk," she explained.
<BR><BR>
The new system lowers capital adequacy requirements for all banks, but it requires from
bigger banking systems that they use more sophisticated models for the valuation of market
risks, Bozic added. <BR><BR>
This will facilitate the operations of small and medium-sized banks as well as mortgages, she
said, adding that an analysis carried out in 40 countries had shown that capital requirements
for smaller banks will be reduced. <BR><BR>
Meanwhile, bigger cross-border banking groups will have to use advanced valuation models.
<BR><BR>
The Basel II standards also upgrade the supervision between the supervisors in the country of
the head office and the countries of the subsidiaries, giving special powers to the supervisor in
the country of the head office in certain cases, Bozic explained. <BR><BR>
If, for example, Slovenia's NLB became a subsidiary of Belgian banking group KBC (which
owns a third of NLB), the Slovenian supervisor would retain certain supervision powers, she
said. Meanwhile, the Belgian supervisor would be in charge of the entire banking group.
<BR><BR>
However, the relevant EU directive stipulates cases where the supervisor in the country where
the bank is headquartered has the exclusive decision-making power, Bozic said. <BR><BR>
"This does not change the fact that the responsibility for the stability of the financial system is
in the hands of the member states. This also changes consolidated supervision," Finance
Minister Andrej Bajuk said, adding that this explained the state's decision regarding the sale
of NLB to KBC. <BR><BR>
KBC owns 34% of NLB, but the state has been reluctant to let it become a majority owner,
quoting supervisory concerns. KBC announced earlier this year that it would "reassess" its
role in NLB, limiting it to that of a pure financial investor. <BR><BR>
Minister Bajuk said after KBC's announcement in May that selling the bank to a foreigner
would greatly limit Slovenia's leverage over its financial market. According to him, EU
regulations demand that Slovenia ensure stability of its financial sector, which is why it does
not want to lose an important instrument of influence on the sector. <BR><BR>
"Incompatibility between responsibilities is a serious political question which the European
Parliament has already started to debate. Until their is a final solution, we shall not change our
position," Bajuk said. <BR><BR>
Bajuk also added that relations in NLB were "perfectly normal". "The government as the
biggest owner and out partners have not closed the doors to each other. Talks are continuing,
but there is nothing substantial to report," he added.
12
Sava Moves to Acquire Belgrade-Based Polis
Pozavarovalnica Sava, a Ljubljana-based reinsurance company, has published a bid to
acquire Serbian insurer Polis, offering EUR 300 per share
Pozavarovalnica Sava, a Ljubljana-based reinsurance company, has published a bid to acquire
Serbian insurer Polis, offering EUR 300 per share. While Sava set the target stake at 73.81%,
it is prepared to acquire up to 99.92%, which would cost it some EUR 12m. <BR><BR>
The reinsurer published the takeover bid in Belgrade papers on 26 September, saying it was
prepared to acquire 406,246 shares or 99.92% of Polis. According to the Serbian stock
registry website, the deadline for the acquisition is 19 October. <BR><BR>
Serbian central bank information ranks Polis 8th among 17 insurance companies operating in
the country, boasting a total of EUR 4.2m in premiums. <BR><BR>
According to Serbian press, its biggest shareholder is Polis Beobanka under receivership,
which holds a 66.32% stake. The stake is in fact commanded by the state after Beobanka lost
its licence due to liquidity problems in 2001. <BR><BR>
According to information posted on its website, Polis was set up as the result of a merger
between Serbian insurance companies Kolos and Beobanka in 2002. It is based in Belgrade,
operating a further eight branch offices across Serbia. <BR><BR>
Pozavarovalnica Sava has recently acquired Kosovo insurer Dukagjini, while it has
withdrawn from Croatia's Helios Osiguranje.
Tax Office to Return EUR 9.86m of Default Interests to NKBM
According to the bank, the money will be returned on the basis of a July Supreme Court
decision and a September decree by the Ministry of Finance
The Slovenian Tax Administration (DURS) is to pay SIT 2.36bn (EUR 9.86m) of default
interests to Slovenia's second largest bank, Nova Kreditna banka Maribor (NKBM), the bank
said on Wednesday, 4 October. <BR><BR>
According to the bank, the money will be returned on the basis of a July Supreme Court
decision and a September decree by the Ministry of Finance. <BR><BR>
The NKBM paid SIT 1.64bn (EUR 6.85m) in excess in tax-related interests in 1996 as well as
was overcharged interests on corporate income in 1999 and 2000 alongside excessive
withholding taxes in 2000 and 2001 to the tune of SIT 711m (EUR 2.97m). <BR><BR>
The bank's 2006 half-yearly profit stood at SIT 3.3bn (EUR 13.79m), around SIT 1bn (EUR
4.18m) less than in the same period last year. The bank's total assets in the first six months of
2006 increased by SIT 65.6bn (EUR 274.31m) to a total of over SIT 780bn (EUR 3.26bn).
SKB Bank Has New Vice-President
SKB banka, Slovenia's fourth-largest bank in terms of assets, appointed at the end of
September Andre-Marca Prudent as the new vice-president of the management board
SKB banka, Slovenia's fourth-largest bank in terms of assets, appointed at the end of
September Andre-Marca Prudent as the new vice-president of the management board, SKB
said on Wednesday, 4 October. <BR><BR>
Prudent has been working for the French bank Societe Generale, which acquired SKB in
2000, since 1980. Effective on 1 October, he has also become the chairman of the supervisory
board at SKB Leasing, a member of the SKB group.
