Slovenia Business Week no. 33, October 23rd, 2006
Table of Contents:
HEADLINES ............................................................................................................................. 3
Pharma Krka Tops Delo FT Ranking of Domestic Corporations .......................................... 3
Heureka to Showcase Creativity, Development, Achievements ............................................ 3
Slovenian and Greek Companies Seek to Join Forces in SE Europe ..................................... 4
INTERNATIONAL COOPERATION ...................................................................................... 5
Ministers Vow to Boost Lyon-Budapest Railway Line Construction .................................... 5
Copenhagen to Serve as Model for Traffic in Ljubljana ........................................................ 5
Danish Minister Pleased with Talks at Seaport ...................................................................... 6
PM Jansa, French Senate Speaker Discussed Bilateral, EU Issues ........................................ 6
Slovenian, French Parliament Officials Discuss EU Constitution ......................................... 6
EUROPEAN UNION ................................................................................................................. 8
EU Presidency Preparations Top Cukjati's Agenda in Berlin ................................................ 8
Slovenia Gets EU Money for Vineyards, Wildlife ................................................................ 8
PM Says EU Summit Agrees on Energy, Innovation ............................................................ 9
Jansa: Schengen and Immigration Go Hand-in-Hand ............................................................ 9
LEGISLATION ........................................................................................................................ 11
Government Amends Copyright, Industrial Property Rights Acts ...................................... 11
Government Drafts Law to Manage SIT 2trn in State-Owned Property.............................. 11
STATISTICS/FORECASTS .................................................................................................... 13
Wages Up 2.1% in August ................................................................................................... 13
Investment Report Says Slovenia Too Focused on EU Markets.......................................... 13
August Unemployment at 9.1% ........................................................................................... 13
Officials Claim Poverty in Decline in Slovenia ................................................................... 14
FINANCE................................................................................................................................. 15
KD Group CEO Believes Ljubljana Dairy Should Remain Coop-Owned .......................... 15
Wrestle for Dezelna banka Continues .................................................................................. 15
Euro Preparations in Full Swing on All Levels .................................................................... 16
Government Adopts Bill on EUR 300m Loan for Motorway Company ............................. 16
Reinsurer Sava Acquires Serbia's Insurer Polis ................................................................... 16
Finance Committee Files 25 Amendments to 2008 Budget ................................................. 17
Statistical Office Expects Smaller Harvest in 2006 ............................................................. 17
Ljubljana Stock Exchange .................................................................................................... 18
Foreign Exchange ................................................................................................................. 18
REGIONAL INFORMATION ................................................................................................ 19
Coalition Pushes Ahead With Regionalisation Proposal ..................................................... 19
EUR 100m Island One of Main Coastal Projects, Official Says .......................................... 19
BRANCH INFORMATION .................................................................................................... 20
Port Management and Logistics Conference Kicks-Off in Portoroz ................................... 20
Transport Minister Outlines Road Transport Network Modernisation ................................ 20
Minister Says Energy Needs to Be Met with Hydro, Nuclear Power .................................. 21
Agriculture Committee Discusses Budget, Dairy Takeover ................................................ 22
COMPANIES ........................................................................................................................... 23
Gorenje Launches Production in Serbia ............................................................................... 23
Anti-Trust Office Clears Gorenje's Foray into Energy ........................................................ 23
New Public Broadcasters Statute Also Brings New Editors ................................................ 24
Trimo Ups Sales, Profits and Investments in 2006 .............................................................. 24
KBM Infond Stakes in 19 Companies up for Sale ............................................................... 25
Blatnik Now Wants to Takeover Zito as Well ..................................................................... 25
Grega Repovz New Content Boss at Mladina ...................................................................... 26
Government Appoints Matjaz Pust Head of Kobilarna Lipica ............................................ 26
CCIS Warns Small Firms to Gear up for Euro ..................................................................... 26
Mercator Acquires First Part of M-Rodic ............................................................................ 27
Krka Free to Market Drug in Slovenia, Hungary ................................................................. 27
SLOVENIA IN BRIEF ............................................................................................................ 28
Minister Says New Approaches Needed to Combat Human Trafficking ............................ 28
Slovenia, China Sign Action Plan in Health ........................................................................ 28
Cabinet Relaunches Strategic Council for Economic Development .................................... 28
EU Commission Praises Slovenian Approach to NGOs ...................................................... 28
Janko Moder, Prolific Translator of Literature, Has Died ................................................... 28
Montenegrin Diplomats to Receive Training in Slovenia .................................................... 28
54th World Congress of Women Entrepreneurs Launched ................................................. 29
Ex Mercator Boss Set to Become Ljubljana's Mayor .......................................................... 29
2
HEADLINES
Pharma Krka Tops Delo FT Ranking of Domestic Corporations
Pharma Krka tops the list of most successful Slovenian business groups in terms of 2005
profit, having posted SIT 23.3bn (EUR 97.43m) in net earnings last year
Pharma Krka tops the list of most successful Slovenian business groups in terms of 2005
profit, having posted SIT 23.3bn (EUR 97.43m) in net earnings last year. The national telco
and pharma Lek, a subsidiary of Sandoz, the generics arm of Novartis, trail in with net profit
of SIT 23bn (EUR 96.18m) and SIT 20bn (EUR 83.63m) respectively, according to the
rankings of the country's leading business groups released by Delo FT on Monday, 16
October.
The listing of companies in the financial supplement of daily Delo also indicates that energy
group Petrol is the leader in terms of 2005 revenues, having generated nearly SIT 444bn
(EUR 1.86bn) last year.
Grocer Mercator and Gorenje, the household appliance manufacturer, rank second and third
with 2005 revenues of SIT 428.5bn (EUR 1.79bn) and SIT 251.2bn (EUR 1.05bn),
respectively.
Following Krka, Telekom Slovenije and Lek as the most profitable corporations is Slovenia's
biggest power producer Holding Slovenske elektrarne (SIT 14.4bn/EUR 60.22m).
Further down the list come banking groups NLB (SIT 11.9bn/EUR 49.76m) and Gorenjska
banka (SIT 11.4bn/EUR 47.67m), the Slovenian Steel Group (SIT 9.4bn/EUR 39.31m),
chemical and tourism conglomerate Sava (SIT 9.2bn/EUR 38.47m), Petrol (SIT 8.4bn/EUR
35.13m) and gaming group Hit (SIT 7bn/EUR 29.27m).
Last year more than 17 business groups reported consolidated revenues in excess of SIT
100bn (EUR 418m). There were just eleven such corporations a year earlier, which Delo FT
says confirms that big groups grow at a fast rate.
Most Slovenian corporations wrapped up last business year with a profit. Out of 140 groups
only 17 ended the year in the red.
In terms of assets, the NLB banking group was far ahead, boasting a total of SIT 2,946bn
(EUR 12.32bn) in 2005. Slovenia's second largest bank, the state-owned Nova Kreditna banka
Maribor owned SIT 831bn (EUR 3.47bn) in assets, and Abanka Vipa SIT 606bn (EUR
2.53bn).
Holding Slovenske elektrarne meanwhile topped the list in terms of capital (SIT 251bn/EUR
1.05bn), followed by Telekom (SIT 234bn/EUR 0.98bn), and Lek (SIT 197bn/EUR 0.82bn).
Retailer Mercator was the biggest employer in 2005 with a workforce of 16,372, followed by
Gorenje (10,492), the railways operator Slovenske zeleznice (10,293) and NLB (8,362).
In an international comparison, Petrol and Mercator would have placed somewhere around
1440th position in terms of 2005 net revenues, while Krka and Telekom would have ranked
around 1667th in terms of profit.
The NLB group ranks somewhere around 900th position among the world's 2,000 companies
with the highest market value, according to the report in Delo FT.
Heureka to Showcase Creativity, Development, Achievements
According to the head of this year's programming committee Janez Bester, the aim of year's
Heureka is to present the development ambitions and achievements at the national level and
enable communication between all stakeholders
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The technology fair Heureka!06, which will be running in Ljubljana between 24 and 26
October, will outline Slovenian and wider creativity, development directions and
achievements, the organisers told the press on Tuesday, 17 October.
According to the head of this year's programming committee Janez Bester, the aim of year's
Heureka is to present the development ambitions and achievements at the national level and
enable communication between all stakeholders.
The event will bring together representatives of the state, the economy and the civil society,
providing an outstanding opportunity for cooperation between the three innovation-seeking
sectors, Bester said.
A total of 50 innovations and 30 research groups and projects are expected at the event
alongside 30 companies and 11 faculties, he added.
The event itself is divided into four forums: information, research, information and
communication technologies and knowledge-based society, Bester noted.
The event will also feature lectures, practical examples, workshops and meetings, he said.
Andrej Kitanovski, the director general of the entrepreneurship and competitiveness
directorate at the Economy Ministry, meanwhile said that Slovenia has enormous potential,
which the fair is bound to bring forward.
