Ljubljana, 27 May (STA) - Interest of German investors in Slovenia has decreased, with the annual survey by the Slovenian-German Chamber of Commerce ranking it ninth among Central and Eastern European (CEE) countries after it ranked first last year. The main challenges are a high tax wedge and high labour costs.
Slovenia has a mixed profile in the CEE region. It is leading in areas such as digitalisation and innovation, but it has one of the highest taxation rates in the region, head of the chamber Dagmar von Bohnstein said at a press conference on Tuesday.
Conducted among 108 companies in March, the survey ranked Slovenia ninth on the list of most attractive CEE countries for German investors. Last year it ranked first.
Among remaining challenges Slovenia faces the respondents stressed high taxation, high labour costs, staff shortages, complicated administrative procedures and unpredictable economic policy.
The chamber found that staff shortages and growing labour costs are the biggest hurdles to future development.
"Slovenia remains a highly rated business location especially because of its effective digital infrastructure and an environment that promotes innovation. A serious risk remains that the country will gradually lose its attractiveness for foreign investments because of chronic location weaknesses," von Bohnstein said.
If Slovenia wants to maintain its position in the region, it needs to take clear, concrete and long-term measures to improve the business environment, she said.
Among the respondents, 80% would choose Slovenia as an investment location again, von Bohnstein said, adding that the result is not good enough when compared to other countries like Bulgaria and the Czech Republic where more than 90% of respondents would invest again.
Some 17% are considering moving their regional headquarters to another country of the Adriatic region. Croatia and Hungary were named as the most likely alternatives.
A third of respondents are also planning to reduce investments in Slovenia, and a quarter plan to reduce the number of jobs.
The chamber's board member Andraž Brodnjak said that it is understandable if companies choose different locations because of the tax burden. He believes Slovenia should think about how to attract foreign investors, which could be achieved by relaxing some red tape and reducing the tax burden.
Von Bohnstein called on Slovenian decision-makers to listen to the private business sector and to engage in an active dialogue with it.
Germany is Slovenia's most important trade partner with the value of trade amounting to EUR 14.7 billion in 2024. Almost 12% of Slovenian exports were to Germany, which makes it Slovenia's second largest export market.
