Business

06 Aug 2019, 11:30 AM

STA, 5 August 2019 - Slovenia's 10-year bonds have recently traded at sub-zero rates on the secondary market for the first time ever, whereas the country had a hard time selling its bonds at a 7% rate during the financial crisis in 2013.

The yield on Slovenia's 10-year bond dropped below zero on Friday, dropping further to minus 0.06% today, the business daily Finance reported, quoting Bloomberg.

The drop to the negative territory is part of a broader trend of falling yields for euro-denominated state bonds witnessed over the past days.

It comes after the European Central Bank said it would further ease its monetary policy and amid raised uncertainties in the European and world economies, while investors are looking for returns elsewhere.

According to the MTS Bonds.com platform, the 10-year bond issued on 14 March and further expanded on 8 July trades at minus 0.01%.

When Slovenia secured another EUR 350 million in July to expand the original 10-year bond issue, which is due in March 2029, the bond had a yield of 0.157%.

If investors buy it on the secondary market now, they find it acceptable to get a lower return then they would pay for it today.

Nevertheless, this does not necessarily mean that a newly issued Slovenian long-term bond would also have a negative rate.

While sub-zero rates are new for Slovenia's long-term debt, its short-term bonds have traded at sub-zero yields for several years.

02 Aug 2019, 16:09 PM

STA, 2 August 2019 - The operator of Slovenia's sole maritime port of Koper is hosting on Friday a delegation from Nagoya, the largest Japanese port in terms of transshipment, for talks on how to expand cooperation. Koper has no direct commercial maritime link with Japan, while it does cooperate with the Japanese Ocean Network Express (ONE).

The delegation featuring more than 30 representatives of the public and private sectors, the port of Nagoya and the chamber of commerce and industry from the city is in Slovenia before making stops in Italy and Croatia.

Representatives of Luka Koper presented the Japanese with the advantages of the port of Koper and the Adriatic Sea in general.

Japan is a major trade partner to Luka Koper, with last year's transshipment reaching almost half a million tonnes. The bulk of the transshipment are containers and cars, with Japan being one of the largest car producers in the world.

The port of Nagoya is the largest and busiest trading port in Japan, with an annual transshipment of 197 million tonnes, including 2.7 million container units and 1.4 million cars.

Luka Koper chairman Dimitrij Zadel told the press on the sidelines of the visit that efforts were being made to establish a direct link with Japan, noting that the port had been cooperating with ONE as of last year.

Today's presentation was also attended by representatives of Japanese companies which are already present in the region.

Tamas Tanarki of the Hungarian subsidiary of Yusen Logistics said that in the last decade, Japanese investors had started taking the Adriatic route into account and perceiving it as a good solution for their cargo transport.

He sees no much room for the Adriatic ports to compete with the North Sea ports in the near future, but he said it was realistic to expect that trade with these ports could increase by between 10% and 15%.

Tanarki thinks that what is important for the ports in north Adriatic is to agree on cooperation, as Trieste, Koper and Rijeka are only 70 kilometres apart, which is considered as one sole port on the global scale.

02 Aug 2019, 13:03 PM

STA, 2 August 2019 - Macro stress tests conducted by the Slovenian central bank have shown that the country's banking system is stable. "In the baseline as well as stress scenario, the Slovenian banking system has been shown to have appropriate capital adequacy," Banka Slovenije said on Friday.

"Slovenian banks are relatively well capitalised and have improved the quality of their credit portfolios, which is the consequence of successful reduction of non-performing exposure in recent years," the central bank said.

The stress tests were conducted using two macroeconomic scenarios designed to check the resilience of banks to shocks.

The baseline scenario considered the most likely macroeconomic trends through 2021 based on the bank's own forecasts, with the stress scenario assuming a downturn - a contraction of the economy by a cumulative 2.3% over three years.

Macro stress tests are top-down exercises for the entire banking system and are seen as complimentary to supervisory stress tests, which are bottom-up exercises focused on each individual bank.