Slovenian and Greek Companies Seek to Join Forces in SE Europe
Economic cooperation between Slovenia and Greece is fairly modest, so there are plenty of
possibilities to join forces in practically all sectors and in particular in Southeastern Europe,
established the participants the Slovenian-Greek business conference
Economic cooperation between Slovenia and Greece is fairly modest, so there are plenty of
possibilities to join forces in practically all sectors and in particular in Southeastern Europe,
established the participants of the Slovenian-Greek business conference on Wednesday, 18
October.
For Slovenian as well as Greek companies, the Balkans is of strategic importance. It would
therefore make sense for companies from the two countries to cooperate instead of competing
where that is not necessary, Nikolaos Sapountzis of the Greek Embassy said.
Slovenia and Greece are the northern and southern doors of the EU respectively as far as the
Balkans is concerned, which is why they should support the economic development of the
countries in the region, Sapountzis also noted at the conference held at the Chamber of
Commerce and Industry of Slovenia (CCIS).
Helen Tsironi of the Greek foreign trade organisation meanwhile said that Slovenian and
Greek companies know were little about each other and added that more presentations of this
sort are needed.
She took the opportunity to invite Slovenian businessmen to Greece and expressed readiness
to back Slovenian companies in entering the Greek market.
Trade between Slovenia and Greece reached EUR 102m in 2005, with Slovenia recording
exports worth EUR 59m.
4
INTERNATIONAL COOPERATION
Ministers Vow to Boost Lyon-Budapest Railway Line Construction
Slovenian, Italian, French, Hungarian and Ukrainian transport ministers have signed a
memorandum of understanding with European Transport Commissioner Jacques Barrot
regarding the construction of the fifth pan-European transport corridor that connects the
French city of Lyon with the Ukrainian border
Slovenian, Italian, French, Hungarian and Ukrainian transport ministers have signed a
memorandum of understanding with European Transport Commissioner Jacques Barrot
regarding the construction of the fifth pan-European transport corridor that connects the
French city of Lyon with the Ukrainian border.
Slovenian Transport Minister Janez Bozic told STA that the document, signed on Monday, 16
October, defines further activities along the 1,600-kilometres long route, a part of which runs
through Slovenia.
The memorandum, signed in the Italian city of Udine, also coordinates the approaches to the
project, which has been dubbed project No 6 and is scheduled for completion around 2015.
The meeting took part as part of a ministerial conference entitled "Pan European Transport
Corridor; a Strategic Tool for a Connected Europe".
At the event Bozic also met Barrot, who later told the press that he was satisfied with
Slovenia's efforts regarding the corridor, but was expecting even more "participation".
"The commissioner reminded us about the ambitious deadlines and warned that Slovenia must
complete its part of the route in time. We therefore agreed that we would send him a detailed
time plan of the operations," Bozic said.
Transport Ministry State Secretary Peter Verlic meanwhile added that a recently adopted bill
earmarks almost SIT 100bn (EUR 420m) for the modernisation of the Slovenian railway
infrastructure in the 2006-2009 period.
More than 70% of this sum is to be used to for projects alongside the fifth and tenth European
transport corridors, Verlic added.
Barrot also said that the EU will favour cross-border railway lines and intends to provide a
fifth of the necessary funds.
The ministers also expressed hope that the EU would favour railway lines and cross-border
sections.
The project No 6 is part of the fifth European transport corridor, which is projected to
accommodate a third of Europe's railway freight traffic.
The fifth pan-European transport corridor runs from Trieste through Italy's port of Trieste,
Slovenia's capital Ljubljana, goes on to Hungary's Budapest ad ends at the Ukrainian border.
Copenhagen to Serve as Model for Traffic in Ljubljana
The transport ministers of Slovenia and Denmark, Janez Bozic and Flemming Hansen, agreed
that the ministries would draw up a concept for traffic in Ljubljana modeled on the experience
of Copenhagen
The transport ministers of Slovenia and Denmark, Janez Bozic and Flemming Hansen, agreed
at a meeting on Tuesday, 17 October that the ministries would draw up a concept for traffic in
Ljubljana modeled on the experience of Copenhagen. The draft could be ready in 8-12
months, Bozic said after talks with Hansen.
Bozic and Hansen established that Denmark and Slovenia had similar traffic problems.
According to Hansen, increased traffic in cities is a problem, but one which Denmark has
been tackling successfully compared to other European cities.
5
Hansen said investment in infrastructure is made for ten years, whereby the investment plan
for the next period is made five years into implementation of the first period.
After talks in Ljubljana, the ministers headed for the Port of Koper, Slovenia's lone maritime
port and a key trans-shipment hub for central Europe.
Port operator Luka Koper has been working with Danish shipping agent Maersk Sealand,
which has recently voiced interest in investing in a container terminal in Koper.
Danish Minister Pleased with Talks at Seaport
Danish Transport Minister Flemming Hansen has labelled as successful the talks he held with
the management of Luka Koper, Slovenia's sole seaport manager
Danish Transport Minister Flemming Hansen has labelled as successful the talks he held with
the management of Luka Koper, Slovenia's sole seaport manager. "We live in a world of
globalisation...it is quite certain that the scope of trading will increase and ports will play an
important role in cargo transports," Hansen said on Tuesday, 17 October.
He also believes that the Danish shipping and energy company Maersk Sealand and Luka
Koper hold a mutual interest in increasing cooperation, so he hopes that the companies will
continue to increase their cooperation, after meeting the management of the port.
Luka Koper chief exec Robert Casar meanwhile said that Maersk was the most important
shipping company doing business with the port and that in contributed more than any other
company to the port's railway transports.
Slovenian Transport Minister Janez Bozic also took part in the meeting, saying that the
Danish minister was told about the port's development objectives.
These include Luka Koper's goal of becoming the largest port in this part of Europe and
maintain its status as a suitable partner to other large European ports.
Bozic was hopeful that the cooperation between the two countries would continue to increase.
He announced that transport ministries of both countries would launch a project on
developing public transport in Ljubljana.
PM Jansa, French Senate Speaker Discussed Bilateral, EU Issues
Jansa and Poncelet expressed their pleasure over the well-developing cooperation between
the two countries in the fields of economy, culture and politics
Prime Minister Janez Jansa received on Wednesday, 18 October French Senate Speaker
Christian Poncelet. The pair discussed bilateral relations and topical EU issues, according to
Jansa's office.
Jansa and Poncelet expressed their pleasure over the well-developing cooperation between the
two countries in the fields of economy, culture and politics.
They agreed on the importance of strengthening political contacts, especially important as
Slovenia will pass on its EU chairmanship to France in the second half of 2008.
The pair shared the view that the process to strengthen the global role of the EU should
continue and touched on the importance of EU policies towards the bloc's neighbouring
countries.
Jansa and Poncelet called for the continuation of the enlargement process in the Western
Balkans.
They discussed migrations and agreed that the expansion of the Schengen regime across the
entire EU would help the bloc to face these challenges more effectively.
Slovenian, French Parliament Officials Discuss EU Constitution
The pair moreover stressed the good relations between the two countries and agreed that
national parliaments play an important role in debates on key aspects of the EU's institutional
development
6
Slovenian Parliament Speaker France Cukjati and his French guest Christian Poncelet, the
chairman of the French Senate, discussed the European constitutional treaty as they met in
Ljubljana on Thursday, 19 October.
The issue was on the agenda as France succeeds Slovenia at the helm of the EU in the second
half of 2008, Cukjati's office said in a press release.
The pair moreover stressed the good relations between the two countries and agreed that
national parliaments play an important role in debates on key aspects of the EU's institutional
development.
Cukjati and Poncelet pointed out the significance of a common foreign and defence policy for
the development of a strong and unified EU, with Cukjati pointing out that harmonisation of
positions between the 'old' and the new EU members is of key importance.
Poncelet already held talks with Prime Minister Janez Jansa on Wednesday, 18 October.
7
EUROPEAN UNION
EU Presidency Preparations Top Cukjati's Agenda in Berlin
Slovenian Parliament Speaker France Cukjati discussed Slovenia's preparations for the
chairmanship of the EU in the first half of 2008 with representatives of deputy groups in the
German Bundestag
Slovenian Parliament Speaker France Cukjati discussed Slovenia's preparations for the
chairmanship of the EU in the first half of 2008 with representatives of deputy groups in the
German Bundestag on Wednesday, 18 October.
Talks touched on EU enlargement, the constitutional treaty and the attitude to hot spots in
Europe, topics that will be interesting for national parliaments and the European Parliament
during the presidency, Cukjati told STA.
Germany is expected to present a report on the constitutional treaty during its presidency in
the first half of 2007, while the final resolution of the issue is expected during France's
presidency one year later.
Cukjati expects that Slovenia's role will be to coordinate positions and try to find a consensus.
Cukjati held talks with representatives of deputy groups in the Bundestag as well as the
members of the parliamentary EU affairs committee.
Members of the EU affairs committee were interested in Slovenia's position regarding Kosovo
and Croatia, Cukjati said.
