SLOVAKIAIdeal Investment & Business Destination

Slovakia – Growing Heart of Europe

Source: SARIO, 2011

I Establishment: 1st January 1993I Official name: Slovak RepublicI Area (km2): 49,035I Population: 5,437,126I Capital: BratislavaI Member of: OECD, WTO, NATO,

EU, Schengen area I Official currency: EURO I Official Language: SlovakI Government: Parliamentary

democracyI Election term: 4 yearsI Neighbours: Austria, Czech

Republic, Hungary, Poland, Ukraine

I Time zone: GMT + 1hour

Macroeconomic Overview

-6

-4

-2

0

2

4

6

8

10

12

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

European Union Slovak Republic

GDP growth GDP Prediction for 2011

EC 3 %

OECD 3,6%

IMF 3,8 %

National Bank of SR 3,4 %

GDP Prediction for 2012

OECD 4,4 %

Source: International Monetary Fund, Eurostat,Slovak Statistics Office, Central office of Labour, social affairs and family

2008 2009 20102011 1Q

2011 2Q

Real GDP growth 6,4% -4,7% 4% 3,5% 3,3%

HICP Inflation 4,6% 1,6% 0,7% 3,4% 3,3%

Unemployment 7,7% 11,4% 14,4% 13,9% 12,9%

Average monthly gross salary (€)

723 744,5 769 746 781

COUNTRY RATINGS(Sovereign foreign currency ratings)

SLOVAKIACZECH

REPUBLICHUNGARY POLAND BULGARIA ROMANIA

A+ positive

AA- stable

BBB- negative

A- stable

BBB stable

BB+ stable

A1 stable

A1 stable

Baa3 negative

A2 Stable

Baa3 positive

Baa3 stable

A+ stable

A+ positive

BBB-stable

A- Stable

BBB- negative

BB+ stable

A+stable

A stable

BBB+ negative

A- Stable

BBBstable

BBB-stable

A stable

A stable

BBB stable

A- stable

OECDCountry risk 0 0 0 2 4 4

Source: www.standardandpoors. com,www.moodys.com, www.fitchratings.com, www.jcr.co.jp, www.r-i.co.jp, www.oecd.org

Ratings & Outlook

1

4851

5962 64

72

0

10

20

30

40

50

60

70

80

Singapore Slovakia Hungary Bulgaria Poland CzechRepublic

Romania

Source: World Bank Group – Doing Business Report 2012

Registering property

Paying taxes

Enforcing contracts

Protecting investors

Closing business

Construction permits

Methodology

The Doing Business projectprovides objective measures of business regulations and their enforcement across 183 economies and selected cities at the subnational and regional level.

Starting a business

Trading across borders

1st Rank in CEE in DOING BUSINESS 2012 !

Getting credit

Low Labour Cost & High Labour Productivity

769 €Slovakia

976 €23 951 CZK

Czech Republic

806 €3 224,98 PLN

Poland

760 €202 576 HUF

Hungary

Data for 2010Source: National Statistical offices of Czech republic, Hungary, Poland, Slovakia, Bulgaria, Romaniaexchange rate (as of 23 March 2011)

GDP (in PPS) per hour worked as compared to EU15 (100)Source: Eurostat 2011

Gross monthly salary

472 €1936 RON

Romania

328 €642 BGN

Bulgaria

0

10

20

30

40

50

60

70

80

90

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Slovakia Romania Poland

Hungary Czech Republic Bulgaria

Slovakia reaches the highest labor productivity

Member of the Eurozone

€1st January 2009Slovakia joined the EURO Zone

EURO IMPLEMENTATION IMPACT: Limitation of Foreign Exchange Risk

Lowering Transaction Costs

Growth in Foreign Trade

Increased Financial Stability

Source: SARIO, 2011

Corporate Income TaxPersonal Income Tax

Value Added Tax - VAT

Dividend tax Inheritance and Gift Tax Real Estate Transfer Tax

Repatriation of profits

19% Flat Tax Rate

Source: SARIO 2011

19%

0%

100%

20%

Simple and Fair Taxes

Regional Differences

4,63%

8,17%

9,51%

11,76%

18,86%

10,86%

17,75%

16,78%

Source: Central Office of Labour, Social Affairs and Family, 2011

991 €

705 €

657 €

636 €

635 €

686 €

594 €

716 €

in Unemployment Levels

NEW Labor Code since Sept. 1st, 2011!!! …more flexible, more motivating & business friendly!I 3/6 months/ upon agreement - probation period

I 1/2/3 months – notice period depends on length of employment <1 / 1-5 / 5+ yrs

I 40 hours - Weekly working time + 30 min unpaid break I longer working times for Managers up to 56 hrs./agreement

I Introducing “flexi account” of working time

I + 150 hours/year - Unpaid overtime can be ordered by the employer/ max. up to 400hrs.I + 250 hours/year – Agreed overtime with employees in managerial positions/ max. 550hrs.

