BUSINESS FRIENDLY SLOVAKIA
Secrets Behind the Largest Business Case in Europe in Last 7 Years
Laura Nadaska, Consultant, Slovak Investment and Trade Development Agency Opportunities for trade between Luxembourg and Slovakia, October 10, 2016 [email protected]
2
JAGUAR LAND ROVER – INVESTMENT OF THE DECADE
1.4 BN € Amount of Investment
2,834 People employed directly
Indirect job generation 15,000
150,000 Annual production
3
SUCCESS STORIES FROM AROUND THE WORLD
CANADA MAGNA
SLOVTECA, Martinrea
Slovakia Fluid Systems, Slomatec
USA US Steel, Emerson,
DELL, Whirlpool, IBM, Hewlett Packard
Enterprise, Johnson Controls, AT&T,
Accenture, Amazon, Honeywell, Getrag Ford, Lear Corp.
UK Jaguar Land
Rover, GlaxoSmithKline, de Miclén, KMF,
Boxperfect, Tesco, Innoparma, DS
Smith
FRANCE PSA Peugeot
Citroen, Orange, Faurecia,
Bourbon, CCN, Alcatel Lucent,
Plastic Omnium, Atos, GeLiMa, Bel,
Decathlon
GERMANY Siemens, Volkswagen, Brose, KUKA, Osram, ZF, Deutsche
Telekom
AUSTRIA KROMBERG & Schubert,
MIBA, Neuman Aluminium, Michatech, ZKW
BRAZIL Embraco, CRW Slovakia, Micro
Juntas SK
SPAIN Gestamp, Jobelsa, Cikautxo, Estamp,
Fagor Ederlan, ArcelorMittal Gonvarri,
Farguell, Elastorsa, Technometal
ITALY Magneti Marelli,
Brovedani, SISME,
Z Industries SK, Bonfiglioli, MTA,
Mevis, Lombardini,
C.I.M.A.
SWITZERLAND Swiss RE, Schindler, Holcim,
Novartis, Vetropack, ABB, Nestlé, Nexis,
Enics
CHINA Lenovo, Yanfeng,
Huawei, ZTE, Mesnac, Boge Elastmetall
TAIWAN AU Optronics,
ESON, Foxconn,
Delta Electronics
JAPAN SE Bordnetze,
Panasonic, Yazaki, Akebono, U-Shin, Sanyo, Siix, Minebea,
Brother Industries
SOUTH KOREA
Kia Motors, Samsung,
Mobis, YURA, Sungwoo Hitech, Hyundai Dymos
4
Establishment:
Official name:
Area (km2):
Population:
Capital:
Official currency:
Official language:
Political system:
Election term:
Neighbours:
Time zone:
SLOVAKIA: GROWING HEART OF EUROPE
1839 (Independence)
Grand Duchy of Luxembourg
2,586
576,000
Luxembourg City
Euro
German, French, Luxembourgish
Constitutional monarchy functioning
as parliamentary democracy, 5 years
Belgium, France,
Germany
Time zone: GMT+1 hour
1 January 1993
Slovak Republic
49,035
5,400,000
Bratislava
Euro
Slovak
parliamentary democracy
4 years
Austria, Czech Republic,
Hungary, Poland, Ukraine
GMT+1 hour
5
INTEGRATED IN INTERNATIONAL ORGANIZATIONS
Source: Ministry of Foreign Affairs of the Slovak Republic (2015)
1993
INDEPENDENCE OF SLOVAKIA
2004
EUROPEAN
UNION
2007
SCHENGEN
AREA
2009
EUROZONE
*1918
CZECHOSLOVAKIA
2016
EU COUNCIL PRESIDENCY
EUROPEAN
UNION
NORTH
ATLANTIC TREATY
ORGANIZATION
UNITED
NATIONS
EURO € since 1 January 2009
6
EURO ZONE MEMBER
CREDIT RATING
AGENCY SLOVAKIA
CZECH
REPUBLIC HUNGARY POLAND BULGARIA ROMANIA
A+
stable
AA-
stable
BB+
stable
BBB+
negative
BB+
stable
BBB-
stable
A2
stable
A1
stable
Ba1
stable
