**COUNTRY COMMERCIAL GUIDE**

**Republic of Slovenia**

##### FY 2004

**Prepared July 2003**

**International Copyright, U.S. & Foreign Commercial Service and the
U.S. Department of State, 2003. All rights reserved outside the United
States.**

**Table of Contents**

**Chapter I Executive Summary**

####### Chapter II Economic Trends and Outlook 

**Chapter III Political Environment**

**Chapter IV Marketing U.S. Products and Services**

**Chapter V Leading Sectors for U.S. Exports Investment**

**Chapter VI Trade Regulations and Standards**

**Chapter VII Investment Climate**

A.1 Openness to Foreign Investment

> A.2 Conversion and Transfer Policies

A.3 Expropriation and Compensation

A.4 Dispute Settlement

A.5 Performance Requirements/Incentives

A.6 Right to Private Ownership and Establishment

A.7 Protection of Property Rights

A.8 Transparency of the Regulatory System

A.9 Efficient Capital Markets and Portfolio Investment

A.10 Political Violence

A.11 Corruption

> B. Bilateral Investment Agreements
>
> C. OPIC and other Investment Insurance Programs
>
> D. Labor
>
> E. Foreign Trade Zones/Free Ports
>
> F. Foreign Direct Investment Statistics

**Chapter VIII Trade and Project Financing**

**Chapter IX Business Travel**

**Chapter X Economic and Trade Statistics**

**Chapter XI U.S. and Country Contacts**

**Chapter XII Market Research and Trade Events**

**Chapter I Executive Summary**

This Country Commercial Guide (CCG) presents a comprehensive analysis of
the Republic of Slovenia's commercial environment through economic,
political, and market analysis. The CCGs were established by
recommendation of the Trade Promotion Coordinating Committee (TPCC), a
multi-agency task force, to consolidate various reporting documents
prepared for the U.S. business community. CCGs are prepared annually at
U.S. embassies through the combined efforts of several U.S. government
agencies.

President Bush's June 2001 visit to Slovenia underscored the strong
relationship between Slovenia and the United States, as did President
Clinton\'s in 1999. The United States considers Slovenia an important
model of economic success and political stability for its neighbors to
the south. The Slovenes are anxious to maintain good relations with the
United States and successfully transition into the European Union.

A small transition economy with a population of slightly under 2
million, Slovenia has been a star performer since its independence in
1991, registering dramatic gains in per capita and aggregate wealth,
establishing a stable and well-functioning democracy, and raising the
standard of living for Slovenes to a level on par with the smaller
Western European economies. Slovenia received invitations in 2002 to
join NATO and the European Union, and international financial
institutions have responded positively to Slovenian policy initiatives.

Slovenia's success is in large part based on pre-existing conditions
that positioned the country extremely well for transition. These
included a highly educated population, sound infrastructure, and an
economy more oriented to the West than most transition countries. These
advantages allowed Slovenia to take a more gradual approach to change.
But now, Slovenia is faced with the increasingly challenging prospect of
completing its reform program. That said, Slovenia\'s drive for EU
membership has resulted in a fevered push to finish alignment of its
political and economic systems with the EU\'s acquis communitaire. These
EU-driven reforms have strengthened Slovenia\'s economy and attracted
foreign investment in record volume.

In 2002, the Government of Slovenia consolidated a number of business
permits, eliminated restrictions on capital flows, and further
strengthened the legal and regulatory framework that supports
Slovenia\'s private sector. Institutions created as a result of EU
accession efforts, such as the Competition Protection Office and Office
for Prevention of Corruption, are becoming more effective regulators of
the Slovene economy. The government continues to reaffirm its intention
to privatize a number of large state holdings the telephone monopoly,
insurance, and other energy and transport facilities. Already, key
foreign direct investments in Slovenia\'s financial sector have
increased competition to the benefit of corporate and retail customers.

With this slow but steady series of reforms, the investment climate in
Slovenia has improved in recent years. Two major investments -- the
takeover of Lek Pharmaceuticals by Swiss multinational Novartis, and
Belgian KBC's acquisition of 34% of Nova Ljubljanska Banka (NLB) --
caused FDI inflow to jump to a record Euro 1.95 billion in 2002, nearly
five times the previous year's figure.

Nevertheless, Slovenia has significant work to do in completing the
reforms necessary to join the EU, to create an attractive environment
for both domestic and foreign investment, and to ensure continued
economic growth. Administrative, regulatory, and other public sector
reforms are necessary to further improve the investment climate in
Slovenia. Labor law and social benefit reforms, as welll as judicial
reform to reduce court backlogs tops this list.

Slovenia also plays an active leadership role in the reconstruction of
the Balkan region as a donor of financial and technical aid through both
the Stability Pact and Southeast European Cooperation Initiative (SECI).
Significantly, Slovenia has become a leading investor in
Bosnia-Herzegovina, Serbia and Montenegro, and the FYROM, and exports
from Slovenia to southeastern Europe have grown rapidly over the past
two years.

Country Commercial Guides are available for U.S. exporters from the
National Trade Data Bank's CD-ROM or via the Internet. Please contact
STAT-USA at 1-800-STAT-USA for more information. Country Commercial
Guides can be accessed via the World Wide Web at
http://www.stat-usa.gov, http://www.state.gov, and
http://www.mac.doc.gov. They can also be ordered in hard copy or on
diskette from the National Technical Information Service (NTIS) at
1-800-553-NTIS. U.S. exporters seeking general export
information/assistance and country-specific commercial information
should contact the U.S. Department of Commerce, Trade Information Center
by phone at 1-800-USA-TRAD(E) or by fax at (202) 482-4473.