According to him, Slovenia supports Croatia's efforts to join the EU, but it also expects that it
will adopt the EU's legal order and standards of conduct.
"This will open new possibilities for more constructive talks, including in the resolution of
open bilateral issues," Cukjati told STA.
Slovenia Gets EU Money for Vineyards, Wildlife
The European Commission has earmarked EUR 450m to 15 member states for restructuring
and conversion of vineyards in the 2006/2007 period, with Slovenia getting EUR 2.4m
The European Commission has earmarked EUR 450m to 15 member states for restructuring
and conversion of vineyards in the 2006/2007 period, with Slovenia getting EUR 2.4m. The
Commission also confirmed the final distribution of money for the 2005/2006 period,
including EUR 2.3m for Slovenia.
The funds are intended for improving the quality of wine and fending off competition from
challenge posed by New World wine producers, Agriculture Commissioner Mariann Fischer
Boel said on Thursday, 19 October.
The Commission is expected to unveil a wine reform proposal early in 2007. Slovenia is in
favour of reform measures, but it opposes the reduction of vineyard areas.
In a separate decision, the Commission approved a total of EUR 141.6m for 61 wildlife
preservation projects in 20 member states, including two in Slovenia, in the framework of the
LIFE 2006 programme.
Slovenia can count on funding for two projects aimed at preserving the wetlands along the
river Mura and the Cerknica vanishing lake.
The LIFE-Nature projects are designed to protect and revive endangered habitats and boost
biodiversity.
The maximum amount of EU funds available for individual projects is EUR 2.3m.
8
PM Says EU Summit Agrees on Energy, Innovation
Speaking at the sidelines of a meeting of EU heads of state and government, Jansa stressed
the importance of the broad acceptance of the notion that only a unified energy policy can
make the EU successful in energy talks with third countries such as Russia
Slovenian Prime Minister Janez Jansa said Friday, 20 October that EU leaders agreed it was
impossible to have a coherent foreign energy policy without a coherent interior energy policy.
The summit also agreed on establishing a European Institute of Technology (EIT), Jansa said
in Finland's Lahti.
Speaking at the sidelines of a meeting of EU heads of state and government, Jansa stressed the
importance of the broad acceptance of the notion that only a unified energy policy can make
the EU successful in energy talks with third countries such as Russia.
Europe needs a more unified access to key energy suppliers, especially in the light of the
increasing dependency in energy imports, the EU leaders have agreed according to Jansa.
They also saw eye-to-eye on the need to strengthen research into sustainable energy sources,
labelling such research the key to preventing climate change.
Jansa told his colleagues that Slovenia would earmark EUR 4bn from public and publicprivate funds for a programme of research and implementation of renewable energy sources in
the coming years.
He said that greater use of nuclear energy in the future is a fact.
The participants also endorsed a European Commission document on a new innovation
strategy and the setting up of the EIT.
Jansa: Schengen and Immigration Go Hand-in-Hand
EU leaders, who met in Finland's Lahti, stressed that the expansion of the Schengen borderfree zone must also include the establishing of a uniform approach to migration policies,
Slovenian Prime Minister Janez Jansa said at the sidelines of the summit
EU leaders, who met in Finland's Lahti on Friday, 20 October, stressed that the expansion of
the Schengen border-free zone must also include the establishing of a uniform approach to
migration policies, Slovenian Prime Minister Janez Jansa said at the sidelines of the summit.
"If the negative migration wave became stronger, the question would emerge as to whether
Schengen presents an additional protection element or an obstacle. The two processes go hand
in hand," Jansa stressed, noting that "it should also be in the interest of Slovenia to join a zone
that renders more as opposed to less security".
Saying that Slovenia is "by far the best prepared candidate" to enter the Schengen zone, Jansa
went out to point out that there is a strong political will as far as the zone's expansion is
concerned, but there are also calls for a uniform policy on migration.
The prime minister explained that the two issues are above all connected in light of the fact
that some EU member states are introducing stricter rules for illegal immigrants. Translated
into the context of the Schengen zone this leads to waves of illegal immigrants splashing into
states with more liberal regimes, Jansa said.
"Given that Slovenia is about to enter the zone, we are also interested in a harmonisation of
these policies," he stressed.
Illegal migration from Africa is a problem concerning the whole of Europe, it is a global
problem that Europe is to tackle successfully, EU leaders agreed. They argued that the way to
go about this is by assisting Africa in eradicating the basic reasons for migrations and
improving the control of the bloc's external borders.
While Spain, Italy and Malta, the countries hit hardest by the migration wave, highlighted the
problem, other countries promised to back Frontex, the European agency managing EU's
external borders, which is entirely dependent on member states' contributions.
9
Jansa said that the meeting also yielded concrete proposals for establishing a joint coast guard
of all member states or at least of the Mediterranean members.
The strengthening of a uniform EU policy on migration is to be either the issue of a special
EU summit, as proposed by some heads of state and government, or a topic of the next session
of the European Council, Jansa concluded.
10
LEGISLATION
Government Amends Copyright, Industrial Property Rights Acts
The government adopted amendments to the copyright act and the act on employment-related
industrial property rights with provisions that are designed to create an efficient system of
tariffs of collective organisations and eliminate shortcomings
The government on Thursday, 19 October adopted amendments to the copyright act and the
act on employment-related industrial property rights with provisions that are designed to
create an efficient system of tariffs of collective organisations and eliminate shortcomings.
The amendments to the copyright act will improve the efficiency of the collective
management of copyrights, Biserka Strel, the head of the Intellectual Property Office, told the
press after the cabinet session.
Meanwhile, the amendments to the act on employment related industrial property rights are
expected to motivate companies to incentivise innovation among their employees.
The amendments define that employees are entitled to bonuses for inventions. The amount is
based on the individual cases, but the act provides appropriate criteria, Strel explained.
Based on comparable legislation abroad, the act will deal solely with inventions; everything
but inventions will be thrown out from the law, she said.
Government Drafts Law to Manage SIT 2trn in State-Owned Property
The proposed law forms the basis for managing the SIT 2trn (EUR 8.35bn) in property owned
by the state and local governments
The cabinet has adopted a bill on the property of the state, provinces and municipalities. The
proposed law forms the basis for managing the SIT 2trn (EUR 8.35bn) in property owned by
the state and local governments.
The sheer worth of the property is reason enough for a special law to have been drafted which
deals with how this property is managed, Public Administration Minister Gregor Virant told
the press after Thursday, 19 October's cabinet session.
The proposed law concerns the state, municipalities and the future provinces, as well as the
public sector as a whole, Virant explained. The main goal is to manage the property with due
care and diligence.
Among other things, the law will seek to ensure that the property not needed by the state is
sold off or leased out to the best bidders.
All transactions will have to be transparent and documentation about them made available to
the public, said Virant.
Real estate is to be sold at public auctions or through Internet auctions or a public call to
invitations in a bid to maximise the price, he said.
He said that even after the best bidder is selected, the competent authorities will be able to
enter into additional negotiations in which the price could be additionally raised.
According to Virant, a direct sale will be possible only in limited cases and is by all means an
exception to the rule.
Such sales will be possible if the state is not a 100% owner of a property or in the case of
exchanges of property, transactions worth less than EUR 80,000 and two or more failed
public auctions or tenders, he explained.
Moreover, transactions involving two state bodies or public institutions - for example
exchanges between the state and municipalities - will also be exempt of auctions or public
tenders.
11
Valuations of property will be necessary regardless of the type of sale, Virant stressed as he
outlined the document.
Moreover, an important feature of the new bill is the transfer of property among public
institutions or state bodies. "This means that a government can transfer real estate which it
does not need free of charge to a municipality and therefore ensure better management of that
property," he said.
However, a number of safety checks have been included to avoid abuses. As an example,
Virant said the state would be able to nullify a deal to transfer not-for-profit real estate to a
municipality if that municipality later goes on to sell the real estate for commercial purposes.
Under the new bill, the government will also be able to sell property worth less than EUR
400,000 without the prior approval of parliament. Currently, parliament needs to approve all
transactions involving state property.
The bill also sets out the establishment of a register of public property and a register of the
internal real estate market, said Virant.
12
STATISTICS/FORECASTS
Wages Up 2.1% in August
The average net wage in Slovenia stood at SIT 184,823 (EUR 771.25) in August, which is an
increase of 2.1% over July and 4.2% more than in August 2005
The average net wage in Slovenia stood at SIT 184,823 (EUR 771.25) in August, which is an
increase of 2.1% over July and 4.2% more than in August 2005, according to the National
Statistics Office.
The average gross wage meanwhile reached SIT 290,148 (EUR 1,210.77), up 2.5% over the
previous month and 4% higher than a year ago.
In real terms, the average gross wages in August were 1.9% up over July and added 0.8%
year-on-year, the figures suggest.
Due to a new collective agreement, average gross wages in the private sector added 3.4% in
August compared to July. The average gross wages in the public sector were meanwhile up
1.2%.