Bank of Slovenia Leaves Key Rates Unchanged
The Slovenian central bank has left key interest rates unchanged even as the European
Central Bank (ECB) raised its benchmark refinancing rate by a quarter point
13
The Slovenian central bank has left key interest rates unchanged even as the European Central
Bank (ECB) raised its benchmark refinancing rate by a quarter point on Thursday, 5 October
to 3.25%.<BR><BR>
That way Bank of Slovenia monetary policy instruments have come even closer to ECB rates,
the central bank said in a press release. <BR><BR>
The gap between the rate for 60-day tolar bills and the ECB's benchmark rate has been
reduced to 25 basis points, whereas the one-week buy/sell-back of securities has been reduced
from 75 to 50 basis points.
The Tolar Celebrates 15th, Last Birthday
On 1 January 2007, Slovenia will abandon a currency which has been enjoying a very high
level of trust among the citizens, to adopt the euro and become the first EU newcomer to join
the eurozone
The tolar, the Slovenian national currency, celebrated its 15th and last anniversary on Sunday,
8 October. On 1 January 2007, Slovenia will abandon a currency which has been enjoying a
very high level of trust among the citizens, to adopt the euro and become the first EU
newcomer to join the eurozone. <BR><BR>
embarked on the journey of fiscal independence on 8 October 1991, when the newly
independent government adopted resolutions declaring the tolar, divided into 100 stotins
(cents), the sole legal tender. <BR><BR>
Until the new notes and coins were ready, special vouchers served as a temporary solution
and as an immediate replacement for the Yugoslav dinar. The first vouchers were issued on 9
October and replaced the dinar within three days at an exchange rate of 1:1. <BR><BR>
The initial exchange rate was set at 32 tolars for one German mark and while the majority of
foreign experts advocated a fixed exchange rate system as more appropriate for countries in
transition, the government - pressed by a shortage of foreign reserve - adopted a floating
system. <BR><BR>
At the end of September 1992 Banka Slovenije, Slovenia's central bank, started to circulate
the first new 100, 500 and 1,000 tolar notes, which were designed by Miljenko Licul and his
team. <BR><BR>
In January 1993 the notes were joined by coins, with Banka Slovenije gradually withdrawing
the transitional vouchers from circulation. The note with the highest denomination, 10,000
tolars, was issued in 1995. <BR><BR>
Despite the initial political and economic uncertainties, the credibility of the tolar was
established fairly quickly and the currency went on to become one of the most trustworthy
institutions in the country, according to public opinion polls. <BR><BR>
Less than two months after it entered the EU on 1 May 2004, Slovenia - also bound by the
Maastricht Treaty, which stipulated that newcomers are obliged to adopt the euro after
meeting the convergence criteria - entered the ERM II exchange rate mechanism, setting as a
goal to carry out the changeover to the euro in 2007. <BR><BR>
Slovenia is the first new EU member which has succeeded in the pursuit of this goal. After the
European Commission and the European Central bank on 16 May, 2006 assessed that
Slovenia was meeting all the criteria, EU finance ministers on 11 July delivered the final step
which paved the way for Slovenia becoming the 13th member of the eurozone. <BR><BR>
Preparations for the changeover are now running at full steam. Slovenia has opted for the bigbang scenario where both currencies will be in circulation for only 14 days. <BR><BR>
Until 1 March all banks will change tolars into euros free of charge; after this date the service
will be commission-free only at the central bank. The tolar notes will eventually be destroyed
and the coins sold as metal. <BR><BR>
14
According to the latest survey published by Banka Slovenije, public knowledge about the
euro is satisfactory. The people's main concerns are possible unjustified price hikes and unfair
rounding-off of prices. The problem has been tackled with dual pricing, which has been
mandatory since 1 March and will last until July 2007. <BR><BR>
The "historic step" however also presents Slovenia with new tasks. As the country is giving
up the management of its fiscal and exchange rate policies, the focus will shift to budgetary
discipline and to the commitments defined under the eurozone's Stability and Growth Pact.
<BR><BR>
Slovenia so far has not been having problems observing the provisions of the pact, with its
budget deficit standing at 1.4% of GDP and its public deficit at 28.9% of GDP at the end of
2005. Both figures are well under the respective 3% and 60% ceilings. <BR><BR>
But as Slovenia faces the need to increase the flexibility and competitiveness of its economy without undermining the long term sustainability of public finances - the adoption of the euro
is also bound to introduce new approaches to structural policies and reforms aimed at
bolstering the economy and employment.
Ljubljana Stock Exchange
Brokers concluded 4,135 deals worth a total of SIT 9.5bn (EUR 39.6m) last week
The floatation of Telekom Slovenije might have aroused a lot of interest on the Ljubljana
Stock Exchange (LJSE) last week, but it was drug maker Krka which stole the show, adding
over 8% on the week to reach unprecedented highs. <BR><BR>
Krka was the main motor of growth, helping to push the benchmark SBI 20 index 75.35
points (1.34%) higher to 5,678.54. The Krka-heavy blue chip SBI TOP index meanwhile
soared 42.07 points (3.22%) to 1,347.46. <BR><BR>
In deals worth SIT 3.3bn (EUR 13.8m), over one third of the week's turnover, Krka closed
8.68% higher to SIT 189,079 (EUR 789.01) on expectations of excellent Q3 results and strong
buying pressure by foreign investors. <BR><BR>
Telekom had a mixed record: on Monday, 2 October it traded at around SIT 71,000 (EUR
296), on the lower range of estimates and well below the grey market price. <BR><BR>
After a significant drop on Tuesday, 3 October, it recovered again by the end of the week only
to shed 1.7% on Friday, 6 October to SIT 70,353 (EUR 239.58). <BR><BR>
The euphoria ended before it even began properly, according to analyst Marko Jovic of
Abanka Vipa. He said the reason why Telekom had such a lacklustre performance is because
investors that bought the shares prior to the floatation cashed in. <BR><BR>
Additionally, investors were cautious considering the absence of data on current performance,
which are not due until the second half of November when Telekom is scheduled to release
Q3 results. <BR><BR>
Pushed to the background but still popular, energy company petrol added 1.05% to SIT
104,932 (EUR 437.87), while retailer Mercator was up 0.56% to SIT 41,574 (EUR 173.49).
