STA, 27 November 2019 - Reflecting on the notion of freedom, the business newspaper Finance takes issue in Wednesday's commentary with restrictions being introduced for Airbnb in Slovenia, hailing the Airbnb "platform and business model as a typical symbol of freedom".

"It brought thousands of real estate units on the market that had not been used before and had generated no earnings. They only had value as walls but not as a business.

"Airbnb instilled life in the walls and made people wealthier. It generated work. Because of Airbnb a large number of cities are more accessible to those not as wealthy, it increased equality, made living cheaper and encouraged tourism and entrepreneurship among people who would have never taken it on otherwise," Finance says.

The paper goes on to acknowledge that Airbnb also drove up housing prices, brought little in terms of tax revenue and can bother neighbours. It however wonders whether the neighbours are really bothered by tourists, suggesting they are simply envious.

"To resolve envy with legislation is not only unfree but also stupid," Finance says in the commentary entitled My Freedom Your Prison.

STA, 25 November 2019 - Businesses from north-east Slovenia are worried that companies providing cross-border services in the EU could be severely affected if Slovenia introduces into its law the new directive governing cross-border services and posted workers "too rigorously". A study by an economist was presented to corroborate their view.

Earlier this year, the European Federation of Building and Woodworkers (EFBWW) asked the European Commission to investigate Slovenia for dumping in temporarily posting workers in other EU countries.

The EFBWW maintains Slovenia's law enables paying lower contributions and taxes for posted workers in the markets where they work, making them more competitive, explained the head of the Štajerska region's association of providers of cross-border services, Albert Kekec.

Related - Temporary Posting of Slovene Workers “Exports Cheap Labour” (Feature)

Slovenian companies believe these are false allegations, and have complained against them, waiting for the final decision, Kekec noted in Maribor on Monday.

He believes Slovenia was challenged because it is a small country and because it has a poor record of defending itself in such cases.

But since the dispute could result in case law which would also apply to other EU countries, it is important that our country realises the weight of the case and acts appropriately, he said.

This is why the regional Štajerska Chamber of Commerce has commissioned a study of exports of construction and engineering services, and posted workers.

Economist Jože P. Damijan, presenting his study, said legislative changes would considerably lower or entirely stop the export of construction, engineering and transport services by Slovenian companies to the EU.

This is particularly true for the part of Štajerska along the Drava river, which has an above-average number of such companies.

Damijan predicts a loss of more than 10,000 jobs around the entire country, and even up to 13,000 in the worst-case scenario, of which some 5,000 in the Drava area.

The chamber wonders whether the government is aware of all the consequences that could result from transposing the directive indiscriminately.

It points to direct and indirect impact on the country's GDP, while the area around the river Drava would be affected the most.

Damijan's study shows Slovenia's construction, engineering and transport companies generate around 20% of all exported services, and almost 4.5% of the country's overall exports. The majority or 80% is exported to the EU.

These companies employ more than 70,000 workers and post around 12,000 workers abroad monthly. Slovenia is thus preceded only by Poland.

Over the past few years Slovenia's services sector has been growing the fastest in the EU.

Damijan said it was true the three sectors employed over 70% of foreign workers, mostly from the Balkans, but noted these were still Slovenian-owned companies paying taxes in Slovenia.

The chamber also criticised the government for not providing enough information, including about the appeal against the EFBWW's request to investigate Slovenia.

State Secretary at the Labour Ministry Tilen Božič has recently said the ministry intends to tackle the issue of posted workers, including alleged violations of worker rights as highlighted by Slovenian trade unions, by changing the law on cross-border services "in a foreseeable future".

STA, 24 November 2019 - Although no case of African swine fever has been recorded in Slovenia, pork prices in the country have risen by 10-12% this year as a serious outbreak of the disease in Asia has made global pork prices skyrocket. Slovenian meat producers believe the 10-12% rise will not suffice to cover the constantly rising producer price of pork.