Investment Report Says Slovenia Too Focused on EU Markets
While countries are increasing foreign direct investment (FDI) into developing countries,
foremost China, Slovenia still directs too much of its FDI onto the transparent EU market
While countries are increasing foreign direct investment (FDI) into developing countries,
foremost China, Slovenia still directs too much of its FDI onto the transparent EU market,
Marjan Svetlicic, the chair of the International Relations Centre at the Ljubljana Faculty of
Social Sciences said on Monday, 16 October.
Presenting a report of the United Nations Conference on Trade and Development (UNTCAD)
on FDI for 2006, Svetlicic added that Slovenia recorded a rise in outgoing FDI from US$
551m in 2004 to US$ 568m in 2005.
The country's incoming FDI meanwhile decreased from US$ 827m in 2004 to the US$ 496m
in 2005, making Slovenia a net exporter of funds.
According to Svetlicic, this means that Slovenian companies have reached a level of
development that requires expansion in order to boost their competitiveness.
He also explained that Slovenia's possibilities for greenfield investments lie in investments in
personnel, while investments into manufacture, except into high technology, are not likely to
come about.
He, however, believes that Slovenia could record a high level of FDI after privatisation, with
possibilities also existing in tourism and health.
The report meanwhile revealed that FDI is expanding around the globe. It accounted for US$
916bn in 2005, a 29% increase over 2004.
FDI growth was mainly recorded in developing countries (37%) with 88% caused by mergers
and takeovers. A total of 60% of FDI was invested into the developed countries, less than in
the past, Svetlicic noted.
August Unemployment at 9.1%
The number of unemployed people stood at 83,056 in August, which is 3% less than in July
Slovenia's registered unemployment rate stood at 9.1% in August, down 0.3 percentage points
from July, according to the Statistics Office.
The number of unemployed people stood at 83,056 in August, which is 3% less than in July,
whereas the number of people in paid employment was level at 825,175, up 1.5% year-onyear.
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Unemployment among women was 11.4% and among men 7.3%, the figures show.
Officials Claim Poverty in Decline in Slovenia
Slovenia's poverty rate is at 11.7% according to the latest available statistical data
Slovenia's poverty rate is at 11.7% according to the latest available statistical data. This puts
the country among the EU nations with lowest poverty rates, comparable Eurostat figures
show, with unemployment slated as one of the major causes of poverty in the country.
Minister of Labour, Family and Social Affairs Janez Drobnic promised more jobs for
Slovenians upon the International Day for the Eradication of Poverty, observed on Tuesday,
17 October.
While voicing satisfaction over a steady decline in Slovenia's poverty rate, Drobnic said he
was aware of the risk posed by unemployment.
"The government works towards stronger economic growth and a more flexible labour market
in a bid to secure more jobs," Drobnic said in a press release.
Apart from the unemployed, poverty is present mainly among old people living on their own,
according to figures from the National Statistics Office. Single-member households are
generally more vulnerable.
An important factor in curbing poverty are welfare benefits. Statistics Office data indicates
Slovenia's poverty rate would have reached 18.9% if it were not for social transfers.
The office's figures also show that the country's poverty rate was at 14% in 1998, but dropped
to 11.7% by 2003, the last year for which statistical data is available.
By contrast, charity Karitas records a 10% increase in the number of people asking for help
each year. Karitas officials told STA on Tuesday, 17 October that they partially attributed this
to their programmes becoming more widely recognised and accessible.
They believe there is not as much extreme poverty now as there used to be, except among
homeless and immigrants. They also note that poverty is nowadays often related to problems
such as addiction and mental illnesses.
17th October was declared the International Day for the Eradication of Poverty by the UN
General Assembly in 1992.
14
FINANCE
KD Group CEO Believes Ljubljana Dairy Should Remain Coop-Owned
According to Gantar, KD Group is withdrawing form the dairy in principle
The chairman of financial firm KD Group, which has put its stake in Ljubljanske mlekarne up
for sale, has told a paper that Slovenia's leading dairy should remain in the ownership of
cooperatives.
In an interview published in Monday, 16 October's edition of Delo FT, Matjaz Gantar
explained that he held such a view because cooperatives own most of other Slovenian dairies,
and, more importantly, because he believed dairies to be the link connecting Slovenian
cooperatives.
KD Group offered its 17.89% stake in Ljubljanske mlekarne up for sale in July together with
the state-run Pension Fund Management (KAD) and Restitution Fund (SOD), which own
7.4% and 4.5% stakes in the dairy, respectively.
According to Gantar, KD Group is withdrawing form the dairy in principle. If the UK
investment fund Salford as a prospective buyer publishes a takeover bid, KD Group will think
about it. It all depends on the price, though, Gantar told the financial supplement of daily
Delo.
On the other hand, KD Group would also be ready to help cooperatives with the takeover if
they showed an interest. But so far they have not accepted the offer, Gantar said.
KD Group is connected with cooperatives also through Dezelna banka Slovenije (DBS). The
largest owners of this small bank are KD Holding, the asset management firm within KD
Group, and Kapitalska zadruga.
KD holding has already published a bid to acquire DBS, offering SIT 4,500 (EUR 18.78) per
share, trumping the recent announcement of the bank's majority owner, Kapitalska zadruga, to
embark on a takeover offering SIT 4,000 (EUR 16.69) per share.
According to Gantar, the problem is that the DBS management wants a capital injection,
while the amount of fresh capital needed for the bank's development is totally
incomprehensible to cooperatives, which own Kapitalska zadruga.
Gantar said that cooperatives had already been offered a stake in Ljubljanske mlekarne and a
25% share in Mlekarna Celeia, the Celje-based dairy, in exchange for a bigger stake in DBS.
But they want the bank as well as the dairies, Gantar said.
Wrestle for Dezelna banka Continues
Dezelna banka boasted total assets of SIT 145.1bn (EUR 605m) at the end of August. Halfyear gross profits stood at SIT 815m (EUR 3.4m)
Kapitalska zadruga published on Wednesday, 18 October a takeover bid for Dezelna banka
Slovenije, offering SIT 4,000 (EUR 16.69) per share. The bid rivals the one made by the other
major owner of this small bank, KD Holding, which had offered 4,500 (EUR 18.78).
In what was labelled by the daily Delo as an escalation of the ongoing dispute between the
two largest owners of the bank, KD Holding, which holds just under 30% of the bank's shares,
published its bid, topping the bid SIT 4,000 (EUR 16.69) announced by Kapitalska zadruga.
The bid by KD Holding, which has already obtained approval from the central bank to
increase its stake in Slovenia's 12th largest bank by assets beyond 50%, expires on 13%
November and will be considered successful irrespective of the number of shares acquired.
Kapitalska zadruga, which owns 42.57%, but is considered to hold more then 50% together
with other cooperatives, has said it would not be selling its stake to KD Holding.
15
While Kapitalska zadruga is still waiting for a takeover approval from the central bank, its
offer expires on 14 November.
According to Matjaz Gantar, the head of KD Holding's parent company KD Group, the
dispute between the two has to do with the supply of fresh capital and the appointment of a
new chairman of the supervisory board.
Owned by cooperatives, Kapitalska zadruga is the successor of the Association of Savings
and Loans Services of Slovenia.
Dezelna banka boasted total assets of SIT 145.1bn (EUR 605m) at the end of August. Halfyear gross profits stood at SIT 815m (EUR 3.4m).
Euro Preparations in Full Swing on All Levels
Before the euro changeover on 1 January 2007 attention has to be paid even to the smallest
details
Before the euro changeover on 1 January 2007 attention has to be paid even to the smallest
details and on Wednesday, 18 October company Arcus International, which develops health
and wellness products, presented a case for keeping euro coins.
The etui has eight grooves for euro coins of different values and five coins can be put in each
groove. It can also easily be used by visually impaired people, since the value of the coins in
the grooves is also marked in the Braille signs, the company has said.
A leaflet with the pictures of the Slovenian euro coins and their value in tolars is added to the
etui, which was designed by Andrej Breznik and Janez Temlin.
Meanwhile, Bank Austria Creditanstalt Ljubljana has stepped up its campaign of informing its
costumers about the euro. Info points have been opened in the bank's offices around Slovenia
where materials on euro are available, the bank said.
Government Adopts Bill on EUR 300m Loan for Motorway Company
The loan will facilitate the construction of motorway sections between Pluska and Ponikve,
Ponikve and Hrastje, Sentvid and Koseze, Slivnica and Drazenci and Vrba and Perac
The government adopted on Thursday, 19 October a bill on a state guarantee for a EUR 300m
loan that is to be taken out by the Motorway Company (DARS) at the European Investment
Bank (EIB).
The loan will facilitate the construction of motorway sections between Pluska and Ponikve,
Ponikve and Hrastje, Sentvid and Koseze, Slivnica and Drazenci and Vrba and Peracica,
government spokesperson Valentin Hajdinjak said after the cabinet session.
