<NREC>Sloveniatoc Slovenia: Table of Contents <A>=Slovenia

 

 

COUNTRY COMMERCIAL GUIDE

 

Republic of Slovenia

 

FY 1999

 

Prepared July 1998

 

 

 

Table of Contents

 

 

Chapter I       Executive Summary                       

 

Chapter II      Economic Trends and Outlook

 

Chapter III     Political Environment

 

Chapter IV      Marketing U.S. Products and Services

 

Chapter V        Leading Sectors for U.S. Exports

                and Investment

 

Chapter VI      Trade Regulations and Standards

 

Chapter VII      Investment Climate (See ICS)

 

Chapter VIII   Trade and Project Financing

 

Chapter IX      Business Travel

 

Chapter X       Economic and Trade Statistics

 

Chapter XI      U.S. and Country Contacts

 

Chapter XII     Market Research and Trade Events

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

 

<NREC>Slovenia01 Slovenia: Executive Summary <A>=Slovenia

 

 

Chapter I       Executive Summary

 

This Country Commercial Guide (CCG) presents a comprehensive look at the Republic of Slovenia’s commercial environment, using economic, political, and market analysis.  The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community.  Country Commercial Guides are prepared annually at U.S. embassies through the combined efforts of several U.S. government agencies.

 

For centuries, Slovenia has been an anomaly in Central and Eastern Europe.  During the long years when it was dominated first by the Bavarian dukes and later by the Hapsburgs, Slovenia resisted Germanizing influences and retained its unique Slavic language and culture.  During the communist era, as Yugoslavia's most prosperous republic, it was at the forefront of Yugoslavia's unique, quasi-market economic system and in constant quest for export markets.  During the late 1980s, as Belgrade sought to reconcentrate political and economic power in its hands, Slovenia underwent a flowering of democracy and an opening of its society in cultural, civic, and economic realms to a degree almost unprecedented in the communist world.  In its early days as a independent republic, Slovenia concentrated its national energies on stabilizing its economy and opening its political process even further.  Today, with a growing regional profile, as a non-permanent member of the UN Security Council, a participant in the SFOR deployment in Bosnia, and a charter WTO member, Slovenia plays a role on the world stage quite out of proportion to its small size (population 2 million). 

 

With a per capita GDP of $9,161 in 1997, Slovenia is transition Europe's most prosperous economy.  This partly reflects its advantageous starting point as Yugoslavia's most prosperous republic.  Indeed, with one-twelfth of Yugoslavia's population, Slovenia produced one-sixth of Yugoslavia's output and nearly one-quarter of its exports.  Although the breakup of Yugoslavia triggered a sharp economic contraction from which the country did not recover until 1995, it was the first former communist country in Europe to register positive growth in the transition period.  The set of macroeconomic stabilization policies the authorities put in place, an early opening to world prices, and a host of structural reforms undertaken in the early stages have been instrumental in maintaining Slovenia's pole position. 

 

International institutions have recognized Slovenia's success.  Moodys and Standard and Poors both give it transition Europe's best risk rating.  The United Nations selected Slovenia to fill the Eastern European seat on the Security Council.  In the most telling recognition of the advances Slovenia has made, the European Union decided in 1977 to include Slovenia among the handful of countries invited to begin accession negotiations.  It will almost certainly be among the first wave of new EU entrants after the year 2000. 

 

The outlook for Slovenia is indeed a positive one.  However, a number of challenges lie ahead.  Foremost among these is fulfilling the requirements for EU membership.  The legislative project this represents will test the political will of Slovenia's leadership to take on a host of vested interests that have kept reforms from moving down the fast track.  The most notable of these reforms from a U.S. business perspective include changes in the financial sector, improvements in competition policy and public procurement, and adoption of a host of non-discriminatory measures.  The government is also likely to accelerate resolution of post-war expropriation claims that have led some to question the effectiveness of the country's legal apparatus.  In addition, the government of Slovenia is launching the next phase of its privatization, in which large state holdings will be sold off, many to strategic investors from abroad.  Likely sales include two large banks, the telephone monopoly, holdings in the rail sector, energy generation facilities, and a host of insurance companies.

 

Despite the large distance that separates them, the United States and Slovenia have developed an excellent bilateral political relationship and a rapidly-evolving economic one.  Slovenes have long considered the United States one of Slovenia's most faithful champions.  The United States has long seen Slovenia, with its well-developed markets, democratic institutions, and infrastructure, as a suitable model for the other countries of the former Yugoslavia -- and indeed for many transition countries -- to emulate.  As a trading partner, the U.S. is a rather distant eighth place, with total two-way trade with the United States amounting to $525 million in 1997, constituting only about 3 percent of Slovenia's total.  On the investment side, however, some U.S. firms have found the rigors of dealing with Slovenian regulations rewarding enough to take significant positions in the country.  With the recent majority stake Goodyear has taken in Sava d.o.o., the United States today ranks as the largest investor in Slovenia. 

 

Country Commercial Guides are available for U.S. exporters from the National Trade Data Bank’s CD-ROM or via the Internet.  Please contact STAT-USA at 1-800-STAT-USA for more information.  Country Commercial Guides can be accessed via the World Wide Web at http://www.stat-usa.gov; http://www.state.gov; and http://www.mac.doc.gov.  They can also be ordered in hard copy or on on diskette from the National Technical Information Service (NTIS) at 1-800-553-NTIS.  U.S. exporters seeking general export information/assistance and country-specific commercial information should contact the U.S. Department of Commerce, Trade Information Center by phone at 1-800-USA-TRADE.

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

 

<NREC>Slovenia02 Slovenia: Economic Trends and Outlook <A>=Slovenia

 

 

Chapter II      Economic Trends and Outlook

 

Major Trends and Outlook

 

Slovenia's recovery began in 1993, as it completed the process of reorienting its trade away from the troubled region to its south and toward Central and Eastern Europe.  Since that time, growth has averaged about 4 percent annually.  Slovenia' openness to trade (with total trade equivalent to about 120 percent of GDP) has been instrumental in perpetuating this growth, and maintaining export competitiveness has consistently been at the focus of policymakers' attention.  Throughout, Slovenia's budget and current account have been in rough balance, and inflation has been on a steady, if sometimes slowing, downward trend.

 

Slovenia posted a growth rate of 3.8 percent in 1997, a moderate acceleration over the previous year's 3.1 percent.  A strong surge in export demand (7.5 percent) fueled manufacturing in 1997, though the strength of imports (growing by 7.3 percent) essentially neutralized the foreign sector's contribution to growth.  Thus, the profile of growth remained dominated by strong domestic demand. Internally, the wage moderation the social partners achieved in 1997 held household consumption to only a 2.3 percent increase, a net drag on growth, while government consumption surged by 5 percent. Although investment growth has been slowing in recent years (from 1995's pace of 17.5 percent to 1997's 6.0 percent growth), it still constituted the biggest contribution to the economy's expansion last year.  The Slovenian government forecasts a repeat performance of investment's contribution in 1998 (to grow by some 7.9 percent), largely on the strength of completion of the processes of privatization and rehabilitation of enterprises and an overall improvement in the macroeconomic climate.  Government consumption is likely to lead growth once again, while household consumption will continue to be a drag on growth.  The official forecast is for an overall advance of GDP of 4 percent in 1998. 

 

All major sectors posted growth last year, with the largest contribution to total value added coming from public utilities and construction.  Value added in the manufacturing sector increased rapidly, in contrast to a considerably smaller increase in industrial production, indicating either increasing quality of output, the inadequacy of the current manufacturing statistics, or both.  Most export-oriented were the sectors of textiles, leather, chemical, machinery, and transportation equipment.  For the first year since independence, net profits of the manufacturing sector exceeded losses increases in revenues.  On the strength of its 1997 performance, manufacturing's share in value added increased from 28.6 percent to 29.2 percent, reversing a secular decline of its share.  Services, constituting 60.2 percent of GDP, also posted gains, with the strongest performance coming in the trade and transport subsector. 

 

External Sector

 

Slovenia has developed an excellent record in exploiting niche markets abroad.  Its export acumen was instrumental in compensating quickly for the loss of markets of the former Yugoslav republics after independence.  Today, Slovenia's total trade (exports plus imports) is equivalent to 116 percent of GDP, and most of this trade is with EU member states. 

 

Economic recovery in those countries -- particularly in Germany, Slovenia's most important trading partner -- as well as a halt in the decline in Slovenia's price competitiveness, were instrumental in a achieving a real increase in Slovenia's exports in 1997 by nearly 12 percent.  (Due to dollar appreciation, exports were substantially flat in dollar terms, however.)  At the same time, strong demand for intermediate goods and tariff reductions under the EU Association agreement supported demand for imports, which increased nearly 11 percent in real terms.  The result was a trade deficit of nearly one percent of GDP; the net addition of services trade (on which the surplus deteriorated somewhat) left the overall current account balance in surplus by $37 million, or about 0.2 percent of GDP.  Although this is a slight deterioration in dollar terms, in real terms it is an improvement of nearly 5 percent from the 1996 figure.  The outlook for 1998 is for the current account deficit to widen to $80 million in 1998.  

 

Price Developments

 

Retail price inflation in 1997 reached 9.4 percent, a slight deceleration from the 1996 pace, much of which was due to bringing officially-administered prices closer to market-clearing levels.  (These prices, which account for roughly one-fourth of the retail price index basket, contributed nearly one-half of the RPI advance.)  There is a general expectation that price increases will remain in the high single digits over the medium term, given the high level of indexation in the economy, continuing adjustments to, and in some cases liberalization of, administered prices, and the introduction of a value-added tax (expected in mid-1999).  The change from a retail to a consumer price index will likely have some salutary effect, since the CPI figure typically yields a lower figure and will in turn be used as an indexation base.  The official outlook for 1998 is for an average CPI inflation rate of 8.5 percent, or 8 percent by year-end. 

 

Public Finances

 

Slovenia has earned an enviable record in achieving a virtual budget balance for a number of years.  However, for the first time in 1997, the government ran a substantial (by Slovenian standards) budget deficit.  Thus, continuation of favorable public finance balances will depend critically on energetic reforms on an number of fronts, notably public sector salaries, pensions, and tax reform. 

 

The delay in adoption of the 1997 budget had severe consequences for public finances.  The provisional rule in effect during the 11 months in 1997 meant that the government of Slovenia went nearly the entire year without a formal budget.  This led to a host of temporary measures and caused a bottleneck in investment expenditures.  The final budget for 1997 shows a deficit of some 1.1 percent of GDP.  However, since the Budget Act extended some of 1997's budget items into 1998, a more normal accounting would have yielded a deficit closer to 1.5 percent of GDP.  Following years of virtual balance (and an actual surplus in 1996), the size of the swing in public accounts called for serious action.

 

The 1998 budget seeks to reverse this deterioration in a number of ways.  Although a series of economizing measures were adopted, including a hiring freeze and administered price adjustment, the burden of reducing the annual deficit to 1 percent of GDP will fall comparatively greater on the revenue side.  General government revenue will increase its share of GDP by 0.5 percentage points over 1997, while general government expenditure's share will rise by 0.4 percentage points.  This will bring the total share of government, on an expenditure basis, to 46.1 percent of GDP.  

 

Infrastructure

 

Slovenia's infrastructure is relatively well-developed, and the government is investing ever more in it in an effort to take full advantage of the potential Slovenia's geographic, trade, and cultural setting offer.  Construction of highways is a top priority, with $4 billion earmarked for 700 km of highways to be completed by the year 2000.  Upgrading Slovenia's rail links will command an additional $2.5 billion by the year 2005, with priority given to the five (east-west) and ten (northwest-southeast) corridors.  The extensive rail system links the Slovenian port of Koper, one of the largest in the region, to all neighboring countries; construction of a direct railroad from Koper to Hungary is in the planning stages.  The port of Koper serves as the principle port for Austrian and Hungarian exporters and as an essential port for Czech, German, and Slovak exporters. In 1997, the port of Koper accommodated 7.3 million metric tons of total cargo, including containers, vehicles, and bulk and liquid cargo.  The port has 20 berths on 2,284 meters of operative quays, 55 hectares of open storage, and over 250,000 square meters of closed warehouses and numerous specialized warehouses. 

 

In information technology, Slovenia has been at the forefront of the Internet revolution, with the highest concentration in Europe of Internet connection per inhabitant or per server.  Slovenia is well-served by its telecommunications infrastructure, with a GSM service provider (soon to be joined by a second) now covering about 90 percent of the population.  In classical telecommunications, the national monopoly, Telekom Slovenije, will invest about $700 million in expansion and modernization, in preparation for full privatization by 2003.

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

 

<NREC>Slovenia03 Slovenia: Political Environment <A>=Slovenia

 

 

Chapter III     Political Environment

 

Slovenia is a parliamentary democracy and constitutional republic.  Within its government, power is shared between a directly-elected President, a Prime Minister, and a bicameral legislature (Parliament).  Parliament is composed of a National Assembly (which takes the lead on virtually all legislative issues) and a National Council.  The Constitutional Court has the highest power of review of legislation to ensure its consistency with the Slovene Constitution. 

 

The present government is a "grand coalition," with the leftist Liberal Democratic Party (LDS) sharing power with the rightist, rural-based People's Party (SLS).  This arrangement took some time to organize, and the delay in forming a government (together with the "teething pains" of this form of cohabitation) are widely held responsible for the delays in adopting and passing a budget.  It also underlies the delays Slovenia has experienced in pursuing a host of pressing reform measures, such as privatization of large state holdings, property restitution, and some legislation needed for accession to the European Union.  Notwithstanding these differences, the government -- indeed most of the Slovenian polity -- shares a common view of the desirability of a close association with the West, specifically of membership in both the European Union and NATO.

 

In the course of 1997, elections were held for the presidency (a contest that the incumbent, Milan Kucan, won handily) as well as for the upper house of Parliament, the State Council.  Local elections, expected in the autumn of 1998, are likely to be closely watched as a preview for general elections expected in the year 2000.  They will also provide a gauge of the direction of policy as Ljubljana devolves authority to the local level -- a process that includes the recent creation of 45 new local administrative units (obcine), bringing that total to 192. 

 

Slovenia's failure to be invited in the first round of NATO enlargement sent a tremor through its political establishment, prompted the resignation of the Foreign Minister, and led to a vote of confidence lodged by the opposition parties, the Social Democrats (SDS), and the Christian Democrats (SKD).  The ensuing debate resulted in the government articulating a general strategy for NATO enlargement, but left the governing coalition firmly in charge.  The invitation by the European Union to begin accession negotiations soon thereafter calmed the political waters, as did the subsequent decision by the United States to waive visa requirements for most Slovenian tourists. 

 

For all the apparent bitterness that divides left and right wings, there are few fundamental philosophical differences between them in the area of public policy.  Slovene society is built on consensus, which has converged on a social-democrat model.  Political differences tend to have their roots in the roles that groups and individuals played during the years of communist rule and the struggle for independence. 

 

Slovenia enjoys excellent relations with the United States and cooperates with it actively on a number of fronts.  It presently occupies a non-permanent seat on the UN Security Council, and in that capacity has distinguished itself with a constructive, creative, and consensus-oriented activism.  Slovenia has been a member of the United Nations since May 1992 and of the Council of Europe since May 1993.  Slovenia is also a member of all major international financial institutions (the International Monetary Fund, the World Bank Group and the European Bank for Reconstruction and Development) as well as 40 other international organizations, among them the World Trade Organization, of which it is a founding member.

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

 

<NREC>Slovenia04 Slovenia: Marketing U.S. Products and Services <A>=Slovenia

 

 

Chapter IV      Marketing U.S. Products and Services

 

Distribution and Sales Channels

 

Several distribution channels are open for U.S. goods to enter the Slovenian marketplace, including wholesaling and retailing, as well as franchising, joint ventures, and licensing.

 

There is a large number of merchants, agents, intermediaries, wholesalers and retailers available in Slovenia. Since 1990, when the transition to a market economy began, foreign trade ceased to be the exclusive domain of a few specialized companies. Today, any firm may now carry out both foreign and domestic trade.

 

Use of Agents and Distributors, Finding a Partner

 

For handling distribution, a carefully chosen local agent or distributor can be much more efficient and cheaper than direct sales by a U.S. exporter not familiar with the Slovene market. Reliable and capable potential partners can be found, but care needs to be exercised. Most trading firms are newly-established, with only a few years of experience, while former "socially-owned" trading companies are being privatized and restructured. 

 

Due to the high cost of borrowing and a general lack of working capital, failure to pay suppliers promptly is a growing problem in Slovenia. Therefore, U.S. firms are advised to obtain a confirmed letter of credit as a basis to conduct business with a new local partner. Dun & Bradstreet’s agent in Slovenia (phone: 386/61/1332076; fax: 386/61/1333105) or the Slovenian Chamber of Commerce (phone: 386/61/1250122; fax: 386/61/219536, attn: INFOLINK Office) may be helpful in determining the creditworthiness of a potential local partner.

 

The following are some well-known American companies that have local agent/distributor or representative offices: Merck, Sharp & Dohme, Coca-Cola Amatil, UPS, IBM, Nike, DHL, Philip Morris, Oracle, Hewlett Packard, 3M, Microsoft, Air Routing International, Pfizer, Wrigley, Deloitte & Touche, Eli Lilly, Ford and many others.

 

Franchising

 

McDonald’s, Atlas-American Express, Dairy Queen, and Diners Club are the best-known U.S. franchises in Slovenia. McDonald’s has opened 10 restaurants during the last three years, but most of them are direct investments; only two are under franchise. There are no other American franchises in Slovenia, although a lot of European companies have established outlets in the market.