<BR><BR>
Buoyed by the solid performance of the big names, investment funds enjoyed a sunny week to
push the PIX investment fund index 54.68 points (1.18%) higher to 4,702.51.
The bond BIO index shed 0.18% to 118.86. <BR><BR>
Brokers concluded 4,135 deals worth a total of SIT 9.5bn (EUR 39.6m) last week.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.62 (+0.02) <BR>
U.S. dollar (USD) - SIT 189.04 (-0.07) <BR>
Swiss franc (CHF) - SIT 150.79 (-0.07) <BR>
15
British pound (GBP) - SIT 354.53 (+0.83)
16
BRANCH INFORMATION
New Entrepreneurship Centre Inaugurated in Ljubljana
The Center for Entrepreneurship and Executive Development (CEED) is designed to help in
the education and development of young entrepreneurs and promote the growth of small and
mid-sized enterprises
The Center for Entrepreneurship and Executive Development (CEED), which is designed to
help in the education and development of young entrepreneurs and promote the growth of
small and mid-sized enterprises, was officially inaugurated in Ljubljana on Monday, 2
October. <BR><BR>
CEED Slovenija is a part of the CEED network, which has subsidiaries in Russia, Bulgaria
and Romania, according to YES, the Slovenian association of young entrepreneurs, which
established the centre together with the US Agency for International Development (USAID)
and the US venture capital fund Seaf. <BR><BR>
The centre will carry out the one-year programme CEED Top Class, which brings together 25
established entrepreneurs and 25 up-and-coming businessmen from companies with high
growth potential, with a view to developing a new generation of successful entrepreneurs.
<BR><BR>
It will also assist other entrepreneurs with practical training, counselling and local as well as
international contacts, YES said in a press release.
National Telco and Tok Telekomunikacije Win FWS Licences
The national telco Telekom Slovenije and a Ljubljana-based telecommunications company
Tok telekomunikacije have been awarded 10-year licences to provide broadband wireless
Internet services
The national telco Telekom Slovenije and a Ljubljana-based telecommunications company
Tok telekomunikacije have been awarded 10-year licences to provide broadband wireless
Internet services, Slovenia's telecommunications watchdog said on Tuesday, 3 October.
<BR><BR>
The other companies vying for the licence were Slovenia's Stelkom and Simobil, Austria's
Wimax Telecom and US company Nexcom Telecommunications, the Agency for Post and
Electronic Communications (APEK) said following the selection process. <BR><BR>
The two selected bidders will have to cover the whole of Slovenia's territory with broadband
wireless Internet services. They were awarded free radio frequencies for a fixed wireless
access system.
The APEK says the licences were awarded in line with the government's strategy to introduce
fixed wireless systems (FWS) in the 3410 MHz-to-3600 MHz frequency span throughout the
country. <BR><BR>
This means that the Internet will now become accessible to people in areas lacking the
necessary infrastructure, especially in rural areas. Moreover, the agency expects this will give
a further boost to competition in urban areas with well-developed infrastructure. <BR><BR>
The invitation to tender put the lowest licence fee at SIT 40m (EUR 0.17m). The highest offer
was made by Stelkom (SIT 140m/EUR 0.59m), followed by Telekom Slovenije (SIT
100m/EUR 0.42m) and Nexcom (SIT 76m/EUR 0.32m). <BR><BR>
Tok telekomunikacije, which a report in the business daily Finance on Tuesday, 3 October,
suggests is affiliated with Voljatel, a domestic Internet services provider, offered SIT 40m
plus one tolar. Simobil and Wimax Telecom offered SIT 40m each. <BR><BR>
17
According to the requirements of the tender, the bidders will have to reach at least 60% of the
Slovenian population with FWS services within three years after being awarded the licence.
Moreover, at least a third of access points will have to be in rural areas. <BR><BR>
The bidders will also have to enable users to switch networks, hosting and inter-networking
with other providers.
New Player on Energy Market Established in Joint Venture
Energy companies Gen energija and Istrabenz Gorenje energetski sistemi (IGES) established
a 50:50 joint venture, GEN-I, which will sell electricity in Slovenia and the EU
Energy companies Gen energija and Istrabenz Gorenje energetski sistemi (IGES) on Friday, 6
October established a 50:50 joint venture, GEN-I, which will sell electricity in Slovenia and
the EU. <BR><BR>
Under the deal, Gen Energija acquired a 50% stake in Istrabenz Gorenje, which had
previously been in sole ownership of IGES, and renamed Istrabenz Gorenje to GEN-I.
<BR><BR>
The two partners also signed an agreement whereby GEN-I would market electricity produced
by Gen energija, which is state-owned and manages Slovenia's 50% stake in the Krsko
Nuclear Power Plant. <BR><BR>
GEN-I will sell 30% of Gen energija's output in 2007, 50% in 2008 and eventually 60%.
