Foreign investors angered at Slovakia's move to lower incentives

Slovakia has one of Central Europe's top performing economies. Foreign companies have invested billions and there's been a strong growth in exports. But now Slovakia's government is trying to sort out how it goes about attracting those foreign investors. A set of rules has been developed following the sacking of Economy Minister Pavol Rusko who it was alleged offered incentives that could not be delivered.

Slovaks like to say that their country has been named the tiger from the Tatras because it has become very attractive for foreign investors. The former Minister of Economy Pavol Rusko has been enthusiastically talking about industrial parks where foreign companies will create plenty of jobs for the unemployed. What ordinary Slovaks seemed to ignore was the fact that these oases of prosperity were to be raised with taxpayers' money. And even more without asking the Ministry of Finance whether the country can really afford them. Finance Minister Ivan Miklos, after discovering that Rusko promised much more to Korean carmaker Kia who are building a plant in Northern Slovakia:

"I have just seen a clause in the initial contract and the total sum the government has to invest in this project reaches about 70 million euros. Nobody at the Ministry of Economy asked my opinion when they signed the contract. I find these tactics very unprofessional. I have informed the management of Kia about this situation."

Pavol Rusko defends his team, who negotiated the contract with Kia and other foreign investors:

"There is harsh competition among countries in the region to attract foreign investors. These people don't come here if they don't get some help from the government. I have a clear conscious because these projects have created thousands of jobs."

With the state budget along a bumpy road the Ministry of Finance has finally decided to make the rules for granting incentives more transparent. Roman Kuruc, the Head of the Trade and Investment Agency explains:

"First of all there is a structure of the future employees especially we will concentrate on the level of education if there is basic, secondary or university education. Secondly the type of the industry whether there is just an assembly line or if there are some products that at the end prove that this industry brings higher added value such as research and development. Of course at the end we will focus on the number of employees - the key factor how the Slovak Republic will decrease its unemployment rate."

According to the new rules a potential investor will receive a decision from the government about providing investment stimuli within 110 days from submitting a complete application form, and the investor should be informed about the sum of this state support within 20 days thereafter. The question is whether some investors may now be unhappy that the Slovak government is not so generous anymore. Roman Kuruc.

"I may say that some of them always push us to give them more that's why these guidelines for us will be public and I think that also members of the government will follow these rules."

One of the companies which threatened to leave when told it asked for too much was the South Korean tyre-maker Hankook Tire, Finance Minister Ivan Miklos said the Slovak Government rejected an investment plan with the Korean investor at the beginning of July because it was excessively generous. Instead of the Sk3.5 million per job originally proposed by former economy minister Pavol Rusko, Miklos is now offering Hankook Tire financial support of 25,000 euro per job. In May, Hankook announced their plan to build a plant in Levice to produce 5 million tyres per year. The investment was to create 1,600 jobs directly, and another 1,000-1,500 jobs indirectly. Now Miklos tries to lure them back saying that his new rules are much more transparent and easier to fulfil.