Economic cooperation between Slovenia and Serbia gets better each year, both in terms of exports and imports, but also in terms of investments. This is a result of the strong growth potential of technologically advanced Slovenian companies and the ability of Serbia’s domestic market to offer strong opportunities for business development
Although major European economies are bound to slow down due to the changing global environment, Slovenia need not worry, despite Slovenia’s real term GDP growth of 3.2% in Q1 is the slowest since the final quarter of 2016, when it ran at 3%. But Is this a cause for concern or satisfaction, considering current EU trends?
“The growth of Slovenian GDP in real terms was 4.5% in 2018. The growth of the Slovenian economy also remained high in the first quarter of this year. It has been slowing down slightly, as you mentioned, but is still above the EU average. I am an optimist, and it is our task as a government to maintain conditions that will continue to enable the economy to also achieve above-average economic growth in relation to the EU in the future”, says Slovenian Economic Development and Technology Minister Zdravko Počivalšek. “We do all we can to raise the competitiveness of our economy and constantly take measures to create a stable, predictive and competitive business environment.”
The rising trade exchange, as well as the level of investments between Slovenia and Serbia, is a result of improved economic conditions in both countries.
How close is Slovenia to the phase in which GDP growth will be more or less equal to mature EU economies? Where are the possibilities for more robust growth?
– It is my firm belief that we still have room for growth. Companies operating in Slovenia demonstrate every day that they can compete effectively on the global market, while at the same time exploring many local advantages. We are committed to diversifying our exports further and developing products and services with high added value. In order to accelerate this process, we wish to attract investment with high-tech products and services.
The Slovenian Government has adopted the Slovenian Smart Specialisation Strategy, which defines nine priority areas and within which we see a lot of possibilities for robust growth. These areas are smart cities and communities; smart buildings and homes, including wood chain; networks for the transition to a circular economy; sustainable food production, sustainable tourism; factories of the future; health – medicine, mobility and the development of materials as end products.
I think there’s also a lot of potential for development within digital technologies, which have huge potential for increasing the productivity of companies. That’s why we promote and implement measures that support digitalisation.
How resilient is the Slovenian economy to external turbulences, considering that it is focused on the EU markets? To what extent have you managed to increase the presence of Slovenian companies in non-EU markets?
– It is important to be prepared for external turbulence, especially in this period when global trade tension is broadening. We are taking steps to further diversify our exports and increase our presence in non-EU markets.
Slovenia has the highest number of companies operating abroad in Serbia and the interest among Slovenian companies for business opportunities in Serbia is increasing
The Slovenian government has adopted its internationalisation action plan, which encourages the systematic research of third markets and defines our priority markets and key measures to increase our exports to those markets. Slovenia traditionally trades the most with countries in the EU. However, exports to markets outside the EU have been increasing, which is also shown in the latest data for the first quarter of this year.
What might the Slovenian economy offer when it comes to the forthcoming shift of global economic power to Asia? How do you envisage your role in China’s Belt and Road Initiative?
– Slovenia is an open, export-orientated economy, offering green, creative and smart solutions. The European Innovation Scoreboard lists us among the world’s strongest innovators. We have a digital and automation-intensive economy that delivers smart products on a daily basis. As a pioneering country in the field of Artificial Intelligence, we are setting up an International Artificial Intelligence Research Centre with UNESCO.
These are the main fields in which we are strengthening cooperation with Asian countries, apart from our traditional sectors of the automotive, pharmaceutical and food processing industries, and green technologies, not to mention tourism, which is gaining more importance annually when it comes to incoming tourists from Asia.
Of course, among Asian countries, China is Slovenia’s largest foreign trade partner. As a result of deeper cooperation with China within the 16+1 initiative, bilateral trade between Slovenia and China has increased annually by more than 15 per cent since 2013.
Slovenia recognises the increasing relevance and benefits of synergies with the Belt and Road Initiative, which will further strengthen relations between China and Slovenia, widening economic cooperation. We are especially interested in improving land, sea and air connectivity with China and strengthening cooperation in the field of high technologies and innovation. Specifically, Slovenia has a central geographical position at the heart of Europe. With modern infrastructure and via the Port of Koper, we connect businesses from the CEE region with the Far East.
In short, we may be a small country, but we make great partnerships across the globe – due to our efficiency and progressive nature.
After two years of construction, Japanese corporation Yaskawa – the world’s biggest manufacturer of industrial robots – has opened a new industrial robot production facility and a European centre for the development of robotics in Kočevje. Is Slovenia ready to attract more such investments?
– Yes, definitely. We are ready and, as I mentioned, we are working systematically to attract more investments with high-tech products and services, like Yaskawa, to Slovenia. Companies operating in Slovenia can use the opportunity to cooperate with our institutions of an innovative environment and our highly awarded research institutions and thus benefit from our supportive environment and incentives for R&D. We have one of the lowest tax rates on corporate profits in the EU and many tax breaks and incentives for investors.
Among our comparative advantage, I always emphasise that people are our very important advantage; people who are highly motivated, educated and experienced, with good knowledge of the language and strong regional connections. Slovenia is among the best-performing countries regarding knowledge and skills. For example, in the recently published EBRD knowledge economy index, which measures institutions for innovation, skills for innovation, innovation systems and ICT infrastructure, Slovenia occupies second place.