<BR><BR>
Martin Novsak, the director of Gen energija, told the press that the joint venture was a part of
the development of the company's marketing functions. <BR><BR>
In addition, it will secure backup power in case of supply disruptions at gen energija and for
periods when the N-plant is shut down for repairs. <BR><BR>
Igor Salamun, the chief supervisor at Gen energija, said this would boost competition on the
energy market, which is in line with the government's guidelines. <BR><BR>
According to forecasts, GEN-I will have purchased and sold 1,900 GWh of electricity this
year, with the volume set to rise to 4,000 GWh a year over the coming decade. <BR><BR>
Igor Bavcar, the boss of the holding Istrabenz and chief supervisor at IGEN, said this was a
great step for Istrabenz. <BR><BR>
This form of public-private partnership is a true indicator of future cooperation on the
electricity market, he said. <BR><BR>
The chairman of IGES, Robert Golob, added that the establishment of the new company
means users now have the choice of a second electricity provider. <BR><BR>
This is just the latest development on the Slovenian energy market after the government
adopted the blueprint for the privatisation of the energy sector in late July. <BR><BR>
To create competition on the market, the government decided it would curb the power of the
dominant player, HSE, by transferring the Brestanica thermal power plant and the hydro
plants on the Sava onto Gen energija. <BR><BR>
HSE will remain the owner of hydro plants on the Drava and Soca rivers, the Sostanj and
Trbovlje thermal power plants and the Velenje coal mine. <BR><BR>
According to plans, HSE will ultimately be privatised, while Gen energija will remain in state
ownership, as the state cannot sell it because of the stake it holds in the Krsko N-plant.
BV McCann Erickson Romania Wins Top Award at Golden Drum
The Romanian agency, which scored 80 points, was followed by Finnish Bob Helsinki OY (38
points) and Saatchi&Saatchi Poland (36 points)
BV McCann Erickson Romania won the Golden Rose award for advertising agency of the
year at the Golden Drum advertising festival in Portoroz on Friday, 6 October. The Romanian
18
agency, which scored 80 points, was followed by Finnish Bob Helsinki OY (38 points) and
Saatchi&Saatchi Poland (36 points). <BR><BR>
The Golden Drums in the individual categories went to Bob Helsinki OY (TV ad), BV
McCann Erickson Romania (print ad and radio ad), while Saatchi&Saatchi Poland won best
ad award in the category outdoor advertising. <BR><BR>
A total of 2576 entries from 42 countries were submitted this year, up from last year's 2483
from 40 countries. The most submissions came from Slovenia (304), followed by those from
the Romania (299), Russia (258), Austria (245) and Poland (210). <BR><BR>
According to the president of the jury, John Pallant, the quality of the ads was satisfactory.
Even though the number of finalists was smaller than last year, there were more top quality
ads, he said. <BR><BR>
This year also marks a turning point for the Golden Drum, which specialises in advertising
from "New Europe". <BR><BR>
It was decided that it would be made part of a festival trio "The Cup", which will include the
Asia-Pacific festival AdFest and the Ibero-American FIAP. <BR><BR>
Next year the finalists of all three festivals will thus compete at The Cup, which is to take
place in Spain in November.
19
COMPANIES
Price of Telekom Shares in Line with Expectations
Telekom Slovenije was floated on the Ljubljana Stock Exchange (LJSE) on 2 October
Telekom Slovenije was floated on the Ljubljana Stock Exchange (LJSE) on Monday, 2
October, with the average price down from an opening of SIT 73,400 (EUR 306.29) to SIT
71,400 (EUR 299.9) an hour before the close of trading. The turnover has so far amounted to
SIT 700m (EUR 2.9m). <BR><BR>
According to independent financial expert Matej Tomazin, the price of Telekom is hovering
within the expected limits, the turnover, on the other hand, is rather modest considering the
telco's market capitalisation. <BR><BR>
Tomazin told STA that early trading was slightly above the current average price, but under
the SIT 75,000 (EUR 312.97), the price Telekom's shares had fetched on the grey market.
<BR><BR>
"There indeed was one deal struck at SIT 75,000 (EUR 312.97) per share, but profit taking
followed immediately," Tomazin explained, adding that the market has not said final word
yet. <BR><BR>
The launch of trading with Telekom's shares on the LJSE has seen other big names taking a
back seat today, Tomazin added. <BR><BR>
A total of 6,535,478 ordinary Telekom Slovenije shares were floated on 2 October under the
sign TLSG.
Sava Tires Gains New Position Within Goodyear
Goodyear-owned tyre maker Sava Tires, one of Slovenia' largest exporters, has become part
of a new organisational structure of 11 Central and Eastern European countries
Goodyear-owned tyre maker Sava Tires, one of Slovenia' largest exporters, has become part
of a new organisational structure of 11 Central and Eastern European countries. The move is
to make the company more responsive and does not entail moving production away from
Kranj, Sava Tires said in a press release on Monday, 2 October. <BR><BR>
Moreover, Andreas Niegsch, who has been leading Sava Tires in the past two years, will take
over as Goodyear CEO for Central and Southeastern Europe, and will be based in Prague but
will continue to also work in Kranj. <BR><BR>
Sava Tires explained to STA that this new reorganisation of the company will increase its
opportunities for promotion and increased sales. Its selling range will expand beyond Slovenia
and the former Yugoslav republics to include the Czech Republic, Slovakia, Hungary,
Romania, Bulgaria and Albania. <BR><BR>
According to Niegsch, greater flexibility will be the result, so the wishes of customers will be
met quicker. "The exchange of information will improve, costs will decrease and at the same
time our reaction time will improve," he said. <BR><BR>
The centralisation of certain Goodyear activities is expected to bring about closer cooperation
with car automobile companies. Sava Tires employees should have better career
opportunities. <BR><BR>
Kranj is set to retain production, marketing and all the other functions it currently holds. The
number of employees, which currently stands at 1,650, will remain unchanged. <BR><BR>
According to Sava Tires, the company is this year achieving its business targets and actually
broke a record in August with the sale of its millionth tyre.