In order to secure the loan, the contract between DARS and EIB must be concluded as soon as
possible. Therefore the government wants parliament to pass the act in shortened procedure,
Hajdinjak added.
Reinsurer Sava Acquires Serbia's Insurer Polis
Sava, the Ljubljana-based reinsurer, was successful in its bid for Serbian insurer Polis,
managing to acquire 98.19% of the Belgrade-based company
Sava, the Ljubljana-based reinsurer, was successful in its bid for Serbian insurer Polis,
managing to acquire 98.19% of the Belgrade-based company, Sava said on Thursday, 19
October.
Sava offered EUR 30 for a share, making the deal worth around EUR 12m. The bid was
published three weeks ago in the Serbian Politika daily.
Polis is a property insurer that held a 1.4% share on the Serbian market in 2005 and will give
Sava a good platform for its expansion on the Serbian market, the Slovenian company added.
16
Sava also managed to acquire a 51% stake in Kosovo insurer Dugkajini. Property insurer
Dugkajini held a 17% market share in Kosovo in 2005, making it Kosovo's third largest
insurance company.
Dugkajini's main asset is its well developed sales network, said Sava, which refused to reveal
how much it paid for the company from Kosovo.
Finance Committee Files 25 Amendments to 2008 Budget
The body called on the government to see whether it would be possible to increase the funds
for roads and the elderly
The parliamentary finance and monetary policy committee filed on Friday, 20 October 25
amendments to the 2008 budget proposal. The body called on the government to see whether
it would be possible to increase the funds for roads and the elderly.
The changes, agreed upon by the committee members, reallocate EUR 13m from the budget
proposal that projects revenues to the tune of EUR 8.1bn and expenditures to the amount of
EUR 8.1bn.
21 of the committee's amendments deal with increasing the budget for national roads by EUR
8.7m.
Another amendment, worth EUR 3.7m, wants to increase the funds for renovating ten
retirement homes.
All of the adopted amendments were proposed by coalition parties. The members of the
committee proposed 76 changes in all.
The government will now have to draft an amended 2008 budget proposal and send it to
parliament by 8 November at the latest.
Deputy groups will then have until 11 November to file additional amendments.
The 2008 budget proposal and the changes to the 2007 budget will be discussed by the
committee on 15 November and are to be submitted for the final vote on 16 and 17
November.
Statistical Office Expects Smaller Harvest in 2006
This year's harvest will bring less crops than the one in 2005, with drought and structural
changes mainly responsible, according to projections and data by the National Statistical
Office
This year's harvest will bring less crops than the one in 2005, with drought and structural
changes mainly responsible, according to projections and data by the National Statistical
Office.
Corn yield this year will total 75% of last year's, although a lower harvest was also brought
about by corn being planted on 7% less fields than last year. Slovenia's corn yield is expected
to stand at 278,000 tonnes.
The mid-summer drought wreaked havoc among industrial plants, causing sugar beet yields to
be 5.3% lower than last year, despite the farmers increasing by 33% the amount of land on
which it was planted.
A similar fate awaits hops, which were also planted on a larger surface than last year, yet the
yield is expected to be 29.7% lower and stand as 1.2 tonnes.
Slovenian farmers will also produce less pumpkins and late potatoes this year.
Wine-growers also have nothing to look forward to, as the volume of grapes this year will be
some 11% lower than last year.
Indeed, fruits seem to be the only category that has improved in quantity in comparison in
2005, however, only in extensive orchards.
While intensive orchards yielded an average amount of apples and pears, the volume of
apples, pears and plums in extensive orchards has increased by over 100%.
17
Ljubljana Stock Exchange
The main market SBI 20 index closed the week on a new record high, adding 111.31 points
(1.95%) to 5,816.65
The main market SBI 20 index closed the week on a new record high, adding 111.31 points
(1.95%) to 5,816.65, with airport operator Aerodrom Ljubljana and energy company Petrol
among the main driving forces.
The SBI TOP index of the five biggest blue chips followed suit, adding 34.56 points (2.54%)
on the week to close at an all-time high of 1,382.03.
Aerodrom Ljubljana started the week with a nearly 5% rise on Monday and managed to gain a
total of 5.48% by Friday, 20 October. It closed the week at SIT 12,059 (EUR 50.43), having
soared 13% since the beginning of the month.
Stock market analyst Marko Jovic told STA that the reasons for the rise lie in the company's
upbeat business results and the approaching Slovenian stint as EU president in the first half of
2008.
Energy company Petrol was the main motor of growth throughout the week, despite losing
some ground on Friday, 20 October. The item added over 7% to SIT 114,538 (EUR 478.96)
on a turnover of SIT 2.37bn (EUR 9.91m).
According to Jovic, the rise was a result of renewed rumours of a takeover by Russian oil
giant Lukoil.
He added that holding Istrabenz is also increasing its stake in Petrol as it wants to have a
bigger say at the AGM that will decide on a joint retail venture with Lukoil throughout the
former Yugoslavia.
Taking the completely opposite path, drug manufacturer Krka was hit by profit taking
throughout the week and only partially recovered on Friday, 20 October.
With deals amounting to SIT 4.78bn (EUR 19.98m), Krka easily dwarfed the remaining
shares in volume terms, but lost 1.66% to close at SIT 183,398 (EUR 766.91).
Beverage group Pivovarna Lasko was also a surprise mover last week, clocking up deals
worth SIT 924m (EUR 3.86m) including block trade. The item added 1.07% to SIT 8,641
(EUR 36.13).
Meanwhile, an acquisition battle broke out in the bread and pasta sector, involving Mlinotest
and Zito alongside the family-owned bakery Pekarna Blatnik.
Zito gained 5% at the beginning of the week, but lost 4.35% on Friday, 20 October, ending
the week on SIT 38.115 (EUR 159.38).
Brokers concluded deals worth SIT 13.8bn (EUR 57.7m), with SIT 4.8bn (EUR 20m) of the
turnover coming in block trade.
Investment firms had a week in the black, pushing the PIX investment fund index 89 points
(1.88%) higher to 4,828.20.
The BIO bond index added 0.59 points (0.5%) to 119.53.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.62 (-----)
US dollar (USD) - SIT 190.07 (-0.9)
Swiss franc (CHF) - SIT 150.95 (+0.58)
British pound (GBP) - SIT 357.75 (+2.4)
18
REGIONAL INFORMATION
Coalition Pushes Ahead With Regionalisation Proposal
The four parties making up the ruling coalition have achieved an agreement in principle on
the package of regionalisation laws needed to form provinces in Slovenia
The four parties making up the ruling coalition have achieved an agreement in principle on
the package of regionalisation laws needed to form provinces in Slovenia.
Prime Minister Janez Jansa told the press following Tuesday, 17 October's meeting of the
coalition that the proposal would now be discussed by the decision-making bodies of each of
the four parties, after which it would be forwarded to the opposition.
Following consultations with the opposition, the four bills making up the package are to be
forwarded to the parliament.
There was no debate on the number of provinces that are to be established, said Jansa, adding
that the coalition had previously reached an agreement on 14 provinces.
A fifth bill in the package, which will determine the names and seats of provinces, is to be
drawn up after the initial four.
Jansa stressed that the project of regionalisation was of national importance, which was why
the opposition would be consulted.
The proposed laws need a two-thirds majority in parliament to be passed.
He reiterated the government's claim that the goal of the current efforts was to achieve
decentralisation and balanced development of Slovenia.
Devolution of certain state powers to a regional level would be a key part of the reforms.
MPs mustered the required super majority on 20 June to pass a constitutional act paving the
way for the establishment of provinces in the entire country.
EUR 100m Island One of Main Coastal Projects, Official Says
The government is planning to construct a EUR 100m artificial island between the coastal
towns of Koper and Izola
The government is planning to construct a EUR 100m artificial island between the coastal
towns of Koper and Izola. The island, one of the projects in Slovenia's Development Strategy
between 2007 and 2023, is expected to be built by 2020, Marjan Hribar of the Economy
Ministry said in Portoroz on Wednesday, 18 October.
The head of the directorate of tourism at the ministry added that the construction of the 30,000
square metre island will be financed mainly by EU funds (EUR 60m), with the state, regional
and local budgets contributing EUR 30m, while the remaining EUR 10m would come from
private sources.
Hribar moreover stressed during the presentation - a part of the government's roadshow aimed
at presenting the development projects - that the 3-metre high island will be constructed from
the material that will be leftover from the construction of a tunnel on the Koper-Izola dual
carriageway.
The island will host spa and wellness tourism alongside entertainment facilities and will be
connected to the mainland by a promenade with a beach.
Hirbar also stressed that the island will also bring a number of jobs and possibilities for
development of small- and medium-sized companies.
Apart from the island, the resolution also stresses linking the tourism potentials of the Karst
region, including the Lipica Stud Farm, reconstruction of the picturesque Stanjel village,
expansion of infrastructure at the UNESCO-listed Skocjan caves and establishment of a Karst
regional park.