A2
negative
Baa2
stable
Baa3
stable
A+
stable
A+
positive
BB+
stable
A-
positive
BB+
stable
BBB-
stable
A+
stable
A
stable
BBB
negative
A
stable
BBB
stable
BBB-
stable
A
stable
A+/AA-
stable
BBB-
stable
A-/A
stable
OECD
Country risk 0 0 4 0 4 3
Data as of January 2016
7
ONE OF BEST COUNTRY CREDIT RATINGS IN CEE
Source: S&P, Moody’s, Fitch, JCR, R&I, OECD (2016)
SURROUNDING INTERNATIONAL PORTS
8 Source: European Commission, European Economic Forecast, Spring 2016 (2016)
Hamburg, DE
Rotterdam, NL
Gdansk, PL
Koper, SI
Izmail, RO
Constanta, RO
Bratislava, SK
Road
Railway
Waterway
direction Krakow, PL 180 km
9
Flights to London,
Riga, Warsaw
direction Brno, CZ 120 km
ROAD & AEROSPACE NETWORK
Source: National Motorway Company, Slovak Airports (2016)
Regular air line to Vienna, Prague, London,
Doncaster, Bristol, Istanbul,
Warsaw
Flights to all major European
cities
direction Vienna, AT 79 km
direction Budapest, HU 200 km
KEY MACROECONOMIC INDICATORS
-3%
-1%
1%
3%
5%
7%
9%
11%
13%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slovakia
European Union (EU28)
11
MACROECONOMIC OVERVIEW
Source: European Commission, European Economic Forecast, Spring 2016 (2016)
2010 2011 2012 2013 2014 2015
Real GDP Growth 5.1% 2.8% 1.5% 1.4% 2.5% 3.6%
HICP Inflation 0.7% 4.1% 3.7% 1.5% -
0.1%
-
0.3%
Unemployment 14.5
%
13.7
% 14%
14.2
%
13.2
%
11.5
%
2016f 2017f
Germany 1.6% 1.6%
Slovakia 3.2% 3.3%
Poland 3.7% 3.6%
Czech Rep. 2.1% 2.6%
Hungary 2.5 % 2.8 %
Romania 4.2 % 3.7 %
Bulgaria 2.0 % 2.6 %
4,01
3,34
3,13
3,04
2,80
2,78
2,23
1,70
1,45
1,38
1,35
1,14
1,08
1,01
1,02
0,91
0,77
0,11
-0,18
-1,21
Slovakia
Lithuania
Latvia
Estonia
Luxembourg
Malta
Ireland
Slovenia
Belgium
Austria
Germany
Netherlands
France
Finland
Cyprus
Euro area
Spain
Portugal
Italy
Greece
12
FASTEST GROWTH IN EURO ZONE
Source: Eurostat, Real GDP growth rate – volume (March 2016)
Average Annual
Growth Rate 2004-2015
in Europe in the export of goods & services to GDP: 93.8% (2015)
EXPORT OF GOODS TO GDP INDEX 1st place in Europe
89.4%
in the world in the export per capita
(2013) 25th 4th
13
IN TOP 15 MOST OPEN ECONOMIES OF THE WORLD
Source: Eurostat (2014),, Intenational Chamber of Commerce (2015)
14
43,8 38,8
51,1 53,3
62,9 66
48,6
97,1
73,3
113 126,4
75,6
2010 2011 2012 2013 2014 2015
Import
Export
Balance of Trade
FOREIGN TRADE BETWEEN SLOVAKIA AND LUXEMBURG
In mil. EUR
15
1,22
1,37
1,59
1,93 1,96 2,09
0,002
0,149
0,426 0,285
0,344
2009 2010 2011 2012 2013 2014
To Slovakia
From Slovakia
FOREIGN DIRECT INVESTMENT SLOVAKIA-LUXEMBOURG
In mil. EUR
SLOVAK LABOUR FORCE
970 € 26,459 CZK
Czech Republic
934 € 3,899 PLN
Poland
799 € 247,784 HUF
Hungary
GDP (in PPS) per hour worked as compared to EU28 (100)
576 € 2,559 RON Romania
457 € 893 BGN Bulgaria
883 € Slovakia
GROSS MONTHLY SALARIES
2015
30,0