20
Steel Group Privatisation Hits Small Shareholders' Snag
Druzba pooblascenka Ravne, a firm representing 5,844 small shareholders of the Slovenian
Steel Group, has filed a claim against the state and the group, demanding that it be given a
20% stake in two companies of the group and SIT 720m (EUR 3.01m) as compensation for a
recent capital injection into two group subsidiaries
Druzba pooblascenka Ravne, a firm representing 5,844 small shareholders of the Slovenian
Steel Group, has filed a claim against the state and the group, demanding that it be given a
20% stake in two companies of the group and SIT 720m (EUR 3.01m) as compensation for a
recent capital injection into two group subsidiaries. <BR><BR>
Should their claim be refused, the small shareholders demand compensation to the tune of SIT
27bn (EUR 112.9m), the head of the company Kristina Slavic and its chief supervisor Janez
Klancnik told the press in Ravne na Koroskem on Monday, 2 October. <BR><BR>
The company insists in having a 20% stake in the steelworks Metal Ravne and in Nozi Ravne,
a maker of industrial blades, which were recently given a capital injection to which Druzba
pooblascenka Ravne was not invited. The capital injection curbed its holding to less than 20%
in the two companies. <BR><BR>
The company, representing former and current workers, filed the lawsuit on 22 September. It
believes that the planned privatisation of the Slovenian Steel Group - an international call for
bids for a 55.35% state-owned stake in the group was published on Friday, 6 October - could
be jeopardised due to the lawsuit. <BR><BR>
The company is protesting, as the workers in the two companies decided to forgo salaries in
1991 and 1992 in order to prevent the bankruptcy of the then troubled companies. They were
issued shares instead of the wages, which they should, according to law, replace for 20%
stake in the two companies. <BR><BR>
They could then decide to sell their stakes or keep them. The company has calculated that the
worker's investment into the two companies amounts to some SIT 27bn (EUR 112.9m).
<BR><BR>
"Potential buyers will have to seriously consider purchasing the state's stake, as the lawsuit
has made the shares of the group risky", Slavic added. <BR><BR>
The state and the group have so far offered between SIT 38,000 (EUR 158.9) to SIT 52,000
(EUR 217.45) for the shares, however the company refused to sell them, as the legislation
allows it to demand at least their nominal value of SIT 100,000 (EUR 418.17).
Family Business Makes Bid to Acquire Mlinotest
Pekarna Blatnik, a family-owned bakery employing just over 200 workers, has published a
bid to take over Mlinotest, the Ajdovscina-based bread and pasta maker, offering SIT 1,600
(EUR 6.69) per share
Pekarna Blatnik, a family-owned bakery employing just over 200 workers, has published a
bid to take over Mlinotest, the Ajdovscina-based bread and pasta maker, offering SIT 1,600
(EUR 6.69) per share. <BR><BR>
The bid, open until 2 November, will be considered successful if at least 75% of the total of
2,389,177 Mlinotest shares are acquired. <BR><BR>
Mlinotest closed at SIT 1,401 (EUR 5.86) on the Ljubljana Stock Exchange on Monday, 2
October. Almost 22% of Mlinotest shares are owned by the state. <BR><BR>
Pekarna Blatnik did not own a stake in Mlinotest before making its acquisition bid official on
Tuesday, 3 October. It hopes the move will enable it to consolidate the production of bread,
pastry, pasta and cereals. <BR><BR>
Moreover, Pekarna Blatnik said its aim is to increase its share in all target markets and
consolidate its negotiating position against possible buyers, in particular large home and
foreign retail systems. <BR><BR>
21
Pekarna Blatnik posted revenues of SIT 2.3bn (EUR 9.62m) in the first half of the year,
according to Tomaz Blatnik, who runs the company he set up together with his wife Anica in
1990. <BR><BR>
He expects synergy effects from the takeover in purchasing, logistics and personnel. He also
wants to move the company's headquarters to Ajdovscina. <BR><BR>
Mlinotest, which employs some 660 workers, reported unaudited half-year sales revenues of
SIT 2.84bn (EUR 11.88m). This is down 2% compared to last year, but still 3% above the
target. The profit of SIT 52m (EUR 0.22m) was 45% below last year's figure and 1% below
what was planned for the first half year.
Iskraemeco Gets New Management
The supervisors of Iskraemeco accepted the resignation of the electric meter maker's
management board on 3 October and appointed as the new CEO Janko Steharnik, who last
worked as administration coordinator for the retail chain Hofer - Aldi
The supervisors of Iskraemeco accepted the resignation of the electric meter maker's
management board on Tuesday, 3 October and appointed as the new CEO Janko Steharnik,
who last worked as administration coordinator for the retail chain Hofer - Aldi. <BR><BR>
The new supervisory board headed by Marko Pogacnik, the director of the Restitution Fund
(SOD), one of the two state-run funds which recently provided a capital injection to the
troubled company, announced that all the members of the former management board would
continue working for Iskraemeco to ensure continuity. <BR><BR>
Steharnik, who is replacing Karl Rozman, told the press that the company, which has been
limited to production, would refocus on services to provide more added value. <BR><BR>
While saying that it was his "first wish that all the workers keep their jobs", Steharnik pointed
out that it will also be necessary to "consider moving parts of the production to markets where
the products are being sold". <BR><BR>
"I am convinced that today new development guidelines have been drawn for Iskraemeco,"
Pogacnik stressed meanwhile. According to him, the new management and fresh capital
secured by SOD and the Pension Management Fund (KAD) are to enable a real recovery of
the company. <BR><BR>
The supervisors also backed the appointment of Robert Bratusa as a member of the
management board. Bratusa also believes in the restructuring of Iskraemeco into a services
company. <BR><BR>
Finally, Pogacnik said that KAD and SOD will transfer the promised SIT 2.6bn (EUR
10.85m) to Iskraemeco's account by Thursday, 5 October. <BR><BR>
He added that an agreement has been reached with Iskraemeco DUS, whose shareholders are
the employees and which owns 51% of Iskraemeco, that the two funds will have the
preemptive right to buy 51% of the newly issues shares that would otherwise belong to DUS.
