The Slovenia Times

A story of success - The result of hard work



Which municipal measures that attracted an investor as reputable as the Japanese corporation Yaskawa would you highlight?

In our case, the price of land was attractive as the municipality offered it at an exceptional EUR 5.2 per square meter. At the same time, the land was located beside an area equipped with the necessary utility infrastructure, meaning that the expansion of the utilities came at a relatively low cost. If this had not been not the case, the negotiations would have never been closed. After all, the Kočevje region is - in terms of its geographic - pretty remote and lacks the proper infrastructure found in Ljubljana, Maribor, etc. There are no nearby airports or motorways and the area lacks a gas system, which means we were never competitive to begin with. In the next stage of negotiations, we tried to determine what else an investor, who aims to invest EUR 25 million in the first phase and increase the added value to EUR 130,000 per employee, can get for the price we have proposed. The answer involved municipal measures. The first was a progressive relief of tax burdens in paying the community infrastructure levy - the reason was that each job vacancy created in the municipality partly relieves the tax burden, and in the case of Yaskawa, more than 25 new job vacancies were to be created. Thus, we agreed that Yaskawa would not pay the community infrastructure levy. The second measure was that we would cover the costs of all the utility infrastructure in the area that was not equipped with utilities upon the purchase. As we went deeper into the negotiations, we also assured the investor that we would provide our full support in obtaining the building permit as well as in communicating with the representatives of the Government and locals. In the end, the investor expressly requested that we conduct a geomechanical analysis of the land in an extremely short period of time - in two days, the investor received the document compiled in the English language. Doing so, we proved our capability and understanding of the matter.

What were the course of events and the timeline like?

We started our negotiations with the investor in autumn 2016. Yaskawa's decision to purchase the land followed in January 2017. We signed the sales agreement in March 2017 at the Kočevje Cinema. People wanted to be there as this was a brand new opportunity for the local community. We laid the foundation stone in November 2017 and, in four months' time, the investor obtained the building permit and all the necessary paperwork to commence construction. It is important to mention that the land was entirely owned by the municipality.

Has the arrival of a multinational company in the area affected the local labour market and how?

It most definitely has. Workers in our area were presented with a new job opportunity, which reflected in the raising of salaries within the municipality. On the other hand, entrepreneurs who have not invested in a number of years started making investments once again. This year, we are expecting five new companies who have entered new investments to open, totalling to approximately EUR 20 million of investments by other entrepreneurs in the local community. What we are dealing with is a positive spill-over. Another synergic effect is that entrepreneurs have started integrating with and talking to one another.

Do you aspire for other, similar investments in the municipality? In what ways are you adapting the municipal infrastructure - e.g. apartments and the qualified labour force?

We believe it is important to create a highly encouraging environment for the economy. Anyone who creates stable job vacancies with high added value and makes green-field investments is more than welcome. The municipality is working on several projects at once. For instance, we have restored the entire water-supply and waste-water system - not just in our municipality, but also in the municipalities of Sodražica and Ribnica. The total value of the project amounted to EUR 32 million, of which 85 % was covered by European funds. Today, the infrastructure in the city of Kočevje can support 30,000 people, which means we can expand threefold without the necessity to attract any new investments, for we already have it all (including sewage treatment plants, public lighting, roads, etc.). In the field of housing, there are two locations where a private investor has already begun the construction of residential buildings with 70 new apartments. At the same time, we are opening new study programmes, e.g. the programme for mechanical technicians, which we stopped implementing 17 years ago. The number of students enrolling in the Kočevje Grammar School has increased dramatically.

How would you describe the general attitude of your municipality towards foreign investors? What business culture are you working on and what are the opportunities you can provide the investors with?

In parallel with the economic development, we are investing in tourism and culture at an accelerated rate. In my opinion, high added value is the basic principle, which comes with technology-oriented and clean companies that abide by the principles of sustainable development. In the Municipality of Kočevje, where 90 % of land is protected under the Natura 2000 network, this is the basis. I do not consider this to be a limitation, but rather an advantage. The municipality has invested EUR 4 million of its own resources into tourism. We set up a hostel, multiple huts and a campsite. We would like to develop a non-mass tourism that is in harmony with nature. What we are looking for is the type of tourist who comes to the municipality, straddles a bicycle and explores the surroundings as well as our forests with their GPS. Companies have to be compatible with this kind of economic development.

What development aids has Kočevje received from the state in the past years?

We received no direct financial aid, but we did receive help in terms of infrastructure upgrades. After 50 years, we will finally get a railway connection to Ljubljana. We have managed to push certain projects, such as the cross-region bicycle track currently in construction. In a nutshell, we have always been doing our best in drawing up and implementing the projects which we acquired the funds for. At the moment, we have EUR 100 million worth of projects at the ready, and we are waiting for the opportunity for their implementation to arise. In the past five years, the state has invested approximately EUR 70 million in the region (namely for the construction of the railway, roundabouts, roads, broadband connections, bicycle tracks, etc.).

Kočevje is the most forested municipality (and region) in Slovenia. In what ways is the municipality supporting the wood industry and the Kočevski les company (a public company that manages the entire wood processing line)?

When I took over the leadership of the municipality and found that the municipality owns 4,000 hectares of woodland, I was interested in the profits, which at the time amounted to EUR 5,000 annually. I hardly believe it at first, but it truly was the case. In the first phase, we took care of the records, studied the situation in the field, etc. Then, we asked ourselves how we can use the situation to our own advantage. I decided for sales on the forest road. We got a purchaser through a public call for tenders, who cut down a proportion of the forest that was scheduled for felling by the Slovenia Forest Service. In one year's time, we increased the annual profits from EUR 5,000 to EUR 500,000. As the wood was sold, I asked myself about the added value for the environment - the funds trickled into the budget, but no job vacancies were created. The forest was purchased by an Austrian entity who cut it down and left, leaving carpenters in Slovenia with no other option but to buy "their" wood in Austria. I decided that Komunala Kočevje (the public utility company owned by the Municipality of Kočevje) would found the Kočevski les company to find someone who would determine the areas that would be felled, someone else who would do the felling, someone to take care of the transport and, lastly, a person who would cross-cut the wood - all here, in Kočevje. The wood would be dried in the municipal wood-drying kilns, for the Municipality of Kočevje has its own boiler with excess heat. The dried-up wood would then be sold to our carpenters. This is how we established a circular economy in our environment, which has created 50 new job vacancies and increased the added value - from a single log to the finished table. At the moment, the company with three employees is worth EUR 2.5 million.

What is the situation with the export of wood like?

60 % of our wood remains in Slovenia and 40 % is exported. This is because we do not yet have the sufficient absorption capacity among our local stakeholders to use it up. Therefore, the municipality does not profit much from this business model. It is true, however, that we are generating new job vacancies and that we have involved the secondary wood processing school in the matter. In exchange for providing them with the wood required in their learning processes, they take care of the urban culture within the municipality.


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