## **Chapter II Economic Trends and Outlook**

# General Overview

In December 2002, Slovenia received an official invitation to join the
European Union (EU) in May 2004. In a national referendum held on 17
March, nearly 90% of voters voted in favor of joining the EU. The
Slovenian government continues to amend or to adopt measures to
harmonize national laws with the EU's Acquis Communitaire. To its
credit, Slovenia was the only acceding country not to receive a warning
in the latest EU accession assessment progress report. Slovenia remains
hopeful that it will fulfill Maastricht criteria and qualify to join the
ERM-II (Exchange Rate Mechanism) in January 2005. The Central Bank has
yet to decide on the appropriate level for the tolar against the euro
when joining ERM-II. Slovenia easily meets the government debt criteria,
but falls well short of the inflation rate criteria. Inflation remains a
top government priority. As a small open economy dependent on trade,
Slovenia will have to find a balance between inflationary pressures and
ensuring export competitiveness.

Slovenia has enjoyed solid real economic growth for the past 7 years,
averaging an annual 4.1% growth rate. The economic slowdown in Western
Europe reduced the pace of growth in 2001 to around 3.0%. The economy
grew by 3.2% in 2002; 2003 forecasts estimate a growth rate between
3.2-3.4%. Slovenia's economy is highly dependent on foreign trade. Trade
equals about 120% of GDP (exports and imports combined). Nearly
two-thirds of Slovenia's trade is with the EU, although the country has
managed to diversify its exports including the successful reentry into
Southeastern Europe and in the countries of the former Soviet Union--
its traditional trading region. The Slovenian economy relies heavily on
the services sector which accounts for 60% of GDP, followed by industry
30%, construction 5%, and agriculture 3%.

Estimates place Slovenia's per capita income around US \$16,500,
adjusted for purchasing power parity, or 72% of the EU average. (This
figure places Slovenia on par with the less developed EU members).
Registered unemployment averaged 11.7% in 2002, a figure that drops to
around 6.4% when measured in accordance with International Labor
Organization (ILO) methodology. The banking system is generally well
capitalized and supervised, with banks' performance in line with those
in other small, open economies.

Slovenia continues to lag behind some acceding countries in other
respects. The public sector continues to play a significant role in the
domestic economy, with private sector accounts equaling 60% of GDP, a
much lower figure when compared with other leading candidate countries.
Labor market flexibility remains a concern, even with the passage of the
new Labor Law in 2003. Inflation remains the Government's greatest
challenge, though levels have fallen dramatically over the past ten
years. In 2002, the annual inflation rate reached 7.5%, and the target
for 2003 is 5.5%. Inflation appears to be driven by administered prices,
which have risen faster than the average CPI. The Government is
considering re-indexing public wage growth to inflation rates in either
the EU as a whole, or in Slovenia's five largest EU trading partners.

#### Exports Continue to Drive Growth

The Bank of Slovenia's exchange rate policy has sought to maintain a
constant real exchange rate essential for ensuring the price
competitiveness of Slovenia's exports. Exports grew 6.8% in 2002 and
accounted for more than 60% of GDP. Over 50% of Slovenia's exports are
to Austria, Italy, Germany and France. However, given the EU's overall
economic downturn, Slovenia has focused on increasing trade links with
Southeastern Europe, with Croatia accounting for nearly 9% of total
exports. Exports to Russia continued to increase, enjoying a 10% growth
over 2001. Slovenia's main exports include road vehicles (11.8%),
machinery (11.1%), and furniture (6.9%), while major imports included
road vehicles (10.2%), machinery (5.6%), and petroleum oils (5.8%).

U.S. exports to Slovenia increased from US \$297 million in 2001 to US
\$313 million in 2002 and accounted for roughly 3% of Slovenia's total
imports. In 2002, U.S. markets received 2.4% of Slovenia's total
exports, increasing from US \$244 million (2001) to US \$283 million. In
terms of total trade, the U.S. was Slovenia's sixth largest trading
partner in 2002.

#### Slovenia's Current Account

In 2002, the balance of payments current account enjoyed the largest
surplus since 1994, a Euro 392.5 million surplus (or 1.7% of GDP). A
lower trade deficit, reduced from Euro 689.6 million in 2001 to Euro
260.7 million in 2002, and improved terms of trade as a result of the
Euro's appreciation vis-à-vis the U.S. dollar, contributed to this
improvement.

The capital and financial account recorded a net capital inflow of Euro
1.5 billion, up from Euro 1.3 billion in 2001. Foreign Direct Investment
(FDI) was the main source of inflows, amounting to a record Euro 1.9
billion or 8.3% of GDP. Swiss multinational Novartis' nearly Euro 900
million takeover of Lek Pharmaceuticals, and Belgium KBC's 34% share
acquisition of Nova Ljubljanska Banka (NLB) (the largest state-owned
bank) fueled this inflow. Anticipated privatizations in the insurance,
energy and telecommunications sectors as well as an improved legal
framework for investors should continue with this positive trend.

Slovenia's foreign exchange reserves increased significantly in 2002 to
US \$6.9 billion from US \$ 4.3 billion in 2001. Meanwhile, Slovenia's
external debt rose from US \$6.7 billion to US \$ 8.2 billion.

#### Budget Deficit

Slovenia's level of indebtedness increased to 38.6% of GDP, while the
general government deficit in 2002 reached 2.9% of GDP, up from 1.4% in
2001. The increase may be partly attributed to one-off effect associated
with a change in the accounting methodology.