 

Direct Marketing

 

Direct marketing is not well-developed in Slovenia:  Selling of mailing lists of individuals is not common, and mail-order houses are rare.  Amway is the only U.S. direct marketing company with an office in Slovenia.

 

Joint Ventures/Licensing

 

In addition to founding their own companies, foreigners can also invest in existing companies.  In companies in which partners’ shares are not in the form of securities (i.e., private companies and limited-liability companies), investments may take place with the agreement of the partners and by joining in the partnership agreement.  Takeovers of joint-stock companies are much more frequent and depend less on partner-shareholders because partners' shares are in the form of securities and are quoted on the Stock Exchange as such.  (Shares of closed companies are an exception.)

 

Takeovers of companies are possible through mergers or acquisitions regulated by the Law on Commercial Companies.  These require the approval of the management board.  In takeovers of companies in the narrow sense, bidders address their tenders directly to shareholders, either with or without the approval of the management board.  Takeovers in this sense are not specifically regulated, so the provisions of the Law on Commercial Companies and the Law on the Securities Market should be used reasonably.  Takeovers are possible both for public companies whose shares are quoted in the market and for private companies through direct offers to shareholders.  If the company conducting a takeover acquires a controlling interest in the other company, it is obliged to so inform the issuer of shares, the Securities Market Agency, and the Stock Exchange within seven days of the date that it is apparent that they hold a controlling number of shares.  The issuer who has received such a notice must publish it publicly within ten days in daily newspapers or on the premises of the Stock Exchange.

 

Both domestic and foreign legal and natural persons may freely conclude all types of commercial contracts (agency contracts, distribution contracts, license contracts, etc.).  Slovenian legislation does not stipulate several different permits and other administrative procedures for the performance of individual foreign trade transactions or contracts.  In addition, contractual parties in international legal transactions may select the law that will regulate their mutual relationships and the court (arbitration tribunal) of competent jurisdiction that will hear disputes. 

 

In fact, only contracts on foreign investments (discussed above) and contracts on long-term production cooperation, which are regulated by the Law on Foreign Trade (LFT), deviate from the standard civil-legal regulation of contracts. In fact, the LFT only defines contracts on long-term production cooperation which should serve as a guide to companies and assists them in concluding contracts of this type.  Contracts on long-term production cooperation, including any amendments or supplements, must be registered with the Ministry of Economic Relations and Development within 30 days of their execution.  They enter into force on the date of their entry into the ministry’s register.

 

Steps to Establishing an Office

 

In conducting business in the Republic of Slovenia, foreign companies have the same rights, obligations and responsibilities as domestic companies.  The principles of commercial enterprise, free operation, and national treatment apply to the operations of foreign companies as well.  Their basic rights are guaranteed by the Law on Foreign Investments (the right to manage or participate in the management of companies in proportion with invested funds; the right to transfer contractual rights and obligations to other foreign and domestic natural and legal persons; the right to participate in profits in proportion with invested funds and the right to free transfer and reinvestment of profits; the right to recover investments in companies and their share in net assets after the dissolution of companies).

 

However, restrictions are placed on foreign investments in certain sectors of strategic or other special significance.  Foreigners cannot establish their own companies in the following areas: manufacture and sale of arms and military equipment, rail and air traffic, communication and telecommunications, insurance, publishing, and the mass media.  These limitations regarding individual activities are statutorily defined; certain limitations have been eased, above all by allowing for the possibility of foreign investments but their share may not exceed a specific percentage which would enable them to have a controlling interest in companies in these sectors.

 

In Slovenia, foreigners may establish any legal-organizational form provided for in the Law on Commercial Companies (limited-liability companies, joint-stock companies, limited partnerships with share capital, limited partnerships, general partnerships, and silent partnerships).  All companies acquire the status of a legal person upon their entry into the court register.  Prior to the entry into the court register, a number of formalities must be performed. Upon deciding to establish a company it is therefore beneficial to consult a lawyer as soon as possible to prevent unnecessary difficulties which may arise during the process of founding the company (from adopting the memorandum and articles of association to their certification by a notary public and entry into the court register).

 

Foreigners may be exclusive or part owners of companies, but general managers or proxies of commercial companies must be citizens of the Republic of Slovenia.  If a proxy is a foreigner and the company's management board has several members, the majority of them must be citizens of the Republic of Slovenia.  When the majority of the management board is Slovenian, the company director may then be foreign. 

 

Companies established in such manner have rights, obligations, and responsibilities in legal transactions in the territory of the Republic of Slovenia equal to those of domestic companies.  Since such companies have acquired the status of a Slovenian legal person, permits issued by the Ministry of Finance are required for the outflow of capital to foreign countries, on condition that the company in question operates without loss and that it has met all its liabilities towards the state (taxes and other duties).

 

Selling Factors/Techniques

 

Shopping hours in Slovenia are between 8AM and 8PM. Most stores are open on Saturday mornings; only a very few are open on Sundays. Most Slovenian consumers prefer to pay in monthly installments, even for low cost goods. Other factors/technologies critical to success are close and frequent contact with buyers, motivated and trained intermediaries, and aggressive market promotion.

 

Advertising and Trade Promotion

 

All normal channels for advertising are available and are widely used in Slovenia: newspapers and magazines, television and radio, outdoor billboards/signs, etc. Other promotional techniques such as sales promotion, public relations, and trade fairs are also common. The major newspapers are: Delo, Dnevnik, Slovenske Novice, and Vecer. The major business journals are: Finance, Gospodarski vestnik, Manager, Podjetnik, and Slovenian Business Report.

 

Pricing Products

 

The level of prices in Slovenia is generally very high due to high costs of labor and lack of competition in some areas. Most prices are determined by the market.  The prices of gasoline, energy, natural gas, railway transport, telecommunications, milk, and some other products are set by the government. The government may also influence the pricing policies of companies under its direct or indirect control.

 

Sales Service/Customer Support

 

Sales service and customer support are relatively undeveloped as a marketing tool in Slovenia.

 

Selling to the Government

 

The procedure used by state agencies and state controlled companies for purchases is prescribed by the Decree on Procurement of Goods, Works, and Services published in the Official Gazette no. 28 of June 1993. Prices of Slovenian companies can be 15 percent higher compared with prices of foreign competitors. In cases where a foreign supplier is selected, it has to import Slovene goods of equal value.  Slovenia is not a signatory to the WTO agreement on government procurement. 

 

Protecting Your Product from IPR Infringement

 

Slovenia has a comprehensive legal framework which provides protection for intellectual property rights.  Slovenia has signed the WTO Uruguay Round Agreement on Trade-Related Aspects of Intellectual Property Rights(TRIPs) and has implemented those commitments.  However, there are still some problems in terms of enforcement.  U.S. industry has raised concerns about the lack of actions to confiscate pirated videos, musical works, and software.  There are also a number of pharmaceutical patent disputes in the Slovenian courts. 

 

Industrial property rights (patents, designs, trademarks and service marks, and appellations of origin) can be protected in Slovenia by their registration at the Slovenian Intellectual Property Office (phone: 386/61/1783054; fax: 386/61/1783110). A list of Slovenian patent attorneys is available from the Patent Office (phone: 386/61/1264012; fax: 386/61/1264079).

 

Slovenia is a party to: the Convention Establishing the World Intellectual Property Organization, the Agreement on Trade-Related Aspects of Intellectual Property Rights, the Paris Convention for the Protection of Industrial Property, the Madrid Agreement Concerning the International Registration of Marks, the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, the Locarno Agreement Establishing an International Classification for Industrial Designs, Hague Agreement Concerning the International Deposit of Industrial Design, the Patent Cooperation Treaty, the Berne Convention for the Protection of Literary and Artistic Works, the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcast Organizations, the 1973 Geneva Phonograms Convention, and the Brussels Convention Related to the Distribution of Program-Carrying Signals Transmitted by Satellite.

 

In case of IPR infringement, a U.S. company should hire a local attorney, who can then pursue the matter in the local commercial court.

 

Need for a Local Attorney

 

Slovenia does not recognize U.S. legal accreditation, and regulations regarding licenses to practice in-country are restrictive.  Some Slovenian law firms can conduct business in English and are familiar with U.S. law. A list of English-speaking law firms is available at the U.S. Embassy in Ljubljana.

 

Performing Due Diligence/Checking Bona Fides of Banks/Agents/Customers

 

A few firms operating in Ljubljana can assist in performing the important task of due diligence on potential Slovenian partners.  These include:

 

I Poslovne informacije d.o.o. (Dunn & Bradstreet’s agent in Slovenia) Zrinjskega cesta 4

1000 Ljubljana

Tel:  386-61-133-2076

Fax:  386-61-133-3105

Marko Batista, Director

 

Creditreform d.o.o.

Dunajska cesta 21

1000 Ljubljana

Tel:  386-61-131-4320

Fax:  386-61-131-3019

Alfred Zemen, Director

 

Intercredit, d.o.o.

Cankarjeva cesta 3/III

1000 Ljubljana

Tel: 386-61-125-9065

Fax: 386-61-125-9130

Milos Varga, Director

 

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U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

 

<NREC>Slovenia05 Slovenia: Leading Sectors for U.S. Exports & Investments <A>=Slovenia

 

 

Chapter V   Leading Sectors for U.S. Exports and Investment

 

Slovenia's legacy of worker self-management continues to be felt in the economy.  The high degree of decentralization of this model and its tendency to discourage flow of resources out of declining firms and into growing ones has led to a high degree of diversity in all sectors.  These performance disparities are likely to disappear as the privatization process reaches its conclusion and resources are allocated more efficiently among sectors.  For the time being, however, it is difficult to identify specific sectors where growth is likely to be concentrated.  Given the cost of factors, the characteristics of viable businesses of the future will probably include:  moderate to low reliance on manual labor input; moderate to low use of real estate; and "environmentally friendly" undertakings. 

 

The following are the non-agricultural sectors where the American Embassy Ljubljana estimates there are prospects for significant sales growth:

 

Aviation Services (AVS):  Slovenia has three international airports -- at Ljubljana, Maribor and Portoroz. Slovenia’s main airport, Aerodrom Ljubljana, plans to increase investment to $8 million in 1998 to finance enlargement of the passenger terminal and improve the airport’s infrastructure. The airport hopes to serve 1.5 million passengers annually by the year 2002. The government has not yet decided whether foreign investors will be allowed to buy Aerodrom shares. Maribor airport specializes in cargo transport and the training of pilots for passenger aircraft. The Republic of Slovenia is planning to thoroughly refurbish the airport in the next few years.

 

Automobiles/Light Trucks/Vans (AUT): In Slovenia approximately 60,000 new cars are sold every year.  The French manufacturer Renault holds the largest market share; its Revoz factory in Novo mesto has given it the status of a domestic producer with a very diversified sales and service network. German Volkswagens and Italian Fiats are also popular.  In the last few years Korean producers such as Hyundai and Daewoo have established themselves in the Slovene market, mainly due to the favorable prices. The leading company in sales of small vans is Volkswagen, with 934 vehicles sold in 1997. The second place is taken by Citroen with 753 vehicles sold; more than 400 vehicles were sold by Peugeot, Renault, Fiat, and Mercedes-Benz. All other producers of small vans have each sold less than 200 vehicles in 1997. In Slovenia approximately 600,000 tires are sold each year. The largest market share is held by the trademark Sava, followed by Michelin, Semperit, and Goodyear.

 

Pulp/Paper Machinery (PUL):  A new era for the paper industry began in 1996, when the sector became profitable after years of losses. The paper industry’s income comprises 3.5 percent of all industry income and 1.4 percent of the entire Slovene economy. The industry is composed of 92 companies -- 11 large, 12 medium and 69 small. The majority of investments in the paper and cellulose industries during the next few years will be dedicated to reducing the emissions accompanying paper and cellulose production to the levels prescribed by the EU. Modernization of the technological process is a permanent feature of this industry.

 

Transportation Services (TRN), Construction Equipment (CON):  Though the basic transportation infrastructure is well developed in Slovenia, the government places emphasis on regional integration with neighboring countries, foreign trade, and regional transit traffic. There is already a dense network of roads and railways, but relatively few highways that meet international standards. The National Highway Construction Program in the Republic of Slovenia, adopted by Parliament in 1995, envisages a network of over 500 kilometers providing fast East-West and North-South links. In 1996, 96 kilometers of the network were built and a further 50 kilometers were completed in 1997. In the period 1994-97, 130 kilometers of four-lane highways were completed. In early 1998 the government passed a highway program budgetary adjustment, setting the total investment for the entire network to be completed by 2004 at just over $4 billion.  

 

Defense Industry Equipment (DFN):  The Slovenian armed forces must transform from a conscripted, territorial defense-based force into a professional force with regional responsibilities. In June 1996 the arms embargo against Slovenia was lifted, and the Slovenian military has plans for an ambitious program of defense procurement.  An equipment fund of about $1.2 billion is available for procurement over the next ten years. 

 

Electrical Power Systems (ELP):  The government’s vision for the energy sector is outlined in its “Strategy of Efficient Use and Supply of Slovenia” which was approved in 1995. Based on high and low demand forecasts, four supply scenarios to 2010 have been prepared. They have been produced using three sets of basic assumptions: high and low rates of economic growth, larger and smaller investments in energy conservation and efficiency, and different supply options.

 

Increased hydro-electric power generation is one of the strategic objectives of the government’s energy policy. The capacity to generate an additional 1.5 TWh of electricity by 2010 is planned, but this requires that 70 percent of the potential sites for development are exploited. Further upgrading on the upper stations of the Sava river are planned along with new plants on the lower course. Five additional new plants are projected for the Sava river to be commissioned every 2 years from 1998 onwards. Feasibility studies are underway for small additional run-of-river and storage plants in several places and for exploitation of other renewable energy sources. These renovations would increase the capacity by 151 MW, and together with new plants, 358 MW of hydro capacity will be added to the system by 2010.

 

Plans for conventional thermal power generation are based on maintaining production at existing plant locations and building facilities at new sites, primarily for combined heat and power generation. Investments will be required to improve pollution control to meet environmental standards, to increase rapid response and peaking capacity, and for renovation of control systems at existing plants. The government also foresees the construction of new oil-fired capacity. One 68 MW oil-fired plant at Brestanica should be commissioned before 2005. A second plant with a capacity of 143 MW is scheduled for completion at 2010. 

 

For the transmission and distribution system, investment plans up to 2010 include the modernization of the national dispatching and local distribution control centers, renovation of the transmission grid, better control of reactive power in the system and the completion and renovation of the east-west 400 kV transmission lines with a connection to Hungary and a 400 kV substation.

 

Realization of all these projects depends on implementation of the government’s goal to increase electricity tariffs to levels that cover costs. Lack of financial resources has postponed these priority investment projects for a number of years.

 

In the medium-term there is no overcapacity of gas transport infrastructure.  Geoplin plans some investments, including the expansion of the gas pipeline network. Other investments contemplated by Geoplin include LNG projects and an underground gas storage facility. Investments in the distribution sector focus on expansion of the existing network.     

 

Financial Services (FNS):  Banking licenses are confirmed by the Bank of Slovenia (BS). By the end of April 1998, 30 banks held such a license, of which 28 were operating. The BS issues licenses in four catagories. The broadest license for performing all business and investment banking services is held by seven banks: Banka Koper, Banka Vipa, Gorenjska Banka, Nova Ljubljanska Banka, Probanka, SKB Banka, and Slovenska Zadruzna Kmetijska Banka. Some banks have merged recently, and new mergers have been announced. Banks in Slovenia with a major foreign ownership are Bank Austria, Creditanstalt, Volskbank, and Bank Societe Generale. The largest banks in Slovenia are: Nova Ljubljanska Banka, SKB Banka, Nova Kreditna Banka Maribor, Banka Koper, and Banka Celje.

 

In 1997, the Government of Slovenia completed the restructuring needed to privatize the two remaining state-owned banks:  Nova Ljubljanska Banka -- the largest in the country -- and Nova Kreditna Banka Maribor -- Slovenia's number three bank.  Although the mode of privatization has not yet been determined, plans are likely to involve a sizable strategic partner, possibly a foreigner.

 

Foreign financial service providers are likely to have improved access to the Slovene market in the wake of the adoption of EU directives in this sector -- probably by the end of 1999.

 

Telecommunications Equipment (TEL), Telecommunications Services (TES):  Modernization and expansion of local telecommunications facilities is an ongoing activity of the state-controlled national telecommunications provider, Telekom Slovenije (TS). According to the Association Agreement between Slovenia and the European Union, the telecommunications sector has to be fully open by the end of 2000. The TS now holds a monopoly over fixed voice telephony. All other telecommunications fields are open for competition according to the Law on Telecommunications adopted in May 1997.  Because supporting legislation to comply with the new law still need to be passed, real competition may come slowly.

 

Following a series of delays and court challenges, the government of Slovenia selected one firm to provide GSM mobile telephony services in June, 1998.  (The other license permitted under the Telecommunications Law was allocated to the current GSM operator, Mobitel.)  The unsuccessful American-Slovenian joint venture has lodged legal challenges to the decision. The government is expected to announce a tender for two licenses for GSM 1800 Mhz by the end of 1998 and is also considering expanding other telecommunications services, including advanced satellite services.

 

Telekom Slovenije is 73 percent owned by the state, which will probably sell around 20 percent of its share to a strategic partner in 1999 and another 20-30 percent by 2003. The government is likely to select its partner on the basis of its ability to help TS maintain its leading position in the market.