Hit Chief Says Cooperation with Harrah's Normal
The chairman of Slovenian gaming company Hit, which is planning a joint venture with US
casino operator Harrah's Entertainment, has said he could not comment on whether the offer
by two private equity funds to take Harrah's private in a leveraged buyout, would affect the
joint project in Slovenia
The chairman of Slovenian gaming company Hit, which is planning a joint venture with US
casino operator Harrah's Entertainment, has said he could not comment on whether the offer
by two private equity funds to take Harrah's private in a leveraged buyout, would affect the
joint project in Slovenia. <BR><BR>
22
"We are working with Harrah's Entertainment normally...Representatives of the company
were in the Gorisko region last week where we looked at several possible locations for the
mega entertainment centre," Niko Trost said on Tuesday, 3 October. <BR><BR>
The joint project, which is valued at 700 million US dollars, would be presented to the
competent minister in October, said Trost at a press conference at which Hit co-signed a
memorandum of understanding on the establishment of a new faculty in Nova Gorica.
<BR><BR>
The mega project rests on the government's willingness to tweak legislation: currently,
foreigners can hold no more than 20% in a gaming venture, whereas the gaming tax is set at
38%. <BR><BR>
Harrah's is seeking amendments that would raise the threshold of foreign ownership in
gaming and a lower gaming tax rate. <BR><BR>
Harrah's is involved in one of the largest leveraged buyouts ever, as private equity groups
Apollo Management and Texas Pacific Group are offering over 15 billion dollars for the
casino group.
Salford Eyeing Majority Stake in Ljubljanske Mlekarne
The Anglo-Serb investment company Salford has officially expressed its interest in the dairy
company Ljubljanske Mlekarne
The Anglo-Serb investment company Salford has officially expressed its interest in the dairy
company Ljubljanske Mlekarne. Representatives of the bidder and those selling their stakes in
the dairy met for the first time on Wednesday, 4 October. <BR><BR>
Zenos, which represents Salford, presented the companies around NFD Holding with details
of the offer and the legal aspects of the transactions, which are necessary for the beginning of
negotiations, NFD Holding and Zenos reported. Negotiations will officially begin on 9
October. <BR><BR>
Investment companies NFD Holding, Zvon Ena Holding Zvon Ena ID, food company Jata
Emona and Mlekodel, which manages the stakes in the dairy held by farmers, are selling a
combined 54.07% of Ljubljanske mlekarne. <BR><BR>
Considering the long-term development of the Slovenian dairy sector, the takeover of
Ljubljanske mlekarne by Salford "is the best out of a list of bad possibilities", agricultural
economist at the Biotechnical Faculty Ales Kuhar, told STA on Tuesday, 3 October. But it
would be best if Slovenia's largest dairy remained in domestic hands, he also said.
<BR><BR>
Salford is a better prospect than an Austrian or Italian dairy company which - in the case of a
takeover - might even close down this largest Slovenian dairy company, or at the very least
they would seriously cut its production capabilities, Kuhar said. <BR><BR>
Salford on the other hand is known to be a strategic investor which keeps trade names and
"does not buy a production company just to close it down, but to develop it further", he added.
Salford owns stakes in Russia and Georgia as well as having important stakes in Serbian
foodstuffs companies. <BR><BR>
Asked why there was no interest expressed from neighbouring countries, Kuhar answered that
Slovenia is not attractive for such foreign investments due to its relatively small market and
expensive labour. Besides, Ljubljanske mlekarne were recently modernised and its current
price is therefore relatively high.
Posta Slovenije Preparing for Postal Market Liberalisation
The national postal company Posta Slovenije is preparing for the full opening of the EU
postal services market, which the European Commission is expected to set for 2009
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The national postal company Posta Slovenije is preparing for the full opening of the EU postal
services market, which the European Commission is expected to set for 2009. This year's
priorities include strengthening cooperation with the postal companies from certain foreign
markets, and the selection of a strategic partner, the company's press release reads on
Wednesday, 4 October. <BR><BR>
The preparations also include a tie-up with one or more strategic partners in the international
delivery of packages and some organisational changes in the company.
Posta Slovenije said it was also planning a diversification of the existing services and
development of new services in the fields of logistics, finance and retail. It is also expanding
its services to the markets of the former Yugoslavia. <BR><BR>
Through the association of public postal companies PostEurop Posta Slovenije is also
involved in the drawing of the new postal directive, the press release reads.
Slovenian Automotive Company Opens Plant in Serbia
Serb President Boris Tadic officially opened near Kragujevec an auto parts plant built by
Grah Automotive from Slovenia
Serb President Boris Tadic officially opened near Kragujevec on Thursday, 5 October an auto
parts plant built by Grah Automotive from Slovenia. The plant stretches over 2,000 square
metres and is to provide up to 250 jobs by the end of the year. <BR><BR>
The Slovenjske Konjice-based company started building the plant in Batocina at the
beginning of this year, with one of its owners, Robert Grah, assessing the value of the
investment at EUR 1.5m. <BR><BR>
Interestingly, the Batocina municipality offered the land needed for the project without
charge. <BR><BR>
According to Grah, all products of Grah Automotive's Batocina plant will be exported to EU
countries, while buyers will include Mercedes, BMW, Volkswagen and Audi. <BR><BR>
Slovenia's Ambassador to Serbia Miroslav Luci, who also attended the opening ceremony,
took the opportunity to call on Slovenian investors to invest in Serbia, which, according to
him, is a politically and economically stable country suitable for foreign investment.
