Summary of major economic happenings of the week
MONDAY, July 17
Slovakia`s Harmonized Inflation Down to 4.5 Percent in June
In June, the year-on-year inflation rate in Slovakia measured by the European Union's harmonized index of consumer prices (HICP) reached 4.5 percent. Compared with May, inflation decelerated by 0.3 percentage points. Measured by EU methodology consumer prices in Slovakia in June increased by 0.1 percent from the previous month, while they increased by 0.5 percent in May compared to the April level, reported the Slovak Statistics Office on Monday. Slovak methodology shows inflation rate of 4.6 percent in June.
Telefonica Confirms Participation in Tender for Third Mobile Operator
Telefonica O2 Czech Republic, a subsidiary of Spanish company Telefonica, is the third company participating in a public tender for the third mobile operator on the Slovak market. Telefonica O2 Czech Republic submitted its bid to Slovak market regulator the Telecommunications Office within the prescribed deadline, confirmed company spokesman Martin Zabka. Mr. Zabka however refused to specify the sum offered by the company for the one-off settlement for frequency assignment. According to the tender's terms set by the Telecommunications Office issued on May 31, 2006, participants must offer at least SKK 100 million.
Wizzair Plans to Fly to 13 Destinations from Bratislava Next Year
Hungarian low-cost airlines Wizzair may join the group of air companies operating from Bratislava airport next year. "We are holding very intensive negotiations with this company. Wizzair is planning to fly to 13 destinations from Bratislava," Bratislava airport executive director Milan Kajan told the press on Monday. These should also include destinations to which no air company currently runs flights from Bratislava, for example Stockholm, Malmo, Glasgow, Liverpool or Dortmund. But it also wants to operate flights to destinations already served from Bratislava, for example London, Paris, Barcelona, Athens, Rome and Brussels.
U.S. Steel Kosice Plans Same Growth as Last Year
U.S. Steel Kosice, s.r.o. (USSK) expects 2006 growth in sales of products at last year's level. In 2005 the company improved revenues from sales of its own products and services by 10 percent to SKK 80.44 billion. Last year's positive operating result increased by approximately 22 percent to SKK 15.69 billion compared to 2004. Mainly growth in product exercise prices positively influenced the improved 2005 operating result, which compensated for the negative impact of input base material price development, media manager Lubomira Soltesova told SITA.
The launch of the new plant's galvanizing hall construction worth USD 160 million is one of the company's most important investments in 2005. "Hall construction also continues this year and the production launch is planned for the beginning of 2007," added Ms. Soltesova.
Tender for Third Mobile Operator could be Completed in Two Weeks
Market regulator the Telecommunications Office chairman Milan Luknar anticipates completion of the tender for the third mobile operator and announcement of the winner in two weeks. "Originally the tender terms were prepared to evaluate twelve to fourteen bids. Therefore I suppose evaluation and announcement of the winner shouldn't take more than fourteen days," stated Mr. Luknar. The Telecommunications Office received three bids for the allocation of GSM, UMTS and FS frequencies. By law the office still has another four weeks to issue licenses after completing the tender. Telefonica O2 Czech Republic, a subsidiary of Spanish company Telefonica, Austrian Mobilkom Austria and Czech company Radiokomunikace, submitting the bid together with Czech and Slovak investment company Penta, confirmed their interest and bids to SITA in the aforementioned tender.
PMU Approves Agrofert's Subsidiary Acquisition of Three Bakeries
After a group of poultry companies, whose concentration within Czech Agrofert Holding the Antitrust Office (PMU) approved in early 2006, this Czech food producing, agricultural and chemical group continues to buy Slovak food companies. The PMU also confirmed for Agrofert the acquisition of a majority in the bakeries Pekaren Novohrad, a.s., Lucenec, Danipek, s.r.o., and PMD-Union, a.s., Bratislava via its subsidiary Penam, a.s., Brno. PMU spokesman Miroslav Jurkovic stated that the PMU approved the concentration of these companies on July 14. Penam Brno obtained the majority in three Slovak bakeries via its Slovak arm Penam Slovakia, a.s.
TUESDAY, July 18
Food Industry Keeps Growing, Registers SKK 1.83 bln Profit in 2005
Food industry companies in Slovakia have registered substantial growth in recent years according to an evaluation of implementation of a medium-term concept for agricultural policy for 2004 to 2006 and the Green Report the Ministry of Agriculture submitted for interdepartmental review. While in the first year of Slovakia's membership in the European Union, profit in the food industry grew by over 21 percent in year-to-year terms and stood at SKK 1.517 bln, in 2005 food businesses earned SKK 1.83 bln, up 21 percent y/y. The fastest improvement was registered in poultry industry, distilleries, dairy businesses, meat processing companies and starch industry. Dairy companies however remained among branches generating a loss together with soft drink producers, bakeries and frozen food companies.