A major goal of the Government of Slovenia is controlling public wages
and social transfers, as these expenses contribute to the growing budget
deficit. The steps taken thus far have managed to control the growth in
public sector wages. The gross wage per employee climbed 2% in real
terms in 2002. The real wage per employee in the public sector rose by
1.1% and by 2.3% in the private sector. From 1996-2002, however, the
gross wage per employee climbed by 24.5% in the public sector in real
terms and by 18% in the public sector.

Nearly 80% of government budget costs are set by law, including
salaries, social transfers, and state institutions. Despite strong union
representation for public administration workers and the pensioners'
party position as a member of the current ruling coalition, Parliament
has adopted a new public wage setting law that will go in effect in
2004.

#### Infrastructure

Slovenia's infrastructure is relatively well developed. The Government
continues to invest even greater resources in order to fully realize the
benefits of Slovenia's strategic location and business culture. Highway
construction remains a top priority. Upgrading Slovenia's rail link will
require an additional US \$2.5 billion by 2005, with priority given to
European Corridors Five (east-west) and Ten (northeast-southeast). An
extensive rail system links Slovenia's port of Koper, one of the
region's largest, to all neighboring countries and construction of a
direct rail link from Koper to Hungary continues. Koper serves as the
principal port for Austria and Hungary and as an essential port for
Czech, German, and Slovak exporters. The port has 20 berths, 2,284
square meters of enclosed warehouses, and numerous specialized
warehouses.

In information technology, Slovenia has been at the forefront of the
Internet revolution, with one of Europe's highest rates of Internet
connections per capita or per server. Slovenia is well served by its
Telecommunications infrastructure. Slovenia enjoys three GSM providers,
including an U.S operator. State-owned Mobitel is the state-designated
Significant Market Player. In classical communications, Telekom
Slovenije continues to make significant investments in expansion and
modernization as it prepares for full privatization in 2004.

**Chapter III Political Environment**

Slovenia is a Parliamentary democracy and constitutional republic.
Within its government, power is shared among a directly elected
President, a Prime Minister, and a bicameral legislature (Parliament).
Parliament is composed of the National Assembly, which takes the lead on
virtually all legislative issues, and the National Council. The
Constitutional Court reviews legislation to ensure its consistency with
the Slovene Constitution.

In November 2002 Janez Drnovsek (then Prime Minister) was elected
President and former Finance Mnister, Anton Rop, replaced Drnovsek as
Prime Minister and leader of the dominant Liberal Democratic Party
(LDS). The governing coalition consists of Rop\'s LDS; the United List
of Social Democrats (ZLSD) headed by Parliamentary Speaker Borut Pahor;
the Slovene People\'s Party (SLS); and the Democratic Pensioners Party
(DeSUS). The coalition controls a commanding majority in the National
Assembly that should enable it to enact important legislation during the
Government's tenure (2000-2004).

The Rop Government's most significant achievement thus far is achieving
Slovenia's twin foreign policy goals of NATO and EU membership. Having
approved membership in both institutions in a March referendum (66% and
89% voted in favor of NATO and EU membership, respectively), Slovenia
will join both NATO and the EU in 2004. This move has broad support
across the political spectrum. For all the apparent bitterness that
divides the left and right wings, there are few differences between them
on major policy issues. Political differences tend to have their roots
in the roles that groups and individuals played during the years of
communist rule and the struggle for independence. This is reflected in
the differing priorities that the center-left and center-right place on
property restitution, for example.

Slovenia enjoys excellent relations with the United States and
cooperates with it actively on a number of fronts. Slovenia was one of
the first countries to join the Coalition against Terrorism and
continues to actively support it, particularly by engaging in and
implementing measures adopted by the UN, EU, NATO, OSCE and the Council
of Europe. Slovenia will take up the OSCE Chairmanship in Office in 2005
and is currently preparing to join that organization's leadership
troika. Slovenia joined the United Nations in May 1992 and held a
non-permanent seat in the UN Security Council from 1998-1999,
distinguishing itself with constructive, creative, and
consensus-oriented activism. Slovenia is also a member of most major
international financial institutions (the International Monetary Fund,
the World Bank Group and the European Bank for Reconstruction and
Development) as well as 40 other international organizations, among them
the World Trade Organization, of which it is a founding member.

One of Slovenia's primary foreign policy goals is the stabilization and
economic and political development of the SEE region (South-Eastern
Europe). Slovenia actively contributes to the political development of
the region through participation in various Stability Pact projects,
within SFOR in Bosnia, and within UNMIK in Kosovo. Through the
"Together" Regional Center for Psychosocial Well-being of Children,
Slovenia supports rehabilitation of victims of violence in the region.
Slovenia has also taken a leading role in demining projects, creating
the International Trust Fund for Demining and Mine Victims Assistance
(ITF), which has achieved considerable success. The ITF has established
partnership relations with competent bodies in SEE countries as well as
with other international structures involved in demining, particularly
UN structures. Economically, Slovenia has become a leading investor in
several SEE countries.

According to the European Commission's Progress Report for 2002 on
European Union accession, Slovenia provisionally closed all negotiating
chapters and remains on schedule for membership in 2004. The report
indicates that Slovenia continues to fulfill the political criteria for
membership, particularly emphasizing the progress made reforming public
administration laws and regulations. Judicial reform is still underway,
and the report draws attention to the need to remove court backlogs.
Slovenia continues to respect human rights and freedoms.