I 20 days/ 25 days after 15 years of work - Annual leaveI 5 weeks in case employee reaches 33 yrs. (January, 2012)

I Reduction of Labor Unions Influence

I Shorter period for recruitment ban; easier process of collective redundancies; work in night shift in 2 weeks in a row,…

I Bonuses for: above the law overtime: 25% of hour wage and bank holidays: 50% of hour wage

Source: SARIO, 2011

Road Network

Source: National Motorway Company, 2011

Aerospace Network

Vienna (AT)

Prague

ViennaBratislavaPrague

All major European cities

All major European & World cities

Brno (CZ) 120 km

Krakow (PL) 180 km

Source: www.slovak-airports.net

Budapest (HU)

All major European & World cities

Prague

SliačAll major European cities

ViennaBratislavaPrague

Prague

Prague

Brno (CZ) 120 km

Krakow (PL) 180 km

Railway Infrastructure

Source: Ministry of Transport, Post and Telecommunications of the Slovak Republic, SARIO, 2011

TOP SECTORS OF THE SLOVAK ECONOMY

Automotive1st in world car

production in 2010

ElectronicsLeading Slovak Exporter –

driver of economic and technological growth

SSC/ICTSR is becoming a

hive of SSC and ICTs

Key Sector: Automotive

Car Production in Slovakia

Full Capacity of 3 automobile companies1,000,000 cars/year

Source: SARIO 2011, Slovak Automotive Industry Association ZAP,VW, KIA, PSA-Peugeot

1st Place in 2010103/1000 inhabitantsin World Car Production/1000 inhabitants

Three World Car Producers in Slovakia

I established 1991I 7.000 employees I VW plants: Bratislava, Martin and Košice

I established 2003I 3.000 employeesI PSA plant in Trnava

I established 2004I 1st production plant in EUI 3.000 employees I KIA plant in Žilina, and 2nd KIA engine plant is under construction

Source: www.volkswagen.sk; www.kia.sk; http://psa-slovakia.sk/

Key Sector: Electronics

Source: SARIO, 2011

I Assembly of Bravia models for the European market doubled in 2008 to 4mil.

I 3D TV from April 2010

I Production of LCD 10 mil pcs.I Assembly of LCDI Logistic centerI Europe service centerI 3D TV from February 2010

I Production of LCD moduls I Only 1 in EuropeI Headquarter for EuropeI 3000 new jobsI Investment 191,3 mil Eur

Map of SSCs & CCs Success StoriesTop Destinations

Over 48 SSCs & CCs

…employing > 25 800+ professionals

Insight into Investment Incentives

Investment Incentives: ELIGIBLE PROJECTS

Industry

Shared Service Centers

R&D Centers

Tourism

ELIGIBLE ARE COSTS OF:

LAND

BUILDINGS

NEW MACHINERY & TECHNOLOGY EQUIPMENT

LICENSES & PATENT RIGHTS

OR

WAGE COSTS OF NEW EMPLOYEES DURING 2 YEARS

Investment Incentives: Aid is calculated from...

Investment Incentives: Forms & Intensity

INCOME TAX RELIEF up to 10 tax periods

- IN ALL DISTRICTS

CASH GRANT (paid ex post, based on annual costs report)

CONTRIBUTIONS ON NEW JOBS (paid ex post, based on annual costs report)

- IN THE CASE OF INDUSTRY APPLICABLE ONLY IN DISTRICTS WITH HIGHER UNEMPLOYMENT

- THE TOTAL AMOUNT IN ALL REQUESTED FORMS CANNOT EXCEED THE MAX. INTENSITY IN DISTRICT 20% - 50% OF THE ELIGIBLE COSTS.

MILESTONES

SUBMISSIONTO MoE

EVALUATION SARIO

DRAFT OF AID OFFER MoE

ACCEPTANCE INVESTOR

APPROVAL GOVERNMENT

EVALUATION MINISTRIES

WORKS ON PROJECT CAN START

20 days30 days

STATEMENT MoE

10 days 30 days

AID OFFER MoE

30 days

Investment Incentives: Industrial Projects

Minimum investment

14 mil. / 7 mil. / 3.5 mil. EUR out of that at least 7/3.5 /1.75 mil EUR to be covered by own equity

Eligible costsland, buildings, machinery & other manufacturing equipment, licenses or patents

Machinery, technology

- at least 40%, 50% or 60% (depending on the unemployment rate) of the eligible costs - new, not depreciated, not used before

Min. new jobs created

no limitation

Maximum incentives

up to 20%-50%

Investment Incentives: INDUSTRYMin. Investment & Share of New Machinery

TV

VT

KSRA

RS

PT

LC

VK

SO

KK SB

PO

GL

LE

BJSK

SPML

HESVPP

SN

BR

LM

TS

NOCA

DK

RKMT

ZA

KMBY

PB

PU

IL

TN

TRBB

ZVDT

ZC

BS

KA

LV

NR

ZM

TOPE

BNNM

PN

TT

GA

DS

MA

SE

SA

PK

SCBA

HC

SL

KE

SAMY

KN

NZ

PD

ZHRV

MI

14 mil EUR & 60%

7 mil EUR & 50%

3.5 mil EUR & 40%

* Region Bratislava is excluded

Investment Incentives: INDUSTRY - Max. Aid

Investment Incentives: Shared Service Centers

Center

providing services with a high added valueemploys qualified experts in

• Software development center• Expert solution center• High-tech repair center• Customer support center• HQs of multinational corporations