 

Travel/Tourism Services (TRA):  In 1997 1.8 million people visited Slovenia’s tourist sites, 10 percent more than the previous year. Total overnight stays were 9.5 percent higher than in 1996, while overnight stays by foreign guests increased 20.7 percent over the previous year. The total bed capacity (basic and ancillary) is around 80,000 persons (basic: 36,000 persons; ancillary: 44,000 persons). The Slovenian Tourist Board, established in 1996, promotes Slovenian tourism and plans to increase the current level of overnight stays to 9 million over the course of five years, doubling the current capacity of 70,000 within the next 10 years.

 

Best prospects for agricultural products:

 

Hides and Skins PS/D 52

 

Slovenia imports significant quantities of raw hides and skins to make final leather products for export.  The U.S. is the second largest exporter of hides and skins to Slovenia, while Italy ranks first.

  Metric Tons

                        1996      1997      1998 est.

Total Local Production  2,072    2,235    2,050

Total Imports           21,655    24,303    25,000

Total Imports from U.S. 10,038    10,531    12,000

 

Pet Food PS/D 11

              

As the overall economic situation in Slovenia improves, Slovenes have more disposable income to spend on their pets. Whiskas and Pedigree are the largest brand names in Slovenia.  Slovenia imports most of its pet food from the Netherlands and Germany.

                                    USD    

     1996       1997         1998  est.

Total imports           12,679,000 12,599,000   11,500,000

Total imports from U.S.  157,000    644,000      950,000

 

Wheat PS/D 11

 

Slovenia imports nearly half of its total wheat consumption, seeking mostly wheat of high, bread-making quality.  The extent of the Slovenian demand for U.S. wheat exports depends mainly on the size and quality of the Hungarian wheat harvest, although typically Hungary does not meet all of Slovenia’s demand for high quality wheat.  U.S. wheat is commonly imported to blend with lower quality wheat.  On April 1, 1998 Slovenia introduced higher protection on wheat imports to stabilize prices for at least the duration of the harvest.  The main competition for U.S. exporters comes from Argentina, Austria, Croatia, Hungary, and Yugoslavia.

                                   Metric Tons (MT)

                             1996      1997      1998 est.

Total Market Size            215,120   270,751  n/a

Total Local Production       137,120   138,930  n/a

Total exports                17,000   18,000  n/a

Total imports                95,000   149,821  160,000

Total imports from U.S.      29,710   26,650  29,250

 

Soybean Meal - PS/D 06

 

Slovenia does not produce soybeans due to unfavorable growing conditions, and it does not have a soybean processing plant.  Although the soybean meal market in Slovenia is relatively small, U.S. producers can export the high quality soybean meal preferred in Slovenia’s expanding pork and poultry production. Processing plants in the U.S. are known for producing higher protein content in soybean meal than the other major soybean meal exporters to Slovenia -- Argentina and Brazil.  

   MT         

                             1996      1997     1998 est.

Total Local Production      0         0        0

Total Exports                0        0        0

Total Imports                151,200   222,700  250,000

Total Imports from U.S.           6,000          6,000    8,000

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

 

<NREC>Slovenia06 Slovenia: Trade Regulations & Standards <A>=Slovenia

 

 

Chapter VI      Trade Regulations and Standards

 

Trade Barriers, Including Tariffs, Non-Tariff Barriers, and Import Taxes

 

Slovenia has a relatively open trade regime, reflecting a view in officialdom of the importance of trade in overall economic liberalization and competitiveness.  As of 1997, the weighted average tariff rate applied to most-favored nations (MFN) was 10.7 percent.  In addition, Slovenia has concluded a number of new free trade agreements and further liberalization has occurred, notably that related to the Association Agreement with the EU.  The effective rate of protection is calculated to be 3 percent -- down from 36 percent prior to liberalization. 

 

Customs rates are generally defined by law according to the following categories: 0-5 percent for raw materials; 5-10 percent for semi-finished products; 8-15 percent for equipment; and 15-27 percent for finished products or consumer goods. Import levies are payable upon the importation of most agricultural and food products. Levies are not charged if the agricultural or food product is exempt from duties pursuant to the Customs Law. These levies are also not payable on imports of products from countries with which Slovenia has signed bilateral trade agreements.

 

Customs Valuation

 

The primary basis for customs valuation is ad valorum on the transaction value of the goods, i.e., the price paid or the price that is to be paid for the goods to be imported, including all duties and taxes paid outside Slovenia.

 

Import Licenses

 

Ninety-eight percent of imports are free of quantitative restrictions.  A few categories of goods are restricted by import quotas, and in some sectors importation is restricted by permits or licenses;

 

  o Textiles and textile products are imported through a quota system;

  o Import licenses are required from the competent ministry for the import of drugs and some chemicals, waste products and raw materials, articles of cultural heritage, gold, waste and scrap of precious metals and coins, nuclear reactors and weapons;

  o A quality certificate is required for the import of some animals, meat and vegetables, and other food products.

 

Export Controls

 

Most technology can be exported from the United States to Slovenia under general export licenses. Some equipment still requires validated export licenses from the Bureau of Export Administration and/or Department of State. 

 

Slovenia levies a special export tax on the export of strategic raw materials -- 10-20 percent on lumber, timber, and scrap raw materials. 

 

Import/Export Documentation

 

A Slovene importer/exporter is responsible for providing the required import/export documentation, which consists of common trade, transport and customs documents, as well as certificates required for quality control and licenses where appropriate.  For foods, a phyto-sanitary certificate or veterinary certificate as well as ecological control may be required.  The Ministry of Agriculture and Forestry and the Ministry of Health are responsible for the control of food products.

 

Temporary Entry

 

Slovenia is a signatory to the ATA Convention on Temporary Imports and Exports.  Products may be imported into Slovenia on a temporary basis and be totally exempted from customs duties in various cases, of which most important are the following:

 

  o Goods to be released into free circulation exempted from customs duty under the Customs Act;

  o Goods temporarily imported for exhibitions or testing, if the foreign owner has made them available free of charge and for a specific period of time;

  o Animals, instruments, requisites and other items required for artistic, sports, or other events and the production of motion pictures;

  o Packaging materials; freight and security equipment, etc. required for the delivery or dispatch of foreign-owned goods;

  o Equipment for governmental and non-governmental international or bilateral organizations, or international or bilateral commissions, with seat in the customs territory, or having representative office with seat in the customs territory;

  o Equipment required to avert imminent danger of epidemics, elementary or other natural disasters or to mitigate the immediate consequences of such disasters;

  o Yachts, sailing ships, and other sea vessels with accessory floating moorings and anchoring equipment, if they are used for sport and tourism, on condition that they are temporarily imported by companies or individual entrepreneur registered for rental of foreign yachts, sailing ships, and other sea vessels on the basis of contracts concluded with foreign sport clubs and their associations, permitting them to rent them to foreign tourists, members of these clubs, and their associations for use in Slovenia;

  o Household items temporarily imported by domestic and foreign natural persons entering Slovenia for a temporary sojourn;

  o Equipment which is temporarily imported by permanent correspondents or editorial offices of foreign media registered in the customs territory.

 

The time limits for temporary imports are established on the basis of the purpose for which goods are temporarily imported, but may not exceed a period of 12 months.

 

Labeling, Marking Requirements

 

The following labeling information must be in Slovenian on the original package of products that are subject to quality control: title of the product; full address of the importer; net quantity/weight/volume; as well as information, where applicable, regarding ingredients; use and storage instructions; and other warnings important for the customer. Technically complicated products also have instructions for use, the manufacturer’s specifications, a list of authorized maintenance offices, warrant, and other applicable data. All this information must be in Slovene and attached to each product before reaching customers.

 

A form ("FORM A") is issued by the Chamber of Economy to prove the Slovenian origin of goods for preferential treatment of goods according to preference schemes.  The certificates of the Slovenian origin of goods, "EUR 1", issued by customs authorities, and a declaration given by the exporter on an invoice (i.e., an invoice declaration) are used to assert preferential customs treatment.

 

Prohibited Imports

 

None.

 

Standards

 

The Standardization Act provides for a new approach to the determination of the legal nature of standards and technical regulations.  According to this Act, standards do not become a binding requirement unless so designated by a competent ministry.  Slovenia intends to harmonize its standards regime with European Union legislation. Free movement of goods will be ensured by the introduction of comparable procedures for evaluation of conformity, conditions for mutual recognition of documentation, and prevention of double testing and certification. For the time being, Slovenia still applies regulations (except regulations on compulsory standards) on the basis of the former federal (Yugoslav) Standardization Act.

 

Goods and services imported for sale in Slovenia typically must comply with prescribed standards and technical regulations and be certified. Certification is usually carried out by an authorized institution.  Where there is no authorized institution for the certification, the Standards and Metrology Institute of the Republic of Slovenia will issue a certificate.  Certificates issued abroad are valid in Slovenia if the issuing authority and the local issuing institution have signed an agreement on the mutual recognition of certificates.  A health, veterinary, phytosanitary, or ecological control is obligatory for individual types of products such as foodstuffs and animals.

 

Technical instructions and a written guarantee statement and, if necessary, instructions for use must be enclosed with technical goods and consumer durables imported into Slovenia.  In addition, the importer must guarantee the servicing of products and supply of spare parts.  A declaration consisting of the name and type of product, name of manufacturer and other prescribed data should be affixed to the product.  The documents and the declaration must be written in the Slovenian language.

 

If a contract with a foreign person, the regulations of a foreign country, or a bilateral or international agreement prescribe that goods to be exported or imported be shipped with documents certified by a competent authority, the Chamber of Economy of Slovenia or an authorized customs organization is the competent authority. If the regulations of the country in which the documents are to be used stipulate that the documents have to be issued by a state body, the Ministry of Foreign Affairs is the competent issuing authority in the Republic of Slovenia.

 

Information on particular Slovenian standards and about products that have to be certified can be obtained from the Slovenian Standards and Meteorology Institute (phone: 386/61/1312322; fax: 386/61/314882).

 

Free Trade Zones/Warehouses

 

Free trade zones (FTZs) are part of Slovenia’s customs zones. Slovenia’s  FTZs are located in Celje, Ljubljana, Maribor, Nova Gorica, Sezana, and Koper. 

 

According to the Free Trade Zones Act, from May 1998, FTZs may be used by domestic and foreign entities. The applicant to use a FTZ shall meet the following requirements: at least 51 percent of the turnover in the FTZ must be generated by the export of goods manufactured and services performed in the FTZ; activities in the FTZ shall be a new line of business for the company; the total number of company’s employees must be increased by doing business in the FTZ; persons founding a new company or a new branch office in the FTZ must have paid all taxes and customs duties.

 

The following activities may be performed in an FTZ: production and service activities; wholesale; banking and other financial services; insurance and reinsurance of persons and property; as well as retail for other users in FTZs. Goods can be moved free of restrictions into FTZs and may be stored there for an unlimited duration. Goods brought into FTZs are duty-free. Goods or products of these goods can then be exported duty-free. The goods or products of these goods can also be imported into Slovenia. In such case, customs or other duties are normally payable on the importation of goods to Slovenia, as are storage costs and costs of other procedures concerned with the goods' processing in the FTZ and which are not part of the customs base.

 

Equipment intended for carrying out activities in FTZs as well as spare parts, tools, and accessories for the equipment are exempt from customs duties for as long as they remain in the FTZ. (This does not hold for office furniture, office equipment, and other administrative facilities, and motor vehicles that are not intended for exclusive use in FTZ.) Sales tax is not charged on equipment and raw materials entering FTZs on the condition that the equipment or materials are used for the production of goods for export.

Profit tax amounts to 10 percent. A tax deduction in the amount of 50 percent of the invested sum is offered for investments in tangible assets in the FTZ. The taxable income of companies in the zone shall be reduced by the amount equal to 50 percent of salaries paid to the trainees and other staff who have been registered as unemployed for at least six months.

 

Special Import Provisions

 

None.

 

Membership in Free Trade Arrangements

 

Slovenia acceded to the General Agreement on Tariffs and Trade (GATT) in September 1994 and was a founding member of the World Trade Organization (WTO).  In January, 1996, Slovenia became a member of the Central European Free Trade Agreement (CEFTA) and assumed the CEFTA presidency in 1997.  On June 10, 1996, Slovenia signed an Association Agreement with the European Union.  Slovenia also has entered into free trade agreements with the following:  European Free Trade Agreement (EFTA); Croatia, Israel, Liechtenstein, Lithuania, Latvia, Estonia, Bulgaria, FYR Macedonia, Romania, and Turkey.

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

 

<NREC>Slovenia07 Slovenia: Investment Climate <A>=Slovenia

 

 

Chapter VII     Investment Climate

 

A.1   OPENNESS TO FOREIGN INVESTMENT

 

THE SLOVENIAN VIEW OF FOREIGN INVESTMENT HAS BEEN

EVOLVING IN RECENT YEARS.  ONCE WIDELY CONSIDERED A

THREAT TO SLOVENIAN CULTURE AND THE NATIONAL INTEREST,

FOREIGN INVESTMENT IS INCREASINGLY SEEN AS A MEANS TO

IMPORT NOT ONLY NEEDED SAVINGS, BUT MODERN TECHNOLOGY AND

"BEST PRACTICES" AS WELL.  DESPITE THIS GROWING AWARENESS

OF THE BENEFITS OF FOREIGN INVESTMENT, A NUMBER OF

PRACTICAL IMPEDIMENTS TO INCREASED FLOWS EXIST.  THESE

INCLUDE A COMPANY LAW WITH STRICT REQUIREMENTS FOR THE

MAKE‑UP OF SENIOR MANAGEMENT, RELATIVELY RESTRICTIVE

TAKEOVER LEGISLATION, SLOVENIA'S PROTRACTED PRIVATIZATION

PROCESS, AND A BUSINESS CULTURE IN WHICH PERSONAL

RELATIONSHIPS (TYPICALLY AMONG SLOVENIANS) PREDOMINATE.

POLICIES GEARED TO STEMMING DISRUPTIVE CAPITAL FLOWS,

INCLUDING FOREIGN LOAN DEPOSIT REQUIREMENTS AND

RESTRICTIONS ON FOREIGN PORTFOLIO INVESTMENT, ALSO TEND

TO COMPLICATE INVESTMENT DECISIONS.  IN ADDITION, DESPITE

A VOTE THAT LIFTED CONSTITUTIONAL PROHIBITION FOR LAND

PURCHASES BY FOREIGN ENTITIES, ENABLING LEGISLATION

LEGALIZING SUCH PURCHASES IS NOT YET IN PLACE.

 

IN THE 1993‑96 PERIOD, CUMULATIVE INFLOWS (STOCK) OF

FOREIGN DIRECT INVESTMENT GREW FROM $954 MILLION TO OVER

$1.9 BILLION.  THE SLOWING TREND THAT MARKED THE PACE OF

FOREIGN INVESTMENT TOWARD THE END OF THAT PERIOD REVERSED

IN 1997, AS FDI INFLOWS INCREASED FROM $186 MILLION IN

1996 TO $320 MILLION. ONCE LIABILITIES TO FOREIGN

SUBSIDIARIES ARE NETTED OUT, THE TOTAL STOCK OF FDI IN

SLOVENIA AT THE END OF 1997 IS LIKELY TO APPROACH $2.5

BILLION.  MOST OBSERVERS EXPECT THIS TREND TO CONTINUE,

AS THE PRIVATIZATION PROCESS MOVES INTO NEW AREAS AND

LEGISLATION REQUIRED FOR EU HARMONIZATION IMPROVES

COMPETITION, EASES SOME RESTRICTIONS ON CAPITAL FLOWS,

AND SIMPLIFIES THE TAX CODE.  WE ALSO EXPECT THE INCREASE

OF FOREIGN INVESTORS IN SLOVENIA TO ENCOURAGE A BUSINESS

CULTURE THAT DEMANDS BETTER REGULATION, MORE

TRANSPARENCY, IMPROVED ACCOUNTING STANDARDS, AND ENHANCED

GOVERNMENT ACCOUNTABILITY.  THIS SHOULD, IN TURN, MAKE

SLOVENIA A MORE ATTRACTIVE LOCUS FOR FOREIGN INVESTMENT.

 

SLOVENIA OFFERS NATIONAL TREATMENT, HAS ATTRACTIVE TAX

FEATURES, AND ALLOWS FOR FREE PROFIT REPATRIATION.  IN

TERMS OF LEGISLATION, ALL BUSINESS ACTIVITIES WITHIN

SLOVENIA ARE OPEN TO FOREIGN INVESTORS, ALTHOUGH SOME

LIMITATIONS ON SHARE OWNERSHIP EXIST IN CERTAIN SECTORS,

SUCH AS BROADCASTING, COMMUNICATIONS, STOCKBROKING,

INSURANCE, AND RAIL OR AIR TRANSPORT.

 

A.2   CONVERSION AND TRANSFER POLICIES

 

SLOVENIA HAS BEEN AN ADHERENT OF ART. VIII OF THE IMF

ARTICLE OF AGREEMENT SINCE SEPTEMBER 1, 1995, COMMITTING

IT TO FULL CURRENT ACCOUNT CONVERTIBILITY, THUS ALLOWING,

AMONG OTHER THINGS, FULL REPATRIATION OF DIVIDENDS.  IN

PRACTICE, TO REPATRIATE PROFITS, JOINT STOCK COMPANIES

MUST PROVIDE:  EVIDENCE OF SETTLEMENT OF TAX LIABILITIES;

NOTARIZED EVIDENCE ON DISTRIBUTION OF PROFITS TO

SHAREHOLDERS; AND PROOF OF JOINT STOCK COMPANY

MEMBERSHIP.  ALL OTHER COMPANIES NEED TO PROVIDE:

EVIDENCE OF SETTLEMENT OF TAX LIABILITIES AND THE

COMPANY'S ACT OF ESTABLISHMENT.