The Slovenian Meat Processing Industry Association has told the STA that although indirect, the impact of swine fever on the Slovenian market is considerable.

Since demand for pork is rising, foremost in China, European exporters have reacted to the trend, so purchase pork prices have risen.

In the European market, they have been increasing since the start of this spring, with purchase prices of certain cuts of meat up by as much as 70% or more.

This has an impact on purchase prices in Slovenia, where pork self-sufficiency is relatively at only 30%.

The association says this situation could last for several years as there is no prospect China could contain the disease any time soon.

"The current situation shows how vulnerable we are due to the low self-sufficiency rate."

The Slovenian meat-processing industry could survive the crisis if meat prices do not lag considerably behind rising costs.

However, the situation could deteriorate if African swine fever, a highly contagious disease, breaks out in Slovenia, the association says.

The association also expects retail prices to rise sooner or later, bu the good news is that retail pork prices in Slovenia are now some 20% below the EU average.

However, leading retailers in Slovenia could not say exactly whether or when consumers can expect another rise in pork prices.

Lidl Slovenija says it increased pork prices for the first time at the start of this summer, by an average 10%.

It said its pork suppliers have notified it of rising producer prices but Lidl could not say how much or when its retail prices would go up.

Mercator, the largest retailer in the country, has told the STA it was just a question of time when retail pork prices will have to be increased.

Hofer, on the other hand, has not yet increased its retail pork price this year, and will make efforts for it to rise as little as possible.

Almost 1,790 cases of African swine fever were recorded in pigs and another 5,320 in wild pigs in the EU between January and mid-November, the most in eastern Europe.

A Czech oligarch set to become the biggest player on Slovenian TV screens is facing criticism in his home country. Czech as well as European journalists point out the  dangers associated with PPF’s political influence over the media in Central and Eastern Europe

The recently announced acquisition of CME by PPF (Reuters reporting here), owned by the richest Czech oligarch, has a rather significant impact for the Slovenian media market.

Provided that the EU as well as Romanian and Slovenian regulators approve the deal (Czech public TV broadcasting here), Slovenia’s PRO Plus, which belongs to Central European Media Enterprises (CME), is to become part of PPF Group in 2020. In other words both POP TV and Kanal A as well as Brio, Oto and Kino are part of a major shift in media ownership, a move which has already stirred controversy in the Czech Republic.

Although the owner of PPF Group, Petr Kellner, lives in the Czech Republic and has recently become active in promoting “conservative values” through establishing a conservative think-tank and expressing his concerns in the PPF annual report over the developments in the West and EU, particularly over the increasing “egalitarianism and relativizing of traditional values”, his PPF Group consists of numerous companies spread across the world (PPF itself is registered in the Netherlands).

While Kellner and PPF made Czech headlines in connection with the Panama Papers affair few years ago (Seznam news in Czech here), many of the PPF companies are also registered in Cyprus where they enjoy greater tax leniency and anonymity than in the Czech Republic. According to the PPF website the group’s greatest turnovers occur on the Russian, Chinese and southeastern markets in Asia, where PPF’s Home Credit International is active.

In fact, PPF prides itself in being the “first foreign entity to be licensed by the Chinese regulator to provide consumer finance services in China” (already since 2009 according to PPF’s official history, as stated here). In the meantime analysts at the Czech-based charity organization People in Need have reported that the Czech branch of Home Credit has been participating in the illegal extortion of property from its clients. (People in Need statement on Home Credit in Czech here).

It needs to be noted that Czech population is struggling with a soaring debt crisis which according to analysts has been sparked by the legislative measures resembling the debt legislation of Russia and China and falling short of the standards exercised across the EU (Observer published a report on Czech debt crisis here).

The Czech online outlet Sinopsis.cz, which focuses on China and is run by lecturers and researchers from the Institute of East Asian Studies at Charles University, regularly reports about Home Credit’s clients in China complaining of “usury practices” of “the Czech credit” as PPF is known in the People’s Republic of China (here).

