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In 2010, when the summit took place for the first time, the agenda centred mainly on the problems that surrounded the lack of influx of foreign capital into the country. This year the focus shifted to the benefits that Slovenia can offer foreign investors - and the benefits that foreign investors can offer Slovenia.
"At a time of financial and economic crisis, one looks for stability in the business environment and business relations; FDI is one of the most stable types of economic cooperation," President Danilo Türk said in opening the conference.
One of the major debates focused on the need for enhanced efforts to promote the country as a regional hub for local markets with a combined 45 million consumers. Türk urged participants to think outside the box, noting that South East Europe should not only be considered as a source of outgoing FDI for Slovenia, but also as a source of inbound investment.

Know your neighbour

The opening panel - moderated by Tine Kračun, director of the Institute for Strategic Solutions - focused exclusively on the potential of Slovenia as an entry point to the Western Balkans. The three panellists, all chief executives of major companies in Slovenia, agreed that the country has the potential to develop as an investors' hub for regional markets. Its skilled workforce, infrastructure, historical links to the Balkans and shared culture all count in its favour. However, chief executive of retailer Mercator Žiga Debeljak argued that these advantages will be less important once the Balkan countries join the European Union.
"Soft elements will be more important," he said, noting that companies would have to develop competence centres with highly skilled labour and cutting-edge know-how. He also dismissed the possibility of Slovenia serving as a hub for Eastern Europe, noting that its links to Bulgaria, for example, were not strong enough.
However, he argued that Slovenia can be a springboard for European companies wanting to do business in the Western Balkans as well as for Balkan countries wanting to penetrate EU markets.

The Swiss example

Biljana Weber, the director general of Microsoft Slovenia, highlighted the Swiss recipe for a successful hub, with ingredients including high spending on research and development, a high rate of innovation, excellent scientific institutions and very efficient public institutions.
Christof Droste, chief executive of German-owned lighting equipment maker Hella Saturnus, added that there were three possible hub models for Slovenia: as a hub for the Balkans, a springboard for Central and Eastern Europe, and, through the Port of Koper, as an entry point for goods from across the world.
Debeljak said before the Balkans started growing at double-digit rates prior to the crisis, regional players had been shielded from big international players by the sheer complexity of the fragmented markets, which acted as a repellent. But now this same complexity is a problem as it makes the region unattractive to investors compared to other emerging markets. This is a drag on much-needed foreign direct investment in the region, Debeljak added.
For Weber, one of the key challenges for the entire region is skills: in 20 years jobs will have changed so much that completely different skills will be required. Hence she argued governments needed to motivate students to study technical professions.

Current successes

Slovenia's potential to become a regional hub was further explored at the conference's second panel. During this discussion, Matjaž Rakovec, chief executive of insurer Zavarovalnica Triglav, said that the high reputation of Slovenian brands, hard-working workforce, and good knowledge of language and culture all counted in the country's favour. He also pointed out that the country's size meant it was not perceived as a threat to the position of other nations.
Similarly, Rudolf Kloetscher, chief executive of German-owned firm BSH Hišni aparati, highlighted the four "Qs" Slovenia has going for it: quality links to regional markets, high quality of infrastructure, quality workforce, and quality of life. Describing the experiences of BSH Hišni aparati, which has used its venture in Slovenia to penetrate the markets of the former Yugoslavia and Bulgaria, he said it was possible to use Slovenia as a springboard. "It is possible, it is profitable, and we can show global investors that it is worth investing in Slovenia."
JAPTI director Igor Plestenjak added that other companies are recognising Slovenia's potential as a hub, with some relocating their regional offices from Vienna to Slovenia.