35,0
40,0
45,0
50,0
55,0
60,0
65,0
70,0
75,0
80,0
2006 2007 2008 2009 2010 2011 2012 2013 2014
SK
CZ
HU
PL
RO
BG
17 Source: National Statistical Offices of respective countries (2015); Eurostat (2014)
THE HIGHEST LABOUR PRODUCTIVITY IN CEE
SLOVAKIA REACHES THE
HIGHEST LABOUR PRODUCTIVITY
ŽILINA REGION
877 € PREŠOV REGION
771 €
KOŠICE REGION
925 €
BANSKÁ BYSTRICA REGION
845 €
TRENČÍN REGION
872 €
NITRA REGION
835 €
TRNAVA REGION
900 €
BRATISLAVA REGION
1,294 €
18 Note: Map displays only the number of job seekers registered at the unemployment office. Please note, that many job seekers are not registered. Source: Central Office of Labour, Social Affairs and Family (February 2016)
UNEMPLOYMENT & AVERAGE SALARY LEVELS
6.31%
5.10%
9.24%
7.29%
8.03%
14.45%
13.65%
14.89%
Job Seekers 274,202
Avg Unemployment Rate 10.09%
Avg Gross Salary 883 EUR
February 2016
20%
72%
8%
Tertiary Upper Secondary Below Upper Secondary
72% One of the highest proportion of secondary educated people in the EU
THE MOST COMMON FOREIGN LANGUAGES (taught at Slovak secondary schools)
92%
46%
13%
5%
English
German
Russian
French
19 Source: OECD: Education Database (2013 data as the latest available in March 2016); Eurostat (2015)
EDUCATION & LANGUAGE COMPETENCE
92% Proportion of at least upper secondary educated among the slovak population
85% OF SLOVAK
PEOPLE SPEAK AT LEAST
ONE FOREIGN LANGUAGE
DUAL EDUCATION
INSTITUTIONAL DUAL EDUCATION SCHEME
2015 New Framework For Dual Education • Shared theoretical education in schools & practical training (60-80%) in company • Tax benefits for involved companies
20
OF ALL SECONDARY VOCATIONAL
STUDY FIELDS ARE TECHNICALLY
ORIENTED
MORE THAN 50%
PREŠOV
KOŠICE
BANSKÁ BYSTRICA
Zvolen
Ružomberok
Dubnica n. Váhom
NITRA
TRENČÍN Skalica
Sládkovičovo
BRATISLAVA
Universities | 36
Students | 162,568
Graduates | 58,089
Komárno
21
UNIVERSITY STUDENTS & GRADUATES
Source: The Institute for the Information and the Prognosis in the Education for the academic year 2015/2016
TRNAVA
ŽILINA
Economics & Business
Social
IT
Technical
KEY SECTORS
6%
11,9%
19,4%
24,4%
30,3%
31,2%
32,5%
33,6%
36,2%
38%
Sweden
Luxembourg
France
EU28
Germany
Hungary
Poland
Slovakia
Romania
Czech Republic
INDUSTRY 33,6% AGRICULTURE 4,4% SERVICES 62%
SLOVAKIA
Among the most industrial countries in the EU
23
STRUCTURE OF ECONOMY
Source: Eurostat, National Accounts Aggregates by industry (2014)
AUTOMOTIVE & ENGINEERING
ELECTRICAL ENGINEERING
ICT & SSC
R&D
24
KEY SECTORS
VOLKSWAGEN SLOVAKIA Germany | 1991 | Bratislava
PSA PEUGEOT CITROËN France | 2003 | Trnava
KIA MOTORS South Korea | 2004 | Žilina
JAGUAR LAND ROVER United Kingdom | 2015 | Nitra
KIA cee’d KIA cee’d Sportswagon
KIA pro_cee’d KIA Sportage
KIA Venga + ENGINE shop for KIA
and HYUNDAI
VOLKSWAGEN Touareg VOLKSWAGEN Up! & e-Up!