 

FOR THE REPATRIATION OF SHARES IN A DOMESTIC COMPANY, A

COMPANY MUST SUBMIT TO THE AUTHORIZED BANK THE COMPANY'S

ACT OF ESTABLISHMENT, A CONTRACT ON SHARE WITHDRAWAL, AND

EVIDENCE OF SETTLEMENT OF TAX LIABILITIES.

 

A.3  EXPROPRIATION AND COMPENSATION

ACCORDING TO ARTICLE 69 OF THE CONSTITUTION OF THE

REPUBLIC OF SLOVENIA, THE RIGHT OF POSSESSION OF IMMOBILE

PROPERTY CAN BE TAKEN AWAY OR LIMITED, WITH COMPENSATION

IN KIND OR WITH FINANCIAL COMPENSATION UNDER CONDITIONS

DETERMINED BY LAW ON THE BASIS OF PUBLIC INTEREST.

 

THERE ARE NO CURRENT INVESTMENT DISPUTES IN SLOVENIA.

NATIONAL LAW GIVES ADEQUATE PROTECTION TO ALL INVESTMENT.

UNDER ARTICLE 5 OF SLOVENIA'S FOREIGN INVESTMENT LAW, A

FOREIGN INVESTOR HAS THE RIGHT TO HAVE HIS INVESTMENT,

OTHER THAN MONEY, RETURNED TO HIM ON HIS DEMAND, IF IT IS

SO PROVIDED IN THE CONTRACT OF INVESTMENT, AND TO HAVE

HIS MONEY INVESTED IN A COMPANY RETURNED TO HIM ON HIS

DEMAND.

 

THERE IS AN ONGOING DISPUTE WITH THOSE WHOSE PROPERTY WAS

EXPROPRIATED BY THE COMMUNIST YUGOSLAV GOVERNMENT AFTER

WORLD WAR II.  SLOVENE DENATIONALIZATION LAW ALLOWED FOR

CLAIMS TO BE SUBMITTED IN 1991.  AROUND 200 U.S. CITIZENS

FILED CLAIMS, WHILE THE TOTAL NUMBER OF CLAIMANTS

EXCEEDED 46,000.  NONE OF THE CLAIMANTS WAS A U.S.

CITIZEN AT THE TIME OF THE EXPROPRIATION.  AFTER ABOUT

ONE‑THIRD OF THE TOTAL PROPERTY HAD BEEN RETURNED, LEGAL

COMPLICATIONS SLOWED IMPLEMENTATION OF THE LAW.  NEW

LEGISLATION TO BALANCE THE RIGHTS OF THE ORIGINAL OWNERS

WITH THOSE OF INDIVIDUALS AND FIRMS THAT HAVE MADE

IMPROVEMENTS WITH THE PROPERTY REMAINS UNDER DISCUSSION

IN PARLIAMENT AS OF THIS WRITING.  ITS TWO KEY PROVISIONS

1) WOULD ALLOW SOME CASES ALREADY SETTLED TO BE REOPENED

UNDER CERTAIN CONDITIONS AND 2) WOULD FACTOR PROPERTY

VALUE AT THE TIME OF EXPROPRIATION INTO THE CLAIM

PROCESS.  IF A PROPERTY HAS INCREASED IN VALUE, THEN THE

ORIGINAL OWNER WOULD HAVE TO PAY THE DIFFERENCE TO

RECLAIM THE PROPERTY.  CONVERSELY, IF THE PROPERTY VALUE

HAS DECLINED, THEN THE STATE WOULD HAVE TO PAY THE OWNER

THE DIFFERENCE.

 

A.4 DISPUTE SETTLEMENT

 

SLOVENIA IS A SIGNATORY TO THE 1958 NEW YORK CONVENTION

ON RECOGNITION OF FOREIGN ARBITRAL AWARDS AND THE 1961

EUROPEAN CONVENTION ON INTERNATIONAL COMMERCIAL

ARBITRATION.

 

LEGAL SYSTEM

 

SLOVENIA HAS A WELL‑DEVELOPED, STRUCTURED LEGAL SYSTEM.

IT IS BASED ON A FIVE‑TIER COURT SYSTEM: DISTRICT COURT,

REGIONAL COURT, APPEALS COURT, SUPREME COURT, AND THE

NEWLY INTRODUCED ADMINISTRATIVE COURT.  THESE COURTS DEAL

WITH THE VAST ARRAY OF LEGAL CASES IN SLOVENIA INCLUDING

CRIMINAL, DOMESTIC RELATIONS, LAND DISPUTES, CONTRACTS,

AND OTHER BUSINESS‑RELATED ISSUES AND PROBATE.  A

SEPARATE SOCIAL AND LABOR COURT ALSO HAS A REGIONAL

COURT, APPEALS COURT, AND SUPREME COURT.  THESE COURTS

DEAL STRICTLY WITH LABOR DISPUTES, PENSIONS, AND OTHER

SOCIAL WELFARE CLAIMS.  SIMILAR TO MOST EUROPEAN

COUNTRIES, SLOVENIA ALSO HAS A CONSTITUTIONAL COURT WHICH

DEALS WITH COMPLAINTS ALLEGING VIOLATIONS OF HUMAN RIGHTS

AND PERSONAL FREEDOMS, EXPRESSES THE COURT'S OPINIONS

OVER CONFORMITY OF INTERNATIONAL AGREEMENTS AND STATE

STATUTES WITH THE CONSTITUTION, AND DEALS WITH OTHER HIGH

PROFILE POLITICAL ISSUES.  ALSO IN KEEPING WITH EUROPEAN

LEGAL STANDARDS, IN 1997 THE SLOVENE PARLIAMENT CREATED

AN ADMINISTRATIVE COURT TO HANDLE DISPUTES BETWEEN LOCAL

AUTHORITIES, BETWEEN STATE AND LOCAL AUTHORITIES, AND

BETWEEN LOCAL AUTHORITIES AND EXECUTORS OF PUBLIC

AUTHORITY.

 

ARBITRATION

 

UNLESS THE PARTIES HAVE AGREED TO BINDING ARBITRATION FOR

DISPUTES, THE REGIONAL COURT SPECIALIZED IN ECONOMIC

ISSUES HAS JURISDICTION OVER BUSINESS DISPUTES.  HOWEVER,

THE PARTIES MAY AGREE IN WRITING TO SETTLE DISPUTES IN

ANOTHER COURT OF JURISDICTION.

 

THE PARTIES MAY ALSO EXCLUDE THE COURT AS THE ADJUDICATOR

OF THE DISPUTE IF THEY AGREE IN WRITING THAT CONTRACTUAL

DISPUTES BE SOLVED BY ARBITRATION, WHETHER AD HOC OR

INSTITUTIONAL.  IN THE FORMER CASE, THE APPLICABLE

PROCEDURE AND LAW MUST BE DETERMINED.  IN THE CASE OF

INSTITUTIONAL ARBITRATION, THE TYPE OF ARBITRATION MUST

BE CLEARLY DEFINED.  THE PERMANENT COURT OF ARBITRATION

WITHIN THE CHAMBER OF ECONOMY IS AN INDEPENDENT

INSTITUTION THAT SOLVES DOMESTIC AND INTERNATIONAL

DISPUTES ARISING OUT OF BUSINESS TRANSACTIONS AMONG

COMPANIES.

THE PROCEDURE BEFORE THE PERMANENT COURT OF ARBITRATION

AT THE CHAMBER OF ECONOMY OF SLOVENIA IS GOVERNED BY THE

REGULATIONS ON THE PROCEDURE BEFORE THE PERMANENT COURT

OF ARBITRATION AT THE CHAMBER OF ECONOMY OF SLOVENIA.

ARBITRATION RULINGS ARE FINAL AND SUBJECT TO EXECUTION.

 

BANKRUPTCY

 

IN SLOVENIA, THE LAW PROVIDES FOR THREE PROCEDURAL

METHODS IN THE HANDLING OF BANKRUPT DEBTORS.  THE FIRST

METHOD, FORCED SETTLEMENTS, ALLOWS THE INSOLVENT DEBTOR

TO SUBMIT A PLAN FOR FINANCIAL REORGANIZATION WITH THE

COURT.  THE FORCED SETTLEMENT PLAN IS THEN VOTED UPON BY

THE CREDITORS AND MUST BE ACCEPTED BY CREDITORS WHOSE

CLAIMS REPRESENT MORE THAN SIXTY PERCENT OF THE CREDITORS

CLAIM.  IF THE FORCED SETTLEMENT IS ACCEPTED, THE DEBTOR

IS EXCUSED FROM THE OBLIGATION TO PAY THE CREDITOR THE

AMOUNT WHICH EXCEEDS THE PERCENTAGE OF PAYMENT SET FORTH

IN THE CONFIRMED SETTLEMENT. THE PAYMENT TERMS ARE THEN

EXTENDED IN ACCORDANCE WITH THE CONDITIONS OF FORCED

SETTLEMENT.  CONFIRMED FORCED SETTLEMENT AFFECTS

CREDITORS WHO HAVE VOTED AGAINST FORCED SETTLEMENT AND

CREDITORS WHO HAVE NOT REPORTED THEIR CLAIMS IN THE

FORCED SETTLEMENT PROCEDURE.

 

THE SECOND METHOD, BANKRUPTCY, MAY BE INITIATED BY EITHER

THE CREDITOR OR DEBTOR.  THE COURT NAMES A BANKRUPTCY

ADMINISTRATOR WHO SELLS THE DEBTOR'S PROPERTY ACCORDING

TO THE INSTRUCTIONS AND SUPERVISION OF THE PRESIDENT OF

THE BANKRUPTCY SENATE.  THE DEBTOR'S PROPERTY, AS A RULE,

IS SOLD BY PUBLIC AUCTION.  OTHERWISE, THE CREDITORS'

COMMITTEE MAY PROSCRIBE A DIFFERENT MODE OF SALE SUCH AS

COLLECTING OFFERS OR PLACING CONDITIONS FOR POTENTIAL

BUYERS. THE LEGAL EFFECT OF COMPLETED BANKRUPTCY IS THE

ENDING OF THE DEBTOR AS A LEGAL PERSON, AND THE FUNDS

CREATED FROM THE SALE OF ASSETS ARE DISTRIBUTED AMONG THE

CREDITORS ACCORDING TO THE EXTENT OF THEIR CLAIMS, I.E.

THE RATIO OF EACH CLAIM TO THE TOTAL DEBT.

 

THE THIRD METHOD, BANKRUPTCY AS FORCED LIQUIDATION, IS

DISTINGUISHED FROM VOLUNTARY LIQUIDATION (WITHOUT COURT

INTERVENTION) AS SET FORTH IN THE LAW ON COMMERCIAL

COMPANIES.  FORCED LIQUIDATION IS PERFORMED ON A DEBTOR, FOR

WHOM THE LAW DETERMINES HIS LIQUIDATION PROCEDURE, AND THE

LEGAL CONDITIONS FOR ENDING HIS EXISTENCE.  FOR EXAMPLE, IF

THE MANAGEMENT DOES NOT OPERATE FOR MORE THAN TWELVE MONTHS,

IF THE COURT FINDS THE REGISTRATION VOID, OR BY COURT ORDER.

 

COMPETITION IS KEEN IN SLOVENIA, AND BANKRUPTCIES ARE AN

ESTABLISHED AND RELIABLE MEANS OF WORKING OUT FIRMS'

FINANCIAL DIFFICULTIES.

 

A.5  PERFORMANCE REQUIREMENTS/INCENTIVES

 

NO PERFORMANCE REQUIREMENTS ARE IMPOSED AS A CONDITION

FOR ESTABLISHING, MAINTAINING OR EXPANDING AN INVESTMENT.

 

HOWEVER, ONE IMPEDIMENT FOR FOREIGN INVESTORS IS THE

DIFFICULTY IN OBTAINING BUSINESS AND WORKING VISAS.

BUSINESS VISAS ARE REQUIRED FOR MANAGEMENT POSITIONS AND

WORKING VISAS ARE REQUIRED FOR GENERAL STAFF POSITIONS.

TYPICALLY, VISA APPLICATIONS ARE PROCESSED IN THREE

WEEKS, BUT IN SOME INSTANCES MAY TAKE UP TO SIX MONTHS.

 

A.6  RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT

 

PRIVATE ENTERPRISE AND OWNERSHIP ARE PROMOTED AND

PROTECTED IN SLOVENIA, BOTH BY STATUE AND THE

CONSTITUTION.  AS PROVIDED FOR IN THE LAW ON COMMERCIAL

COMPANIES, ALL BUSINESS ACTIVITIES WITHIN SLOVENIA ARE

OPEN TO DOMESTIC AND FOREIGN NATURAL AND LEGAL PERSONS.

THE FOREIGN INVESTMENT ACT PERMITS FOREIGN INVESTORS TO

ESTABLISH WHOLLY OR PARTIALLY OWNED COMPANIES IN ANY

LEGAL FORM PROVIDED BY THE COMMERCIAL COMPANIES ACT

(LIMITED, GENERAL, AND SILENT PARTNERSHIPS; JOINT STOCK

COMPANIES, LIMITED LIABILITY COMPANIES, AND PARTNERSHIPS

LIMITED BY SHARES; AND ECONOMIC INTEREST GROUPS).  THE

FOREIGN INVESTMENT ACT PROVIDES FOREIGN INVESTORS WITH

THE RIGHT TO ENTER CONTRACTUAL JOINT VENTURES, WHICH

ALLOW THE INVESTOR TO PARTICIPATE IN THE MANAGEMENT OF

THE COMPANY AND TO SHARE IN THE PROFITS.  FOREIGN

INVESTORS MAY FREELY INVEST INTO SLOVENE COMPANIES, BUT

TO COMPLETE A 100 PERCENT TAKEOVER OF A SLOVENE COMPANY,

THE FOREIGN COMPANY FIRST MUST REGISTER WITH THE SLOVENE

COURTS.  FOREIGN INVESTORS ARE PERMITTED TO OBTAIN

CONCESSIONS FOR THE EXPLOITATION OF RENEWABLE AND NON‑

RENEWABLE NATURAL AND PUBLIC GOODS.

 

THERE ARE SOME RESTRICTIONS ON FOREIGN INVESTMENT IN

CERTAIN BUSINESS OPERATIONS.  WHOLLY‑OWNED FOREIGN

COMPANIES ARE NOT PERMITTED TO OPERATE BUSINESSES IN THE

FIELDS OF MILITARY SUPPLY, RAIL AND AIR TRANSPORT,

COMMUNICATIONS AND TELECOMMUNICATIONS, AND INSURANCE.

MAJORITY FOREIGN‑OWNED INSURANCE COMPANIES MAY NOT ENGAGE

IN RE‑INSURANCE.  SOME BUSINESS ENDEAVORS ARE RESTRICTED

BY MAXIMUM FOREIGN INVESTMENT LIMITS:  49 PERCENT IN

AUDITING COMPANIES, 33 PERCENT IN PUBLISHING AND

BROADCASTING, 24 PERCENT IN STOCKBROKING COMPANIES, AND

20 PERCENT IN INVESTMENT COMPANIES THAT DEAL WITH THE

MANAGEMENT OF INVESTMENT FUNDS.  IN ALL OTHER FIELDS,

HOWEVER, FOREIGN INVESTORS ENJOY NATIONAL TREATMENT.

 

ANY COMPANY REGISTERED IN SLOVENIA IS GRANTED THE STATUS

OF A SLOVENIAN LEGAL ENTITY UNDER WHICH THEY ENJOY

NATIONAL TREATMENT.  THIS PROVIDES FOR EQUAL TREATMENT

BETWEEN FOREIGN AND DOMESTIC COMPANIES; FOREIGN INVESTORS

ARE TREATED LEGALLY THE SAME WAY AS DOMESTIC COMPANIES

AND ENJOY THE SAME RIGHTS AND OBLIGATIONS AS DOMESTIC

SLOVENE COMPANIES.  THE REGISTRATION PROCESS IS RATHER

SIMPLE AND USUALLY TAKES BETWEEN THREE WEEKS AND ONE

MONTH TO COMPLETE.  FOREIGN INVESTORS ARE ALSO ENTITLED

TO OWN PROPERTY IN SLOVENIA AS LONG AS THEY ARE PROPERLY

REGISTERED IN SLOVENIA.  WHILE THE LAW PROVIDES FOR THIS

RIGHT, SOME FOREIGN COMPANIES HAVE EXPERIENCED

UNEXPLAINABLE DELAYS IN OBTAINING LAND EVEN THOUGH ALL

THE NECESSARY PAPER WORK HAS BEEN IN ORDER.  REGISTERED

FOREIGN COMPANIES MAY EVEN BE MEMBERS OF THE LJUBLJANA

STOCK EXCHANGE.

 

FOREIGN SHAREHOLDERS ARE ENTITLED TO FREE AND

UNRESTRICTED TRANSFER OF THEIR PROFITS ABROAD IN FOREIGN

CURRENCY.  THE 25 PERCENT CORPORATE TAX RATE IN SLOVENIA

APPLIES TO DOMESTIC AND FOREIGN COMPANIES AND IS AMONG

THE LOWEST RATES IN EUROPE.