31 Jul 2019, 14:22 PM

STA, 31 July 2019 - Slovenian beer exports grew by almost 20% in 2018 year-on-year, while hop exports increased by 17%, showed the Statistics Office data released on Wednesday, ahead of International Beer Day, which is observed on the first Friday in August.

The country's beer exports exceeded imports last year - exports topped EUR 34 million, while imports reached EUR 28.5 million.

Slovenia exported most of its beer to Croatia (30%), Italy (21%) and Bosnia-Herzegovina (19%), while most of Slovenian beer imports, which decreased slightly last year (by 3%), came from Austria (40%), Croatia (19%) and the Czech Republic (10%).

The number of Slovenian beer makers is on the rise - there were 61 registered in Slovenia last year, which is quite an increase compared to 2010 when there were only 13 of them.

Beer lovers paid some 2.8 euro on average for half a litre of pale ale in pubs or some 90 cents in stores in 2018.

Slovenian hop growers produced more than 3,000 tonnes of hop, which is a record amount since 1998 and a 43% increase on 2017.

Slovenia ranks third in hop production among EU countries, following Germany and the Czech Republic. The country's hop exports outweighed imports by far, amounting to EUR 26 million. On the other hand, hop imports totalled EUR 2.1 million.

Almost half of Slovenian exported hop went to Germany last year, with China (16%) and the UK (10%) being target markets as well.

29 Jul 2019, 18:48 PM

The UK’s Ascent Resources, often in the news in Slovenia for its long-running and so far less than successful attempts to exploit it’s Petišovci gas field with the use of hydraulic stimulation, has announced a series of cost-cutting measures and managerial changes. As reported by Morning Star, the moves are an attempt to cut costs by 50%, and are needed because of the delays to the Slovenian project. As the website notes:

In its Slovenian operations, Ascent said it will cut the number of its employees and halt "all non-essential expenditure", including its May order of compression equipment for the Pg-10 and Pg-11A wells.

The company is also changing its CEO, with Chief Operating Officer John Buggenhagen replacing Colin Hutchinson, who will stay with company on a part-time, interim basis as a finance director.

Also leaving the company's board is Cameron Davies, retiring as chair having been a company director since 2010.

The new CEO, a geophysicist who has been working in various capacities at Ascent since January of this year, said: “we continue to pursue an appeal against the Environment Ministry in Slovenia, in conjunction with our joint venture partner at Petišovci, and we are prepared to initiate legal action against the Republic of Slovenia, who we believe is in breach of European Union law.”

Shares in the company were down 12% at 0.26 pence each in London at the close of trading, Monday.

The full report can be seen here, while all our reporting on Ascent Resources is here.

29 Jul 2019, 17:33 PM

STA, 29 July 2019 - The Competition Protection Agency (AVK) has given a nod to the merger of Dnevnik and Večer, the publishers of the second and third largest daily newspapers in the country, respectively.

The AVK said on Monday it had established that the merger was in line with the competition rules. The content of the decision is yet to be published, while the managements of both publishers have already received it.

The clearance was first reported by the public broadcaster Radio Slovenija, which said the joint company would have a 40% share on the printed media market, which is believed to have been the reason why the deliberations of the AVK on the case took a whole year.

The approval of the Culture Ministry was already issued last December.

Maribor-based Večer, controlled by the no. 1 publisher Delo until 2014 when it was sold to entrepreneurs Uroš Hakl and Sašo Todorovič due to anti-trust concerns, has a circulation of about 19,000, while Dnevnik, owned by Bojan Petan of publisher DZS, one of 21,000.

According to some estimates, labour cost rationalisation alone will save the companies EUR 2 million. The two papers each generated around EUR 1.5 million in net profit last year.

Večer and Dnevnik are meant to continue being published as separate papers. Forces are expected to be joined when it comes to covering foreign and internal affairs as well as sports, while regional topics are to be covered separately.

Večer has traditionally had a strong subscriber base in the north-east of the country, while Dnevnik is perceived more as a central Slovenian or Ljubljana-based paper.

At least partial mergers are also expected for the subscriptions, marketing and administration department.

More about the plans and expected lay-offs will be clear once the owners comment on the AVK's decision, which has not yet been published officially.