AUDI Q7 ŠKODA Citigo
SEAT Mii PORSCHE Cayenne
CITROËN C3 Picasso PEUGEOT 208
new CITROËN C3 + ENGINE shop as of
2019
Medium sized luxury SUVs (specific
models yet to be determined)
The only plant in the
world producing 5 brands under
one roof
The most profitable plant in
the PSA group
KIA´s first and only factory
in Europe
The most sophisticated
production site of the JLR group
25 Source: SARIO (2016)
218 349
561 933
639 763
926 555
987 718
971 160
1 038 503
1 350 000
2005
2010
2011
2012
2013
2014
2015
2020f
Number of Cars Produced
SLOVAKIA Leader in World Car Production Per Capita (2015)
190 Vehicles | 1,000 Inhabitants
World Average = 10 Vehicles | 1,000 Inhabitants
26 bn €
Volume of industrial export generated by the
automotive industry
250,000
People employed directly & indirectly by
the automotive industry
Share of the automotive industry of the country’s
total industrial production
44%
Added value in the automotive industry
2.5 bn €
26
KEY SECTOR NR. 1 — AUTOMOTIVE
Source: Slovak Automotive Industry Association; VW; KIA; PSA-Peugeot; International Organization of Motor Vehicle Manufacturers (2016)
BRATISLAVA
Stupava
Malacky
Pezinok
Senec
Dunajská Streda
Galanta
Sereď
TRNAVA Hlohovec
NITRA
Senica
Skalica
Piešťany
Šaľa
Nové Zámky
Levice
Zlaté Moravce
Topoľčany
Komárno
Nové Mesto n. Váhom
TRENČÍN
Bánovce n. Bebravou
Dubnica n. Váhom
Púchov
Bytča
Považská Bystrica
ŽILINA
Martin
Čadca
Ružomberok
Dolný Kubín
Liptovský Mikuláš
Brezno
BANSKÁ BYSTRICA
Zvolen
Žiar n. Hronom
Lučenec
Rimavská Sobota
Revúca
Veľký Krtíš
Rožňava
KOŠICE
Trebišov
Bardejov
Stará Ľubovňa
Kežmarok
Poprad
Spišská Nová Ves
PREŠOV
Humenné Snina
Michalovce
Partizánske
Prievidza
TIER 2 SUPLLIER
TIER 1 SUPLLIER
KIA SLOVAKIA Žilina
VOLKSWAGEN Bratislava
VOLKSWAGEN Stupava (tool shop)
PSA PEUGEOT CITROËN Trnava
JAGUAR LAND ROVER
Nitra
VOLKSWAGEN Košice
(vehicles customization for Russian market)
VOLKSWAGEN Martin
(gearboxes component production)
27
NETWORK OF 316 AUTOMOTIVE SUPPLIERS
Source: SARIO; Online Matchmaking Fair for Automotive Slovakia; GLOBAL Slovakia (2016)
1.18 BN € Added value
7% Turnover and added value
growth in 2014
956 € Average salary
11% Share on total
industrial production of Slovakia
43,000+ People
employed
9.23 BN € Sales revenue in
2014
28
KEY SECTOR NR. 2 — ELECTRICAL ENGINEERING
Source: Trend Top in Industry (2014 data as the latest available in March 2016)
Nové Zámky
Nitra
Trenčín
Liptovský Hrádok
Michalovce
BRATISLAVA
Prešov
Žilina
Trnava
Galanta
Piešťany Senica
Poprad
Rimavská Sobota
Stropkov
≤ 3000
Size of Electrical
Engineering hub defined by
number of employees
≥ 8000
≤ 6000
≤ 3000
≤ 2000
29
ELECTRICAL ENGINEERING — MAJOR HUBS
IT Accounting & Finance
Other Business Services
Customer Service
HR Procurement, Purchasing,
Order Processing
Sales & Marketing
40+ SSCs & BPOs
already established in Slovakia
AREAS OF OPERATION IN SLOVAK SSCS & BPOS
• over the last 10 years, Slovakia has developed a leading reputation for quality & high value services
• more than 40 Shared Services Centers (SSCs) and Business Process Outsourcing Centers (BPOs) are established in Slovakia providing multifunctional scope of operations
30 Source: Grafton Recruitment Slovakia (2016)
KEY SECTOR NR. 3 — SHARED SERVICES CENTRES
31
Source: SARIO list of SSC, BPO, ICT companies in Slovakia (2016)
PSA France
SSCs & BPOs IN SLOVAKIA – ALREADY ESTABLISHED CENTERS
32
Source: Grafton Recruitment Slovakia (April 2016); PwC, Shared Services Centres 2014, Moving towards Centres of Excellence Czech Republic & Slovakia (October 2014)
AVERAGE ATTRITION RATE in Slovak SSCs and BPOs
11%
Below CEE average, which is around 17%
32
SSCs & BPOs - EMPLOYEMENT
25,000+ People employed by the Slovak SSC &
BPO centers
Core languages: German, French, Italian, Czech, Bulgarian, Hungarian, Polish, Romanian, Russian, Slovenian, Spanish. Non–core languages: Albanian, Arabic, Croatian, Danish, Dutch, Finnish, Flemish, Greek, Hebrew, Chinese, Japanese, Lithuanian, Macedonian, Norwegian, Portuguese, Serbian, Swedish, Turkish, Ukrainian
LANGUAGES WITHIN SLOVAK SSC & BPOS:
33
Slovak SSC can support Asia market in the early morning hours, then cover the American continent from the afternoon till late evening hours and any other time zones in between.