In September and October much of Czech media reported on an announced controversial partnership between the Charles University and Home Credit under which Home Credit was to use the title of an “exclusive partner” of the oldest and most respected Czech university. Amid the public outcry, student petition and several faculties distancing themselves from such partnership (Charles University vice-chancellor Zima is since then facing calls to resign), Home Credit stepped away from the announced partnership (report in English available here).

Many Czech observers point out that PPF’s acquisition of CME is the group’s latest attempt to garnish their public image, but perhaps even more importantly a tool of asserting their political influence not only in the Czech Republic, but in the Central European region more effectively.

The Czech Syndicate of Journalists has called on PPF to guarantee independent journalism and democratic standards (the full statement in Czech is here) in a way reminiscent of demands Le Monde journalists addressed to another Czech oligarch, Daniel Křetínský (Kellner’s business partner and a partner of his daughter), who purchased a 50% stake in Le Monde’s parent company (Courriere International on Kretinsky and Le Monde  and Columbia Journalism Review here).

PPF’s Director of Communications Vladimír Mlynář refused to address the demands of the Czech Syndicate of Journalists when presented with the statement by the Czech public TV broadcaster. Moreover, Mlynář went as far as questioning the Syndicate’s legitimacy saying he does not know who they represent and quoted his journalist and dissident past to support his own one-sided judgment of the Syndicate and of the Czech TV reporter whom he accused of displaying emotions (debate on Czech TV available here).

Since then the Czech Denik N has reported on Josef Šlerka, chairman of the Czech Fund of Independent Journalism, whose participation in the TV debate was canceled shortly before the start of it, just as he was on the way to the studio. Czech TV responded by saying that this has been a regrettable mistake by an individual employee of the company (full report here).

Previously, the Fund had issued a statement warning against further deterioration of media independence in the Czech Republic, which the forthcoming acquisition will facilitate, and called on PPF to publicly declare that CME will not become an instrument of “PPF’s business, financial and political interests” in the Czech Republic as well as in Bulgaria, Romania, Slovakia and Slovenia (full statement here).

The Fund’s statement echoes the recent warnings issued by the European Federation of Journalists and Reporters without Borders about the state of journalistic independence and freedom in the Czech Republic (here and here). Once a highest-ranking post-communist country in World Press Freedom Index, the Czech Republic has been steadily sliding down the list (in 2019 sitting 40^th, a far cry from its top ten placement at the beginning of this decade).

Reporters without Borders cite the concentration of media ownership in the hands of few oligarchs and Czech PM’s political influence over the media, and police intimidation of journalists investigating the Czech PM (besides being Czech Prime Minister, Andrej Babiš is a tycoon in control of large business agro-chemical empire and the second largest media group Mafra).

Babiš’ media influence is rivaled only by that of the aforementioned Daniel Křetínský who owns Czech News Center, a large collection of dailies, magazines and lifestyle and sport outlets. Petr Kellner is now poised to join or even overshadow these two.

It will be rather remarkable to follow the respective regulators in the EU, Romania and Slovenia, whose turn it is now to assess the impact of the CME acquisition on their respective markets, and to see whether these have any legal means to address concerns voiced by the Czech and European community of independent journalists.

In what can be a glimpse at how PPF views opposition to its investments, PPF’s chief boss regarding the media, Mlynář has already downplayed the role of the Bulgarian regulator (which in the past prevented PPF from entering Bulgarian market) in the afore-mentioned debate on the Czech public TV.

Mlynář called the Bulgarian regulator’s then decision-making process “below standard”, without giving any further evidence to support this, perhaps trying to capitalize on the stereotypes associated with the post-Communist and Balkan authorities. Needless to say, his statements make the future of media freedom in the Czech Republic look ever more questionable, and may have the same implications for Slovenia.

STA, 22 November 2019 - The insurance group Sava reported on Friday a net profit of EUR 37.7 million for the first nine months of the year, a 29.3% year-on-year increase driven by high premium growth and improved cost-efficiency. Operating revenue was up 8.7% to EUR 427.5 million.