19
BRANCH INFORMATION
Port Management and Logistics Conference Kicks-Off in Portoroz
Slovenia's ambitions to participate in the eighth pan-European transport corridor and the
importance of successfully coordinating all sectors of transport were highlighted as an
international conference on port management and logistics
Slovenia's ambitions to participate in the eighth pan-European transport corridor and the
importance of successfully coordinating all sectors of transport were highlighted as an
international conference on port management and logistics got underway in Portoroz on
Wednesday, 18 October.
While Slovenia is located at the crossroads of the 5th and 10th transport corridors, it also
wishes to participate in the 8th corridor, which connects Italy to Bulgaria via Macedonia and
Albania, the CEO of port operator Luka Koper, Robert Casar, told participants of the two-day
event.
According to Casar, this was part of the port's strategy to expand its activities beyond
Slovenian borders in terms of cooperating with other providers of transport and logistics
services in the region.
Transport Minister Janez Bozic on the other hand stressed that transport strategies need to
consider the provisions of the European white paper, which sets out to achieve a successful
cooperation between railway, road and maritime transport.
According to Bozic, the Portoroz conference will focus on the use of logistics services
combined in securing successful port management.
Bozic also pointed to the environmental aspects of the increase in maritime freight transport,
noting that environmental organisations have to work closely with the economy in order to
mitigate the environmental toll of this trend.
On the sidelines of the conference, Bozic also met his Macedonian counterpart Mile
Janakieski, who expressed hope that Slovenia would support Macedonia in its EU accession
endeavours. Janakieski added that his country would also very much appreciate Slovenia
sharing its experience in setting up a modern transport network.
Bozic expressed Slovenia's readiness and wish to cooperate with Macedonia in this field,
adding that possible joint projects would be discussed by delegations of Slovenia's and
Macedonia's transport ministries.
At the conference, Janakieski said that developing the infrastructure for the eighth and tenth
transport corridors was a priority task for the Macedonian government.
Roberto Ferrazza of the Italian transport ministry meanwhile told the press that the Slovenian
transport minister and Italy's infrastructure minister are to establish a joint commission tasked
with monitoring the implementation of the fifth and tenth corridor infrastructure projects.
Finally, Adina Stefanescu of the Romanian transport ministry expressed her country's
satisfaction with Slovenia's support of Romania's EU accession. She added that Romania
would also make use of Slovenia's experience in constructing a modern transport network.
Transport Minister Outlines Road Transport Network Modernisation
Presenting plans to modernise the national road transport network, Transport Minister Janez
Bozic told the press that renovation and construction works on roads which are part of the
priority development axes would begin this year and conclude by 2020
Presenting plans to modernise the national road transport network, Transport Minister Janez
Bozic told the press on Thursday, 19 October that renovation and construction works on roads
which are part of the priority development axes would begin this year and conclude by 2020.
20
The project is part of a government's package of development projects to be carried out
between 2007 and 2023. Some EUR 963m is to be earmarked from the 2007-2020 state
budgets, EUR 283m from EU funds and EUR 200m through public-private partnerships.
Bozic explained that the details of the public-private funding have not yet been defined, they
will however probably involve tolls on some sections.
"Tolls are a key source for the repayment of loans that we take out for the construction of
motorways and expressways," he said, adding that "the alternative is to stick with the budget
frameworks and find out that we will not be done before 2050, which is unacceptable".
The first of the project's three priority transport links is termed the third development axis.
The 170 km link is to connect the country's major economic centres by 2020 and is considered
a crucial north-south transport link from Austria via Slovenia to Croatia. Its value is estimated
at EUR 1.23bn.
The regional link, which is part of the 3a development axis (Ljubljana, Skofljica, Ribnica,
Kocevje, Croatian Border) will above all improve access to Ljubljana. The road is to be
completed by 2017 and is expected to cost EUR 79m.
The fourth development axis (Italian border, Kobarid, Tolmin, Cerkno, Gorenja vas, Skofja
Loka, Jeprca) is important especially from a regional point of view, as it connects Posocje
(W) with central Slovenia, Bozic stressed. The value of the project scheduled for completion
in 2013 is estimated at EUR 135m.
Minister Says Energy Needs to Be Met with Hydro, Nuclear Power
Slovenia intends to answer the challenge of providing for increasing electricity demand
primarily by constructing hydro power plants and building a second nuclear reactor at Krsko,
Economy Minister Andrej Vizjak has said
Slovenia intends to answer the challenge of providing for increasing electricity demand
primarily by constructing hydro power plants and building a second nuclear reactor at Krsko,
Economy Minister Andrej Vizjak has said.
Outlining the government's Resolution on Development Projects between 2007 and 2023 in
Brezice on Friday, 20 October, Vizjak said that continuing the construction of the chain of
hydro power plants on the lower Sava, building a new generator at the Sostanj Coal-Fired
Power Plant and building a second reactor of the Nuclear Power Plant Krsko were the main
energy projects set down in the resolution.
The total worth of investment in energy projects, which also include upgrades to the
electricity grid and a gas storage facility in Senovo (eastern), are estimated at EUR 3.4bn, he
explained.
Three of the projects are earmarked for the eastern Slovenian region of Posavje: the hydro
plants on the lower Sava, the second reactor at the Krsko Nuclear Power Plant and the Senovo
gas storage facility.
The construction of the chain of five hydro power plants is estimated at EUR 459m, including
EUR 350m for energy infrastructure and EUR 109m for other infrastructure. The chain is to
produce 716 gigawatt hours of electricity per year, said Vizjak.
The second reactor at the Krsko Nuclear Power Plant is to be constructed by power producer
Gen energija for EUR 2bn, said Vizjak, but did not specify a date. He said a second nuclear
reactor at Krsko was one of the key answers to the electricity shortage in Slovenia, as it will
provide cheap and reliable energy.
He added that the project hinges on finding a solution for a depository for low and medium
radioactive waste. A location is expected to be approved in 2008, with the depository
expected to begin operating in 2017.
21
The Senovo gas storage facility will be built to provide a backup source of fuel for the
Termoelektrarna Brestanica thermal power plant. According to Vizjak, it will ensure that the
power plant has a steady supply of gas in case of disruptions in coal supply.
Vizjak was speaking during the latest stop of the government's roadshow aimed at presenting
the package 35 projects worth EUR 24m that were confirmed by the cabinet last week.
Agriculture Committee Discusses Budget, Dairy Takeover
While the parliamentary agriculture, forestry and food committee was more or less in favour
of the proposed budgetary amendments for 2007 and the budget proposal for 2008, the
discussion on the sale of the Ljubljanske mlekarne dairy was far more lively
While the parliamentary agriculture, forestry and food committee was more or less in favour
of the proposed budgetary amendments for 2007 and the budget proposal for 2008, the
discussion on the sale of the Ljubljanske mlekarne dairy on Tuesday, 17 October, was far
more lively.
The tweaked 2007 budget allocates SIT 91.7bn (EUR 383.45m) for agriculture, 1.7% more
than the original 2007 budget, said Agriculture Minister Marija Lukacic.
"The ministry is pleased with the budget as it allows for the realisation of all the major goals,"
Lukacic added, explaining that the 2008 budget is more or less based on the same projections
as the amended 2007 one.
Regarding the possible sale of Slovenia's leading dairy - its management recently launched
takeover talks with British investment fund Salford - the committee members were of
different opinions.
Salford has been reported as offering SIT 7.55bn (EUR 31.5m) for a 54% stake in the dairy.
The stake is being sold by financial firm NFD Holding along with asset management firms
Zvon Ena Holding and Zvon Ena ID, food company Jata Emona and Mlekodel, which
manages the shares held by cooperatives.
The dairy's chief exec Matjaz Vehovar said that the company is gearing up for due diligence
and will issue no comments during the time of the talks.
The head of Mlekodel Anton Vrhovnik meanwhile said that the cooperatives decided to sell
their stakes after the same decision was taken by the state-run pension Fund management
(KAD) and Restitution Fund (SOD).
Representatives of other cooperatives added that their sale of the stake was necessitated by the
poor position of the cooperatives, which are themselves fighting for survival.
While the cooperatives are aware of what might happen if the dairy is sold to a foreign owner,
they are unable to purchase the company by themselves.
Lukacic pointed out that the state gave the share to the cooperatives so that they could protect
the farmers' interest.
Franc Susnik, MP of the ruling Slovenian Democrats (SDS) meanwhile warned that while
everybody is talking about the national interest, they are forgetting that the state has already
shown its commitment to it by transferring the ownership stakes to the cooperatives. And they
seem to be poor managers, he added.
The committee decided to warn the cabinet and both state-run funds to rethink whether it is
necessary to sell their 11% stake in Ljubljanske mlekarne.
22
COMPANIES
Gorenje Launches Production in Serbia
Gorenje, the Velenje-based home appliance maker, has launched a new EUR 20m
refrigerator and freezer production plant in the Serbian town of Valjevo
Gorenje, the Velenje-based home appliance maker, has launched a new EUR 20m refrigerator
and freezer production plant in the Serbian town of Valjevo.