Adoption and implementation of the acquis by the GOS continues, with
significant progress on the free movement of persons, fisheries,
economic and monetary union, employment and social policy, regional
policy, the environment and financial control. The Commission gives a
positive assessment of the harmonization of legislation in the internal
market, underlining the need for additional progress regarding public
procurement, financial services control, removing barriers to foreign
direct investments, protection of intellectual property and guaranteeing
efficient competition in the Slovenian market, particularly within the
telecommunications industry. In the field of justice and home affairs,
the Commission commends Slovenia for the progress achieved, particularly
in establishing new institutions. Laws on asylum and migration have yet
to be harmonized with the acquis, and the GOS must strengthen its
institutions' capacity and infrastructure to comply with the Schengen
action plan.

**Chapter IV Marketing U.S. Products and Services**

[Distribution and Sales Channels]{.underline}

Several distribution channels are open to U.S. goods on the Slovene
marketplace, including wholesaling and retailing, as well as
franchising, joint ventures, and licensing.

There are a large number of merchants, agents, intermediaries,
wholesalers, and retailers available in Slovenia. Since 1990, when the
transition to a market economy began, foreign trade has ceased to be the
exclusive domain of a few specialized companies. Today, any firm may
carry out both foreign and domestic trade.

[Use of Agents and Distributors: Finding a Partner]{.underline}

The use of a carefully selected local agent or distributor can be
cheaper and more efficient than direct sales by a U.S. exporter
unfamiliar with the Slovene market. Reliable and capable partners can be
found, but care should be exercised. Most trading firms are newly
established, with only a few years of experience, while former
\"socially-owned\" trading companies are undergoing privatization and
restructuring.

Due to the high cost of borrowing and a general lack of working capital,
prompt payment to suppliers is a relatively common problem in Slovenia.
Therefore, U.S. firms are advised to obtain a confirmed letter of credit
as the basis for conducting business with a new local partner. Dunn &
Bradstreet's agent in Slovenia (phone: 386/1/1332076; fax:
386/1/1333105) or the Slovenian Chamber of Commerce (phone:
386/1/5898102; fax: 386/1/5898100, attn: INFOLINK Office) may be helpful
in determining the creditworthiness of a potential local partner.

The following are some well-known American companies with local
agent/distributor or representative offices: Goodyear, Merck, Sharp &
Dohme, Coca-Cola Amatil, UPS, IBM, Nike, DHL, Philip Morris, Oracle,
Hewlett Packard, 3M, Microsoft, Air Routing International, Pfizer,
Wrigley, Deloitte & Touche, Cisco, Chrysler, Ernst & Young, Johnson &
Johnson, Masterfoods, Pharmacia & Upjohn, Proctor & Gamble, Schering
Plough, Eli Lilly, Western Wireless, and Compaq.

[Franchising]{.underline}

McDonald's, Atlas-American Express, and Diners\' Club are the best-known
U.S. franchises in Slovenia. McDonald's has opened 17 restaurants thus
far; 3 are company-owned, while the others are under franchise. There
are no other American franchises in Slovenia, although several European
companies have established outlets in the market.

[Direct Marketing]{.underline}

Direct marketing is not well developed in Slovenia. The sale of mailing
lists of individuals is not common and mail-order houses are rare. Amway
is the only U.S. direct marketing company with an office in Slovenia.
Studio Moderna offers direct marketing of U.S. products on local
television in several countries in the region.

[Joint Ventures/Licensing]{.underline}

In addition to establishing their own companies, foreigners can also
invest in existing companies. For companies in which partners' shares
are not in the form of securities (i.e., private companies and
limited-liability companies), investments are allowed with the agreement
of the partners and by joining in the partnership agreement. Takeovers
of joint-stock companies are much more frequent and depend less on the
individual partners/shareholders as the shares are in the form of
securities and are quoted on the Stock Exchange (shares of closed
companies are an exception).

Takeovers can be accomplished through mergers or acquisitions. The
approval of the management board is required. For company takeovers,
bidders address their tenders directly to shareholders, either with or
without the approval of the management board. The 1997 Law on Takeovers
and the Law on Commercial Companies regulates takeovers. This law
establishes conditions for the purchase of securities sold by individual
companies and issuers of securities, when specific legal or natural
persons acquire or wish to acquire a securities stake that gives the
buyer more than 25% of voting rights. Takeovers of both public companies
with shares quoted in the market and private companies through direct
offers to shareholders. If the company conducting a takeover acquires a
controlling interest in another company, it is obliged to inform the
issuer of shares, the Securities Market Agency (SMA), and the Stock
Exchange within seven days of the date that it acquires a controlling
number of shares. The issuer who has received such a notice, must
publish it publicly within ten days in daily newspapers or on the
premises of the Stock Exchange (Official Gazette no. 47/97).

Both domestic and foreign legal and natural persons may freely conclude
all types of commercial contracts (agency contracts, distribution
contracts, license contracts, etc.). Slovene legislation does not
stipulate different administrative procedures for the performance of
individual foreign trade transactions or contracts. Contractual parties
in international legal transactions may select the law that will
regulate their mutual relationships and the court (arbitration tribunal)
of competent jurisdiction that will hear disputes.

[Steps to Establishing an Office]{.underline}

In conducting business in Slovenia, foreign companies have the same
rights, obligations, and responsibilities as domestic companies. The
principles of commercial enterprise, free operation, and national
treatment apply to the operations of foreign as well as domestic
companies. Basic rights are guaranteed by the Law on Commercial
Companies and the Law on Foreign Transactions, including: the right to
manage or participate in the management of companies in proportion to
invested funds; the right to transfer contractual rights and obligations
to other foreign and domestic natural and legal persons; the right to
participate in profits in proportion to invested funds; the right to
free transfer and reinvestment of profits; and the right to recover
investments in companies and their share in net assets after the
dissolution of companies.

