Slovakia – Best Bet for Your Business Slovak - Portugese Business Forum

Bratislava, 8 July 2009

COUNTRY PROFILECOUNTRY PROFILE

MARKET OF

300 MILLION

IN 1000KM

Strategic location with great export potential

Area (km2): 49,035Population: 5,379,000Capital: BratislavaMember of OECD, WTO, NATO, EU, Schengen border-free area, Euro currency zone

MACROECONOMIC OVERVIEWMACROECONOMIC OVERVIEW

6,8

10,4%

4,3

Growing 2007

rea

l wa

ge

s

pro

du

ctiv

ity

GD

P

Basic macroeconomic indicators 2008

Real GDP growth 6,4%

Labour productivity growth 5,8 %

Real wages growth 3,3%

HICP Inflation 3,9 %

Unemployment 9,6%

Average monthly salary (EUR) 723

Sovereign credit rating (Long-term Foreign Currency Debt)

A positive outlook

A1 positive outlook

A+ stable outlook

EURO IMPLEMENTATION IMPACT:

Limitation of Foreign Exchange Risk Lowering Transaction Costs Growth in Foreign Trade Increase financial stability

CURRENCY EXCHANGE-RATE DEVELOPMENTCURRENCY EXCHANGE-RATE DEVELOPMENT

€

SLOVAKIA JOINED THE EURO

ZONE

1st JANUARY 2009

THE EXCHANGE RATE FOR

CONVERSION SET AT

30,126 SKK/EUR

Exchange rates of Central Europe during the crisis

90

95

100

105

110

115

120

125

EURSKK EURCZK EURHUF EURPLN EURRON EURUAH

Source: European Central Bank, 2008

STABILITY IN THE CRISISSTABILITY IN THE CRISIS

Corporae & Personal Income Tax

Value Added Tax

Dividend tax

Inheritance and Gift Tax

Real Estate Transfer Tax

Repatriation of profits: 100%

0%

19%

PAYING TAXESPAYING TAXES - Simple and Fair - Simple and Fair

19% Flat Tax Rate

LABOUR LABOUR MARKETMARKET• Weekly working time 40 hrs (excluding 30 min. break) + 8 hrs overtime per week

•3 months probation period

• 150 of overtime per year can be ordered + 250 hrs agreed with employee • No obligation to pay bonuses (25%) for 150 hrs of overtime per year

• Minimum salary: 296 EUR / month (2008)

• Average salary : 723 EUR / month (2008) •Annual leave of 20 days (25 days after 15 years of employment)

•Bonuses for overtime (25%) and for working on bank holidays (50%)

Source: Statistical Office of the Slovak Republic, 2009

Source: World Bank Group – Doing Business Report 2008

Employing workers

Paying taxes

Enforcing contracts

Protecting investors

Closing business....

Starting a business

1st rank indicates the easiest conditions for doing business

DOING BUSINESS 2009

Methodology (conditions included)

FDI is growing steadily

Source: Slovak National Bank , 2007

0

3 000

6 000

9 000

12 000

15 000

18 000

21 000

24 000

27 000

1999 2000 2001 2002 2003 2004 2005 2006 2007f

million EUR

FDI inflow per year (million EUR)FDI inflow per year incl. reinvested profit (million EUR)Inward FDI position (million EUR)

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

900 000

1999 2000 2001 2002 2003 2004 2005 2006 2007f

million SKK

FDI inflow per year (million SKK)

FDI inflow per year incl. reinvested profit (million SKK)

Inward FDI position (million SKK)

Minimum monthly wage Slovakia269 EUR / month (2008)

Average monthly salary Slovakia 723 EUR / month (average 2008)

Soc. security covered by employer35,2 %

Soc. security covered by employee13,4 %

•Excl. social security contributions covered by employer

Slovakia

723 EUR

843 EUR

Poland

792 EUR

Hungary

Czech rep. 942 EUR

Source: Statistical Office of Slovak Republic, ČSOB bank

WAGES and SOCIAL CONTRIBUTIONS

NETWORK OF UNIVERSITIESNETWORK OF UNIVERSITIES

Bratislava

university region

West Slovakia university region

East Slovakia university region

Central Slovakia university region

Number of universities: 33Total Number of Students in 08/09: 208 072Graduates in 08/09: 58 447

Study branch in % (2007/08):

Technical sciences 28,54%

Natural sciences: 6,22%

Medical and farmaceutical sciences: 6,77%

Large selection of available land

in more then 50 industrial parks

ROAD NETWORK and INDUSTRIAL PARKSROAD NETWORK and INDUSTRIAL PARKSPLAN 2012

to connect Bratislava and Kośice

Note: Flight destinations as of January 2009

AIRPORT INFRASTRUCTUREAIRPORT INFRASTRUCTURE

Bratislava

Poprad

Košice

Vienna (A)

