Potato import ban sets the mood
According to the Tourism Institute, Slovakia is our second most favourite travel destination after Germany. In 2001, the last year with complete figures, 800,000 of us visited our southern neighbour with more than 60% declaring our trips as holidays. Despite such a national exodus to sample Slovakian forest paths, ski slopes and national beverages, the economic co-operation between our two countries remains somewhat stagnant.
The most recent news in Polish-Slovak relations was PSA Peugeot Citroen's decision to locate its new factory in Slovakia's Trnava rather than Radomsko. Foreign relations experts put the decision on down to Volkswagen's positive experience in the country. The PSA investment would be very similar both in size as well as the amount of the workforce required as in the VW plant, so VW's recommendation probably played a significant role in the decision.
Our backward infrastructure also cost us several penalty points, experts said, while pointing out that the Slovakian labour market is also better from an investor's point of view as average pay is 50% lower, thus resulting in higher yields for the plant. Also, according to the experts, the authorities seemed more flexible. They immediately set up a venture that purchased the land for the investment. Simply put, they were seeking the investment more actively.
According to Milan Wenik, the Polish commercial attaché in Slovakia, there is a silver lining, however, as preliminary results for the 2002 trade balance between Poland and Slovakia show an increase in cross-border trade over the previous year's figures, with Polish exports to Slovakia totalling E496 million and imports amounting to E716 million.
Surprisingly, agricultural products make little impression on these figures. Although 6% of total Slovak imports are fruits and vegetables, very little of that comes from Poland, although these products constitute nearly 10% of our exports. Instead, our prices for fruits and vegetables - which are half of those in Slovakia - result in "grocery-shopping tourism," whereby Slovaks do their shopping across the border. This form of tourism is a byproduct of Slovakia's import rules; particularly an import ban on Polish potatoes due to fears that they may carry a potato disease. Another diplomat in Slovakia said he believes that without these rules the bilateral trade relations would improve significantly. It remains to be seen what will happen once both countries join the EU since the union prohibits such disruptions to trade.
Meanwhile, one-third of our exports are made up of industrial products, such as steel, machine parts and zinc, which have been a particularly buoyant area of trade, registering a 16% rise on the previous year. A further 16.6% consists of cars and transport vehicles, TVs and household goods traded between large multinationals, bringing the trade balance to E82.5 million. This sector, which relies on co-operation between the VW plant in Bratislava and VW Poland for car parts and the Opel factory in Gliwice for complete car exports, registered a slight decrease compared with the previous year.
The same sectors - industrial products, such as steel and machinery, and transportation equipment - dominate imports from Slovakia. Forty percent of automobile imports from Slovakia are covered by vehicles coming from VW's largest plant in Central and Eastern Europe, located in Bratislava.
Apart from Ciech chemicals group and national airline LOT, both of which have their own offices in Slovakia and have been on the Slovak market for a long time, there are no other significant Polish companies present there. Wenik believes that this lack of interest in the local market is a result of the mentality among our entrepreneurs that a market of five million is too small to bother with, leaving investors more likely to try their luck in a larger market.
Most of the compnies which do operate in Slovakia bring their products into the country via companies registered under Slovak law, and then use that firm to distribute the products on the market. While many Polish products, ranging from Atlas tile glue to products from our Danone factory and fruit juices, have gained an established market presence in Lithuania and the Czech Republic, Wenik says he still sees a lot of room for their demand in Slovakia.
Wenik points out that it is difficult to find a success story in Slovakia to parallel Kredyt Bank's prosperous investment in Lithuania. Bus manufacturer Sanok wanted to bring its buses to Slovakia, but one of the companies involved in the deal suffered from bankruptcy and left a mountain of debt behind. PZU once expressed interest in buying a Slovakian insurer, but the deal fell through. Kulczyk Holding was said to have been interested in buying a bank there but also backed out. The pattern is apparent, and at present only ketchup producer Rolewski is one of the few believed to be trying to enter the market.
"The apparent lack of co-operation between Poland and Slovakia is born from the fact that they are both looking west to attract new investors," Widek said. "Poland does not seek out the attention of Slovak investors, and similarly Slovaks do not focus on attracting Polish investments and are not interested in closer trade relations. They do not realise the amount of niches available for smaller entrepreneurs."
To reverse the "big brother" trend, the Slovaks are investing more in Poland. For Poland, Slovakia is its 17th largest trade partner, while for Slovakia, Poland ranks sixth. For the Slovaks, Poland is an investment opportunity.
The Slovnaft petrol station chain in southern Poland is the largest Slovak investment in the country. Since 1997 it has managed to build four gas stations in the Katowice area and has also been increasingly involved in the bulk sales of liquid fuels. The company, a subsidiary of the Slovak Slovnaft, is 36.2% owned by MOL Hungarian Oil and Gas, and its own subsidiaries include firms in the Czech Republic, Ukraine and Austria.