IN ADDITION TO THE FIELDS OF EXCLUSION LISTED ABOVE,

FOREIGN INVESTORS ARE FURTHER RESTRICTED IN THE MAKE UP

OF THEIR MANAGEMENT BOARDS.  THE COMMERCIAL COMPANIES ACT

REQUIRES THAT THE MANAGER OR PROXY OF A COMPANY

REGISTERED IN SLOVENIA BE A SLOVENIAN CITIZEN.  IF THERE

ARE SEVERAL MANAGERS, THE MAJORITY OF THEM MUST BE

SLOVENIAN.  THE DIRECTOR OF THE COMPANY, HOWEVER, MAY BE

FOREIGN WHENEVER THE MANAGER OR PROXY IS SLOVENIAN, OR

WHEN THE MAJORITY OF THE MANAGERS ARE SLOVENIAN.  IF THE

MANAGEMENT BOARD IS MADE UP OF ONLY ONE PERSON, THAT

PERSON MUST BE SLOVENIAN.  THERE IS EVIDENCE, THOUGH,

THAT THESE REQUIREMENTS ARE LOOSELY ENFORCED OR AVOIDED

BY THE USE OF "STRAW MEN" MANAGERS.

 

CREDIT, GUARANTEES, AS WELL AS OTHER FORMS OF SURETIES

CONTRACTED BETWEEN RESIDENTS AND NON‑RESIDENTS ARE

REGULATED BY THE LAW ON FOREIGN CREDIT TRANSACTIONS;

PROVISIONS OF THIS LAW REGULATE TRANSACTIONS OF DOMESTIC

PERSONS, SUCH AS BANKS, THE REPUBLIC OF SLOVENIA,

COMPANIES AND OTHER ENTITIES. REGISTRATION OF SUCH

CONTRACTS WITH THE BANK OF SLOVENIA IS REQUIRED.

 

RESIDENTS MAY CONTRACT COMMERCIAL CREDITS WITH NON‑

RESIDENTS. THERE ARE NO RESTRICTIONS FOR THESE

TRANSACTIONS. COMMERCIAL CREDITS ARE SUBJECT TO

REGISTRATION WITH THE BANK OF SLOVENIA PROVIDED THE

PAYMENT FOR GOODS AND SERVICES IS DEFERRED FOR MORE THAN

12 MONTHS. DOMESTIC LEGAL PERSONS ARE ALLOWED TO EXTEND

CREDIT TO NON‑RESIDENTS ONLY IF THE LATTER ARE CONTROLLED

BY THE FORMER. DOMESTIC AUTHORIZED BANKS ARE PERMITTED TO

GRANT FINANCIAL CREDITS TO NON‑RESIDENTS IN ACCORDANCE

WITH THEIR BUSINESS STRATEGY.

 

IN FEBRUARY 1995 THE BANK OF SLOVENIA INTRODUCED A

SPECIAL MEASURE, ACCORDING TO WHICH DOMESTIC PERSONS ARE

LIABLE TO MAKE A 40 PERCENT NON‑ INTEREST BEARING TOLAR

DEPOSIT WITH THE BANK OF SLOVENIA, IN CASE OF CONTRACTING

FOREIGN FINANCIAL LOANS, I.E. OTHER THAN THOSE RAISED FOR

THE IMPORT OF GOODS OR SERVICES, OR FOR REPAYMENT OF

LOANS PREVIOUSLY RAISED ABROAD UNDER RELATIVELY LESS

FAVORABLE TERMS, IN CASE THE MATURITY OF SUCH A

TRANSACTION WAS CONTRACTED FOR A PERIOD OF UP TO 7 YEARS.

BY A DECISION OF THE BANK OF SLOVENIA ADOPTED ON DECEMBER

23, 1996, DOMESTIC PERSONS ARE LIABLE TO PAY A 10 PERCENT

NON‑INTEREST BEARING TOLAR DEPOSIT WITH THE BANK OF

SLOVENIA IN CASE OF CONTRACTING FOREIGN FINANCIAL LOANS

AND DEPOSITS WITH THE MATURITY OF OVER 7 YEARS. BUT THE

FOLLOWING EXEMPTIONS WERE INTRODUCED FOR THE 10 PERCENT

DEPOSITS:

 

1. WHEN THE LOANS ARE RAISED BY DOMESTIC AUTHORIZED BANKS

   AND

2. WHEN THE LOANS ARE RAISED BY THE REPUBLIC OF SLOVENIA

   AND THE PAYING AGENT IS THE BANK OF SLOVENIA

 

IN ADDITION, THE FOLLOWING CASES ARE EXEMPT FROM PAYMENT

OF DEPOSIT AS SUCH:

 

3. WHEN DOMESTIC PERSONS DRAW ON THE LOAN RAISED WITH A

   NON‑RESIDENT IN THE PORTION THAT IS INTENDED FOR THE

   REPAYMENT OF A FOREIGN LOAN PRIOR TO DUE REPAYMENT

   DATE

4. WHEN DOMESTIC PERSONS UTILIZE THE LOAN RAISED WITH A

   NON‑RESIDENT TO SET UP A COMPANY ABROAD, OR TO

   INCREASE THE CAPITAL, OR TO PURCHASE A SHARE IN A

   FOREIGN COMPANY

 

FOREIGN COMPANIES, WHILE PERMITTED TO ESTABLISH BRANCH

OFFICES AND LEGAL ENTITIES IN SLOVENIA, ARE ALSO

RESTRICTED FROM ESTABLISHING REPRESENTATIVE OFFICES IN

SLOVENIA.

 

A.7  PROTECTION OF PROPERTY RIGHTS

 

MORTGAGES

 

IN THE REPUBLIC OF SLOVENIA, THERE IS NO LAW, STATUTE OR

REGULATION THAT SPECIFICALLY DEALS WITH MORTGAGE BANKING

SERVICES.  HOWEVER, THE GOVERNMENT HAS COMMITTED ITSELF

TO CREATING A MORTGAGE BANKING SYSTEM, INCLUDING PROPERTY

ASSESSMENTS AND DEEDS, RATHER THAN THE CURRENT LAND

REGISTRY SYSTEM. CURRENTLY THERE ARE NO SPECIAL MORTGAGE

BANKS IN SLOVENIA.  ACCORDINGLY, SLOVENIAN BANKS DO NOT

GRANT MORTGAGE LOANS PER SE, BUT PROVIDE LOANS WHICH ARE

SECURED BY MORTGAGES.  LOANS SECURED BY MORTGAGES ARE

VERY OFTEN USED FOR LOANS, GRANTED MOST OFTEN TO

CORPORATE CLIENTS AND ENTREPRENEURS AND LESS OFTEN TO

PRIVATE INDIVIDUALS.

 

IN ORDER FOR MORTGAGES TO BE EFFECTIVE AGAINST ANY OWNER

OF REAL ESTATE, THE MORTGAGE ON A PARTICULAR REAL ESTATE

MUST BE REGISTERED IN THE LAND REGISTRY BOOK AT THE LAND

REGISTRY OFFICE.  THE LAND REGISTRY BOOK WAS INTRODUCED

WITHIN THE PRESENT TERRITORY OF SLOVENIA IN THE 19TH

CENTURY AND SERVES TO PUT THE GENERAL PUBLIC ON NOTICE OF

THE OWNER OF LAND, BUILDINGS AND PARTS OF BUILDINGS.

WITHIN THE LEGAL SYSTEM, THE LAND REGISTRY BOOK IS

CONNECTED IN PART WITH SUBSTANTIVE CIVIL LAW WHICH

REGULATES DEFAULT PROCEDURES ON REAL ESTATE.

 

GENERALLY, THE FINANCING OF REAL ESTATE DEVELOPMENTS BY

MORTGAGES IS UNCOMMON IN SLOVENIA.  MORTGAGES ARE USED

STRICTLY AS COLLATERAL FOR CORPORATE FINANCING OF

DEVELOPMENT PROJECTS.  THE CREDITOR REQUIRES THE DEBTOR

TO OWN, IN EQUITY, THREE TIMES THE AMOUNT OF THE LOAN.

ONCE THE MORTGAGE IS CONSUMMATED BETWEEN THE CREDITOR AND

DEBTOR, IT IS THEN REGISTERED IN THE LAND REGISTRY BOOK.

IF THE MORTGAGOR DEFAULTS ON THE LOAN, THE LAW PROVIDES

FOR A FORECLOSURE PROCEDURE ON THE MORTGAGED PROPERTY.

 

INTELLECTUAL PROPERTY

 

AS A NEWLY SOVEREIGN STATE, SLOVENIA HAS TAKEN THE

OPPORTUNITY TO ENACT HIGHLY ADVANCED, COMPREHENSIVE

LEGISLATION FOR THE PROTECTION OF INTELLECTUAL PROPERTY

WHICH FULLY REFLECTS THE MOST RECENT INTELLECTUAL

DEVELOPMENTS SUCH AS THE TRIPS AGREEMENT (TRADE RELATED

ASPECTS OF INTELLECTUAL PROPERTY) AND VARIOUS EU

DIRECTIVES.  SLOVENIA NEGOTIATED ITS TRIPS COMMITMENTS AS

A DEVELOPING COUNTRY AND IS IMPLEMENTING ITS COMMITMENTS

AS OF JANUARY 1, 1996.  SLOVENIA IS A FULL MEMBER OF THE

TRIPS COUNCIL OF THE WORLD TRADE ORGANIZATION AND THE

WORLD INTELLECTUAL PROPERTY ORGANIZATION.

 

THE 1995 COPYRIGHT AND RELATED RIGHTS ACT DEALS WITH ALL

FIELDS OF MODERN COPYRIGHT AND RELATED RIGHTS LAW,

INCLUDING TRADITIONAL WORKS AND THEIR AUTHORS, COMPUTER

PROGRAMS AND AUDIOVISUAL WORKS, AS WELL AS RENTAL AND

LENDING RIGHTS.  THE ACT ALSO TAKES INTO ACCOUNT NEW

TECHNOLOGIES SUCH AS STORAGE AND ELECTRONIC MEMORY,

ORIGINAL DATABASES, SATELLITE BROADCASTING AND CABLE RE‑

TRANSMISSION.

 

SLOVENIAN INTELLECTUAL PROPERTY LAW IS COMPATIBLE WITH

EUROPEAN UNION STANDARDS, WITH ONLY A FEW EXCEPTIONS.

ACCORDING TO ITS EU ACCESSION STRATEGY, SLOVENIA STILL

MUST HARMONIZE THE DURATION OF THE PROTECTION OF AUDIO‑

VISUAL PRODUCTIONS AND INTRODUCE SUPPLEMENTARY PRODUCTION

CERTIFICATES.

 

THE 1994 LAW ON COURTS GIVES THE DISTRICT COURT OF

LJUBLJANA EXCLUSIVE SUBJECT MATTER JURISDICTION OVER

INTELLECTUAL PROPERTY DISPUTES.  THE AIM OF THE LAW IS TO

ENSURE SPECIALIZATION OF THE JUDGES AND THE SPEED OF

RELEVANT PROCEEDINGS.  THERE HAVE BEEN MINOR COMPLAINTS,

THOUGH, BY FOREIGN INVESTORS REGARDING THE SPEED OF THE

COURT SYSTEM.  CONSIDERING THE TRIPS AGREEMENT'S

ENFORCEMENT PROVISION, SLOVENE LAW PROVIDES FOR A NUMBER

OF CIVIL LEGAL SANCTIONS INCLUDING INJUNCTIVE RELIEF AND

THE REMOVAL OF THE INFRINGEMENT, THE SEIZURE, AND THE

DESTRUCTION OF ILLEGAL COPIES AND DEVICES, THE

PUBLICATION OF THE JUDGMENT IN THE MEDIA, COMPENSATORY

AND PUNITIVE DAMAGES, BORDER (CUSTOMS) MEASURES, AND THE

SECURING OF EVIDENCE AND OTHER PROVISIONAL MEASURES

WITHOUT THE PRIOR NOTIFICATION AND HEARING OF THE OTHER

PARTY.  FURTHERMORE, THESE INFRINGEMENTS ALSO CONSTITUTE

A MISDEMEANOR WITH A MINIMUM FINE OF 400,000 SIT (APPROX.

$2,500) FOR LEGAL PERSONS AND A MINIMUM FINE OF 80,000

SIT (APPROX. $500) FOR NATURAL PERSONS, PROVIDED THAT THE

REPORTED OFFENSES ARE NOT CRIMINAL IN NATURE.  IN SUCH A

CASE, THE SLOVENE CRIMINAL CODE WOULD APPLY, WHICH MAY

RESULT IN FINES OR IMPRISONMENT IN EXTREME CASES.

 

SINCE THE ENACTMENT OF THE LAW ON COPYRIGHT AND RELATED

RIGHTS ACT, THERE HAVE BEEN RELATIVELY FEW REPORTED

PROSECUTIONS FOR INFRINGEMENT VIOLATIONS.  MOST NOTABLY

ARE CASES OF COMPUTER SOFTWARE PIRACY.  IN 1997, 25 CASES

WERE PROSECUTED FOR INTELLECTUAL PROPERTY RELATED

CRIMINAL OFFENSES, INCLUDING AUDIO, VIDEO, AND SOFTWARE

PIRACY. SINCE PIRACY PROSECUTION IS STILL IN THE EARLY

STAGES OF IMPLEMENTATION, SLOVENIA HAS DEDICATED

RESOURCES TO THE TRAINING OF PROSECUTORS AND PUBLIC

AUTHORITIES.  AS PART OF ITS STRATEGY FOR ACCESSION TO

THE EUROPEAN UNION, SLOVENIA ALSO INTENDS TO ADDRESS THE

PRESERVATION OF EVIDENCE IN INFRINGEMENT PROCEDURES AND

BORDER MEASURES BY AMENDING EXISTING LEGISLATION.

MOREOVER, THE MINISTRY OF CULTURE RECENTLY ESTABLISHED

THE INTELLECTUAL PROPERTY FUND, THE SLOVENE COPYRIGHT

AGENCY, AND THE ANTI‑PIRACY ASSOCIATION OF SOFTWARE

DEALERS (BSA) TO COMBAT THE PROBLEM OF PIRACY IN A

COLLECTIVE MANNER.

 

PATENTS AND TRADEMARKS/LICENSING

 

THE LAW ON INDUSTRIAL PROPERTY GRANTS AND PROTECTS

PATENTS, MODEL AND DESIGN RIGHTS, TRADEMARK AND SERVICE

MARKS, AND APPELLATIONS OF ORIGIN.  THE HOLDER OF A

PATENT, MODEL, OR DESIGN RIGHT IS ENTITLED TO:

EXCLUSIVELY WORK THE PROTECTED INVENTION, SHAPE, PICTURE,

OR DRAWING; EXCLUSIVELY MARKET ANY PRODUCTS MANUFACTURED

IN ACCORDANCE WITH THE PROTECTED INVENTION, SHAPE,

PICTURE, OR DRAWING; DISPOSE OF THE PATENT, MODEL, OR

DESIGN RIGHT; PROHIBIT WORKING OF THE PROTECTED

INVENTION, MODEL, OR DESIGN AND LEGAL TRANSACTIONS IN

RESPECT OF THEM, BY ANY PERSON NOT HAVING HIS CONSENT.

 

THE HOLDER OF A MARK HAS THE EXCLUSIVE RIGHT TO USE THE

MARK IN THE COURSE OF TRADE TO DESIGNATE HIS PRODUCTS OR

SERVICES.  THE AUTHORIZED USER OF A PROTECTED APPELLATION

OF ORIGIN HAS THE RIGHT TO USE THE APPELLATION IN THE

COURSE OF TRADE FOR MARKING PRODUCTS TO WHICH THE

APPELLATION REFERS.

 

THE PATENT AND TRADEMARK RIGHTS GRANTED BY THE LAW ON

INDUSTRIAL PROPERTY TAKE EFFECT FROM THE DATE OF FILING

THE APPROPRIATE APPLICATIONS.  PATENTS ARE GRANTED FOR

TWENTY YEARS FROM THE DATE OF FILING AND MODEL AND DESIGN

RIGHTS ARE GRANTED FOR TEN YEARS.  TRADEMARKS ARE GRANTED

FOR TEN YEARS, BUT MAY BE RENEWED AN UNLIMITED NUMBER OF

 

TIMES.  THE TERM OF AN APPELLATION OF ORIGIN IS

UNLIMITED.  ALL PATENTS AND TRADEMARKS ARE REGISTERED

THROUGH THE SLOVENIAN INTELLECTUAL PROPERTY OFFICE WITH

ALL REGISTERS OPEN TO THE PUBLIC.  PATENT AND TRADEMARK

APPLICATIONS FILED IN MEMBER COUNTRIES OF THE

INTERNATIONAL UNION FOR THE PROTECTION OF INDUSTRIAL

PROPERTY ARE AFFORDED PRIORITY RIGHTS IN SLOVENIA.  THE

PRIORITY PERIOD IS TWELVE MONTHS FOR PATENTS AND SIX

MONTHS FOR MODEL AND DESIGN RIGHTS.

 

ANY PERSON WHO INFRINGES UPON A PATENT OR TRADEMARK RIGHT

MAY BE HELD LIABLE FOR DAMAGES AND PROHIBITED FROM

CARRYING ON THE INFRINGING ACTS.