The group wrote EUR 471.1 million in non-life premiums, up 9.5% year on year, mostly on account of 10.9% growth in gross premiums written in the non-life insurance business in Slovenia and 20.3% growth in the non-life insurance business outside of Slovenia.

More moderate growth figures were recorded for the reinsurance business (3.6%), life insurance outside of Slovenia (7.4%) and life insurance in Slovenia (0.4%).

In the first three quarters of the year, Sava wrote 84.9% of its full-year premium target for 2019.

The company added the group's performance had also been bolstered by better cost-efficiency, with a 1.5-point year-on-year improvement in the expense ratio of insurance business, primarily reflecting faster growth in premiums over expenses.

Net claims incurred increased by 21% to almost EUR 287 million. "The net incurred loss ratio was somewhat larger than planned, mainly due to the impact of higher net claims incurred by the group's non-life insurers".

Primary insurance saw an increased claims burden in Croatia, where claims rose in motor third-party liability and in motor casco business, as well as owing to the integration of the Ergo non-life insurer into the group, the business reports says.

Sava said that in addition to achieving significant organic growth, it remained committed to its strategy of acquisitions-based growth.

In October 2019, Sava issued subordinated bonds worth a total of EUR 75 million, with a scheduled maturity of 2039. It said this would provide the group even more flexibility to pursue growth.

The total assets of the Sava group, which has a 2,500-strong workforce, stood at EUR 1.84 billion at the end of September, 8.1% more than at the end of 2018.

STA, 21 November 2019 - The Organisation for Economic Co-operation and Development (OECD) has downgraded Slovenia's GDP growth forecast for 2019 from 3.4% to 3.1% after already downgrading it slightly in May. Forecast for 2020 and 2021 indicate similar growth of 3.0% and 3.1%, respectively.

The OECD says that private consumption will continue to be the main driver of growth, sustained by higher wages and solid employment gains.

"Uncertainty about the external environment will slow the pace of new business investment. Improvements in export performance will slow with rising labour unit costs."

Fiscal policy will remain supportive of growth in the coming two years, driven by higher public sector wages and social transfers, the OECD says.

Measures to restrict pathways to early retirement would mobilise older workers, while accelerating privatisations and decentralising wage bargaining, would contribute to improve labour allocation, and alleviate labour shortages and wage pressures, the OECD says.

Meanwhile, economic growth is projected to remain broadly stable in 2020 and 2021. A deterioration in cost competitiveness, owing to higher labour costs and weak productivity gains, will hold back export growth, says the OECD.

Investment will continue to slow somewhat in the next two years, despite higher construction activity, as spending on machinery and equipment weakens. A slow recovery of exports and business investment is expected towards the end of 2021.

The main upside risk stems from a faster recovery of business sentiment and business investment growth. On the downside, prolonged tensions in the international environment could lead to lower-than-anticipated export market growth.

Today's downgrade comes after the OECD has already changed Slovenia's forecast from 3.6% to 3.4% for 2019 in May. However, at that time the OECD also improved the country's forecast for 2020 from 2.7% to 3.1%.

This forecast for Slovenia for 2019 is the most optimistic of all forecast updated in recent weeks, both domestic and foreign.

The European Bank for Reconstruction and Development expects Slovenia's GDP to grow 3.0%, the International Monetary Fund (IMF) 2.9%, the government macroeconomic think tank IMAD 2.8% and the European Commission 2.6%.

Banka Slovenije is yet to update its forecast this fall after saying in May that the country's economy is expected to grow 3.2% this year.

STA, 21 November - The Novo Mesto-based pharmaceutical group, Krka, generated EUR 1.09 billion in sales revenue in the first nine months of the year, which is 12% more than in the same period last year. Net profit increased by 42% to EUR 171.9 million. Sales were up in all regions and most markets.