Source: SARIO 33
STRATEGIC TIME ZONE FOR GLOBAL FUNCTIONS
SUCCESS STORIES & INNOVATION POTENTIAL
35
EXAMPLES OF CORPORATE R&D CENTRES
Source: Spinea (2016)
36
Development, production and sales of
high precision reduction
gears
Member Of The International
Federation Of Robotics
Twin Spin
#1
Application
References
SUCCESS STORY – SPINEA The only European manufacturer of high precision gearboxes
37
Source: CEIT Group (2016)
An innovative group with a
strong focus on R&D that brings
practical solutions to improve
productivity & efficiency
Engineering Services
Industrial Automation
Biomedical Engineering
References
SUCCESS STORY CENTRAL EUROPEAN INSTITUTE OF TECHNOLOGY
38
SUCCESS STORY — ESET
Source: ESET (2016)
A pioneer of antivirus
protection, creating award winning
threat-detection software since
1987
ESET security solutions
allow businesses and consumers in more than 180 countries to make the most
of the digital world
ESET developed one of the first antivirus software in the world.
NOD 32
#1
Tackling Cyber Crime
39
SUCCESS STORY — c2i
Source: c2i (2016)
Hi-tech designer and
manufacturer of premium carbon fibre composites
components since 2015
AUTOMOTIVE INDUSTRY • structural carbon-fibre composites
AEROSPACE INDUSTRY • c2i designs and manufactures aircraft interior
structures & assemblies for Airbus A350, Airbus A320 and Boeing 787
OTHER INDUSTRIES • motorcycles, satellite communication,
defence & security, nautic
SUCCESS STORY — AEROMOBIL
40
Prototype of the world’s
most advanced flying car
Ready to take first
preliminary orders in
2016
„Finally, the flying car may
have landed“
„Little-known Slovakian start-up
has taken the wraps off of what they’ve
touted as the world’s most
advanced flying car“
„The elegant blue-and-white vehicle fits neatly in a parking space or a garage and tanks up at any filling
station. But once it reaches an airport, it can unfold its
wings within seconds, becoming a plane“
„Finally, the long-
awaited flying car is almost
here “
SUCCESS STORY INSTITUTE OF MATERIALS AND MACHINE MECHANICS
AUDI Q7 Rear impact
stiffeners
FERRARI MODENA Car frame stiffeners
RESEARCH INSTITUTION
R&D of advanced nonferrous materials, technologies of their
preparation and research in applied
mechanics
Innovative Materials
Aluminium Foam
Applied Research
41
INVESTMENT INCENTIVES
43
INVESTMENT INCENTIVES — ELIGIBLE PROJECTS
FRAMEWORK
INDUSTRIAL PRODUCTION
STRATEGIC/ SHARED SERVICES
CENTERS
TECHNOLOGY/ R&D CENTERS
TOURISM
44
INVESTMENT AID — MAXIMUM REGIONAL AID INTENSITIES
35% 35%
25%
*Districts in Bratislava region are excluded from the investment aid scheme
FORMS • Income tax relief — up to 10 tax periods • Cash grant — paid ex-post, based on annual costs report • Contributions on new jobs — paid ex-post, based on annual costs report • Transfer of public real estate for discounted price
n/a*
+ 10 to 20% for SMEs
45
MAXIMUM INTENSITIES — AVAILABLE FORMS
*Districts in Bratislava region are excluded from the investment aid scheme
MA
PK
SC BA
RS
TV
VT
KS
SO
KK SB
PO
GL
LE
BJ
SK
SP ML
HE SV PP
SN
SL
KE MI
PB
PU
IL
TN
LV
NR
ZM
TO PE
BN
NM
PN
TT
GA
DS
SE
SA
HC
SA
MY
KN
NZ
PD
RA
PT
LC
VK
BR
LM
TS
NO CA
DK
RK MT
ZA
KM BY
BB
ZV DT
ZC
BS
ZH
KA
TR
RS
Western Slovakia
Central Slovakia
Eastern Slovakia
Max. Investment Aid (in total) 25 % 35 % 35%
Max. Cash Grant 25 % 35 % 35 %
Max. Income Tax Relief 25 % 35 % 35 %
Public Real Estate for Discounted Price
25 % 35 % 35 %
INTENSITIES OF
• Cash Grant
• Income Tax Relief
• Transfer of Public Real Estate
Western Slovakia
Central Slovakia
Eastern Slovakia RV
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47
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