Slovak Economy Minister Juraj Miskov plans to eliminate red tape and relax labor laws as the former advertising executive seeks to attract investors to what he says can be the Singapore of eastern Europe.
Slovakia, which prospered by luring carmakers to the country, became less attractive to investors as former Prime Minister Robert Fico increased the state’s role in the economy, Miskov said Aug. 25 at his office in the capital, Bratislava.
“We want to reverse all measures that have worsened the business environment,” said Miskov, 37, the former chief of MUW Saatchi & Saatchi, the Slovak arm of New York-based advertising agency Saatchi & Saatchi Worldwide. “We will be able to brand Slovakia as the Singapore of central and eastern Europe.”
Singapore is the easiest country to do business in, according to 2010 rankings by the World Bank. Slovakia, which adopted the euro in 2009, slipped seven places to 42nd as Fico increased regulation and made it more difficult to fire workers.
Foreign investment in Slovakia slowed over the past two year as the global recession engulfed the country. The Slovak Investment and Trade Development Agency brokered 244 million euros ($311 million) of investment projects last year, down from a record 1.7 billion euros in 2004. The government seeks to equal the record before its term ends in 2014, Miskov said.
Slovakia will have to compete with neighboring countries such as Hungary and the Czech Republic, which are also working to attract international investment, said Vladimir Vano, an economist at Volksbank AG in Bratislava.
“One can’t have too high expectations,” he said in an interview. “Capacities in western Europe are heavily underutilized, so Slovakia would need to rely on Asian companies that want to get manufacturing closer to European markets.”
Slovakia became a favored destination for manufacturers such as Seoul-based Kia Motors Corp. after Fico’s predecessor, Mikulas Dzurinda, introduced a flat 19 percent tax rate for companies and individuals.
Iveta Radicova, a member of Dzurinda’s party, replaced Fico as prime minister last month after her three-party coalition won a majority in parliamentary elections.
Miskov said his ministry will push for a further cut in the tax rate once the budget deficit is in line with the European Union limit of 3 percent of gross domestic products, adding that he can “imagine” the rate falling as low as 15 percent.
Slovakia, which adopted the euro at the beginning of 2009, plans to cut the deficit to 2.9 percent of GDP in 2013 from a projected 8 percent of GDP this year.
Samsung, AU Optronics
The ministry is focusing its efforts on attracting investments from technology companies and others that add large amounts of value to their products, Miskov said. Three technology makers are considering investments that may create as many as 5,000 jobs, he said, declining to name them.
Seoul-based Samsung Electronics Ltd. said in February that it planned to increase investment in its assembly plant in Galanta, Slovakia, which makes liquid-crystal displays. AU Optronics of Hsinchu, Taiwan, is building a similar plant.
Investment will help cut unemployment to less than 10 percent from 12.3 percent in July, he said. The country of 5.4 million people has lost more than 300,000 jobs since 2008 as exporters cut workforces in response to reduced demand from abroad.
“We need to make a restart of Slovakia,” Miskov said.