The new plant, which was officially opened on Monday, 16 October in the presence of
Serbian Minister of International Economic Relations Milan Parivodic, is part of Gorenje's
push on new markets and is the second production location outside of Slovenia after the
Czech Republic.
The group plans to produce 840 units a day at the plant in the initial stages, while production
capacity is to rise to one million units a year by 2010, Gorenje chairman Franjo Bobinac told
the press in Valjevo.
Bobinac said at the opening that Valjevo will be the home to Gorenje's story of success in
Serbia. Moreover, he believes it will help raise the share of Gorenje's production outside of
Slovenia to 25%.
He stressed that the new plant was an important gain for a company that sells 93% of its
products outside of Slovenia.
Other production facilities are to follow, Bobinac said, and announced that Gorenje had in
recent days bought a plant in Stara Pazova. There it intends to launch production of water
heaters in 2007.
Valjevo suits Gorenje as a location because of its proximity to key markets as well as a rail
connection. Moreover, the land around the plant allows for expansion.
Furthermore, Bobinac said Gorenje was being treated as a domestic brand in Serbia, with
households owning two to three Gorenje products on average.
He also said that in planning the investment, Gorenje "believed that we could get good
workers and make our investment a success in Serbia, a country with a rich tradition of
industry".
The refrigerators and freezers from the Valjevo plant, which currently employs 330 workers,
will be destined for all of Gorenje's markets.
Adjacent to the plant, the company also launched a modern showroom with all types of
Gorenje household products.
Gorenje plans to make a total of 3.7 million household appliances this year and generate EUR
1.1bn in sales revenues.
Anti-Trust Office Clears Gorenje's Foray into Energy
The Competition Protection Office (CPO) has cleared household appliance group Gorenje's
purchase of 49.95% in Istrabenz energetski sistemi (IBES), the energy arm of the holding
Istrabenz
The Competition Protection Office (CPO) has cleared household appliance group Gorenje's
purchase of 49.95% in Istrabenz energetski sistemi (IBES), the energy arm of the holding
Istrabenz.
The CPO said in a press release on Monday, 16 October that the deal from 18 July did not
break anti-trust rules in Slovenia and is being allowed to stand.
Gorenje paid SIT 1.23bn (EUR 5.1m) to become a near 50% owner of IBES, which earlier
this month launched a joint venture with energy company Gen Energija, GEN-I, to sell
electricity in Slovenia and the EU.
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.
23
At the time of their deal, Gorenje and Istrabenz said they would through IBES invest in
energy production sources in Slovenia and abroad.
New Public Broadcasters Statute Also Brings New Editors
The new statue eliminated the mandates of all the editors of the broadcaster's programmes
The new articles of association for RTV Slovenija, which entered into force on Monday, 16
October, have also brought some changes to the editorial board of the public broadcaster, with
the bulk of the replacements hitting Radio Slovenija.
The new statue eliminated the mandates of all the editors of the broadcaster's programmes.
Therefore RTV Slovenija director general Anton Guzej appointed anew the acting editors that
are to perform their duties until the naming of new editors by 31 December at the latest, RTV
Slovenija said in a press release.
The only change made at TV Slovenija concerns the position of the editor-in-chief of the
entertainment programmes, where Petar Radovic has replaced Vanja Vardjan.
Guzej moreover appointed Ljerka Bizilj as the acting editor-in-chief of the planned
programme devoted to live broadcasts from parliament.
Radio Slovenija, which is being restructured into four production units, on the other hand
experienced across-the-board changes.
Matjaz Erznoznik has taken over from Bojan Veselinovic as acting editor-in-chief of the news
programmes and has also become the acting editor of Radio 1. Radio 2 is to be headed by
Mirko Stular and Radio 3 by Vlado Senica.
The posts of editor of cultural programmes and editor of musical programmes, held before the
new statute by Vlado Senica and Ivanka Mulec Ploj respectively, have been abolished.
The new statute has also brought wage cuts for the leading workers at RTV Slovenija brining
them in line with the broadcaster's collective bargaining agreement.
Trimo Ups Sales, Profits and Investments in 2006
Trimo, the Trebnje-based maker of pre-fabricated construction components, generated
revenues to the tune of EUR 112m in the first nine months of 2006
Trimo, the Trebnje-based maker of pre-fabricated construction components, generated
revenues to the tune of EUR 112m in the first nine months of 2006, Trimo chief exec Tatjana
Fink told the press on Wednesday, 18 October.
Surpassing its plans by 18% places the company on track to exceed the planned profit of SIT
875m (EUR 3.66m) by the end of the year, Fink added.
The company managed to increase exports by 68% in the January-September period, with
Croatia, the Czech Republic, Serbia, Denmark, The Netherlands, Romania and Moldavia
recording the highest rises in sales.
Fink also explained that the company managed to offset the rising purchase prices by
accelerating cost-cutting and seeking new business opportunities.
The company increased its investments, including in a new factory in Serbia and a new
research facility worth SIT 300m (EUR 1.25m). Trimo's investments this year amounted to
SIT 1.6bn (EUR 6.69m).
In order to expand the sales network, Trimo established companies in Romania, Bulgaria and
Spain.
Trimo's Serbia subsidiary, Trimo Inzenjering, is meanwhile investing in a new factory and the
technology for manufacturing facade components. The EUR 12m investment is to be
completed in 2007.
Trimo sees Serbia as one of its more important markets in the long term and plans to employ
100 people in the country by 2007.
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Trimo VSK, the company's subsidiary in Russia, is meanwhile carrying out a EUR 4.5m
investment in a new production line for roof and facade panels, Fink also said.
KBM Infond Stakes in 19 Companies up for Sale
Its management said the public invitation to investors to make non-binding offers for shares
held by investments funds Infond and Infond 1 would stand open until 2 November
The Maribor-based asset management KBM Infond offered its stakes in 19 Slovenian
companies up for sale on Wednesday, 18 October. Its management said the public invitation
to investors to make non-binding offers for shares held by investments funds Infond and
Infond 1 would stand open until 2 November.
The list of stakes on offer includes a 15% share in the Maribor-based newspaper publisher
Vecer, an 11% stake in Casino Portoroz, a 13% stake in the Maribor-based public utility
Nigrad and a lesser share in casino operator Hit.
KBM Infond Chairman Stanko Brglez told STA that the company had decided to sell nonquoted shares issued by Slovenian companies in the process of bringing its portfolios in line
with the requirements of legislation on investment funds and asset management companies.
"The restructuring will adjust both funds' portfolios to their investment polices with a view to
increasing the share of listed securities. At the same time it will be a step towards
transforming both investment funds into mutual funds as required by the law," Brglez said.
The 2004 law binds investment funds to transform into mutual funds by 2011. Companies
managing the funds appealed against such provision to the Constitutional Court, which
dismissed their complaint last year.
Blatnik Now Wants to Takeover Zito as Well
After publishing a bid for bread and pasta maker Mlinotest, the family-owned bakery Blatnik
published an intention to acquire Mlinotest rival Zito
After publishing a bid for bread and pasta maker Mlinotest, the family-owned bakery Blatnik
published on Wednesday, 18 October an intention to acquire Mlinotest rival Zito. Blatnik's
move comes after Zito announced on 13 October that it too would be bidding for Mlinotest.
Zito already replied, saying that Blatnik wants to thwart its Mlinotest bid.
Blatnik's intention, published in the daily Finance, is defensive, as the company wants to
protect itself from a powerful concentration of market shares that would result from a possible
acquisition of Mlinotest by Zito.
According to Blatnik, Zito and Mlinotest account for over 50% of bread production in
Slovenia, over 80% in pasta production and over 75% in wheat milling.
The merger of the two food giants would, Blatnik believes, would cause the competitiveness
in the industry to drop.
The management of Zito responded to Blatnik's move by saying that the family bakery's intent
is to prevent Zito from publishing its takeover bid for Mlinotest.
Zito's management will assess whether it would continue with the procedure for taking over
Mlinotest.
Blatnik, employing just over 200 workers, published a bid to take over Mlinotest, the
Ajdovscina-based bread and pasta maker, offering SIT 1,600 (EUR 6.69) per share on 3
October.
Its bid was rejected by Mlinotest managers on 12 October, saying that the information
provided in the offer does not enable a reliable assessment of the impacts of a potential
takeover.
Zito then entered the scene on 13 October, promising to publish in 10 days a takeover bid that
would trump the offer by Blatnik.
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Grega Repovz New Content Boss at Mladina
Grega Repovz, a journalists of the daily Delo and the head of the Slovenian Journalists'
Association, has been appointed the new editor-in-chief
Grega Repovz, a journalist of the daily Delo and the head of the Slovenian Journalists'
Association, has been appointed the new editor-in-chief of the left-leaning political weekly
Mladina effective in November.
