Generally overlooked in the past, Slovenia is one of the most successful newly joined European Union countries. It has a strategic location, plentiful natural resources, and an excellent infrastructure, and is open for foreign investments.
By William Bell
The Republic of Slovenia has many enviable characteristics, including its strategic central location in Europe, a solid growing economy, large reserves of natural resources, well-developed infrastructure, and a welcoming business environment. The Slovenia government is actively working to increase the country’s presence in the global market, creating additional ways for foreign investors to take advantage of opportunities.
This is a country aggressively pursuing inward FDI, and it should be considered by businesses of all sizes that are interested in going global.
By the Numbers
Forbes ranked Slovenia as no. 20 on its list of best countries for business in 2016. At the time the list was developed, the country had 3 percent GDP growth rate, $29,900 GDP per capita, and a 6.9 percent positive trade balance. For comparison purposes, the U.S. was ranked as no. 22, and had a 2.4 percent GDP growth rate, a $54,400 GDP per capita, and a minus 2.2 percent trade balance.
Slovenia’s status is remarkable when considering the population is approximately 2 million, and the U.S. population is 321.4 million. The World Bank ranks Slovenia as one in 2016 for trading across borders.
Underlying the numbers is a country with a flourishing economy due to growing domestic production and significant growth in the inward inflow of foreign direct investments (FDI).
According to Bank of Slovenia research, the largest inward FDI segment is manufacturing (32.5 percent), followed by wholesale and retail (23 percent); financial and insurance (15.4 percent); real estate (7.2 percent); information and communication (5.4 percent); professional, scientific and technical activities (3.7 percent); transportation and storage (3.7 percent); and electricity, gas and steam supply (3.3 percent). Some of the world’s largest corporations have invested in Slovenia – Goodyear Dunlop, Renault, Deloitte, McDonald’s, Microsoft, PricewaterhouseCoopers, Henkel and many others.
Most inward FDI is currently flowing from European countries, accounting for over 80 percent. There are enormous opportunities for U.S. firms of all sizes in the automotive industry, pharmaceuticals, electronics, electrical and optical equipment, life science, tourism, energy, products made from plastic materials, and business and financial consultancy. In particular, Slovenia wants to grow its high-tech sector and especially in R&D. To bring employment to economically disadvantaged regions, the Slovenian government established special facilities and special incentives to make the locations, like the Prekmurje region close to the Hungarian border, attractive to foreign investors.
The European Innovation Scoreboard 2015, prepared by the European Commission, recognized Slovenia as the fastest growing innovation follower among a group of countries that also includes France, Austria, Ireland, Belgium, Luxembourg, the United Kingdom and the Netherlands. Additionally, the country ranks as no. 24 among the top 50 innovative economies per the 2016 Bloomberg Innovation Index.
Reaching Into and Outside Slovenia
Slovenia’s location makes it an excellent locale to establish a base for doing trade with other European Union countries. There is Hungary to the north, Austria and Italy to the west, Croatia to the east, and 29 miles of coastline on the Adriatic Sea.
The government has been working to develop a business friendly environment, improving the ease of doing business and offering special financial and fiscal incentives. The Slovenian Public Agency for the Promotion of Entrepreneurship surveys foreign businesses in Slovenia on an annual basis, and the top reasons firms chose Slovenia for investment is the expertise and high skills of the labor force, the high quality of export goods manufactured in the country, good prospects for forming long-term relationships with suppliers and customers, easy market access to services, and location. Other advantages include the unrestricted transfer of profit and capital repatriation, low taxes, and ease of setting up a business.
There are some barriers to foreign investments, including strict employee dismissal requirements that make it difficult, but not impossible, to fire an employee. Privatization has been slow but is accelerating, and the bureaucracy is greatly streamlined.
However, export.gov, the U.S. online agency, has found Slovenia to have high business ethics and a strong commitment to doing quality work. If interested in establishing a business in Slovenia that will hire employees, it is important to do thorough research on all business laws, including labor laws. Once established as a business, a foreign-owned firm has the same rights as domestic companies.
Another option is to export goods to Slovenia. The U.S. Embassy in Slovenia has a commercial section dedicated to promoting the export of U.S. goods and services to Slovenia. The office is located in Slovenia’s capital city of Ljubljana. Embassy professionals can help U.S. companies find partners and customers. Other useful contacts can be made at the Chamber of Commerce and Industry of Slovenia and closer to home the Embassy of Slovenia in Washington, D.C.
Ready to Assist
Several other government agencies and organizations can be extremely helpful to foreign businesses interested in investing in Slovenia.
The organization called Invest Slovenia was created to assist investors when it was determined the country was in need of a high-level agency to promote FDI. The country takes pride in the fact it is not promoting itself as a low-cost manufacturing location but rather as an innovation-driven economy. Invest Slovenia works with SPIRIT Slovenija.
SPIRIT is the acronym for Public Agency for Entrepreneurship, Internationalization, Foreign Investments and Technology. Both organizations are frequently present at large trade shows. They offer many complimentary services, including assistance with networking, site selection, and guidance on desired investments.
The OECD Better Life Index ranks Slovenia above average in education, skills, environmental quality, work-life balance and personal security. Slovenians embrace community and well-being, take pride in their cultural heritage and cultural activities, and participate in year-round outdoor activities.
Business people who choose to live in Slovenia with their families experience a high quality of life. The beautiful natural environment includes thermal spas and a section of the Alps. There are museums, medieval castles, and fine food and local wines.
Combine the revamped business-friendly environment with the natural environment and local culture, and Slovenia becomes a top location deserving of further investigation.