Večer director Uroš Hakl and Dnevnik chairman Bojan Petan welcomed the decision by the AVK, labelling it as a "move which both companies perceive as necessary considering the aggravated situation on the printed media market."

Dnevnik editor-in-chief Miran Lesjak said that the merger "is certainly one of the most important decisions in the history of both newspapers."

According to Lesjak, the decision was made so that the newspapers survive. "We live in times when newspapers...which bet on quality of information, professionalism and their own credibility fight for survival," he added.

Igor Dernovšek, the president of Dnevnik journalists' trade union, told the STA that the decision was expected, adding that the trade union was assured that for now, there would be no lay-offs or pay cuts.

The Slovenian Journalists' Association (DNS) responded to the news by urging that both papers preserve their level of quality and professionalism, their separate brands, content plurality, as well as jobs.

The DNS expressed concern over the owners' limited sharing of information regarding their plans and consequences of the merger. It urged transparency, the inclusion of journalists in future steps and against only pursuing a strategy of survival and synergies, arguing this could prove fatal eventually.

"The owners must not only look at their economic interest but also at public interest - this means quality, in-depth and investigative reporting in what is in fact an increasingly barren Slovenian media landscape.

"Both of these media outlets are among the pillars of quality journalism in Slovenia, each a backbone of public opinion in their environment. Shaking them up would have irreparable consequences for the entire media and democratic environment," the DNS wrote.

The association moreover pointed out that it had launched an ongoing administrative dispute over being excluded from the Culture Ministry's deliberations on the merger.

The Association of Journalists and Commentators (ZNP) assessed that the merger will not change the balance of power on the Slovenian media market, and that it would not have a significant impact from the aspect of media plurality.

"Considering that both newspapers are...distinctively leaning to the left, their merger will not bring anything significantly new from the aspect of media plurality," said ZNP president Matevž Tomšič, who does not expect any major changes content-wise, either.

"Večer is a more regionally-oriented newspaper, which could hurt its image," he said, adding that the merger will render certain journalists and other media workers in both newspapers redundant and that they would be fired.

In addition to the DNS, the perils of the development have also been highlighted by media expert Marko Milosavljević, who particularly warned against the merging of the two paper's internal policy desks.

"This aspect definitely cuts deep into public interest and the plurality of the media landscape," Milosavljević told the STA, warning this could result in "a single person having control over reports in two key national papers".

He argued watchdogs too often only considered the economic side of things and forgot about the intellectual aspect. "This intellectual market often shrinks as a result of media mergers," the Ljubljana Faculty of Social Sciences professor said.

29 Jul 2019, 14:48 PM

STA, 29 July 2019 - The Slovenian Financial Administration (Furs) has told the STA that serious efforts have been under way to detect and sanction individuals engaged in regular crypto currency mining or trading while failing to pay taxes. It highlighted the example of a miner who had to pay EUR 100,000 in taxes after his undeclared activity was discovered.

Furs responded last year to the soaring values of popular cryptocurrencies by issuing warnings that regular crypto mining and trading can amount to a work activity that needs to registered and is subject to taxation.

Cases are evaluated on an individual basis, with key factors being the turnover value and number of transactions in a specific period.

Asked whether any undeclared miners or traders had been discovered in recent months, Furs highlighted the example of an individual who was discovered to have engaged in regular mining over an extensive period which would have required registration as an activity.

"This discovery of undeclared work led to the individual making a self-declaration and paying almost EUR 100,000 taxes," Furs explained.

It remains unclear how many people in Slovenia are engaged in the activity of mining or trading in cryptocurrencies.

Furs has various channels for obtaining information, indulging through the international exchange of data among tax administrations.

29 Jul 2019, 10:57 AM

STA, 28 July 2019 - The government has proposed a series of tax tweaks aimed at reducing labour taxation, coupled with higher taxes on capital, which would partly offset the loss of revenue. The rest is to be secured through more effective tax collection.

The Finance Ministry submitted the blueprint of the tax reform for public consultation on 22 June, and is accepting comments from stakeholders until 1 August after which it will compile draft amendments ready to be passed by the government and then by parliament.

