The first country where the new Slovak cabinet introduced its foreign investment strategy was Croatia. Peter Brňo, the state secretary of the Ministry of Economy of SR presented it to investors at the Slovak presentation at the 1st Economic Fore of the Central European Initiative in Zagreb.

The foreign direct investment in Slovakia is much less than in most transition countries of the Central European Initiative. The total volume of foreign capital was 1.7 billion USD by 30 June 1998. Of that amount 1.4 billion USD went to the corporate sector, the rest landed in the banking sector.

Germany and Austria, with a 25 per cent share, are still the largest foreign investors in Slovakia. Most of the investment, almost 50%, went to the industrial sector.

The largest volume of foreign capital arrived in Slovakia in mid 1998. Foreign companies invested 217 million USD in the Slovak economy which is the largest amount of investment in one year if comparing the years from 1993 on.

Peter Brňo specified five crucial priorities of the foreign investment strategy of the Slovak government. The primary priority is modernization of production capacities in areas with the lowest productivity of labour right now. Priority No. two is to target investment at those types of production which have the lowest dynamics in the global market or which account for stagnation or low exporting power of Slovakia. The government also wants to prefer production with higher degree of processing/compounding, and to attract investors to regions with the higest unemployment rates.

The Slovak government, in order to attract more foreign investment, specified four strategic areas, namely: automotive industry and cooperation in related industries, information technologies and electronics, telecommunications, mechanical engineering, and metallurgy.

The Slovak government implements very low restrictions on foreign investment. There is a set of incentives in the tax system to support long-term investment. Tax holidays approved by the Slovak government rank among the most important ones. An investor who, in the course of ten years, invests at least one billion Slovak crowns and sells certain portion of the output abroad, is exempted from income tax.

Law on income tax has come into effect as from July 1998 which permits tax payers to use tax credit based on the amount of investment expenses and successive possible tax reduction. This measure provides room for fostering the influx of foreign capital, by reducing the tax liability of foreign entities operating in Slovakia as long as these entities invest the "saved tax money" back in the Slovak economy.

The Slovak government also designed a special regime for duty free zones and bonded warehouses. The government is considering granting special tax or duty reliefs to entities which acquire the license to do business in these zones or warehouses. The foreign capital influx should also be fostered by exemptions from non-financial deposits, import duty or value added tax.

The largest investors to Slovakia (from 1992 to June 1998):

Slovak Trade FORUM