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news 09 Jan 13

Slovenia Fears Investment Flight to Croatia

Slovenes fear ‘bridging’ role between West and former Yugoslavia will pass to Croatia once it joins the EU in July.

Zagreb

Slovenes fear that once Croatia enters the European Union this July, it will become more attractive to foreign investors than Slovenia where investments have stagnated over the past few years.

The theory that Slovenia could lose its attractive role as an investment “bridge” to the former Yugoslavia, because it will no longer be the only EU member from the region, and that the baton will pass to Croatia, was again the topic of a recent commentary in the Finance business magazine.

The Maribor daily Vecer on Monday meanwhile reported an investment by Sweden’s IKEA furniture chain near Zagreb worth 100 million euro. It also reported another by the low cost airline Ryanair, will set up its 54th European base in Zadar, Croatia, worth 70 million euro.

The head of the Slovenian Chamber of Commerce, Samo Hribar Milic, told the daily that he feared Slovenia “is not interesting to foreign investors” and was becoming uncompetitive.

The daily reported that investments were flowing faster towards Croatia through a combination of incentives and good cooperation between the government and local authorities, which is reportedly sometimes missing in Slovenia.

In the years before the crisis, most foreign investors in Slovenia put their money in the finance sector and service industries such as retail. Green-field investments in production were fewer.

The government believes that foreign investments and European funds will be the only accessible investment capital available in the coming years.

Hence, it intends to reduce corporate taxes and has also announced the sale of some state assets, such as the state telecom and petrol companies and some banks.

Another obstacle to investments is seen as an inflexible labour market and high salaries compared to other countries in the region, which Janez Jansa’s government has said it intends to deal with by liberalising labour laws.

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