Setting up a company

The Slovak Spectator has a good article on their website on establishing a company in Slovakia. Definetely worth reading.

Final Slovak Crown to Euro Conversion Rate

Today the EU has decided on the final rate. It is going to be 30.126, the same as the midpoint set a couple of weeks ago. Preparations for introduction of the Euro on january 1st 2009 are already in progress, but can now really start. I cannot wait to not having to change anymore when going to current Euro countries.

Where is it?

Most of the pictures you see about Slovakia are taken in Bratislava. I decided there are enough of them around, so the picture on the top of this blog is not Bratislava.

Do you know where it is? Answer to follow later in the comments.

Fair for potential investors in Slovakia

In September Sario, the Slovak investment agency I wrote about before, is organising a fair. It will be an excellent opportunity to learn more about investing in Slovakia. It will also be possible to meet potential business partners, and meet others that want to invest as well in Slovakia.

I’m thinking of going myself, so let me know if you are planning to come, so we can meet. The registration form and more information can be found here.

Recent News – 5th June 2008

Besides all the news of the approval of the European Finance Ministers to allow Slovakia to become the 16th member to introduce the Euro, below some other interesting news and background.

• Dynamics of Globalisation. Jobs coming to Slovakia, but also already going away.
• Slovakia has fastest growing economy in Europe
• But has to be careful with raising wages
• And retail sales are up 7.2%, but the expectation was 9.2%

Labour Market in the regions

One of the important items to consider when investing in another country like Slovakia is what does the labour market look like.

Slovakia in total still has a high unemployment, in April 2008 it was 7.38%. However the unemployment rate is not the same in all regions. The Statistical Office is tracking regional unemployment data. The latest available data I can find is for 2006, at which time the unemployment rate for all of Slovakia was 9.4%. Split it is as follows:

• West Slovakia: 6.62%
• Central Slovakia: 11.55%
• East Slovakia : 14.41%

The region with the lowest unemployment rate was the Bratislava region with 2.29%, the highest Banská Bystrica with 16.12%.

So when selecting a location for your investment, make sure that you head of to the website of the Statistical Office. They have a lot of data that can help you make a decision where to go.

Finance Ministers agree on Slovak entry to Euro

As was to be expected the finance ministers have agreed to Slovakia entering the Eurozone today. The time schedule is now as follows. On June 19-20 the EU leaders will give the political green light. After that in early July the Finance ministers will set the final conversion rate between the Slovak Crown and the Euro. My expectation is that this conversion rate will be close to the current central parity of 30.1260. it might be even exactly that rate.

Slovak Crown revalued as preparation for Euro introduction

Last week I wrote about the introduction of the Euro in Slovakia. In the post I highlighted that the Slovak crown had gained ground against the Euro, in anticipation of setting the conversion rate. Yesterday evening the NBS has announced that the Slovak crown has been revaluated by over 17%, to a central rate of 30.1260. The NBS information is here and here.

The reason for the revaluation is that when the Euro is introduced, the Slovak government cannot use the appreciation of the currency to influence inflation. And inflation is the main concern at the moment with the introduction of the Euro. So by allowing the revaluation now, and setting a strong conversion rate later, inflation can be contained at least in the month following the introduction of the Euro.

Recent News 27th May 2008

On a regular basis I will give an idea of what is happening in Slovakia regarding investments, expansions or other interesting news about the slovak economy.

• Conditions for businesses are in Slovakia better than in Czech and Hungary, according to a study by Ernst and Young.
• KraussMaffei Technologies GmbH, Munich, Germany, is currently expanding its presence in north-western Slovakia by setting up a new Engineering Center in the university city of Zilina.
• After Slovakia joins the Euro, it will have the lowest average salary of the Eurozone.
• National Bank of Slovakia keeps interest rates unchanged.

When we invest in Slovakia, can we get state aid?

The best place to go for state aid is SARIO. It is possible to get state aid, but there are obviously restrictions and not all investment projects will get the same level of state aid. A good document on investing in Slovakia to start with from SARIO is Why Invest in Slovakia.

As you might have heard, a lot of investment till now has happened in Western Slovakia and in particular in Bratislava. That is why if you invest in Bratislava, you could only get up to 10% of the investment sum as aid, in western Slovakia up to 40%, and in middle and eastern Slovakia up to 50%. Besides that Bratislava is easier to reach, it is definitely worth investigating locating a new business in middle or eastern Slovakia. First of all it is very nice there, but there are some other factors at play as well. Labor cost are lower and unemployment is higher,  but the level of education is the same between the different areas. It is even the case that a lot of employees work in Bratislava, but actually come from other parts of Slovakia. They travel back home in the weekend, which can be seen by the traffic on the D1, the main motorway out of Bratislava.

So yes, it is possible to get state aid to invest in Slovakia. In a future post I will touch on EU grants that are also possible.

If you have any insights that might help, please leave a comment below.