In a situation where proximity does not necessarily translate into enthusiastic economic relations, perhaps the best solution would be to patiently await EU accession. With unnecessary trade barriers out of the way, proximity is bound to become an advantage, while growing tourism may encourage more smaller businessmen to venture into the Slovakian market for longer.
The most recent news in Polish-Slovak relations was PSA Peugeot Citroen's decision to locate its new factory in Slovakia's Trnava rather than Radomsko. Foreign relations experts put the decision on down to Volkswagen's positive experience in the country. The PSA investment would be very similar both in size as well as the amount of the workforce required as in the VW plant, so VW's recommendation probably played a significant role in the decision.
Our backward infrastructure also cost us several penalty points, experts said, while pointing out that the Slovakian labour market is also better from an investor's point of view as average pay is 50% lower, thus resulting in higher yields for the plant. Also, according to the experts, the authorities seemed more flexible. They immediately set up a venture that purchased the land for the investment. Simply put, they were seeking the investment more actively.
According to Milan Wenik, the Polish commercial attaché in Slovakia, there is a silver lining, however, as preliminary results for the 2002 trade balance between Poland and Slovakia show an increase in cross-border trade over the previous year's figures, with Polish exports to Slovakia totalling E496 million and imports amounting to E716 million.
Surprisingly, agricultural products make little impression on these figures. Although 6% of total Slovak imports are fruits and vegetables, very little of that comes from Poland, although these products constitute nearly 10% of our exports. Instead, our prices for fruits and vegetables - which are half of those in Slovakia - result in "grocery-shopping tourism," whereby Slovaks do their shopping across the border. This form of tourism is a byproduct of Slovakia's import rules; particularly an import ban on Polish potatoes due to fears that they may carry a potato disease. Another diplomat in Slovakia said he believes that without these rules the bilateral trade relations would improve significantly. It remains to be seen what will happen once both countries join the EU since the union prohibits such disruptions to trade.
Meanwhile, one-third of our exports are made up of industrial products, such as steel, machine parts and zinc, which have been a particularly buoyant area of trade, registering a 16% rise on the previous year. A further 16.6% consists of cars and transport vehicles, TVs and household goods traded between large multinationals, bringing the trade balance to E82.5 million. This sector, which relies on co-operation between the VW plant in Bratislava and VW Poland for car parts and the Opel factory in Gliwice for complete car exports, registered a slight decrease compared with the previous year.
The same sectors - industrial products, such as steel and machinery, and transportation equipment - dominate imports from Slovakia. Forty percent of automobile imports from Slovakia are covered by vehicles coming from VW's largest plant in Central and Eastern Europe, located in Bratislava.
Apart from Ciech chemicals group and national airline LOT, both of which have their own offices in Slovakia and have been on the Slovak market for a long time, there are no other significant Polish companies present there. Wenik believes that this lack of interest in the local market is a result of the mentality among our entrepreneurs that a market of five million is too small to bother with, leaving investors more likely to try their luck in a larger market.
Most of the compnies which do operate in Slovakia bring their products into the country via companies registered under Slovak law, and then use that firm to distribute the products on the market. While many Polish products, ranging from Atlas tile glue to products from our Danone factory and fruit juices, have gained an established market presence in Lithuania and the Czech Republic, Wenik says he still sees a lot of room for their demand in Slovakia.
Wenik points out that it is difficult to find a success story in Slovakia to parallel Kredyt Bank's prosperous investment in Lithuania. Bus manufacturer Sanok wanted to bring its buses to Slovakia, but one of the companies involved in the deal suffered from bankruptcy and left a mountain of debt behind. PZU once expressed interest in buying a Slovakian insurer, but the deal fell through. Kulczyk Holding was said to have been interested in buying a bank there but also backed out. The pattern is apparent, and at present only ketchup producer Rolewski is one of the few believed to be trying to enter the market.
"The apparent lack of co-operation between Poland and Slovakia is born from the fact that they are both looking west to attract new investors," Widek said. "Poland does not seek out the attention of Slovak investors, and similarly Slovaks do not focus on attracting Polish investments and are not interested in closer trade relations. They do not realise the amount of niches available for smaller entrepreneurs."
To reverse the "big brother" trend, the Slovaks are investing more in Poland. For Poland, Slovakia is its 17th largest trade partner, while for Slovakia, Poland ranks sixth. For the Slovaks, Poland is an investment opportunity.
The Slovnaft petrol station chain in southern Poland is the largest Slovak investment in the country. Since 1997 it has managed to build four gas stations in the Katowice area and has also been increasingly involved in the bulk sales of liquid fuels. The company, a subsidiary of the Slovak Slovnaft, is 36.2% owned by MOL Hungarian Oil and Gas, and its own subsidiaries include firms in the Czech Republic, Ukraine and Austria.
In a situation where proximity does not necessarily translate into enthusiastic economic relations, perhaps the best solution would be to patiently await EU accession. With unnecessary trade barriers out of the way, proximity is bound to become an advantage, while growing tourism may encourage more smaller businessmen to venture into the Slovakian market for longer.