<BR><BR>
According to reports by Serb media, President Tadic, on the other hand, said that auto parts
production had great prospects and pointed out that Serbia's airports would soon get "too
crowded for all the world's investors".
Risk Management Tops Meeting of Managers Agenda
Participants of a panel on risk management expressed their pleasure that risks are finally
being talked about and stressed a more active role of the state in managing
Participants of a panel on risk management expressed their pleasure that risks are finally
being talked about and stressed a more active role of the state in managing them after hearing
an address by Economy Minister Andrej Vizjak, who described the state's future contribution
towards risk management in Maribor on Thursday, 5 October. <BR><BR>
Vizjak, speaking at a meeting of Slovenian managers organised by the Manager Association,
pointed out a public venture capital fund, mulled by the state, and the drafting of an act on
venture capital companies, which envisages a partnership between the state and companies.
<BR><BR>
Vizjak believes that Slovenia's stable macroeconomic environment greatly contributes
towards risk management. The recently passed legislation on companies, chambers of
commerce and chambers alongside the planned tax reform bills also improved the business
environment, he added. <BR><BR>
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He moreover pointed out the programme of promoting foreign direct investment (FDI) and
privatisation which would facilitate FDI and aid in the successfulness of Slovenian small- and
medium-sized companies on foreign markets. <BR><BR>
At the ensuing panel, Borut Bratina of the Maribor Economics and Business Faculty pointed
out the vagueness of contracts and called for a greater inclusion of law firms in the
negotiations, and was seconded by lawyer Ana Stanic, who stressed the necessity of legal
experts taking part in negotiating and concluding contracts. <BR><BR>
Peter Groznik of the KD Group investment firm meanwhile said that political and regulatory
risks present the biggest danger in Slovenia. <BR><BR>
The Manager Association also presented the award for the best manager in 2006, which this
year went to CEO of pharma company Krka Joze Colaric. He was chosen for continuing with
Krka's excellent business results after taking over in January 2005. <BR><BR>
The autumn meeting of the association will continue on Friday, 6 October, with participants
discussing innovation. European Science and Research Commissioner Janez Potocnik of
Slovenia is to be among the speakers.
No Future for Ormoz Sugar Factory, Head of Board Says
The European Commission wants to preserve only the most efficient sugar producers,
therefore the president of the supervisory board of the Tovarna sladkorja Ormoz sugar
factory, Alexander Roberti, says he faces the unpleasant task of closing down the factory
The European Commission wants to preserve only the most efficient sugar producers,
therefore the president of the supervisory board of the Tovarna sladkorja Ormoz sugar
factory, Alexander Roberti, says he faces the unpleasant task of closing down the factory.
<BR><BR>
The EU wants to cut down the production of sugar by five to six million tonnes, therefore
small factories are doomed, Roberti told the business daily Finance on Friday, 6 October.
<BR><BR>
"Our task is to prepare a good plan which will provide social security for the 200 employees,
and to repay the shareholders a part of their investments. However, we will not be making
much money," Roberti said. <BR><BR>
He also told the daily that the factory started this year's production only because of an
agreement with the Slovenian government, under which the government would acquire
sufficient European funds to divide them among the sugar beet farmers over the next four
years. <BR><BR>
He also said that the future of the factory does not lie in the production of bioethanol, which
the municipality was considering, since talks with energy company Petrol lead to the
conclusion that Petrol would not be buying bioethanol in Ormoz. <BR><BR>
The state should take care of the dismantling of the factory in line with the European
regulations and protect the company from claims by the beet root growers, added Roberti, the
representative of the Dutch food group Cosun, which is the majority owner of the factory.
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FAIRS, CONGRESSES
20th Biennial of Industrial Design (BIO) Takes Place in Ljubljana
"This year's BIO will be representative, of high quality and offer a clear insight into the
design spirit of our times," Peter Krecic, the director of the Architecture Museum of
Ljubljana, which will host the event, told the press
Over 350 exhibits by designers from 17 countries are on display at the 20th Biennial of
Industrial Design (BIO), which is being underway in Ljubljana between 5 October and 5
November. <BR><BR>
"This year's BIO will be representative, of high quality and offer a clear insight into the
design spirit of our times," Peter Krecic, the director of the Architecture Museum of
Ljubljana, which will host the event, told the press on Wednesday, 4 October. <BR><BR>
Krecic pointed to the increasing importance of industrial design in the modern market
economy, adding that the BIO also experienced a change of concept in the past years as it was
able to increasingly shift from quantity to quality. <BR><BR>
Francisco Carrera, the chair of this-year's international jury, said that visitors will be able to
recognise the impact of industrial design on our daily lives. <BR><BR>
According to him, the 44th year of the biennial will also offer an opportunity to look back on
the changes that Slovenian industrial design experienced during this period. <BR><BR>
Davor Horvat, who chairs the BIO's selection committee, said that Slovenian designers
contributed 111 works this year. <BR><BR>
He also explained that exhibits will be presented in three groups: regular products, visual
messages and design projects. <BR><BR>
Organisers have also prepared a fringe programme, which includes panels, exhibitions of
foreign designers, presentations by publishing houses and a meeting of designer organisations.