The core company Krka saw its sales revenue rise by 10% to top EUR 1 billion, while its net profit rose by 46% to EUR 174.8 billion, shows the company's business report, published on the web site of the Ljubljana Stock Exchange on Thursday.

Sales went up in all regions and for all groups of products and services. Krka generated the most revenue in Eastern Europe, where sales went up by 18% to almost EUR 339.7 million in the first nine months of the year, which is 31% of total sales.

In Russia, the group's largest individual market, sales increased by 15% to EUR 218.2 million.

In Slovenia, where Krka generated 6.4% of its total sales, sales increased by 5% to EUR 69.9 million. Some EUR 40 million worth of products were sold in Slovenia alongside EUR 29.9 million worth of spa tourism services.

Central Europe, which contributed 23.2% to total sales revenue, recorded a 5% rise in revenue to EUR 252 million. In the biggest market of the region, Poland, sales were up 6% to EUR 119.2 million.

In Western Europe, sales jumped by 16% to EUR 243.1 million, which accounted for 22% of total sales. The biggest growth was recorded in Scandinavian countries, Spain, the UK and Benelux countries.

The sales revenue in South-East Europe rose by 10% to EUR 145.6 million, mostly on account of Bulgaria and Serbia.

The group allocated EUR 81.1 million for investment in the January-September period, of which EUR 66.3 million were investments of the core company.

In the first nine months of the year, 13 new products were registered in 30 pharmaceutical forms and strengths.

The group expects sales to reach EUR 1.43 billion at the end of this year. Net profit should top EUR 200 million and investment EUR 114 million, mostly into production capacities and infrastructure. Some 10% of sales revenue will go for research and development.

Next year, sales revenue is expected to reach EUR 1.52 billion and net profit over EUR 210 million. Labour force should increase by 3%, meaning that the group would employ more than 12,300 people at the end of 2020.

STA, 20 November 2019 - Chemical company Cinkarna Celje generated a net profit of EUR 15.9 million by the end of the third quarter. Although 91% above plans, the figure was also 43% lower year-on-year. Net revenue stood at EUR 134.8 million, 1% more than in the same period the previous year.

"The management believes that the business results are very good in objective terms," says a business report published on Wednesday, which also notes that the company expected to see a net profit of EUR 8.3 million for the first nine months.

Last year, the company posted a record profit of EUR 30.6 million and by the end of the third quarter, profit had already soared to EUR 27.9 million.

Operating profit dropped by 44% over the same period last year to EUR 18.7 million. Exports reached EUR 119.4 million, 3% more than in the first three quarters of last year.

Cinkarna had no financial debt and recorded a total of EUR 27.7 million in deposits, which was 20% less than at the end of September 2018 and 17% less than at the end of 2018.

Its main product is titanium dioxide pigment, whose price has been falling in Europe and Asia due to the US-China trade wars, the company says in the report.

Protectionist measures by the US allow US producers to set higher prices, thus the price of the pigment on the US market has grown by about 5%. As a result, Chinese-made pigment is uncompetitive in the US and is therefore channelled to the European markets, pushing down prices.

Ex-Yu Aviation reports that Joc Pečečnik – the founder of Interblock Gaming, which manufactures products for lottery games – has plans to establish a new airline based in Ljubljana. The businessman has made a bid for what remains of Adria Airways, along with an unnamed foreign partner with experience in aviation.

Mr Pečečnik is quoted as saying: “We decided to do this because we would like to establish a successful business and because we would like to be able to fly to European cities again from Ljubljana, and not go to neighbouring airports three or four hours before our flights, which are typically [just] an hour long.”.

The report goes on to say that the new airline would draw on the expertise of Adria’s former CEO Mark Anžur, who ran the company from late 2012 until its privatisation in March 2016, going on to work as the CEO of the Irish regional carrier Stobart Air for eight months.

Moreover, the Slovenian banana and real estate tycoon Izet Rastoder has reportedly founded a new carrier called Air Adriatic and is currently looking to acquire two private jets. On the state side of things, the government is said to still be considering setting up a new national carrier with a foreign partner, although a decision on this is not expected until the end of the month.