 

THE LAW ON INDUSTRIAL PROPERTY ALSO PROVIDES FOR THE

CONTRACTUAL LICENSING OF PATENTS, MODEL AND DESIGN

RIGHTS, AND MARKS.  ALL LICENSE AGREEMENTS MUST BE IN

WRITING AND SPECIFY THE DURATION OF THE LICENSE, THE

SCOPE OF THE LICENSE, WHETHER THE LICENSE IS EXCLUSIVE OR

NON‑EXCLUSIVE, AND THE AMOUNT OF REMUNERATION FOR THE USE

IF COMPENSATION IS AGREED UPON.

 

COMPULSORY LICENSES MAY BE GRANTED TO ANOTHER PERSON WHEN

THE INVENTION IS IN THE PUBLIC INTEREST OR THE PATENTEE

MISUSES HIS RIGHTS GRANTED UNDER THE PATENT.  A MISUSE OF

A PATENT WILL OCCUR WHEN THE PATENTEE DOES NOT WORK OR

INSUFFICIENTLY WORKS A PATENTED INVENTION AND REFUSES TO

LICENSE OTHER PERSONS TO WORK THE PROTECTED INVENTION OR

IMPOSES UNJUSTIFIED CONDITIONS ON THE LICENSEE.  IF A

COMPULSORY LICENSE IS GRANTED, THE PATENTEE IS ENTITLED

TO COMPENSATION.

 

ALTHOUGH SLOVENIAN INDUSTRIAL PROPERTY LEGISLATION

COMPLIES WITH EU STANDARDS, SLOVENIA'S ACCESSION STRATEGY

FOCUSES ON ASPECTS OF ITS IMPLEMENTATION.  IN PARTICULAR,

SLOVENIA MUST ADDRESS THE EXHAUSTION OF TRADEMARKS,

PARTICULARLY IN THE PHARMACEUTICAL SECTOR.

 

A.8  TRANSPARENCY OF THE REGULATORY SYSTEM

 

IN CONDUCTING BUSINESS IN THE REPUBLIC OF SLOVENIA,

FOREIGN COMPANIES HAVE THE SAME RIGHTS, OBLIGATIONS AND

RESPONSIBILITIES AS DOMESTIC COMPANIES.  THE PRINCIPLES

OF COMMERCIAL ENTERPRISE, FREE OPERATION, AND NATIONAL

TREATMENT APPLY TO THE OPERATIONS OF FOREIGN COMPANIES AS

WELL.  THEIR BASIC RIGHTS ARE GUARANTEED BY THE LAW ON

FOREIGN INVESTMENTS.

 

GENERALLY, THE BUREAUCRATIC PROCEDURES AND PRACTICES ARE

SUFFICIENTLY STREAMLINED AND TRANSPARENT FOR THE FOREIGN

INVESTOR WISHING TO START A BUSINESS IN SLOVENIA.  IN

ORDER TO ESTABLISH A BUSINESS IN SLOVENIA, THE FOREIGN

INVESTOR MUST PRODUCE A SUFFICIENT MINIMUM AMOUNT OF

CAPITAL, 4.1 MILLION SIT (APPROX. $24,500) FOR A STOCK

COMPANY AND 2.1 MILLION SIT APPROX. $12,000) FOR A

LIMITED LIABILITY COMPANY; ESTABLISH A BUSINESS ADDRESS;

AND FILE APPROPRIATE DOCUMENTATION WITH THE COURT.  THE

ENTIRE PROCESS MAY TAKE FROM THREE WEEKS TO ONE MONTH,

AND MAY BE LONGER IN LJUBLJANA DUE TO THE COURT'S

BACKLOG.  PREVIOUSLY, THE REGISTRATION PROCESS TOOK ONE

YEAR, BUT SLOVENIA HAS MADE GREAT EFFORTS TO REDUCE THE

DELAY.

 

HOWEVER, THERE EXIST A NUMBER OF BARRIERS THAT MAY IMPEDE

FOREIGNERS FROM INVESTING IN SLOVENIA.  MOST NOTABLE IS

THE FACT THAT ALTHOUGH  FOREIGNERS MAY BE THE EXCLUSIVE

OR PART OWNERS OF A COMPANY, SLOVENIAN LAW REQUIRES THAT

GENERAL MANAGERS MUST BE CITIZENS OF SLOVENIA.  MOST

COMPANIES, HOWEVER, WANT LOCAL RESIDENTS TO HELP

ESTABLISH AND MANAGE THE BUSINESS BECAUSE OF THEIR

FAMILIARITY WITH THE MARKETPLACE AND LOCAL BUSINESS

PRACTICES.  THE COMPANY DIRECTOR, THOUGH, MAY BE FOREIGN

SO LONG AS THE MAJORITY OF THE MANAGERS ARE SLOVENE.

 

THE SLOVENIAN TAX CODE MAY ALSO DISCOURAGE U.S. INVESTORS

FROM INVESTING IN SLOVENIA.  FOR EXAMPLE, SLOVENIA DOES

NOT HAVE A DOUBLE TAX TREATY WITH THE U.S., AND FOREIGN

COMPANIES CANNOT REIMBURSE EXPENSES INCURRED BY FOREIGN

MANAGERS IN THE COURSE OF BUSINESS OPERATIONS OR DEDUCT

IT FROM THEIR GROSS REVENUES FOR TAX PURPOSES.  HOWEVER,

EXPENSES INCURRED BY SLOVENIAN WORKERS MAY BE REIMBURSED

AND DEDUCTED AS A BUSINESS EXPENSE.  MOREOVER, THE RATE

OF TAXATION OF PROFITS IN SLOVENIA IS LOWER THAN IN THE

UNITED STATES.  CURRENT PLANS CALL FOR THE REPLACEMENT OF

THE TURNOVER TAX WITH A VALUE‑ADDED TAX BY MID‑1999.

 

DESPITE THESE DIFFICULTIES, SLOVENIA CONTINUES TO IMPROVE

AND UPDATE ITS LAWS DEALING WITH FOREIGN INVESTORS.  AS

SLOVENIA MOVES CLOSER TO JOINING THE EU, IT WILL HAVE TO

ACCEPT AND IMPLEMENT BUSINESS PRACTICES AND LAWS THAT ARE

"FOREIGN FRIENDLY" AND ABOLISH ANY DISCRIMINATION THAT

MAY EXIST AGAINST THE FOREIGN INVESTOR.

 

PROTECTION OF COMPETITION

 

THE LAW ON THE PROTECTION OF COMPETITION PROHIBITS ACTS

THAT RESTRICT COMPETITION ON THE MARKET AND ACTS THAT

CONFLICT WITH GOOD BUSINESS PRACTICES RELATING TO MARKET

ACCESS OR ACTS OF PROHIBITED SPECULATION.  THE LAW IS

APPLICABLE TO CORPORATE BODIES AND NATURAL PERSONS

ENGAGED IN ECONOMIC ACTIVITIES REGARDLESS OF THEIR LEGAL

FORM, ORGANIZATION, OR OWNERSHIP.  THE LAW ALSO APPLIES

TO THE ACTIONS OF PUBLIC COMPANIES.

 

RESTRICTION OF COMPETITION THROUGH CARTEL AGREEMENTS,

UNFAIR COMPETITION (I.E., FALSE ADVERTISING,

PROMISES/GIFTS IN EXCHANGE FOR BUSINESS, TRADE SECRETS,

ETC.), ILLICIT SPECULATION DURING TIMES OF IRREGULAR

MARKET SITUATIONS, AND DUMPING AND SUBSIDIZED IMPORTS ARE

ALL PROHIBITED.  THE GOVERNMENT OF THE REPUBLIC OF

SLOVENIA MAY, HOWEVER, PRESCRIBE MARKET RESTRICTIONS IN

THE FOLLOWING CASES: IN CASES OF NATURAL DISASTERS,

EPIDEMICS, STATES OF EMERGENCY; IN CASES OF APPRECIABLE

MARKET DISTURBANCES DUE TO THE SHORTAGE OF GOODS; WHEN

NECESSARY TO SATISFY REQUIREMENTS CONCERNING THE

PRODUCTS, RAW MATERIALS, AND SEMI‑FINISHED GOODS OF

SPECIAL OR STRATEGIC IMPORTANCE TO THE DEFENSE OF THE

REPUBLIC.

 

THE LEGALLY PRESCRIBED TASKS OF PROTECTING COMPETITION

ARE PERFORMED BY THE BUREAU FOR THE PROTECTION OF

COMPETITION.  THE BUREAU INITIATES ITS OWN INVESTIGATIONS

OF COMPANIES AND ALSO AT THE REQUEST OF PRIVATE

COMPANIES.  THE BUREAU WILL THEN ISSUE A DECREE AGAINST

ANY COMPANY FOUND TO HAVE VIOLATED THE LAW ON THE

PROTECTION OF COMPETITION, ALTHOUGH IT LACKS THE POWER TO

ISSUE FINES.  THE POWER TO FINE COMPANIES REST IN THE

HANDS OF SLOVENIA'S COURTS.  ANY INJURED PARTY TRADING IN

GOODS OR SERVICES ON THE MARKET MAY INITIATE LEGAL

PROCEEDINGS IN CASES OF UNFAIR COMPETITION.  INJURED

PARTIES ARE ENTITLED TO COMPENSATION AND THE INJUNCTION

OF THE UNFAIR ACTS.  THE COURT MAY ISSUE A MINIMUM

PENALTY OF 3 MILLION SIT AGAINST COMPANIES FOUND TO HAVE

ENGAGED IN CARTEL AGREEMENTS, FOR ABUSING A DOMINANT

MARKET POSITION, FOR COMMITTING AN ACT OF UNFAIR

COMPETITION, AND FOR ILLICIT SPECULATION.  THE MANAGERS

AND DIRECTORS OF THE SANCTIONED COMPANY MAY BE LIABLE FOR

A MINIMUM FINE OF 250,000 SIT.  SELF‑EMPLOYED PERSONS

FOUND TO HAVE COMMITTED ANY OF THE LEGALLY PROHIBITED

ACTIONS ARE LIABLE FOR NO LESS THAN 1 MILLION SIT.

 

WHILE THE BUREAU FOR THE PROTECTION OF COMPETITION HAS

ISSUED A NUMBER OF DECREES AGAINST COMPANIES FOR UNFAIR

PRACTICES, THE COURTS HAVE YET TO ISSUE A SINGLE MONETARY

FINE.  SOME OF THE CASES HAVE BEEN SITTING IN THE COURT

SYSTEM FOR TWO YEARS SINCE THE FINAL DECREE WAS ISSUED BY

THE BUREAU.

 

A.9  EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT

 

SLOVENIA'S FINANCIAL SECTOR REMAINS RELATIVELY

UNDERDEVELOPED FOR A COUNTRY OF SLOVENIA'S PROSPERITY.

ENTERPRISES RARELY RAISE CAPITAL THROUGH THE STOCK

MARKET.  THE SHALLOWNESS OF THE SECTOR MILITATES AGAINST

ECONOMIES OF SCALE, AND DESPITE SHORTCOMINGS IN THE

BANKING SECTOR CAPITAL IS CHEAPER TO ACQUIRE THROUGH

BANKS THAN THROUGH MORE DIRECT EQUITY OR DEBT SALES.

 

BANKING: THE BANKING SECTOR IN SLOVENIA IS MARKED BY A

RELATIVELY HIGH LEVEL OF CONCENTRATION (THREE BANKS

ACCOUNT FOR HALF OF TOTAL BANKING ASSETS), EXCESSIVE

CAPACITY (28 BANKS, SIX SAVINGS BANKS, AND 70 SAVINGS

COOPERATIVES OPERATE IN A COUNTRY OF 2 MILLION PEOPLE),

AND A LOW LEVEL OF SERVICES.  THIS MEANS THAT A NUMBER OF

BANKS ARE UNABLE TO EXPLOIT ECONOMIES OF SCALE AND HAVE A

RELATIVELY LOW LEVEL OF PRODUCTIVITY.  THE CONSEQUENCES

CAN BE SEEN IN HIGH MARGINS AND LOW RETURN ON EQUITY.

THE BALANCE SHEETS OF SLOVENIAN BANKS ARE RELATIVELY

STRONG, REFLECTING AN EARLY AND AGGRESSIVE PROGRAM OF

BANK REHABILITATION THE GOVERNMENT LAUNCHED IN 1992.  ONE

OF THE CONSEQUENCES OF THAT REHABILITATION IS THAT TWO OF

THE COUNTRY'S THREE LARGEST BANKS TODAY ARE GOVERNMENT‑

OWNED. PRIVATIZATION PLANS FOR THESE BANKS HAVE YET TO BE

CLARIFIED.  THE GOVERNMENT HAS ENCOURAGED BANK MERGERS AS

A MEANS OF DEALING WITH THE SECTOR'S EXCESS CAPACITY, SO

FAR TO LITTLE EFFECT.

 

NEW BANKING LEGISLATION, WHICH SHOULD BE ADOPTED BY

NOVEMBER 1998, IS AIMED PRIMARILY AT HARMONIZING THE

BANKING SECTOR WITH EU DIRECTIVES.  ALTHOUGH IT WILL STOP

SHORT OF THE SINGLE BANKING LICENSE, FREE CAPITAL

MOVEMENT, AND MUTUAL RECOGNITION ELEMENTS THAT MARK THE

SECOND BANKING DIRECTIVE, THE NEW LEGISLATION WILL EASE

SOME CAPITAL ACCOUNT RESTRICTIONS (NOTABLY FOREIGN LOAN

DEPOSIT REQUIREMENTS).  UNDER THE TERMS OF THE EU‑

SLOVENIA ASSOCIATION AGREEMENT, MORE THOROUGHGOING REFORM

MUST BE COMPLETED WITHIN FOUR YEARS OF THE AGREEMENT'S

RATIFICATION (EXPECTED BY THE END OF 1998).

 

SECURITIES MARKETS:  THE LJUBLJANA STOCK EXCHANGE (LSE)

WAS ESTABLISHED IN 1990 AND UNDERWENT ITS MOST RAPID

GROWTH IN THE 1994‑1997 PERIOD, AIDED BY THE LISTING OF

NEW COMPANIES AS PART OF THE FIRST PHASE OF PRIVATIZATION

IN SLOVENIA.  (A COMMODITY EXCHANGE (CE), ESTABLISHED IN

1994, CEASED OPERATION IN 1998.)  INDEED, THE LSE'S ROLE

AS A VEHICLE TO ACHIEVE THE TRANSFORMATION OF ENTERPRISES

IS GREATER THAN ITS ROLE OF RAISING CAPITAL FOR LISTED

COMPANIES.  THE LSE'S FUNCTION IN TRANSFORMING

ENTERPRISES IS LIKELY TO INCREASE ONCE PRIVATIZATION

INVESTMENT FUNDS ENTER THE MARKET. FOR THE TIME BEING,

THE ASSETS OF PRIVATIZATION INVESTMENT FUNDS ARE TIED UP

IN PRIVATIZATION VOUCHERS FOR WHICH CORRESPONDING CAPITAL

IS NOT PRESENTLY AVAILABLE.

 

IN 1997 LSE BECAME A FULL MEMBER OF THE INTERNATIONAL

ASSOCIATION OF STOCK EXCHANGES (FIBV).  IN SPITE OF

RECENT GROWTH, HOWEVER, SECURITIES MARKETS REMAIN

RELATIVELY UNDERDEVELOPED IN SLOVENIA.  TOTAL.LSE MARKET

CAPITALIZATION AT THE END OF 1997 AMOUNTED TO 400 BILLION

SIT ($2.3 BILLION) ‑ AN INCREASE OF 125 PERCENT (OVER 80

PERCENT IN DOLLAR TERMS) OVER THE PREVIOUS YEAR, BUT

STILL ONLY 17 PERCENT OF GDP.  THIS IS ALSO A RELATIVELY

ILLIQUID MARKET, WITH TOTAL ANNUAL TURNOVER ONLY ABOUT

ONE‑FOURTH OF TOTAL MARKET CAPITALIZATION.

 

THE LSE HAS TWO OFFICIAL LISTINGS ‑‑ A AND B ‑‑ DEPENDING

ON THE AMOUNT OF A LISTING'S CAPITAL, AUDITED FINANCIAL

STATEMENTS, SIZE OF THE CLASS OF SECURITIES AND

SECURITIES DISTRIBUTION.  THE OVER‑THE‑COUNTER (C) MARKET

HAS LESS STRINGENT REQUIREMENTS.  THE MARKET

CAPITALIZATION OF A AND B LISTINGS, AS OF THE END OF

1997, WAS 337 BILLION SIT ($2 BILLION); THAT OF MARKET C

WAS 62.3 BILLION SIT ($370 MILLION).  TOGETHER, THESE

MARKETS ARE EQUAL TO 17 PERCENT OF GDP.

 

IN 1995, THE CENTRAL SECURITIES CLEARING CORPORATION

(KDD) WAS ESTABLISHED.  ITS MAIN ACTIVITIES ARE RUNNING

THE CENTRAL REGISTRY OF DEMATERIALIZED SECURITIES AND

PERFORMING CLEARING OF TRADES THAT ARE CONCLUDED ON THE

LSE ELECTRONIC TRADING SYSTEM AND TRANSFERRED TO KDD

AUTOMATICALLY.  A SECURITIES MARKET AGENCY (SMA),

ESTABLISHED IN 1994, HAS POWERS SIMILAR TO THE SEC IN THE

UNITED STATES.  IT SUPERVISES INVESTMENT FIRMS, THE LSE,

THE KDD, INVESTMENT FUNDS, AND MANAGEMENT COMPANIES AND

SHARES RESPONSIBILITY WITH THE BANK OF SLOVENIA FOR

SUPERVISION OF BANKING INVESTMENT SERVICES.