The changes would affect laws on personal income tax, corporate income tax and on tax on profit from disposal of derivatives. This would also require changes to the tax procedure act. The bills are to hit parliamentary benches in the autumn to be fast-tracked in order to kick in on 1 January 2020.

Finance Minister Andrej Bertoncelj would like the package to be revenue neutral. "We've planned a set of soft measures with the main role to be played by the Financial Administration," the minister said in a recent interview with the magazine Reporter.

The revenue service is to produce an extra EUR 160 million through a proactive approach that would make tax collection more effective and crack down on tax evasion and fraud involving social contributions, the minister explained.

Overall, the planned cuts on labour taxation, along with the cuts on holiday allowance that have already been implemented, are projected to reduce receipts by roughly EUR 220 million annually, while additional taxes would increase receipts by an estimated EUR 87 million.

FURS has told the STA it has already drawn up measures designed to collect an additional EUR 160 million more in taxes. These include measures to increase voluntary payment of taxes such as expanding payment methods and advancing tax literacy among the young, and improving inspection procedures.

In this way they hope to collect EUR 50 million more social contributions, EUR 45 million more VAT and EUR 40 million more personal income tax. A further EUR 25 million could be gained from more aware tax payers and better oversight of how legal persons calculate and pay tax and of tax on motor vehicles.

The proposed changes include increasing general tax credit and tweaks to the income tax brackets to reduce the tax burden on the middle class. This is to be offset by higher corporate income tax and higher taxation of capital gains and of rental income.

28 Jul 2019, 15:27 PM

STA, 27 July 2019 - The value of construction works in Slovenia carried out last year amounted to EUR 2.57 billion, which is 29% more than in the year before, the Statistics Office has reported. It was the second time in a row that the value increased on the annual basis, and it was also 1% above the amount from 2010.

The works that construction companies carried out on buildings last year are valued at EUR 1.35 billion, which is 35% more than in 2017.

The value of works on engineering structures was meanwhile up by 23% to EUR 1.22 billion, show the final data from the Statistics Office.

The growth in value was the most prominent in non-residential buildings, being up by 38% to EUR 906 million.

The value of works on residential and non-residential buildings combined was up by 35% compared to 2017. It was up by 28% for the former and by 38% for the latter.

When it comes to non-residential buildings, the value of construction works was up the most in the industrial and warehouse buildings segment (up by 59% to EUR 318 million).

This segment was followed by office and administrative buildings, and by commercial and service buildings, up by 42% to EUR 165 million and by 23% to EUR 160 million, respectively.

The value of works on transport infrastructure was up by 38% to EUR 770 million.

The value was meanwhile down for works on pipelines, communication networks and electricity transmission networks (-0.3% to EUR 333 million) and for works on industrial complexed (-9% to EUR 46 million).

26 Jul 2019, 17:30 PM

STA, 26 July 2019 - Slovenia's model of temporary posting of workers to other EU countries has been subject to sharp criticism about exportation of cheap labour. The country has seen an exponential growth in such postings over the past ten years and is reportedly third in the EU by the number of posted workers.

 

The Health Insurance Institute (ZZZS), which issues forms to employers posting workers abroad, issued 17,668 such forms in 2008, 103,370 in 2014 and as many as 159,136 in 2017, but the figure fell to 127,059 last year. A worker may be posted abroad several times a year, which means several forms.

The social contributions paid by Slovenian employers for the workers sent abroad do not correspond to the actual pay they earn but to what they would if they did the same work in Slovenia. Posted workers as a rule also get extras such as allowances for separation and higher living costs, so their earnings are higher than if they performed their job in Slovenia.

The strong growth in the number of postings and deductions on social contributions paid by employers has provoked criticism from European interest associations.

The European Federation of Building and Woodworkers (EFBWW) has calculated that Slovenia posts at least 100,000 construction workers to the EU even though it has only 55,000 domestic workers in the industry. Most of them come via Slovenia from the Western Balkans.

This is why the federation submitted a request to the EU Commission at the end of May to investigate the practice and its regulation in Slovenia.