All our stories on Adria can be found here

STA, 19 November 2019 - The Slovenian and Hungarian automotive clusters signed an agreement to develop cutting-edge technologies which they hope would make them leaders in the transition to e-mobility. A technology and development business event held in Maribor on Tuesday was also attended by the Slovenian economy minister and Hungarian innovation minister.

The event was organised by the Chamber of Commerce from the Štajerska region in collaboration with the Hungarian Embassy in Ljubljana and the University of Maribor.

Economy Minister Zdravko Počivalšek said Slovenian companies were already taking part in the development of Hungary's test track for conventional and autonomous cars.

Slovenia's automotive industry generates around 10% of the country's GDP and 20% of its entire exports, so he deems technological solutions in this area a basis enabling companies from both sides of the border to become an important player in the global car industry.

He said today's meeting with Hungarian Minster for Innovation and Technology Laszlo Palkovics further "enhances our excellent bilateral cooperation", noting trade in 2018 totalled EUR 2.4 billion.

[GOSPODARSTVO] Minister za gospodarski razvoj in tehnologijo Zdravko Počivalšek in madžarski minister za inovacije in tehnologijo Laszlo Palkovics sta bila danes v Lendavi. #vestnik #nicsenezgodibreznas #slovenija #madzarska https://t.co/wFPA1Yw3yd

— Vestnik (@Vestnik_si) November 19, 2019

Palkovics added that this was one of the most exciting technological periods which would result in major technology changes to radically change people's lives. "Even if we are both small countries, we have to find our places in the development of high technologies," he said.

Zoran Ren of the University of Maribor said the university had worked with the universities in Austria's Graz and Hungary's Budapest on developing some components for Hungary's ZalaZone test track.

Od besed k dejanjem. V Mariboru pravkar podpisan sporazum o sodelovanju med Združenjem madžarskih proizvajalcev avtomobilskih delov in Slovenskim avtomobilskim grozdom. Skupaj z ?? ministrom dr. Palkovicsem dajeva razvoju avtonomne in brezogljične mobilnosti nov zagon. pic.twitter.com/IUqpS8h4pj

— Zdravko Počivalšek (@PocivalsekZ) November 19, 2019

"Today's event is important because it defines the future. New ties are being forged which will help design an orderly and safer mobility in the future," said Rem, the vice-chancellor in charge of scientific and research projects.

He said the first stage of the test track project, worth EUR 150 million, had already been completed, with the second one, worth EUR 50 million, now continuing.

Iztok Seljak of Hidria Holding, a supplier of car parts for many leading car producers, said the Slovenian Automotive Cluster was looking for breakthrough solutions to tap in the potential offered by the transition to a society based on e-mobility.

One such solution is wireless electric car charging, for which a special consortium has already won some start-up funds, he explained.

"We are first partnering up with Hungarians, then we will also with Austrians and other European partners to receive more development funds and to make sure this becomes a priority European project which will enable us to become a leader in e-mobility," Seljak said.

Meanwhile, the two ministers continued the meeting in the Slovenian border town of Lendava, where the topics included a revitalisation of the abandoned Nafta industrial complex, the use of local geothermal sources and innovative zero carbon energy generation.

Commenting on the industrial complex, Počivalšek announced the state was ready to provide a 20% investment subsidy to investments in Lendava.

"We agreed that we need to encourage cooperation of the Porabje and Prekmurje border regions, along with the Austrian border area - the building of the test track for electrical and autonomous vehicles in Zalaegerszeg is a very good basis for this," Počivalšek moreover said.

Palkovics said the two countries also wanted to strengthen cooperation in the phasing of EU funds.

He proposed that funding for research cooperation be upped to EUR 1 million and moreover argued that the situation of young people living near the border could be improved with cooperation among universities and secondary schools in both countries.

All our stories about Hungary and Slovenia are here