However, restrictions are placed on foreign investments in certain
sectors of strategic or other special significance. Foreigners cannot
establish their own companies in the manufacture or sale of arms and
military equipment, or in pension or medical security insurance.
Majority foreign-owned insurance companies cannot engage in reinsurance.

In Slovenia, foreigners may establish any legal-organizational form
provided for in the Law on Commercial Companies (limited-liability
companies, joint-stock companies, limited partnerships with share
capital, limited partnerships, general partnerships, and silent
partnerships). All companies acquire the status of a legal person upon
their entry into the court register. Prior to the entry into the court
register, a number of formalities must be performed. It is therefore
beneficial to consult a lawyer as soon as possible to prevent
unnecessary difficulties that may arise during the process of founding a
company (from adopting the memorandum and articles of association to
their certification by a notary public and entry into the court
register). Foreigners may be exclusive or part owners of companies.

[Selling Factors/Techniques]{.underline}

Shopping hours in Slovenia are Monday through Friday from 8am to 8pm,
with the majority of stores closing by 7 or 8pm. Most stores are open on
Saturday mornings and several shopping malls are open on Sundays. Most
Slovenian consumers prefer to pay in monthly installments, even for low
cost goods. Other factors/technologies critical to success are close and
frequent contact with buyers, motivated and trained intermediaries, and
aggressive market promotion.

[Advertising and Trade Promotion]{.underline}

All the normal channels for advertising are available and are widely
used in Slovenia, including newspapers, magazines, television, radio,
and outdoor billboards/signs. Other promotional techniques commonly
employed are sales promotions, public relations, and trade fairs.
Slovenia's major newspapers are *Delo*, *Dnevnik*, *Slovenske Novice*,
and *Vecer*. The major business journals are *Finance*, *Gospodarski
Vestnik*, *Manager*, *Podjetnik*, and *Slovenian Business Report*.

[Pricing Products]{.underline}

The price level in Slovenia is generally quite high due to the high cost
of labor and lack of competition in certain sectors. The market
generally determines prices. The price of gasoline is set through a
pricing model, which adjusts to world prices every two weeks. The
government sets the prices of energy, natural gas, railway transport,
telecommunications, milk, and some other products. The government may
also influence the pricing policies of companies under its direct or
indirect control.

[Sales Service/Customer Support]{.underline}

Sales service and customer support are relatively developed as a
marketing tool in Slovenia.

[Selling to the Government]{.underline}

The procedure used by state agencies and state controlled companies for
purchases is prescribed by the Law on Public Procurement, published in
the Official Gazette no. (39/00). Foreign and domestic bidders have the
same rights. Slovenia is not a signatory to the WTO agreement on
government procurement (GPA).

[Protecting Your Product from IPR Infringement]{.underline}

Slovenia has a comprehensive legal framework for the protection of
intellectual property rights. Slovenia signed the WTO Uruguay Round
Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPs) and has implemented those commitments. The number of
intellectual property complaints has been quite low, although U.S.
industry representatives have raised some concerns about the pace and
scope of action taken by the government against infringement.

Industrial property rights (patents, designs, trademarks and service
marks, and appellations of origin) are protected in Slovenia through
registration at the Slovenian Intellectual Property Office (phone:
(386)(1)4783054; fax: (386)(1)4783110). A list of Slovenian patent
attorneys is available from the Patent Office (phone: (386)(1)4264012;
fax: (386)(1)4264079).

Slovenia is a party to the following intellectual property agreements:

-   Convention Establishing the World Intellectual Property
    Organization;

-   Agreement on Trade-Related Aspects of Intellectual Property Rights;

-   Paris Convention for the Protection of Industrial Property;

-   Madrid Agreement Concerning the International Registration of Marks;

-   Nice Agreement Concerning the International Classification of Goods
    and Services for the Purposes of the Registration of Marks;

-   Locarno Agreement Establishing an International Classification for
    Industrial Designs;

-   Hague Agreement Concerning the International Deposit of Industrial
    Design;

-   Patent Cooperation Treaty;

-   Bern Convention for the Protection of Literary and Artistic Works;

-   Rome Convention for the Protection of Performers, Producers of
    Phonograms and Broadcast Organizations;

-   1973 Geneva Phonograms Convention; and

-   Brussels Convention Related to the Distribution of Program-Carrying
    Signals Transmitted by Satellite.

In the event of an Intellectual Property Right infringement, U.S.
companies are advised to hire a local attorney who can then pursue the
matter in local commercial court.

[Need for a Local Attorney]{.underline}

Slovenia does not recognize U.S. legal accreditation, and regulations
regarding licenses to practice in-country are restrictive. Some Slovene
law firms conduct business in English and are familiar with U.S. law. A
list of English-speaking law firms is available at the U.S. Embassy in
Ljubljana.

[Performing Due Diligence/Checking Bona Fides of
Banks/Agents/Customers]{.underline}

The following firms operating in Ljubljana can assist in performing the
important task of due diligence on potential Slovenian partners:

I Poslovne informacije d.o.o. (Dunn & Bradstreet's agent in Slovenia)

Zrinjskega cesta 4

1000 Ljubljana

Tel: (386)(1)433-2076

Fax: (386)(1)433-3105

Marko Batista, Director

Creditreform d.o.o.

Dunajska cesta 21

1000 Ljubljana

Tel: (386)(1)431-4320

Fax: (386)(1)431-3019

Alfred Zemen, Director

Intercredit, d.o.o.