<BR><BR>
An international jury made up of Carrera (Spain), Judit Varhelyi (Hungary), Leimei Julia
Chiu (Japan), Jacques Lange (South Africa) and Carlo Branzaglia (Italy) will award gold
medals, honourable mentions and "good project" awards. <BR><BR>
Additionally, the international designers' associations ICSID (International Council of
Societies of Industrial Design), ICOGRADA (International Council of Graphic Design
Association), BEDA (Bureau of European Designers' Associations), EIDD (Design For All
Europe) as well as RTV Slovenija, will confer their awards.
Industrial Design Gold Medal Goes to German Designer
German designer Markus Temming won the Gold Medal for his "me Markus T" glasses at the
20th Biennial of Industrial Design
German designer Markus Temming won the Gold Medal for his "me Markus T" glasses at the
20th Biennial of Industrial Design which got underway in Ljubljana on Thursday, 5 October.
Temming's glasses were awarded for their unique combination of innovative technology and
high-quality design. <BR><BR>
The ICSID Design Excellence Award meanwhile went to a refrigerator from the Pininfarina
high-end line of household appliances produced by Slovenian white goods maker Gorenje.
<BR><BR>
Gigodesign was conferred the ICOGRADA Excellence Award for designing the corporate
identity of casino operator Hit Gorica, while the BEDA European Design Award for best
European design achievement went to the bottle Brachia Olive by Izvorka Serdarevic and
Jelena Zecevic. <BR><BR>
The EIDD Design for All award for human diversity, social inclusion and equality was not
conferred. The jury assessed that none of the products met the required criteria. <BR><BR>
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The jury, made up of Francisco Carrera (Spain), Judit Varhelyi (Hungary), Leimei Julia Chiu
(Japan), Jacques Lange (South Africa) and Carlo Branzaglia (Italy), assessed that the overall
standard of the exhibited works is high. <BR><BR>
However, compared to two years ago they noticed a drop in innovativeness and a lack of
design-for-all solutions, the organisers, the Architecture Museum of Ljubljana, said in a press
release. <BR><BR>
Over 350 exhibits by designers from 17 countries are on display at the 20th Biennial of
Industrial Design (BIO), which will be underway in Ljubljana until 5 November.
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SLOVENIA IN BRIEF
Minister Says Kosovo Key for Stability of Western Balkans
Slovenian Defence Minister Karl Erjavec told STA on Monday, 2 October that his EU
counterparts, taking part in a two-day informal meeting in Finland's Kittila, agreed that the
unsolved status of Kosovo presents an obstacle to ensuring the stability of Western Balkans.
Next EU troika to Strengthen EU Cooperation in Home Affairs
The interior ministers of the next EU presiding troika - Germany, Portugal and Slovenia - on
Monday, 2 October adopted an agreement on tighter cooperation in home affairs when they
successively hold the rotating EU chairmanship from January 2007 until June 2008.
Slovenian Graphic Art Put on Display in Ljubljana
An exhibition entitled "The Allure of the Matrix, the Woodcut in Slovenia in the 20th
Century" opened on Thursday, 5 October, 5 October, in the International Centre of Graphic
Arts (MGLC). The exhibition highlights woodcut and linocut art in Slovenia between the
years 1911 and 2006 with the emphasis on the period after 1950.
Faculty of Applied Social Sciences to Open in Nova Gorica
A new Faculty of Applied Social Sciences will open in Nova Gorica next year in line with a
memorandum of understanding signed on Tuesday, 3 October by the city, the Higher
Education and Research Centre of Primorsko and the gaming company Hit.
Piran HostsExhibition of Juan Miro
An exhibition of 34 works by Catalan painter and sculptor Joan Miro opened in the Mestna
galerija gallery in the seaside resort of Piran on Thursday, 5 October. The works in the
exhibition were lent by the Lelong gallery from Paris and the Miro family. The exhibition,
which features 15 drawings, 13 prints and six sculptures, is the latest in a series of
presentations of the great masters of the 20th century, the organisers said.
Slovenian Elected President of International Judge Association
Maja Tratnik, a Supreme Court judge, was elected the president of the International
Association of Judges at the 49th congress of the association that took place between 27
September and 2 October in Hungary's Siofok, the Slovenian Association of Judges said on
Wednesday, 4 October. Supreme Court judge Nina Batetto was on the same occasion elected
the president of the association's second study commission for civil law and procedure.
Mate: Alternative Solution to SIS II Ever More Probable
EU interior ministers adopted on Thursday, 5 October a new time plan for bringing the
Schengen Information System II (SIS II) on line for EU-15 members in June 2008, yet no date
has been set for the bloc's new members, said Slovenian Interior Minister Dragutin Mate after
meeting his counterparts in Luxembourg.
Rupel: Slovenia Might Have to Accept Arbitration with Croatia
Foreign Minister has said that while he would prefer Slovenia and Croatia found a solution to
the border issue by way of negotiations, Slovenia will soon have to decide whether to insist on
bilateral talks or accept Croatia's initiative for arbitration.
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Minister Says EU Can Be Pleased with Data Sharing Deal with US
Slovenian Justice Minister Lovro Sturm has said that the EU can be happy with the deal that
gives the US access to data about passengers on US-bound flights. "The US is no longer
demanding that the sensitive data be sent generally; they just want them for individual cases,"
Sturm said on the sidelines of a meeting of EU home and justice ministers on Friday, 6
October.
Slovenia Launches Earthquake Observatories Network
The Slovenian Environmental Agency on Friday, 6 October officially marked the launch of a
nation-wide network of earthquake observatories, which Slovenia started establishing after a
heavy earthquake in the upper Posocje region in the west of the country in 1998.
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