WEDNESDAY, July 19
Some Problems Remain with Land Purchase for Kia Zilina Project
Purchase of plots for car assembly plants near Zilina in northern Slovakia of South-Korean Hyundai/Kia as well as plots under infrastructure around these plants is not complete yet. Economy Ministry elaborated a report, which proposes further steps in purchasing plots and solve specific instances of claimed co-ownership rights exceeding 100 percent. As far as plots under infrastructure are concerned, Zilina Invest has failed to buy majority stakes in sixteen instances because these owners do not want to sell them until they get a top-up payment up to SKK 350 per one square meter.
Chamber of Commerce Points Out Pros and Cons of Dzurinda's Cabinet
From the viewpoint of interests of the economy and entrepreneurs Slovakia has achieved significant historical successes in the country's international integration during the two terms of Mikulas Dzurinda's cabinet since 1998. President of the Slovak Chamber of Commerce and Industry (SOPK) Peter Mihok said this on Wednesday. "Entry into the Organization for Economic Cooperation and Development (OECD), the subsequent admission to the European Union (EU) and NATO was a culmination of independence and sovereignty of Slovakia. On the other hand he sees problems in the previous government in the country's too narrow focus on selected industrial activities. In spite of its positive features the automotive industry in Slovakia represents, according to Mr. Mihok, one of the biggest risks to the economic portfolio's structure.
Finance Ministry Nominations Deserve Praise of Market Analysts
Economic analysts in Slovakia positively evaluate the appointment of up-to-now Finance Ministry's budget policy department director general Frantisek Palko as Finance Ministry second state secretary. "Mr. Palko's appointment implies certain continuity in the state budget forming process, which has significantly gained in quality in recent years," ING analyst Jan Toth told SITA. Frantisek Palko was appointed Finance Ministry state secretary on Wednesday, July 19. Other positively assessed Finance Ministry news is appointing tax reform author Richard Sulik as the finance minister's advisor, which Mr. Sulik himself confirmed to SITA. "The finance minister directed this proposal to me," said Mr. Sulik.
THURSDAY, July 20
National Strategic Reference Framework will Change, Says PM Fico
Next Wednesday the Slovak cabinet plans to modify priorities of drawing EUR 11 billion which Slovakia should receive from the European Union in the next programming period between 2007 and 2013. After first unofficial consultations, Brussels has already sent its remarks to the Slovak Ministry of Construction and Regional Development. Construction Minister Marian Janusek told SITA that he will negotiate with European Commission representatives over the National Strategic Reference Framework next Friday in Bratislava. He will introduce to them also changes, which the Slovak cabinet will approve next week. Prime Minister Robert Fico claims that they will be considerable. "During next few days the cabinet will deal with the National Strategic Reference Framework and adopt relatively considerable changes to it," said Mr. Fico.
Largest Health Insurer VsZP Expects Income Drop Next Year
Slovakia's biggest health insurance company Vseobecna Zdravotna Poistovna (VsZP) with over three million insureds expects its income to decrease by 6.11 percent to SKK 48.723 next year. The insurer's draft budget for the next three years reads that VsZP's total expenditures should decrease to SKK 47.923 billion in 2007. Incomes are expected to increase by 3.22 percent to almost SKK 50.293 billion in 2008. Expenditures are predicted at SKK 49.493 billion. One year later incomes should rise 6.56 percent to SKK 53.594 billion when expenditures should climb to SKK 52.794 billion.
FRIDAY, July 21
Economy Ministry Presents Draft Revision to the Mining Law
In its draft revision to the Mining Law, the Slovak Economy Ministry proposes to put on equal footing private individuals and legal entities that want to do business in Slovakia in the mining industry and have their headquarters or permanent residences in countries of the European Economic Community (EEC) or the European Union (EU). Simultaneously, the ministry proposes to create reorganize the state mining administration so that regional mining offices (OBU) act as specialized construction offices. Another proposal of the ministry is to create a financial reserve in line with the EU regulation, which would cover consequences of potential damages caused by mining activities. The Ministry of Economy submitted the draft revision to the mining law for interdepartmental review. The ministry believes that the revision will have a positive impact on the environment, since also workers from environment protection department should be installed in selection commissions of OBU to allocate available mining localities.
Pociatek to Replace Miklos in International Institutions
Slovakia's representation in international financial institutions will change with the new Slovak government. According to a proposal submitted by the Finance Ministry, former Finance Minister Ivan Miklos should be recalled from his positions in the Board of Governors of the World Bank Group as well as in the European Bank for Reconstruction and Development and in the European Investment Bank. Current Finance Minister Jan Pociatek should newly assume these positions.
Jahnatek Holds Talks with Kia President on Additional Incentives
Slovak Economy Minister Lubomir Jahnatek discussed with Kia Motors Slovakia (KMS) president In-Kyu Bae on Friday about the KMS plan to extend the original investment in Slovakia and build additional capacities to increase engine production. Dagmar Hlavata from the ministry's press department stated that KMS submitted an application for additional state assistance to the Economy Ministry on June 7. "This application is now being assessed. In the event that the applicant meets the conditions the ministry will submit a proposal to cabinet on what attitude to take on this issue," said Ms. Hlavata.