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FDI Summit: Slovenia as Hub Feasible, Tough Work Ahead (adds)

Ljubljana, 13 October (STA) - The chief executives of three mayor companies agreed at a FDI Summit panel on Thursday that Slovenia had the potential to develop as an investors' hub for regional markets, but they underlined that a lot of work would be needed to get there and remain relevant.

Slovenia is considered an excellent hub for the region owing to its skilled workforce, infrastructure, historical links to the Balkans and shared culture.

But as CEO of retailer Mercator Ziga Debeljak pointed out, these advantages will be less important once the Balkan countries join the EU.

"Soft elements will be more important," he said, noting that companies would have to develop competence centres with highly skilled labour and cutting-edge know-how.

He also dismissed the notion that Slovenia could serve as a hub for Eastern Europe, noting that its links to Bulgaria, for example, were not strong enough.

However, Slovenia can be a hub for the Western Balkans, as a springboard for European companies wanting to do business there and for Balkan countries wanting to penetrate EU markets.

Biljana Weber, the director general of Microsoft Slovenija, meanwhile highlighted the Swiss recipe for a successful hub, whose ingredients include high spending on R&D, high rate of innovation, excellent scientific institutions and very efficient public institutions.

Christof Doste, the CEO of German-owned lighting equipment maker Hella Saturnus, noted that many had seen Slovenia as a Switzerland of the Balkans and indeed it had had the potential. However, what was missing was a long-term plan, which should have been followed-up by action.

Doste said that there were three hub models for Slovenia: as a hub for the Balkans, a springboard for Central and Eastern Europe, and, through the Port of Koper, an entry point for goods from across the world.

He suggested Slovenia should place emphasis in its efforts in attracting FDI on sectors such as tourism and alternative energy.

Having closed nuclear power plants, Germany, for example, is forced to invest in R&D on alternative energy, which will give it an edge in the industry. Doste said Slovenia should follow in the same direction, as countries which are not investing will fall behind.

Another opportunity he sees for Slovenia is in attracting medium-sized companies which have expanded sales in the region and are not looking for branches in the region to service their customers.

Mercator having a significant presence across the Balkans, Debeljak provided an interesting insight into the complexity of doing business there.

He said before the Balkans started growing at double-digit rates prior to the crisis, regional players had been shielded from big international players by the sheer complexity of the fragmented markets there, which acted as a repellent.

But now this same complexity is very negative, as it makes the region unattractive to investors compared to other emerging markets, which is a drag on much-needed foreign direct investment in the region.

For Weber, one of the key challenges for the entire region is skills: in 20 years jobs will change so much that completely different skills will be required. She noted that governments needed to motivate students to study technical professions.

In a second panel at the conference, participants presented a more upbeat picture of Slovenia's potential as a regional hub.

Matjaz Rakovec, the CEO of insurer Zavarovalnica Triglav, noted that his firm was the leading insurer in Western Balkans, with over EUR 1bn in gross written premiums, having achieved that with a change of strategy that involved a shift of focus from market share to profitability.

He said Slovenia had a lot of advantages as a hub for the region: high reputation of Slovenian brands, hard-working workforce, and good knowledge of language and culture. Moreover, Slovenian being small, it is not perceived as a threat.

In similar vein, Rudolf Kloetscher, the CEO of German-owned household appliance maker BSH Hisni aparati, said Slovenia had four "Qs" going for it: quality links to regional markets, high quality of infrastructure, quality workforce, and quality of life.

Describing the experiences of his company, which has used its Slovenia venture to penetrate the markets of the former Yugoslavia and Bulgaria, he said it was possible to use Slovenia as springboard. "It is possible, it is profitable, and we can show global investors that it is worth to invest in Slovenia."

While Kloetscher said Slovenia as a hub should be better promoted, Japanese Ambassador Toshimitsu Ishigure, fielding a question from the audience, berated Slovenia for being too conservative in its ambitions.

He said Slovenia should reach beyond Southeast Europe in its ambitions, saying that some hi-tech companies which havs dared to reach towards Japan had been very successful there.

But JAPTI director Igor Plestenjak pointed out that Slovenia was reaching further, naming as an example the fact that some Japanese companies have recognised Slovenia's potential and were relocating their regional offices from Vienna to Slovenia.

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