Cankarjeva cesta 3/III

1000 Ljubljana

Tel: (386)(1)425-9065

Fax: (386)(1)425-9130

Miloš Varga, Director

**Chapter V Leading Sectors for U.S. Exports and Investment**

Slovenia\'s legacy of worker self-management continues to be felt in the
economy. A high degree of decentralization and a tendency to discourage
the flow of resources from declining firms to growing ones has led to
large gaps between top and bottom performers in all sectors. These
performance disparities are likely to disappear as the privatization
process continues and resources are allocated more efficiently among
sectors. For the time being, however, it is difficult to identify
specific sectors where growth is likely to be concentrated. Given cost
factors, viable businesses of the future are likely to have the
following characteristics: moderate to low reliance on manual labor
input; moderate to low use of real estate; and \"environmentally
friendly\" undertakings.

The following are the non-agricultural sectors in which the American
Embassy in Ljubljana estimates there is potential for significant sales
growth:

[Automobiles/Light Trucks/Vans (AUT):]{.underline} The French
manufacturer Renault holds the largest market share; its Revoz factory
in Novo Mesto has given it the status of a domestic producer with a very
diversified sales and service network. German Volkswagens and Italian
Fiats are also popular. In the last few years, Korean producers such as
Hyundai and Daewoo have established themselves in Slovenia, due mainly
to aggressive pricing. The leading company in van sales is Mitsubishi,
followed by Volkswagen and Renault. Approximately 600,000 tires are sold
in Slovenia each year. The largest market share is held by the trademark
Sava, followed by Michelin, Semperit, and Goodyear.

[Defense Industry Equipment (DFN)]{.underline}: The Slovene armed forces
are undergoing a long-term transformation from a conscripted,
territorial defense-based force into a professional force with regional
peacekeeping responsibilities. In June 1996, the arms embargo against
Slovenia was lifted and the Slovene military began an ambitious program
of defense procurement. A total of about US \$3.7 billion is available
for procurement and modernization over the next seven years. The Slovene
armed forces anticipate substantial procurement as defense spending is
ramped up to 2% of GDP in the next few years to meet Slovenia's NATO
commitments.

[Electrical Power Systems (ELP)]{.underline}: The government's vision
for the energy sector is outlined in its 1995 \"Strategy of Efficient
Use and Supply of Slovenia.\" Four supply scenarios through 2010 have
been prepared based on different sets of basic assumptions: high versus
low rates of economic growth; larger versus smaller investments in
energy conservation and efficiency; and different supply options.

Increased hydroelectric power generation is one of the strategic
objectives of the government's energy policy. The capacity to generate
an additional 1.5 TWH of electricity by 2010 is planned, but will
require the development of 70% of all potential sites. Further upgrading
of the upper stations on the Sava River is planned as well as
construction of new plants on the lower Sava. Plans for the construction
of the first two of four such planned plants were completed in June
2002. Feasibility studies are underway for additional small run-of-river
and storage plants and for the exploitation of other renewable energy
sources. Together with the new plants, these renovations will create an
additional 358 MW of hydroelectric capacity by 2010.

Plans for conventional thermal power generation are based on maintaining
production at existing plant locations and building facilities at new
sites, primarily for combined heat and power generation. Investments
will be required to improve pollution controls to meet environmental
standards, to increase rapid response and peaking capacity, and for
renovation of control systems at existing plants. The government also
foresees the construction of oil-fired facilities, including a 68 MW
plant at Brestanica that should be commissioned before 2005. A second
oil-fired plant with a capacity of 143 MW is scheduled for completion by
2010.

Investment plans through 2010 in the transmission and distribution
system include the modernization of national dispatching and local
distribution control centers, the renovation of the transmission grid,
better control of reactive power in the system, and the completion and
renovation of the east-west 400 kV transmission lines with a connection
to Hungary and a 400 kV substation. In order to realize these projects,
the government will need to successfully increase electricity tariffs to
cover costs. Lack of financial resources has already postponed these
priority investment projects for a number of years.

In 2001, a new Energy Law was implemented to break the sector's
long-standing monopoly and to allow companies to buy electricity on the
European market. Energy exchange operations began in April, with several
companies applying for and receiving licenses for trading.

[Financial Services (FNS)]{.underline}: the Bank of Slovenia (BS) issues
banking licenses in four categories, with 28 banks holding licenses. The
broadest type of license covers all business and investment banking
services and is held by seven banks: Banka Koper, Banka Vipa, Gorenjska
Banka, Nova Ljubljanska Banka, Probanka, SKB Banka, and Slovenska
Zadruzna Kmetijska Banka. A number of bank mergers have occurred
recently. Banks in Slovenia with majority foreign ownership are Bank
Austria & Creditanstalt, Volksbank, and Banque Societe Generale.

In May 2002, the Government of Slovenia reached an agreement bank to
sell a 34 percent share of Nova Ljubljanska Banka to Belgian KBC,
representing the first phase of privatization of Slovenia's largest
commercial bank. An additional 5% was sold to the European Bank for
Reconstruction and Development. An attempt to privatize the
second-largest bank, Nova Kreditna Banka Maribor, fell through in April
2002 after the government failed to find a suitable buyer.

A number of recent regulatory changes are directing Slovenian financial
services in a more global direction. Foreign credit deposit requirements
have been reduced to zero. Custodial account charges for foreign
portfolio investors have been eased and holding periods for portfolio
investments were eliminated as of July 1, 2001. New legislation also
eases the range of stockbrokerage activities and further opens these
activities to foreign enterprises.

