The Slovenia Times

IMD - Slovenia's international investment sub-factor ranks at 59th



Despite achieving a sound market economy and a peaceful transition process of political power, Slovenia's investment landscape presents a mixed picture. The 2015 IMD World Competitiveness Yearbook highlights some key issues that negatively affect the Slovenian investment environment and contribute to a somewhat adverse image abroad of the country.

Slovenia's trade to GDP ratio remains strong. Similarly, the international trade sub-factor ranks high at 18th (of 61 economies) in the Yearbook's ranking. Slovenia's international investment sub-factor, however, ranks at 59th. The country's basic and technological infrastructures also rank relatively low (40th and 43rd respectively). In the overall competitiveness ranking, Slovenia ranks 49th.

Capital markets dynamics show the same fluctuating pattern. Direct investment flows (inward), stock market capitalization and banking sector assets (all as percentage of GDP) have increased since 2011 while investment risk sharply declined in the same period. The adequacy of the finance and banking regulation remains low despite the fact that it has been steadily improving since 2013. In addition, the rather weak regulatory compliance and protection of shareholders' rights exacerbate the country's investment environment.

Data gathered trough the IMD executive opinion survey further underline such trends. Executives consider that limited policy stability and predictability, a weak legal environment and competitive tax regime are among the major issues that Slovenia experiences. They perceive that such issues lead to an increasing threats of relocation of production, services and R&D facilities.

According to survey participants, companies' agility or their adaptability to industry/market trends remains low. In addition, corporate boards fail to effectively fulfil their supervisory duties (i.e., supervise the top management of firms). There is also a sense that the adequacy of the auditing and accounting practices is somewhat limited.

The highlighted issues, in addition to increased competition from non-European economies, could make it harder for Slovenia to continue to attract FDI. Nevertheless, the country's current plans to enhance its financial regulatory framework could act as a catalyst for the general improvement of its investment environment.


More from Nekategorizirano