Minimum investment

400 000 EUR out of that at least 200 000 EUR to be covered by own equity

Eligible costsland, buildings, technological equipment, software, licenses or patents

Min. new jobs created

no limitation

Other conditions at least 30% employees with university education

Maximum incentives

up to 30% - 50% (depends on further examination)

Investment Incentives: SSCs- Max. Aid

Investment Incentives: Technology Centers

Minimum investment

500 000 EUR

at least 250 000 EUR to be covered by own equity

Eligible costsland, buildings, machinery & other equipment, know-how, licenses or patents

Minimum newly created jobs

- no limitation- at least 60% of newly created jobs for employees with university education

Maximum incentivesup to 30%-50% depending on the level of unemployment

Investment Incentives: Technology Center - Max. Aid

Investment Incentives: Tourism

Minimum investment

10 MIL. / 5 MIL. / 3 MIL. EURout of that at least 5 / 2.5 / 1.5 mil EUR to be covered by own equity

Eligible costsland, buildings, machinery & other equipment, know-how, licenses or patents

Machinery, technology

- at least 20% or 40% (depending on the unemployment rate) of the eligible costs - new, not depreciated, not used before

Maximum incentivesup to 30%-50% depending on the level of unemployment

Other conditionsTourism Center Complex with Combination of more Services

Responsible institution

Minister of Transport,Construction and Regional Development of the Slovak Republic

Investment Incentives: TourismMin. Investment & Share of New Machinery

TV

VT

KSRA

RS

PT

LC

VK

SO

KK SB

PO

GL

LE

BJSK

SPML

HESVPP

SN

BR

LM

TS

NOCA

DK

RKMT

ZA

KMBY

PB

PU

IL

TN

TRBB

ZVDT

ZC

BS

KA

LV

NR

ZM

TOPE

BNNM

PN

TT

GA

DS

MA

SE

SA

PK

SCBA

HC

SL

KE

SAMY

KN

NZ

PD

ZHRV

MI

10 mil EUR/40%

5 mil EUR/20%

3 mil EUR/20%

* Region Bratislava is excluded

State Aid Effectivity

In the period 2002 – 2011:

I 109 approved investment project

I 41,057 number of newly created jobs

I 25% - average intensity of state aid

I 29,000 EUR – average intensity of state aid per 1 newly created job

Important facts

I Investment must be implemented within max. 36 months

I Submission of investment plan before start of the work on project

I Work on the project can start after the Ministry of Economy issues a preliminary statement (takes approx. 40 days)

I The investor must meet his investment plan in all material aspects (especially amount and no. of newly created jobs)

I The beneficiary of the aid is obliged to keep investment at least 5 years after completion of investment plan

I Also newly created position must be maintained at least 5 years after their creation

Slovakia´s Success Stories

Source: SARIO, 2010

Golf opportunities

Beautiful mountains

Aqua parks

Wellness

Small Country of Great Opportunities

Source: SARIO, 2010

Spa resorts

A place where history meets future

Delicious Slovak Food

Rafting

Skiing opportunities

Visit the mysterious caves

Charming Castles

SARIO – Closer to You Strategy Key Focus New Services

18 October 2011, Košice

SARIO Who We Are

Government Funded

Organization under the direction

of the Slovak Ministry of Economy

MISSION EXECUTED THROUGH 3 CORE SECTIONS

Foreign Direct Investment

Foreign Trade

Structural Funds of the EU

SARIO Services

From providing General services & information to all subjects

interested in FDI in Slovakia Tailor-made solutions for potential investors exploring Slovakia such as

Best Location for Your Investment Best Location for Your Expansions

Through Assistence in STATE AID application process for

investments into: INDUSTRY SHARED SERVICE CENTERS R&D CENTERS TOURISM

Support foreign trade via match-making & subcontracting

To AFTERCARE services - for established foreign

companies

GovernmentalAgency:Services

Free of Charge

Business Development Department

I Broad network of cooperation partnersI Promotion of Slovakia home & abroadI Latest developments in business environment:

I Comprehensive investment package (tax, legal, HR, costs, …)I Investment incentives information I Sector & regional analyses

I Assistance to incoming commercial & official delegations

Gateway for Investors

Corporate Development Department

I Extensive experience in supporting business & investment activities I Local presence in each region of Slovakia I Individual client approach I Updated database of existing investors I Contacts to sub-suppliers and other business entities

Dedicated to Investor’s Needs

Thank you for your attention!

Foreign Direct Investment Section

For more information, you can contact us at:

Address: Slovak Investment and Trade Development Agency

Martincekova 17 821 01 BratislavaSlovak republic

Tel.: +421 2 58260 100Email: invest@sario.sk

Source: SARIO, 2011