[Telecommunications Equipment (TEL), Telecommunications Services
(TES)]{.underline}: Modernization and expansion of local
telecommunications facilities is an ongoing activity of the
state-controlled national telecommunications provider, Telekom Slovenije
(TS). TS now holds a monopoly over fixed voice telephony. All other
telecommunications fields are open to competition according to the Law
on Telecommunications adopted in May 1997. However, because supporting
legislation to comply with the new law still needs to be passed, real
competition is still limited.

In April 1999, a second GSM operator began operations in Slovenia. (The
other license permitted under the Telecommunications Law was allocated
to the current GSM operator, Mobitel.) The government awarded a third
license for GSM 1800 MHz in 2000 to Western Wireless and is also
considering expanding other telecommunications services, including
advanced satellite services.

Telekom Slovenije is 73% state owned. Plans to privatize TS have been
repeatedly postponed and are now scheduled for 2004. The government is
likely to select a buyer on the basis of its ability to help TS maintain
its leading position in the market.

[Computer Software (CSF):]{.underline} There are no concrete statistics
or market data for the Information Technology sector in Slovenia.
Information is based on the permanent work of the IT sector and
estimates of IT businesspeople. The software market in Slovenia is
estimated at US \$70 million. The vast majority represents legal sales
of major world software vendors. One fifth of the sum goes for
applications software. Copyright legislation is sufficient, but the
critical issue is its slow enforcement. The illegal use of software is
comparable to that found in the rest of Eastern Europe. So-called gray
imports of top PC software vendors infringe on the sales of legitimate
vendors in the market. Imports and exports of hardware are very liberal.
No customs duties are imposed on imports. The distribution pattern
follows the usual model of distribution in the developed world and is
left to the discretion of individual vendors. Top vendors have strong
subsidiaries in Slovenia or have built strong relations with existing
domestic computer companies. Because of the large American presence,
most major IT contracts attract and are won by American companies or
their distributors.

[Agriculture Sector:]{.underline} According to the 2000 Agricultural
Census, using EU standards there are 86,467 family farms and
agricultural enterprises in Slovenia. These enterprises control 848,058
hectares of land. Family farms own an average of almost 10 hectares of
land, which is more than five times less than agricultural enterprises,
and four timea less than EU family farm average. For family farms,
medium-sized holdings predominate, with the largest share (27.3%) owning
5-10 hectares of land. Within the category of non family enterprises,
almost a half are holdings with over 20 hectares of land owned.

The year 2001 was unfavorable for agriculture. The added value growth
was negative for the third year, primarily as a result of unfavorable
natural conditions. Draught, frost and hail caused a decrease in plant
production. The highest losses were registered for fodder production
(-17%), maize (-9%) and sugar beet production (-49%). The 2001 harvest
was favorable for grain, where wheat production showed an 11% increase.
Strong decreases were also observed in fruit growing (-40%) and
viticulture (-16%).

In animal production the trend has been increased production,
particularly of poultry and pork. The detection of two BSE cases has
caused a decrease in beef consumption. Milk production is growing,
although Slovenia is already facing overproduction. In the year 2001
milk production grew 3%, and since 1991 the total production has grown
20%. This is the result of stronger specialization of dairy producers.
It is estimated that this year (2002) the growth in plant production,
after three unfavorable years, will increase, while the animal
production will remain stable because of global problems with diseases
and food safety (BSE, FMD). Value added in agriculture was estimated to
increase 3% in 2002 and an additional 2% is expected in 2003.

State rural development measures should have a positive affect on
agriculture. In 2002 subsidies for farmers reached 60% of the EU level,
and are expected to increase to 75% in 2003 and 100% in 2004. The total
number of farmer receiving subsidies in 2001 was 60,000, or 70% of all
Slovene farmers. The total amount of agricultural subsidies paid was
US\$ 56.3 million. In 2002 Slovenia started to use SAPARD EU
preaccession funds, which are mainly used for investments into farms and
the food processing industry. In 2001 the Slovene agri-environmental
programme was begun, and already 24,000 applications have been received
and a total of US \$5.6 million has been paid out to farmers.

Fishing, which represents only 0.01% of Slovene GDP, recorded growth in
2001 after a decline in 2000. Approximately 3% growth is expected to
continue in 2002 and 2003. This is mainly due to increased demand for
seafood. In Slovenia, the most prosperous fishing sector is sweet water
fish farming.

Table 1: Some macroeconomic indicators for Slovene agriculture, forestry
and fishing

  ---------------------- ------- ------- ------- ------- ------- ------- -------- --------
  Indicator              Years                                                    

                         1995    1996    1997    1998    1999    2000    2001\*   2002\*

  share of Agriculture,  4.6     4.5     4.3     4.2     3.7     3.3     3.2      3.6
  forestry and fishing                                                            
  in gross domestic                                                               
  product in %                                                                    

  value added by         380.2   429.1   470.3   507.5   500.3   502.7   540.3    591.8
  Agriculture, forestry                                                           
  and fishing - current                                                           
  prices in mio. \$US                                                             

  value added by         3.9     3.8     3.7     3.6     3.1     2.9     2.7      2.7
  Agriculture, forestry                                                           
  and fishing - share in                                                          
  GDP in % -current                                                               
  prices                                                                          

  Real growth of added           1       -2.9    3.1     -2.1    -1      -1       3
  value in agriculture,                                                           
  forestry and fishing                                                            
  in % (constant 1995                                                             
  prices)                                                                         
  ---------------------- ------- ------- ------- ------- ------- ------- -------- --------

\*-estimation (source: Statistical office of Slovenia and IMAD)

**Chapter VI Trade Regulations and Standards**

[Trade Barriers, Including Tariffs, Non-Tariff Barriers, and Import
Taxes]{.underline}

Slovenia has a relatively open trade regime, reflecting the importance
the GOS has placed on trade in improving overall economic liberalization
and competitiveness. As of 2000, the weighted average tariff rate
applied to most-favored nations (MFN) was 8.76%. Slovenia has concluded
a number of new free trade agreements and further liberalization has
occurred, notably concluding its Association Agreement with the EU. The
effective rate of protection is calculated to be 3%, down from 36% prior
to liberalization.