 

THE LSE USES DIFFERENT DISSEMINATION SYSTEMS, INCLUDING

REAL TIME ON‑LINE TRADING INFORMATION VIA REUTERS OR

USING THE BDS SYSTEM. THE LSE HAS ALSO STARTED PUBLISHING

INFORMATION ON THE INTERNET (HTTP://WWW.LJSE.SI).

 

SLOVENIA'S EXCELLENT CREDIT RATING, THE LAUNCH OF A

SERIES OF INTERNATIONAL BOND ISSUES, THE QUALITY OF

TRADED SLOVENIAN FIRMS AND SLOVENIA'S EXCELLENT

MACROECONOMIC OUTLOOK HAVE COMBINED TO ATTRACT

CONSIDERABLE ATTENTION AMONG FOREIGN INVESTORS.  HOWEVER,

THE BANK OF SLOVENIA HAS IMPOSED RESTRICTIONS ON

PORTFOLIO TRADES:  EITHER A FOREIGN INVESTOR MUST

ESTABLISH A "CUSTODY ACCOUNT" IN A LOCAL BANK (THUS

REDUCING THE INVESTOR'S RETURN), OR HE MUST NOT SELL TO A

SLOVENIAN PARTY FOR A PERIOD OF SEVEN YEARS.

 

A NEW SECURITIES MARKET ACT (EXPECTED TO BE PASSED BY

NOVEMBER 1998) WILL STRENGTHEN THE SUPERVISORY REGIME OF

SLOVENIA'S CAPITAL MARKETS, WITH THE EMPHASIS ON

INVESTMENT FIRMS' CAPITAL REQUIREMENTS, EXPOSURE, AS WELL

AS ON FIRMS' LIQUIDITY AND ON THE STRENGTHENING OF THE

SUPERVISORY AUTHORITY ITSELF.  IT WILL ALSO ELIMINATE

SOME OF THE DISCRIMINATION AGAINST FOREIGN INVESTORS

INHERENT IN EXISTING LEGISLATION IN ACCORDANCE WITH THE

ASSOCIATION AGREEMENT'S (THREE‑YEAR) TRANSITION SCHEDULE.

OTHER DEVELOPMENTS EXPECTED IN 1998 INCLUDE A NEW LAW ON

BANKING, FOREIGN EXCHANGE LEGISLATION, THE LAUNCHING OF

THE NEXT ROUND OF PRIVATIZATION, A GRADUAL OPENING OF

FINANCIAL SECTOR, AND A CONTINUAL INCREASE IN MARKET

CAPITALIZATION.

 

INSURANCE:  THIS SECTOR IS RELATIVELY UNDERCAPITALIZED

AND MARKED BY A HIGH DEGREE OF PROTECTION, POOR RATES OF

RETURN, AND A PREPONDERANCE OF GOVERNMENT OWNERSHIP.

REFORMS IN THE INSURANCE SECTOR ARE ON A GRADUALIST PATH,

AND LEGISLATION IS UNLIKELY BEFORE THE END OF 1999.

 

A.10  POLITICAL VIOLENCE

 

BUT FOR A BRIEF, 10‑DAY CONFLICT OVER SLOVENE

INDEPENDENCE IN 1991, SLOVENIA HAS SUFFERED NO POLITICAL

VIOLENCE.  THE HOSTILITIES TO THE SOUTH (CROATIA, BOSNIA‑

HERZEGOVINA) HAD ONLY INDIRECT EFFECTS ON SLOVENE

SECURITY AND ECONOMIC CONDITIONS, MAINLY RELATED TO THE

INFLUX OF OVER 10,000 REFUGEES.  RECENT TENSIONS IN

KOSOVO HAVE LED TO FEARS, SO FAR UNREALIZED, OF A NEW

INFLUX OF REFUGEES.  SLOVENIA HAS NORMAL DIPLOMATIC AND

COMMERCIAL RELATIONS WITH ALL FORMER YUGOSLAV REPUBLICS,

WITH THE EXCEPTION OF THE FEDERAL REPUBLIC OF YUGOSLAVIA

(SERBIA‑MONTENEGRO).

 

A.11  CORRUPTION

 

SIMILAR TO MANY OTHER EUROPEAN COUNTRIES, SLOVENIA DOES

NOT HAVE A BRIBERY STATUTE EQUAL IN STATURE TO THE U.S.

FOREIGN CORRUPT PRACTICES ACT.  HOWEVER, CHAPTER 24 OF

THE SLOVENE CRIMINAL CODE (S.C.C.) PROVIDES FOR STATUTORY

PROVISIONS FOR CRIMINAL OFFENSES AGAINST THE ECONOMY.

CORRUPTION AGAINST THE ECONOMY CAN BE SPLIT INTO TWO

FORMS:  CORRUPTION AMONG PRIVATE FIRMS AND CORRUPTION

AMONG PUBLIC OFFICIALS.

 

THE S.C.C. PROVIDES FOR CRIMINAL SANCTIONS AGAINST

OFFICIALS OF PRIVATE FIRMS FOR THE FOLLOWING CRIMES:

FORGERY OR DESTRUCTION OF BUSINESS DOCUMENTS,

UNAUTHORIZED USE OR DISCLOSURE OF BUSINESS SECRETS,

INSIDER TRADING, EMBEZZLEMENT, ACCEPTANCE OF GIFTS UNDER

CERTAIN CIRCUMSTANCES, MONEY LAUNDERING, AND TAX

CONCEALMENT.

 

SPECIFICALLY, ARTICLES 247 AND 248 OF THE S.C.C. MAKE IT

ILLEGAL FOR A PERSON PERFORMING A COMMERCIAL ACTIVITY TO

DEMAND OR ACCEPT UNDUE REWARDS, GIFTS, OR OTHER MATERIAL

BENEFITS WHICH WILL ULTIMATELY RESULT IN THE HARM OR

NEGLECT OF HIS BUSINESS ORGANIZATION.  WHILE ARTICLE 247

MAKES IT ILLEGAL TO ACCEPT GIFTS, ARTICLE 248 PROHIBITS

THE TENDER OF GIFTS IN ORDER TO GAIN AN UNDUE ADVANTAGE

AT THE CONCLUSION OF ANY BUSINESS DEALINGS.

 

PUBLIC OFFICIALS ARE HELD ACCOUNTABLE UNDER ARTICLE 267

OF THE S.C.C. WHICH MAKES IT ILLEGAL FOR A PUBLIC

OFFICIAL TO EITHER REQUEST OR ACCEPT A GIFT IN ORDER TO

PERFORM OR OMIT AN OFFICIAL ACT WITHIN THE SCOPE OF HIS

OFFICIAL DUTIES.  THE ACCEPTANCE OF A BRIBE BY A PUBLIC

OFFICIAL MAY RESULT IN A FINE OR IMPRISONMENT OF NO LESS

THAN ONE YEAR UP TO A MAXIMUM SENTENCE OF FIVE YEARS.

THE ACCEPTED GIFT/BRIBE IS ALSO SEIZED.

 

WHILE ARTICLE 267 HOLDS PUBLIC OFFICIALS ACCOUNTABLE,

ARTICLE 268 HOLDS THE OFFEROR OF THE GIFT ACCOUNTABLE.

ARTICLE 267 MAKES IT ILLEGAL FOR NATURAL PERSONS OR LEGAL

ENTITIES TO BRIBE PUBLIC OFFICIALS WITH GIFTS.  VIOLATION

OF THIS ARTICLE CARRIES A SENTENCE OF UP TO THREE YEARS.

HOWEVER, IF THE OFFEROR OF THE GIFT DISCLOSES SUCH

BRIBERY BEFORE IT IS DETECTED OR DISCOVERED, PUNISHMENT

MAY BE REMITTED.  GENERALLY, THE GIFT IS SEIZED.

HOWEVER, IF THE OFFEROR OF THE GIFT DISCLOSED THE

VIOLATION, THE GIFT MAY BE RETURNED TO THE OFFEROR.

 

THE STATE PROSECUTOR'S OFFICE IS RESPONSIBLE FOR THE

ENFORCEMENT OF THE FOREGOING ANTI‑BRIBERY PROVISIONS.

THE NUMBER OF CASES OF ACTUAL BRIBERY ARE FEW AND ARE

GENERALLY LIMITED TO INSTANCES INVOLVING INSPECTION AND

TAX COLLECTION.  ALTHOUGH THE PROSECUTOR'S OFFICE

SUSPECTS BRIBERY AND RELATED CORRUPTION PRACTICES IN THE

GOVERNMENT PROCUREMENT OFFICES, THE ABILITY TO ASCERTAIN

EVIDENCE IS DIFFICULT, THEREBY MAKING IT EQUALLY

DIFFICULT TO PROSECUTE.  IT IS THE EMBASSY'S VIEW THAT

CORRUPTION IN SLOVENIA IS ON ONLY A VERY MINOR SCALE.

 

B.  BILATERAL INVESTMENT AGREEMENTS

 

SLOVENIA HAS SIGNED BILATERAL INVESTMENT AGREEMENTS

(BITS) WITH ALBANIA, BELGIUM, BOSNIA AND HERZEGOVINA,

BULGARIA, CHINA, CROATIA, CZECH REPUBLIC, DENMARK, EGYPT,

FINLAND, FRANCE, GERMANY, GREECE, HUNGARY, ISRAEL, ITALY,

LITHUANIA, MACEDONIA, MALAYSIA, NETHERLANDS, POLAND,

PORTUGAL, ROMANIA, SINGAPORE, SLOVAK REPUBLIC, SPAIN,

SWEDEN, SWITZERLAND, THAILAND, THE UNITED KINGDOM, AND

UZBEKISTAN. BITS ARE UNDER NEGOTIATIONS WITH ARGENTINA,

CANADA, AND RUSSIA.

 

C.  OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS

 

THE U.S. OVERSEAS PRIVATE INVESTMENT CORPORATION AND

SLOVENIA SIGNED A BILATERAL AGREEMENT ON APRIL 24, 1994.

OPIC PROGRAMS FOR INVESTMENT FINANCE AND INVESTMENT

INSURANCE CURRENTLY AVAILABLE IN SLOVENIA INCLUDE LOAN

GUARANTEES AND DIRECT LOANS, AS WELL AS POLITICAL

VIOLENCE AND EXPROPRIATION INSURANCE.  THE U.S. EXPORT‑

IMPORT BANK OFFERS SHORT‑, MEDIUM‑, AND LONG‑TERM PRIVATE

SECTOR PROGRAMS, AND SHORT‑TERM PUBLIC SECTOR PROGRAMS IN

SLOVENIA.  SLOVENIA IS ALSO ELIGIBLE FOR U.S. TRADE AND

DEVELOPMENT AGENCY PROGRAMS.

 

D.  LABOR

 

A LARGE DISCREPANCY EXISTS BETWEEN UNEMPLOYMENT RATES

DERIVED FROM REGISTERED UNEMPLOYMENT AND FROM ILO

METHODOLOGY (13.6 VERSUS 7.1 PERCENT).  THE ILO NUMBER

SHOWS A SLIGHTLY BETTER SITUATION COMPARED WITH OTHER

OECD COUNTRY RATES.  THE REGISTRATION NUMBERS NEED TO BE

USED CAREFULLY, AS THEY TEND TO SUFFER FROM SOME

SHORTCOMINGS (E.G., COVERING THOSE ACTUALLY EMPLOYED).

MOREOVER, SINCE SOCIAL PAYMENTS ARE MADE TO THOSE

REGISTERED ON UNEMPLOYMENT ROLLS, THE INCENTIVE TO

REGISTER MAY BIAS THIS NUMBER UPWARD.

 

TOTAL EMPLOYMENT SLIGHTLY INCREASED IN 1997 (BY 0.2

PERCENT).  THE NUMBER OF REGISTERED UNEMPLOYED DECLINED

AT AN ACCELERATED PACE IN THE FIRST HALF OF THE YEAR AS

DISCOURAGED JOB‑SEEKERS WERE DELETED FROM THE ROLLS.  IN

THE FALL, THE NUMBER OF (REGISTERED) UNEMPLOYED BEGAN

GROWING AGAIN ‑ THE STATISTICS SHOW AN INCREASE OF

REGISTERED UNEMPLOYED OF 4.5 PERCENT OVER THE PREVIOUS

YEAR TO REACH THE WORST POINT AT 14.8 PERCENT IN

DECEMBER. THERE IS SIGNIFICANT REGIONAL VARIANCE IN THIS

NUMBER, WITH LARGE POCKETS OF UNEMPLOYED CONCENTRATED IN

AREAS WHERE HEAVY INDUSTRY SUPPLIED THE YUGOSLAV AND CMEA

MARKETS.

 

SLOVENIA'S WAGE‑SETTING PRACTICE IS IN THE "SOCIAL

PARTNERS" MODE, WHICH IS SUPPOSED TO CONTAIN HIGH WAGE

DEMANDS BY CENTRALIZING WAGE DECISIONS.  IN PRACTICE,

HOWEVER, HIGH WAGE EXPECTATIONS HAVE PUSHED SLOVENIAN

WAGE LEVELS FAR ABOVE THOSE OF SLOVENIA'S CENTRAL

EUROPEAN NEIGHBORS, TO ABOUT HALF THE COST OF AUSTRIAN

LABOR.  IN SLOVENIA'S FAVOR IS THE FACT THAT IT HAS A

WELL EDUCATED LABOR FORCE THAT IS THE MOST PRODUCTIVE OF

THE TRANSITION ECONOMIES, WHICH ALLOW IT TO BE

COMPETITIVE IN NICHE MARKETS.  ALTHOUGH COMPLICATED LAY‑

OFF AND REDUNDANCY PROCEDURES AND SEVERANCE COSTS HAVE

DISCOURAGED ENTERPRISE RESTRUCTURING AND KEPT LABOR COSTS

HIGH, A NEW LABOR LAW IS LIKELY TO STREAMLINE THESE

PROCEDURES AND MAY LEAD TO INCREASED HIRING AND BETTER

RETENTION.

 

SLOVENIAN SKILLS ARE ESPECIALLY STRONG IN HIGHER VALUE‑

ADDED ACTIVITIES WHERE THEY CAPITALIZE ON THEIR STRENGTHS

AS GOOD TECHNICIANS AND ENGINEERS AVAILABLE AT A SOMEWHAT

LOWER COST THAN IN THE DEVELOPED WEST.  HOWEVER, SLOVENIA

WOULD BENEFIT FROM STRONGER MANAGERIAL SKILLS, MOST

NOTABLY IN THE BANKING AND INSURANCE SECTORS.

E. FOREIGN TRADE ZONES

 

FREE TRADE ZONES (FTZS) ARE PART OF SLOVENIA'S CUSTOMS

ZONES. SLOVENIA'S  FTZS ARE LOCATED IN CELJE, LJUBLJANA,

MARIBOR, NOVA GORICA, SEZANA AND KOPER.

 

ACCORDING TO THE FREE TRADE ZONES ACT FROM MAY 1998, FTZS

MAY BE USED BY DOMESTIC AND FOREIGN ENTITIES. THE

APPLICANT FOR THE FTZ SHALL MEET THE FOLLOWING

REQUIREMENTS: AT LEAST 51 PERCENT OF THE TURNOVER IN THE

FTZ MUST BE GENERATED BY THE EXPORT OF GOODS MANUFACTURED

AND SERVICES PERFORMED IN THE FTZ; ACTIVITIES IN THE FTZ

SHALL BE A NEW LINE OF BUSINESS FOR THE COMPANY; THE

TOTAL NUMBER OF COMPANY'S EMPLOYEES MUST BE INCREASED BY

DOING BUSINESS IN THE FTZ; PERSONS FOUNDING A NEW COMPANY

OR A NEW BRANCH OFFICE IN THE FTZ MUST HAVE PAID ALL

TAXES AND CUSTOMS DUTIES.

 

THE FOLLOWING ACTIVITIES CAN BE PERFORMED IN AN FTZ:

PRODUCTION AND SERVICE ACTIVITIES; WHOLESALE; BANKING AND

OTHER FINANCIAL SERVICES; INSURANCE AND REINSURANCE OF

PERSONS AND PROPERTY; AS WELL AS RETAIL FOR OTHER USERS

IN FTZS. GOODS CAN BE MOVED FREE OF RESTRICTIONS INTO

FTZS AND MAY BE STORED THERE FOR AN UNLIMITED DURATION.

GOODS BROUGHT INTO FTZS ARE DUTY‑FREE. GOODS OR PRODUCTS

MADE FROM THESE GOODS CAN THEN BE EXPORTED DUTY‑FREE. THE

GOODS OR PRODUCTS MADE FROM THESE GOODS CAN ALSO BE

IMPORTED INTO SLOVENIA. IN SUCH A CASE, CUSTOMS OR OTHER

DUTIES ARE NORMALLY PAYABLE ON THE IMPORTATION OF GOODS

TO SLOVENIA, AS ARE STORAGE COSTS AND COSTS OF OTHER

PROCEDURES CONCERNED WITH THE GOODS' PROCESSING IN THE

FTZ AND WHICH ARE NOT PART OF THE CUSTOMS BASE.