"Slovenia has built a money-spinning business model based on social fraud and worker exploitation. This is totally unacceptable and should be stopped at once," said the EFBWW president Dietmar Schäfers.

The commission has also received complaints from interest groups in Austria, while the country itself has said it will try to engage in dialogue with Slovenia before taking any such step.

Slovenian posting companies have been accused of exporting workforce to the EU at dumping prices as Slovenian labour costs are lower, which makes workers from Slovenia cheaper.

Meanwhile, the Slovenian government has acknowledged that the situation provided food for thought regarding necessary measures.

Slovenia's regulation entails that posting companies need to obtain an A1 document which allows posting temporary workers to other member states and is issued in accordance with the EU legislation by a relevant district unit of the ZZZS.

According to the Labour Ministry, a special task force is examining relevant regulations from 1970, including those governing the social contribution deductions for employers, and drawing up measures to reform them.

Responding to the criticism of the increase in the number of posted workers and worker exploitation, the Labour Ministry told the STA that the transnational provision of services act, which tightened regulations for issuing A1 documents, had been adopted last year.

The law aims to prevent cross-border posting of workers by mailbox companies or employers, particularly in construction and industry, who have already violated regulations, thus tackling worker exploitation, which has been a critical issue.

According to the Labour Inspectorate, there have been 20 violations of the act in 2018.

On the other hand, the ZZZS, which is in charge of revoking issued A1 documents, recorded more than 17,450 irregularities, including over 6,400 tax-related and over 6,300 pertaining to employment contracts.

Foreign authorities have been submitting requests about checking conditions compliance of posting companies or revoking their posting permits to the institute, which has received around 10 such requests by June this year.

According to the ZZZS, the issue is complex and hard to tackle, while Goran Lukič of the Workers' Counselling Office told the STA that the new act somewhat improved the situation even if he is still sceptical about its enforcement.

Meanwhile, Slovenian employers' associations deny the accusations of Slovenia being a kind of gateway for social dumping in Europe.

The Slovenian Employers' Association (ZDS) told the STA that given the amount of labour costs in Slovenia one could not speak about dumping, while the Chamber of Commerce and Industry (GZS) said that it was key that foreign workers who got work permits in Slovenia and ended up working in other EU countries were paying their social contributions and income tax in Slovenia.

26 Jul 2019, 10:25 AM

STA, 25 July 2019 - DARS, the national motorway company, has received five fresh bids in what is the latest chapter in the construction of Slovenia's half of the second tube of the Karavanke tunnel to Austria. Turkish builder Cengiz, already picked in a procedure last year that was subsequently quashed, is the cheapest bidder again.

Cengiz Insaat, which had promised to execute the project for EUR 89.3 million in 2018, now issued a bid worth EUR 99.6 million, DARS announced after opening the bids on Thursday.

Cengiz is followed by Greek J&P Avax with EUR 115 million, and Slovenia's Kolektor CGP, which has partnered with Slovenian engineering company Riko and Turkish company Yapi Merkezi to offer to build the tube for EUR 121 million.

The fourth lowest bid, worth EUR 121.5 million, was submitted by Implenia Österreich in partnership with Implenia Switzerland and Slovenia's CGP Novo Mesto, and the fifth, worth EUR 122.2 million by Slovenia's Gorenjska Gradbena Družba in cooperation with Czech builder Metrostav, which had been the second lowest among nine bidders in 2018.

Bosnia's Euroasfalt and its Slovenian partner Cestno Podjetje Ptujm, which had been among the six bidders invited by DARS into the new round of talks and bids, has not submitted a bid this time.

The bids are now to be examined and the procedure is continuing after the National Review Commission - which annulled the original awarding of the deal to Cengiz with the argument the Turkish company had made subsequent changes to their offer - rejected the call by Kolektor CPG, Yapi Merkezi and Riko to halt the new stage of the procedure.

While Austria is already in the midst of building its portion of the 8-kilometre tunnel, the project has been stuck in the tender stage in Slovenia since it began in 2017, having seen a number of appeals processed by DARS as well as the National Review Commission.

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