The appointment, announced on Thursday, 19 October, comes after the director of the
company, Andrej Klemenc, dismissed Jani Sever without cause less than one year into his
four-year tenure.
The magazine's journalists were split down the middle in their non-binding vote on the new
editor on Thursday, 19 October, which led them to leave the decision up to the board of
editors.
Sever was the editor-in-chief for the past 10 years. He was appointed for a four-year term in
the beginning of 2006.
Recently Mladina also lost one of its most prolific reporters, Ali H. Zerdin, who started
working for the daily Dnevnik.
Government Appoints Matjaz Pust Head of Kobilarna Lipica
Pust wooed successfully the cabinet with his programme of activities and his vision for the
development of the public institution
The cabinet appointed on Thursday, 19 October Matjaz Pust the director of the institution that
manages the Lipica Stud Farm. Pust, who had worked as the acting director at Kobilarna
Lipica so far, was proposed by the council of the Lipica Stud Farm.
Pust wooed successfully the cabinet with his programme of activities and his vision for the
development of the public institution.
His activities so far - he was appointed as the stud farm's acting director at the end of April also brought good results, the Government PR and Media Office said in a press release.
Pust graduated in international marketing at the University of Maribor in 1976 and worked as
a manager at the Rasica fashion company between 2000 and this year.
CCIS Warns Small Firms to Gear up for Euro
Unlike the big companies, small companies are inadequately prepared or they have not
started making preparations at all yet, CCIS vice-president Cveto Stantic told the press
The Chamber of Commerce and Industry of Slovenia (CCIS) has warned small companies to
get serious about getting ready for the adoption of the euro, which is less than three months
away.
Unlike the big companies, small companies are inadequately prepared or they have not started
making preparations at all yet, CCIS vice-president Cveto Stantic told the press on Thursday,
19 October.
According to CCIS adviser Nina Preseren, some of the smaller firms do not realise that the
changeover to the euro is a complex and demanding project which affects all the functions of
the company.
Stantic added that there are some 35,000 limited-liability companies in Slovenia, so many
bottlenecks can be expected.
Moreover, the switch to the euro entails strategic shifts: for example companies that have so
far purchased in dollars might find it more prudent to switch purchasing to the eurozone to
reduce foreign exchange risks, Stantic pointed out.
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Mercator Acquires First Part of M-Rodic
Slovenia's top grocer Mercator has signed a contract with Serbian Holding Rodic M&B,
thereby acquiring a 76% of M-Rodic, a joint venture to which Rodic M&B has transferred its
retail unit
Slovenia's top grocer Mercator has signed a contract with Serbian Holding Rodic M&B,
thereby acquiring a 76% of M-Rodic, a joint venture to which Rodic M&B has transferred its
retail unit, according to a pres release posted on the website of the Ljubljana Stock Exchange.
Mercator will acquire the remaining 24% from Holding Rodic M&B in 2008 and 2009. At the
same time, the Novi Sad-based company will get a 5% share in Mercator, a stake that will
increase accordingly after the overall deal has been completed.
The two partners signed the contract on Thursday, 19 October after they had met the agreed
requirements, one of which was the go-ahead of the Serbian competition protection office.
The deal will make Mercator the second-biggest retailer in Serbia.
The agreed price for the 100% share in M-Rodic, attuned to the actual state of assets and
liabilities on the day of transaction, is EUR 152m. The price for the 24% stake to be acquired
by Mercator later, will depend on the operating results of M-Rodic over the following two
years.
The price for the initial, 76% share is EUR 116m, EUR 30m of which will be paid in
Mercator shares, and the rest in cash, according to the press release.
Mercator will issue new shares on the basis of a recent capital injection. The share value
equals the mean price on the Ljubljana Stock Exchange in the last full month before the
transaction was completed, i.e. September 2006. The emission price of each of the 174,517
fresh shares is thus SIT 41,194.77 (EUR 171.90).
Both additional 12% stakes to be acquired in 2008 and 2009 will also be paid in shares. This
will require a consent from the Mercator shareholders to a new share issue. Given that the
price for the stakes depends on M-Rodic's future operations, the overall price for the entire
stake in the company is expected to range between EUR 137m and 177m.
As the overall deal is completed, Holding Rodic M&B will become one of the major owners
of Mercator, while the Slovenian grocer is expected to control about 8% of the Serbian
market, according to the press release form Mercator.
Krka Free to Market Drug in Slovenia, Hungary
The Ljubljana District Court has rejected a motion for a temporary injunction prohibiting the
marketing of Krka's drug Prenessa in Slovenia and the same ruling was arrived at for
Hungary by a court in Budapest
The Ljubljana District Court has rejected a motion for a temporary injunction prohibiting the
marketing of Krka's drug Prenessa in Slovenia. The same ruling was arrived at for Hungary
by a court in Budapest, the pharma company said on Friday, 20 October.
The case was brought to the courts by France's Les Laboratories Servier against Salus, a
Ljubljana-based wholesaler of drugs and medical instruments.
While the Ljubljana court rejected the patent infringement claim by the French company
because it was filed too late, the Hungarian court said that the plaintiff's claim on patent
infringement cannot be substantiated.
The French company wanted to prevent the sales of Prenessa, an inhibitor of the angiotensinconverting enzyme, alleging that Krka was infringing the patent for the active ingredient
perindopril in alpha crystalline form.
Les Laboratories Servier also filed the claim against Krka's Hungarian and Polish subsidiaries,
Krka Magyarorszag and Krka Polska.
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SLOVENIA IN BRIEF
Minister Says New Approaches Needed to Combat Human Trafficking
Not only is Slovenia a transit country for trafficking in human beings, it is also a country of
origin and a destination country, Interior Minister Dragutin Mate has told a debate on the
Council of Europe Convention on Action against Trafficking in Human Beings. This type of
crime is undertaken by organised gangs, so it is difficult to fight it, Mate told the CoEorganised debate in Ljubljana on Wednesday, 18 October.
Slovenia, China Sign Action Plan in Health
Slovenian Health Minister Andrej Brucan and Li Xin, China's deputy health minister, have
signed an action plan on cooperation between the two ministries in the area of health and
medicine for the 2006-2007 period. The purpose of the plan, signed on Thursday, 19 October,
is to broaden the cooperation between the two ministries in the fields of blood safety and
transfusion medicine, acupuncture and in researching the impact of the environment on
people's health, Brucan said after the signing.
Cabinet Relaunches Strategic Council for Economic Development
The government decided on Thursday, 19 October to put together again the Prime Minister's
Strategic Council for Economic Development. Prime Minister Janez Jansa has appointed
Marjan Senjur as the head of the council and Peter Groznik as his deputy, government
spokesperson Valentin Hajdinjak said. Also sitting on the council will be economists and
business representatives France Krizanic, Marko Kranjec, Ljubo Sirc, Anton Jurgetz, Matjaz
Gantar, Ivo Boscarol, Keith C. Miles, Boris Pleskovic, Zan Oplotnik, Timotej Jagric and Peter
Jesovnik.
EU Commission Praises Slovenian Approach to NGOs
The Slovenian Public Administration Ministry has received a special award from the
European Commission for its presentation of an example of good practice and a
comprehensive approach towards establishing a partnership with NGOs. Taking part in the
Partnership Forum, which took place in Brussels as part of the European Week of Regions
and Cities held between 9 and 12 October, the ministry presented its approach to creating a
partnership with NGOs.
Janko Moder, Prolific Translator of Literature, Has Died
Janko Moder, one of the most prolific Slovenian translators of literature, died in Ljubljana on
Friday, 20 October aged 92. His bibliography contains over 400 literary translations from 20
languages as well as 200 audio works and plays, the Association of Slovenian Literary
Translators said. Moder translated the works of many of the world's literary giants, including
Chechov, Turgenyev, Dostoyevsky, Ibsen, Faulkner, Brecht and Beckett.
Montenegrin Diplomats to Receive Training in Slovenia
The Slovenian Centre for European Perspective (CEP) and the Montenegrin Foreign Ministry
signed on Thursday, 19 October an agreement which provides for the training of Montenegrin
diplomats in Slovenia. The project is part of the assistance provided by Slovenia to
Montenegro under an agreement signed by the foreign ministries of the two countries in
February 2006, the CEP said in a press release.
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54th World Congress of Women Entrepreneurs Launched
The 54th congress of the World Association of Women Entrepreneurs (FCEM) kicked-off in
Ljubljana on Saturday, 21 October with over 170 entrepreneurs from 29 countries expected to
exchange knowledge and experience, the organising GIZ Podjetnost association of women
entrepreneurs has told STA.
Ex Mercator Boss Set to Become Ljubljana's Mayor
The man who is credited with turning Mercator into the country's leading retailer is set to get
a chance to lead the city of Ljubljana for the next four years. Exit polls suggest Zoran
Jankovic, running as an independent, won two-thirds of the votes in the race for mayor in the
capital city tat took place on Sunday, 22 October.
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