How does the Slovenian government support domestic companies entering foreign markets?
– The Ministry of Economic Development and Technology devotes a lot of attention to supporting our companies, especially small and medium-sized enterprises, in entering foreign markets.
We have been supporting them in cooperation with public agency SPIRIT, and we recently introduced the voucher-based measurement system implemented by the Slovene Enterprise Fund.
In addition to traditional measures like the co-financing of market research, visits to trade fairs and business events that encourage companies to enter foreign markets, we also support new forms of promoting the internationalisation of companies, such as the digitalisation of companies and introducing e-contents into business operations, supporting new business models in business operations, and partnerships with the goal of jointly entering a selected foreign market, to name just a few.
Where are Serbia and the Western Balkans positioned on your map? To what extent is the Western Balkans suitable as your production base?
– Many Slovenian companies have already acknowledged the Western Balkans as their production base. With the Western Balkans, and especially Serbia, we have traditionally very close economic ties. Slovenian companies are extremely well acquainted with the Serbian market and, consequently, business is growing on both sides. For instance, last year we achieved commercial exchanges worth 1.85 billion euros, which is 13 per cent more than in the previous year. Slovenia has the highest number of companies operating abroad in Serbia, and interest among Slovenian companies for business opportunities in Serbia is increasing. Among all foreign trade partners outside the EU, Serbia holds a very high place among Slovenian economic partners, both in terms of exports and imports, as well as investments, which serves to prove the consistency and quality of our cooperation.
Who are your major partners when it comes to the exploration of new market opportunities in Serbia?
– Among different stakeholders, I would like to mention the Slovenian Business Club, which works in cooperation with our embassy to help Slovenian companies on the Serbian market, as a meeting point of information, knowledge and influence. There are also good relations with other institutions, ministries and the entire Serbian government.
After years of restrictions, Slovenia is now opening its doors to foreign workers. Where (in which countries) do you see your hiring base?
– Indeed, with such economic growth, our companies are facing a lack of skilled workers in Slovenia. First, we are looking for new workers among unemployed and retired people. Second, we are also striving to enable younger workers to enter the labour market faster after finishing school. Of course, on the other hand, we had to open our doors to foreign workers too. With certain countries, for example, Bosnia-Herzegovina and Serbia, we have signed agreements regarding the employment of foreign citizens in Slovenia.
In Slovenian tourism in particular, especially in hospitality, there is a gap between the needs of the tourism industry and people being prepared to work in this sector. Therefore, our tourism industry is in favour of employing waiters, chambermaids, cooks and people of other similar professions from EU countries, because they are easier to employ due to the internal market and free movement of people and services. Workers from the countries of the former SFRY are also very welcome because the language and culture do not represent a big barrier. I must admit that our tourist companies are very satisfied with employees from Serbia because you have a very good quality of education for hospitality and tourism.
On the occasion of World Tourism Day, you have said that tourism is at the forefront of digital innovation. How well is Slovenia prepared for these trends?
– There are some projects being carried out in Slovenia in the field of digital innovation in tourism, especially in cultural heritage offered to tourists. The biggest step in digitalisation has been taken by the promotion of Slovenian tourism, carried out by the Slovenian Tourist Board. At the 2019 ITB fair in Berlin, Slovenia won four gold medals and two silvers under “The Golden City” for a digital campaign.
Slovenia is going to become an attractive green tourist destination for five-star experiences. For the realisation of this vision, we welcome both domestic and foreign investors
Although Slovenia is breaking records in tourism revenues each year, you’ve said there’s no time to rest, as tourism infrastructure still needs to be improved significantly. What does that mean in terms of investments and required facilities?
– We need some improvements and the modernisation of existing tourism infrastructure, as well as greenfield investments.
We welcome both domestic and foreign investors. According to our tourism strategy, Slovenia is going to become an attractive green tourist destination for five-star experiences. In order to realise this vision, we need attractive tourist products, the highest quality tourist offer and, of course, modernised tourism infrastructure. Our government is taking an active role in the consolidation of Slovenian tourism companies with hotel capacities that are state-owned. First, we need to improve their performance and only then privatise responsibly. Something has already been done in that direction, but we should not rest.
Your strategy for the Sustainable Growth of Slovenian Tourism for 2017-2021 is somewhere in the middle of its implementation. How satisfied are you with what’s been done to date?
– We are satisfied with the realisation of measures and actions taken to date. By creating four macro destinations in Slovenia, we managed to convince tourism stakeholders from each macro destination to cooperate in preparing tourist products and stories. Several five-star experiences have been created and will be promoted under the brand “Slovenia, Unique Experiences”. Regarding results achieved to date, I am pleased to say that we have already reached almost 15.9 million overnight stays, which we initially planned to reach in 2021. Therefore, I am optimistic regarding the achieving of our strategic goals and vision.
We have a digital and automation-intensive economy that delivers smart products on a daily basis
We are interested in improving land, sea and air connectivity with China and strengthening cooperation in the field of high technologies and innovation
Slovenian companies are extremely well acquainted with the Serbian market and business is consequently growing on both sides