The right recipe

The closing panel of the first day explored how Slovenia might attract strategic high-value-added-FDI. Again, the appeal of the country's quality labour force was highlighted but representatives of foreign investors also emphasised the need to make it easier to do business.
"Slovenia needs to create an environment in which investors can make a profit," said Giulio Bonazzi, the boss of the Italian Aquafil group, which owns Slovenian chemical company Julon. Nonetheless, his company obviously sees the potential to make profit from being in Slovenia as it has invested close to EUR 150m in Julon in the last 15 years - EUR 17m of it this year alone. Bonazzi also said further investments were planned as the company intends to remain in Slovenia.
Thierry Villard, director of Goodyear Dunlop Central and South-East Europe, also argued the state should make it easier to do business and change the mindset about FDI, which is still perceived as a threat to the national interest. Like Aquafil, Goodyear Dunlop plans to continue investing in its Slovenian wing as investments during the crisis have proved to be a good decision, Villard said.
Saša Bavec, director of Škofja Loka-based insulation maker Knauf Insulation, revealed that the German owners of the company were having problems with decision-making in Slovenia. It is not clear what the actual rules are and how they are implemented, he said.

Location and education are the key

Good projects can always secure investment but clearly the economic crisis has made those with capital behave much more cautiously than prior to 2008. The question of attracting money in the current conditions was the topic of the first panel of day two of the FDI Summit. The topic was discussed by two eminent guests: Marjan Hribar of the Ministry of the Economy and Damir Kuštrak of Agrokor, the Croatian company which is the main bidder for shares in Slovenian retailer Mercator. Kuštrak detailed the FDI practice in Croatia, which has been slightly less conservative than Slovenia's. He also said that as Croatia looks forward to joining the EU, cooperation and partnerships with Slovenia will be eased, along with cross-border acquisitions. Praising good capital exchange with both Serbia and Slovenia, Kuštrak mentioned difficulties when it comes to the still unstable Bosnia. Challenged by the moderator who mentioned the fears provoked by Agrokor's possible acquisition of Mercator, Kuštrak emphasised that the takeover would by no means be a hostile one.
Agreeing that the Slovenian market has been relatively closed to foreign capital, Hribar pointed out that while more and more companies are approaching JAPTI with business ideas the problem remains putting them into practice. That said, the ministry is preparing to target the areas that make it difficult - payment delinquency, high taxes, labour costs, building permits and so on. Feri Gönc of Mura Development Agency argued from the audience that taxation of wages might be an issue, while many others problems, such as building plots, can be effectively dealt with at the municipal level.
Speaking of Slovenia's benefits, Hribar once again highlighted the four "Qs" of Slovenia. But Kuštrak mentioned that in a global sense labour costs are losing their importance and the focus is instead on an area's specialities.

Avoiding the Greek scenario

The second panel of the day discussed how to create a development concept for Slovenia which would effectively respond to global trends. The discussion kicked off with the question of whether it is possible to compare Slovenia's recent negative trends to the "Greek scenario".
Dean of the Faculty of Economics and former Finance Minister Dušan Mramor argued such a comparison was overblown, pointing to Slovenia's very favourable macroeconomic pointers. On the other hand Marko Voljč - chief executive of KBC Group, which is part owner of NLB bank - contended that the Greek crisis is the ultimate result of a state of denial and resistance to anything that would cut one's privileges. Both speakers did agree, however, that current trends are less than optimistic and urged the future Slovenian government to take reforms seriously, including the improvement of the legal system. Director of Technology Park Ljubljana, Iztok Lesjak, pointed to another aspect of the Greek crisis - the distribution of public money. The worst things, he said, happen when the money is only given away and not invested, a charge of which Slovenia is not entirely innocent.
One of the general complaints about Slovenia's attitude to FDI is taxation policy, but the current state of public finances leaves little space available for fiscal stimulus, the panel agreed. Indeed it argued that the country needs to decrease the deficit, reduce the items with lowest multipliers on GDP and the public sector, the panellists argued. According to Voljč, Slovenia has exhausted the opportunity to do that without cutting wages. Lesjak argued the action was nonetheless essential, if Slovenia is to avoid experiencing a massive brain drain.
Even though there are no simple solutions available to respond to the "rude awakening of 2009", the panellists expressed some moderate optimism. Mramor recalled a period when Slovenia was widely admired for doing things right and with great success. The country has the means to get back on that track - it just has to overcome challenges first.

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