 

EQUIPMENT INTENDED FOR CARRYING OUT ACTIVITIES IN FTZS AS

WELL AS SPARE PARTS, TOOLS AND ACCESSORIES FOR THE

EQUIPMENT ARE EXEMPT FROM CUSTOMS DUTIES FOR AS LONG AS

THEY REMAIN IN THE FTZ. (THIS DOES NOT HOLD FOR OFFICE

FURNITURE, OFFICE EQUIPMENT AND OTHER ADMINISTRATIVE

FACILITIES, AND MOTOR VEHICLES THAT ARE NOT INTENDED FOR

EXCLUSIVE USE IN FTZ.) SALES TAX IS NOT PAYABLE ON

EQUIPMENT AND RAW MATERIALS ENTERING FTZS ON THE

CONDITION THAT THE EQUIPMENT OR MATERIALS ARE USED FOR

THE PRODUCTION OF GOODS FOR EXPORT.

 

PROFIT TAX AMOUNTS TO 10 PERCENT. A TAX DEDUCTION IN THE

AMOUNT OF 50 PERCENT OF THE INVESTED SUM IS OFFERED FOR

INVESTMENTS IN TANGIBLE ASSETS IN THE FTZ. THE TAXABLE

INCOME OF COMPANIES IN THE ZONE SHALL BE REDUCED BY THE

AMOUNT EQUALING 50 PERCENT OF THE SALARIES PAID TO THE

TRAINEES AND OTHER STAFF WHO HAVE BEEN REGISTERED AS

UNEMPLOYED FOR AT LEAST SIX MONTHS.

 

F.  FOREIGN DIRECT INVESTMENT STATISTICS

 

INWARD FOREIGN DIRECT INVESTMENT AT END‑1996

BY COUNTRY

 

COUNTRY   NUMBER OF PROJECTS  TOTAL VALUE  SHARE OF TOTAL

                              ($MIL)       (PERCENT)

 

AUSTRIA         444           662.7         34.26

CROATIA         181           356.9         18.45

GERMANY         258           271.8         14.05

FRANCE           22           144.5          7.47

ITALY           460           144.0          7.44

GREAT BRITAIN    47            90.7          4.69

SWITZERLAND      69            68.3          3.53

DENMARK           8            21.4          1.11

UNITED STATES    40            25.0          1.29

NETHERLANDS      38            39.6          2.05

BELGIUM          11             6.0          0.31

OTHER           103.4           5.35

TOTAL          1792          1934.3        100.00

 

INWARD FOREIGN DIRECT INVESTMENT AT END‑1996

BY SECTOR

 

SECTOR    NUMBER OF PROJECTS TOTAL VALUE SHARE OF TOTAL

                               ($MIL)       (PERCENT)

 

BANKING             47       330.8        17.10

ELECTRICAL DEVICES   9        28.0         1.45

CARS                12       139.5         7.21

MACHINERY           41       104.3         5.39

PAPER               12       142.7         7.38

WHOLESALE TRADE    720       170.2         8.80

OTHER                       1018.8        52.67

TOTAL             1792      1934.3       100.00

 

OUTWARD FOREIGN DIRECT INVESTMENT AT END‑1996

BY COUNTRY

 

COUNTRY  NUMBER OF PROJECTS TOTAL VALUE SHARE OF TOTAL

                              ($MIL)      (PERCENT)

 

AUSTRIA   101                 ‑4.71     ‑1.29

CROATIA   579                 188.0     51.37

GERMANY    93                  34.3      9.37

FRANCE      9                   2.3      0.63

ITALY      52                   1.5      0.41

BOSNIA     93                  15.7      4.29

CZECH REPUBLIC

           29                   8.1      2.21

HUNGARY    33                   2.3      0.63

UNITED STATES

           27                  12.2      3.33

MACEDONIA  74                  23.3      6.37

RUSSIA     27                   8.8      2.40

OTHER                          74.2     20.28

TOTAL    1300                 366.0    100.00

 

OUTWARD FOREIGN DIRECT INVESTMENT AT END‑1996

BY SECTOR

 

SECTOR    NUMBER OF PROJECTS  TOTAL VALUE  SHARE OF TOTAL

                               ($MIL)       (PERCENT)

 

BANKING           40          34.1                9.32

CHEMICAL PRODUCTS 79          48.2               13.17

FOOD              43          55.1               15.05

WOOD              39          34.4                9.40

WHOLESALE TRADE  250          36.2                9.89

OTHER                        158.0               43.17

TOTAL           1300         366.0              100.00

 

SOURCE OF STATISTICS: BANK OF SLOVENIA

 

FDI STOCK IN GDP:             9.4%

FDI 1996 INFLOWS IN GDP:      1.0%

 

SOURCE:  BANK OF SLOVENIA

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

<NREC>Slovenia08 Slovenia: Trade and Project Financing <A>=Slovenia

 

 

Chapter VIII  Trade and Project Financing 

 

The banking sector in Slovenia remains fairly rudimentary.  Unlike many of the transition economies' banking industries, Slovenian banks have rather strong capital bases and robust loan portfolios.  The prime weakness of Slovene banking is a lack of dynamism.  Banks are limited to a narrow range of traditional activities, disregarding areas such as new consumer services, investment banking, and management of more complex financial instruments.  Nevertheless, the financial statements of Slovenian banks are in compliance with international standards and audited by internationally recognized auditors.

 

In practice, this means that identifying financing for domestic projects will be problematic.  Banks typically seek 100 percent collateral in most lending.  Until Slovenia adopts financial services legislation as part of its EU membership bid, the sector will continue to lack the dynamism necessary for larger-scale domestic funding for operations. 

 

There are no referential interest rates in Slovenia such as, for example, LIBOR. Banks set the interest rate in the form of TOM plus real interest. TOM is calculated as the arithmetical average of the past twelve months and is determined once a month. In 1998 it is estimated to be around ten percent per annum. Real interest rates for loans amount to five percent or more, while real interest rates for savings are between two and six percent per annum.

 

There are other sources of financing available, although on a limited range of activities. The U.S. Export-Import Bank provides medium-term and long-term loans and guarantees, and OPIC offers loan guarantees and direct loans. The European Investment Bank and the International Finance Corporation are involved in funding large infrastructure projects, while the European Bank for Reconstruction and Development provides financing for banking sector privatization. 

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

<NREC>Slovenia09 Slovenia: Business Travel <A>=Slovenia

 

 

Chapter IX      Business Travel

 

Business Customs

 

During the period of socialism, the former Yugoslav federation was not a fully integrated part of the Eastern bloc.  It had a unique, "self-management" economic system where management decisions were made at the firm level and frequently reflected market responsiveness. As a result, Slovenian business managers are quite familiar with Western-type market economy philosophy and customs.

 

Management style in Slovenia tends to concentrate decision-making on senior management; delegation of authority at companies is relatively poor. Thus, in principle, a negotiation should not be considered concluded unless confirmed by the general manager or a clearly acknowledged decision-maker in the company.  Slovenes place a premium on personal contacts, and correspondence and visits play significant roles in the conduct of business in Slovenia. Clarity and continuity in communication are important.

 

Travel Advisory and Visas

 

There have been no travel advisories for Slovenia. There are no visas necessary for visits lasting less than three months. Application for a visa allowing an extended stay must be made from outside the country. An entry visa for the purpose of work, education, training or other professional activities can be obtained at any Slovenian Embassy or Consulate. In the same way a business visa can be obtained on an exceptional basis (foreign investment, bilateral contacts, etc.).

 

Holidays

 

Jan 1 and 2        -  New Year’s Day

Feb 8              -  Slovenian Cultural Day       

March/April        -  Easter Monday

April 27                -  Day of Uprising Against Occupation

May 1 and 2        -  Labor Day

May 31             -  Whit Sunday

Jun 25             -  Independence Day

Aug 15             -  Assumption Day

Oct 31             -  Reformation Day

Nov 1              -  All  Saints Day

Dec 25             -  Christmas Day

Dec 26             -  National Day

 

Business Infrastructure

 

- Transportation

 

Ljubljana is accessible by air.  The international airport, Ljubljana-Brnik is located 27 kilometers from the capital city. The airport is serviced by the national carrier, Adria Airways, as well as other international airlines such as Aeroflot, Air France, Austrian Airlines, British Airways, Lufthansa, Swissair, and Air Bosna. 

 

Slovenia’s transportation system is good. Highways connect most cities, and numerous border crossings into neighboring countries are easily accessible. Air travel within Slovenia is not available, but is not necessary given the small size of the country. Rail is a popular and convenient form of travel.  Major Slovenian cities have efficient public transportation systems, relying mainly on buses. Tokens for buses and trams can be purchased at newspaper stands or post offices.  Fares can be paid in cash, at a somewhat higher tariff.  Taxi service is readily available. Taxis are generally requested by telephone or at designated taxi-stands.  Taxis are metered (a 10 percent tip is customary). 

 

- Language and Communications

 

The official language in Slovenia is Slovene, a southern Slavic language with only some resemblance to Croatian or Serbian. Script is the standard Roman alphabet.  Most businessmen in Slovenia speak foreign languages, with English the most predominant, although German is often useful in some parts of Slovenia.  Use of Italian tends to be confined to the Italian border area. When necessary, translators can be hired at the Slovene Association of Conference Interpreters (phone: 386/61/317862; fax: 386/61/320131).

 

Slovenia has efficient postal and telephone services. Fax machines are widely used. The use of e-mail is increasingly available.  Telephone calling card services are not available in-country, and long-distance charges tend to be high, even by European standards.  In many areas only pulse telephone lines are available, though tone dialing availability is increasing. 

 

The dialing code for Slovenia is 386, followed by area codes:  Ljubljana (61), Maribor (62), Celje (63), Kranj (64), and Portoroz (66).  To dial internationally from Slovenia, you must dial 00 before the country code.  Operator assistance is 998. 

 

- Accommodation and Food

 

Comfortable accommodation is available in all major cities in Slovenia. Office space or housing can be rented through a specialized local agency or by individual advertisements in local daily newspapers. A list of Slovenian real estate agencies is available from the American Embassy Ljubljana as is a list of English speaking physicians.

 

The food is typically of high quality and variety. Restaurants are relatively expensive. Credit cards (e.g., MasterCard, Visa, American Express and Diners Club) are widely accepted.

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

 

<NREC>SloveniaA01 Slovenia: Country Data <A>=Slovenia

 

 

Chapter X       Economic and Trade Statistics

 

Appendix A.  Country Data

 

Population    1,986,848

Population Growth Rate  - 0

Religion      predominantly Roman Catholic

Government System  parliamentary democracy

Languages     Slovene; Italian, Hungarian in two localities

Work week     40 hours

 

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

 

<NREC>SloveniaA02 Slovenia: Domestic Economy <A>=Slovenia

 

 

Appendix B.  Domestic Economy    

 

                             1997     1998(proj)   1999(Est)

 

GDP Growth Rate                3.8       4.0        4.5

GDP per capita USD           9,161     9,653     10,566

Government Spending

 as % of GDP                45.7     46.1       45.2

Inflation                      9.1       8.5        6.8

Unemployment                   7.1       7.1        7.1

Foreign Exchange

 Reserves USD mil.           4,337                  

Average Exchange

 Rate for 1USD               159.7     171.0       173.5      

Debt Service Ratio             8.5                  

U.S. Economic Military Assistance         

 

Source: Bank of Slovenia, May 1998; Economic Mirror, June 1998

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

 

<NREC>SloveniaA03 Slovenia: Trade <A>=Slovenia

 

 

Appendix C.  Trade

     (in USD millions)

                         1997     1998(proj)  1999(Est)

 

Total Slovenia Exports  8,372     8,874       9,300

Total Slovenia Imports  9,358     9,800     10,200

U.S. Exports              284       300         340

U.S. Imports              243       260         300

 

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

 

<NREC>SloveniaA04 Slovenia: Investment Statistics <A>=Slovenia

 

Appendix D.  Investment Statistics (see ICS)

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND

U.S. DEPARTMENT OF STATE, 1998.  ALL RIGHTS RESERVED OUTSIDE OF

THE UNITED STATES

 

<NREC>SloveniaA05 Slovenia: U.S. and Country Contacts <A>=Slovenia

 

 

Chapter XI      U.S. and Country Contacts

 

Appendix E: U.S. and Country Contacts

 

Embassy of the United States of America

Marko Mlakar, Commercial Specialist

Prazakova 4, 1000 Ljubljana, Slovenia

Phone: 386/61/301427

Fax: 386/61/301401

Web site:  www.usis.si

 

The Multilateral Development Bank Office

U.S. Department of Commerce

14^th and Constitution, NW, Washington, D.C. 20007

Phone: 202/4823399

Fax: 202/4825179

Web site:  www.mac.doc.gov/eebic/finangov/mldb.html

 

U.S. Department of Agriculture

Foreign Agricultural Service

Trade Assistance and Promotion Office

Phone: 202/7207420

Web site:  www.fas.usda.gov

 

U.S. Department of Commerce

Central and Eastern Europe Business Information Center

Paul Marin, Desk Officer for Slovenia

Washington , D.C. 20230

Phone: 202/4822645

Fax: 202/5010787

Web site:  www.iep.doc.gov/eebic/ceebic.html

 

Business Associations

 

Chamber of Small and Medium-Sized Enterprises

Mr. Miha Grah, President

Celovska c. 71, 1000 Ljubljana, Slovenia

Phone: 386/61/1593182

Fax: 386/61/559270

 

Slovenian Chamber of Commerce and Industry

Mr. Jozko Cuk, President

Slovenska c. 41, 1000 Ljubljana, Slovenia

Phone: 386/61/1250122

Fax: 386/61/219536

Web site:  www.gzs.si

 

U.S. Business Council for Slovenia

Gary J. Wolf, President

Noel J. Burkhard, Administrative Officer

7 Broadway, Suite 1028

New York, N.Y. 10004

Phone: 212/4399025

Fax: 908/4399105

 

Slovenian Government

 

Bank of Slovenia

Dr. France Arhar, Governor

Slovenska 35, 1000 Ljubljana, Slovenia

Phone: 386/61/1719000

Fax: 386/61/215516

Web site:  www.bsi.si

 

Bank Rehabilitation Agency of the Republic of Slovenia

Ms. Barbara Perne, Acting Director

Trg Republike 3, 1000 Ljubljana, Slovenia

Phone: 386/61/1257350

Fax: 386/61/1256188

 

Development Corporation of Slovenia

Dr. Bogdan Topic, Director

Dunajska 160, 1000 Ljubljana, Slovenia

Phone: 386/61/1894800

Fax: 386/61/1894819

 

Embassy of the Republic of Slovenia

Dr. Dimitrij Rupel, Ambassador

1525 New Hampshire Ave. N.W., Washington, D.C. 20036

Phone: 202/6675363

Fax: 202/6674563

 

Institute for Macroeconomic Analysis and Development

Dr. Janez Potocnik, Director

Gregorciceva 25, 1000 Ljubljana, Slovenia

Phone: 386/61/1782112

Fax: 386/61/1782070

Web site:  www.sigov.si/zmar

 

Ljubljana Stock Exchange

Dr. Drasko Veselinovic, General Manager

Slovenska 56, 1000 Ljubljana, Slovenia

Phone: 386/61/1710211

Fax: 386/61/1710213

Web site:  www.ljse.si

 

Ministry of Agriculture and Forestry

Mr. Ciril Smrkolj, Minister

Dunajska 56-58, 1000 Ljubljana, Slovenia

Phone: 386/61/1789103

Fax: 386/61/1789107

 

Ministry of Agriculture, Forestry and Food

Veterinary Directorate

Dr. Zoran Kovac, Chief Veterinary Officer

Parmova 53, 1000 Ljubljana, Slovenia

Phone: 386/61/1322274, 1318052

Fax: 386/61/1315320

Web site:  www.sigov.si/vurs

 

Ministry of Agriculture, Forestry and Food

Phyto-Sanitary Department

Mrs. Jozi Jerman-Cyelbar, Department Head

Parmova 33, 1000 Ljubljana, Slovenia

Phone: 386/61/322197

Fax:  386/61/1323013

 

Ministry of Culture

Mr. Jozef Skoljc, Minister

Cankarjeva 5, 1000 Ljubljana, Slovenia

Phone: 386/61/1785900

Fax: 386/61/1785901

Web site:  www.sigov.si/cgi-bin/spl/mk/eng/indexe.htm

 

Ministry of Defense

Mr. Alojz Krapez, Minister

Kardeljeva ploscad 2, 1000 Ljubljana, Slovenia

Phone: 386/61/1331111

Fax: 386/61/1318164

 

Ministry of Economic Affairs

Mr. Metod Dragonja, Minister

Kotnikova 5, 1000 Ljubljana, Slovenia

Phone: 386/61/1783311

Fax: 386/61/1331031

Web site:  www.sigov.si/mgd/mgd-ang.html

 

Ministry of Economic Relations and Development

Dr. Marjan Senjur, Minister

Kotnikova 5, 1000 Ljubljana, Slovenia

Phone: 386/61/1783600

Fax: 386/61/1783522

Web site:  www.sigov.si/meor

 

Ministry of Education and Sport

Mr. Slavko Gaber, Minister

Zupanciceva ulica 6, 1000 Ljubljana, Slovenia

Phone: 386/61/1785507

Fax: 386/61/1785669

 

Ministry of Environment and Physical Planning

Dr. Pavel Gantar, Minister

Zupanciceva 6, 1000 Ljubljana, Slovenia

Phone: 386/61/1785211

Fax: 386/61/224548

 

Ministry of Finance

Mr. Mitja Gaspari, Minister

Zupanciceva 3, 1000 Ljubljana, Slovenia

Phone: 386/61/1785211

Fax: 386/61/1785655