BratislavaLondonBolognaBasel Vienna

PragueBratislavaManchesterPoprad

All major European cities

All major European & World cities

ŽilinaPrague

SliačPiešťany

AUTOMOTIVE SECTOR IN SLOVAKIAAUTOMOTIVE SECTOR IN SLOVAKIA

Volkswagen 1991 – 2000: 1 220 MIL. EUR

Planned: 350 000 cars/year

2003 – 2009: 1 100 MIL. EUR

Planned: 300 000 cars/year

2004 – 2009: 1 250 MIL. EUR

Planned: 300 000 cars/year

SLOVAK SUCCESSSLOVAK SUCCESS

K1 ATTACKK1 ATTACK

ELECTRONIC SECTOR IN SLOVAKIA

Expansion of capacity

Assembly of Bravia models for the European market to be doubled in 2008 to 4mil.

Expansion of activities

Production of LCD 10 mil pcs. Assembly of LCD Logistic center Europe service center

Research and Development in SR

Source: Statistical Office of the Slovak Republic

Slovak R&D network of domestic and foreign

companies

The main R&D locations in Slovakia

are: Košice region

Žilina region

Banská Bystrica

region

Bratislava region

Košice region

Total number of R&D organizations in Slovakia

265

272 273

278

255

260

265

270

275

280

y.2003 y.2004 y.2005 y.2006Poprad region

Michalovce region

State aid: eligible projects

Industry

Technological Centres

Shared Services Centres

Tourism

Minumum investment amount

Tourism Industry

1. 4. 2009 – 31. 12. 2010

Other conditions Industry: Procurement of machinery / technological equipment in the amount of at least 40% of

the total eligible costs At least 50% of the minimum amount of investment to be covered by own equity Compliance with the environmental protection rules

Technological centres: At least 50% of the minimum investment amount to be covered by own equity University education – at least 60% of the employees

Shared service centres: At least 50% of the minimum amount of investment to be covered by own equity University education – at least 30% of the employees

Tourism: Procurement of machinery / technological equipment in the amount of at least 20% of

the total eligible costs At least 50% of the minimum amount of investment to be covered by own equity Compliance with the environmental protection rules

Regional aid intensity

Regional aid intensity is calculated as a percentage of the eligible costs:

SLOVAKIA - Top reasons to rememberSLOVAKIA - Top reasons to remember

1. Central European hub and favourable geographic location

2. Political & economic stability, the highest economic growth in the region

3. 19% flat tax rate and 0% dividend tax

4. Availability of highly skilled workforce

5. Low labour costs vs. high labour productivity

6. Euro as an official currency from 2009

7. Large selection of industrial land and offices available for purchase/lease

8. Harmonised investment incentives

9. Infrastructure that is growing steadily

10. High innovation potential for R&D projects

SUCCESS STORIES – Hi-Tech, R&DSUCCESS STORIES – Hi-Tech, R&D

FOREIGN TRADE SLOVAKIA - PORTUGALFOREIGN TRADE SLOVAKIA - PORTUGAL

mil. EUR 2004 2005 2006 2007 2008

Export SR 48,7 44,5 62,3 141,6 170,9

Import SR 47,6 51,2 85,6 85,0 80,5

Turnover 96,2 95,7 147,9 226,6 251,4

Balance - 1,1 - 6,7 - 23,3 56,6 90,3

FOREIGN TRADE SLOVAKIA - PORTUGALFOREIGN TRADE SLOVAKIA - PORTUGAL

Export commodities to PortugalTotal value 170,9 mil. €

Electric machinery, TV-sets Motor cars and motor vehicles Iron and steel Machinery and equipment Wood and wooden products Artificial fibres Products from iron and steel Products from basic metals Shoes Plastics and plastic products

Import commodities from PortugalTotal value 80,5 mil. €

Electric machinery, TV-sets Motor cars and motor vehicles Plastics and plastic products Products from basic metals India rubber and products Shoes Machinery and equipment Raw leather Pharmaceutical products Textile

Statistics of the year 2008:

SARISARIOO -- WHO WE ARE?WHO WE ARE?

is a government funded organisation under the direction of the Slovak Ministry of Economy.

Slovak Investment and Trade Development Agency

-to improve the standard of living of Slovak citizens

-to increase the employment rate

- to reduce regional disparities

SARIO´s primary objective is:

Thank you for your attention

Slovak Investment & Trade Development Agency

Contact Information:

Alexander ŠkurlaAssigned Head of International Cooperation DepartmentSection of Foreign Trade

tel.: +421 2 58 260 341cell: +421 910 828 311

alexander.skurla@sario.sk

www.sario.sk