Is Slovakia a suitable investment target ? It certainly is! March 2002

Summary The presentation of the French-Slovak Chamber of Commerce and the Slovak Rating Agency General information on the Slovak Republic The Governmental Program for the Support of Foreign Investments Macroeconomic data Microeconomic data The most important French investors in the Slovak Republic

The presentation of the French-Slovak Chamber of Commerce Year of foundation February 1994 Member of l’UCCIFE sinceDecember 1995 Number of members184 Mission of the Chamber the support of mutual activities of Slovak and French companies the organization of common communication platforms the support of both parties in the area of collection and evaluation of information the administrative and organizational support of the members Contacts : Address: Bratislava, Mierová 23, postal code Phone/Fax:  , web site:

The presentation of the Slovak Rating Agency, a.s. member of the French-Slovak Chamber of Commerce Mission: to materialize and standardize the risk of Slovak companies and transactions for needs of foreign investors Products: rating of communes and cities rating of production subjects and subjects of services rating of projects and transactions analyses of macroeconomic environment and individual economic sectors analyses of entrepreneurial subjects Member of the French-Slovak Chamber of Commerce since 2001 Contacts: Address: Bratislava, Ursulinska 3, postal code Phone:  Fax:  web site:

General information on the country I. Geographical position: Middle of the Europe Area: km 2 Population: Borders:Hungary, Poland, Czech Republic, Austria, Ukraine Religion:Catholic – 70 % Ethnic structure:Slovaks – 85,7 % Hungarians – 10,8 % Others – 3,5 % Time zone:GMT + 1 hour

General information on the country II. Social system : Republic Official language : Slovak President : Rudolf Schuster Coalition government : SDK, SDKÚ, SDĽ, SMK, SOP Electoral system : proportionate Electoral term : 4 years (next election in 2002)

General information on the country III. Capital city :Bratislava Self-governing structure:8 regions

The Governmental Program for the Support of Foreign Investments The minimum volume of investments in a region with the rate of unemployment bellow 10 % mil. SKK (approximately mil. FRF) The minimum volume of investments in a region with the rate of unemployment above 10 % mil. SKK (approximately mil. FRF) Tax holidays Allowance for retraining of workers Allowance for the creation of jobs – its value is fixed depending on the rate of unemployment in the regions

GDP – Restoration of higher growth In spite of reforms Slovakia avoided a recession. In the past, the driving force of the growth was export, in this year it shall be domestic demand too. GDP per capita in Slovakia corresponds to USD (PPP). The region of Bratislava already achieves the EU average (GDP in PPP). Restructuring of economy is at its final stage. In 2002 the growth of GDP should exceed 3%.

The price level is stabilized The inflation was stabilized on a one-debit value. The core inflation was stabilized between 4 to 5 per cent. The price level in the Slovak Republic still reaches less than 40% of the level in Germany. The Central Bank intends to decrease the inflation within a medium-term horizon bellow 4%. Slovakia need not to fear a two-digit inflation.

Internal and external deficit The external imbalance has been successfully decreased. The situation in public finance has also stabilized. With the growth in domestic demand we expect a growth in current account deficit, but actually we have no problem to finance this deficit. Public finance is the Achilles´ heel of the Slovak economy. A macroeconomic stability was restored but this balance is still fragile.

A strong offer on labour market The rate of unemployment reaches values close to 20 %. Good news: The labour productivity grows. More good news: The over employment decreases. A foreign investor has no problem to find a qualified and cheap labour force.

The most part of FDI was absorbed by privatisation The most part of FDI was linked to the privatisation. Almost 50% of capital comes from Germany (France is on the 7th place). There are two areas, which have absorbed more than 90% of FDI: industrial production and telecommunications. Other significant investments were made in finance and trade. In 2000 Slovakia succeeded to achieve the highest growth of FDI from the V4 countries. mil. USD (cummulative)

The Slovak currency is relatively stable System of rates: floating Reference currency: 100% EUR Macroeconomic stability has brought relatively high stability of the Slovak currency. The Central Bank dispose of volume of finance large enough to protect the Slovak currency. 1 EUR = 41,725 SKK ( ) The exchange risk has decreased in the recent period.

Macroeconomic summary Economic stability was restored Slovakia faces a higher growth of GDP The price level and the rate of crown were stabilized Foreign direct investments are accelerating The problem area: public finance Opportunity: cheap and qualified labour force

Microeconomic data I. Share of individual regions in the formation of GDP

Microeconomic development II. Share of individual industries in the formation of GDP Legend A Agriculture, forestry, fishing B Mining, industrial production, power, gas and water generation and distribution C Building industry D Trade, restaurants, transport, posts, telecommunications E Banking, insurance business, other commercial services F Other market and non-market services

Structure of labour market I. Average monthly wages in Slovak enterprises with more than 20 employees : 11,864 SKK (approximately 284 EUR) Average monthly wages in individual sectors in SKK

Structure of labour market II. Economically active population – 2, ten. Number of registered unemployed – inhabitants Structure of unemployed by sex - women – 44.7 % - men – 55,3 % Number of unemployed graduates – 23,659 (4.4 %)

Structure of labour market III. Qualification structure of unemployed

Legislative environment I. High level of approximation of law to EU legislation Double Taxation Treaty concluded Treaty on the Support and Mutual Protection of Investments concluded Option of free export of capital Unallowed acquisition of immovable property by foreign entities The most frequent legal forms of enterprising entities – limited liability company and joint-stock company Average duration of the foundation of a company – 2 months Obligation to apply double entry bookkeeping Obligation to audit financial statements for turnover exceeding SKK 40 mil. ( EUR) and assets exceeding SKK 20 mil. ( EUR) Average duration of commercial litigation – 18 to 36 months

Legislative environment II. Joint-stock company Minimum amount of stock capital – SKK 1, ,- ( EUR) Option of monetary or non-monetary contribution It is headed by a Board of Directors – at least three members Obligation of members of the Board of Directors to have a sojourn in the territory of the Slovak Republic Obligation to establish the Supervisory Council – at least three members Limited liability company Minimum amount of registered capital – SKK 200,000,- (7.709 EUR) Option of monetary or non-monetary contribution It is headed by an agent Obligation of the agent to have a sojourn in the territory of the Slovak Republic Obligation to establish the Supervisory Council –– not imposed Upon foundation of a company we recommend to contact a local lawyer.

The most important investors Crédit Lyonnais Bank Dexia Kommunalkredit Holding Danone Alcatel Rhône – Poullenc France Télécom Lafarge Carrefour

This presentation was prepared by the French-Slovak Chamber of Commerce in collaboration with the Slovak Rating Agency, member of FSOK. FRANCÚZSKO-SLOVENSKÁ OBCHODNÁ KOMORA Miletičova 23, P. O. BOX Bratislava 2 Slovakia Tel./Fax: , , http: // Ing. Igor SCHMIDT, director of the Office of FSOK SLOVENSKÁ RATINGOVÁ AGENTÚRA Uršulínska Bratislava 1 Tel.: Fax: Rudolf AUTNER, chairman of the Board of Directors and executive manager of company