In 1999, Slovenia adopted a temporary change in its trade regime
permitting it to reduce its MFN tariff rate in step with its bilateral
tariff reduction vis-à-vis the EU. The government intends to make such
stepwise reductions a permanent feature of its economic policy,
culminating with the wholesale adoption of the EU\'s Common External
Tariff (CXT) upon EU accession in 2004. The effect of this measure will
be to limit the disadvantages third country (including U.S.) exporters
face in selling on the Slovene market in advance of EU accession, as
well as to limit the disruption to individual sectors that a
discontinuous adjustment to the CXT would cause.

Customs rates are defined by the Customs Law (OG RS 1-3/95) and the Law
on Customs' Tariffs (OG RS 66/00). For all products from the EU, custom
rates are zero percent. Import levies are payable upon the importation
of most agricultural and food products. Levies are not charged if the
agricultural or food product is exempt from duties pursuant to the
Customs Law. These levies are also not payable on imports of products
from countries with which Slovenia has signed bilateral trade
agreements.

[Customs Valuation]{.underline}

The primary basis for customs valuation is *ad valorum* on the
transaction value of the goods, i.e., the price paid or the price that
is to be paid for the goods to be imported, including all duties and
taxes paid outside Slovenia. For more than 95% of imports, customs value
is established on the basis of transaction value. Besides customs duties
paid according to rates provided by the Customs Tariff or preferential
agreements, imports are also liable for VAT payment. Imports of
alcoholic beverages, wines, and tobacco products are subject to excise
duties.

[Import Licenses]{.underline}

Ninety-eight percent of imports are free of quantitative restrictions.
Import quotas restrict a few categories of goods, and in some sectors
importation is restricted by permits or licenses:

-   Textiles and textile products are imported through a quota system;

-   Import licenses are required from the competent ministry for the
    import of drugs and some chemicals, waste products and raw
    materials, articles of cultural heritage, gold, waste and scrap of
    precious metals and coins, nuclear reactors and weapons; and

-   A quality certificate is required for the import of some animals,
    meat and vegetables, and other food products.

[Export Controls]{.underline}

Most technology can be exported from the U.S. to Slovenia under general
export licenses. Some equipment still requires validated export licenses
from the Bureau of Export Administration and/or the Department of State.

Slovenia levies a special export tax on the export of strategic raw
materials, including a 10-20% export tax on lumber, timber, and scrap
raw materials.

[Import/Export Documentation]{.underline}

A Slovene importer/exporter is responsible for providing the required
import/export documentation, which consists of common trade, transport
and customs documents, as well as certificates required for quality
control and licenses where appropriate. For food products, a
phytosanitary certificate or veterinary certificate as well as
ecological control may be required. The Ministry of Agriculture and
Forestry and the Ministry of Health are responsible for the control of
food products.

[Temporary Entry]{.underline}

Slovenia is a signatory to the ATA Convention on Temporary Imports and
Exports. Products may be imported into Slovenia on a temporary basis and
be exempt from customs duties in various cases, of which the most
important are the following:

-   Goods to be released into free circulation exempt from customs duty
    under the Customs Act;

-   Goods temporarily imported for exhibitions or testing, if the
    foreign owner has made them available free of charge and for a
    specific period of time;

-   Animals, instruments, requisites and other items are required for
    artistic, sports, or other events and the production of motion
    pictures;

-   Packaging materials, freight, and security equipment, etc. required
    for the delivery or dispatch of foreign-owned goods;

-   Equipment for governmental and non-governmental international or
    bilateral organizations, or international or bilateral commissions,
    with seat in the customs territory, or having representative office
    with a seat in the customs territory;

-   Equipment required to avert imminent danger of epidemics, elementary
    or other natural disasters, or to mitigate the immediate
    consequences of such disasters;

-   Yachts, sailing ships, and other sea vessels with accessory floating
    moorings and anchoring equipment, if they are used for sport and
    tourism, on condition that they are temporarily imported by
    companies or individual entrepreneurs registered for the rental of
    foreign yachts, sailing ships, and other sea vessels on the basis of
    contracts concluded with foreign sport clubs and their associations,
    permitting them to rent them to foreign tourists, members of these
    clubs, and their associations for use in Slovenia;

-   Household items temporarily imported by domestic and foreign natural
    persons entering Slovenia for a temporary sojourn; and

-   Equipment that is temporarily imported by permanent correspondents
    or editorial offices of foreign media registered in the customs
    territory.

The time limit for temporary imports is based on the purpose for which
goods are temporarily imported, but may not exceed a period of 12
months. Partial exemption from payment of customs duty may be granted
for the temporary import of goods not mentioned above, if they remain
the property of foreign persons. The amount of duty to be paid for
temporary imports of goods with a partial exemption from customs duty is
3% of the duty that would have to be paid for these goods if they were
released for free circulation.

[Labeling and Marking Requirements]{.underline}

The following labeling information must be in Slovene on the original
package of products subject to quality control: title of the product;
full address of the importer; net quantity/weight/volume; information,
where applicable, regarding ingredients; use and storage instructions;
and other warnings important for the customer. Technically complicated
products must also include instructions for use, the manufacturer's
specifications, a list of authorized maintenance offices, a warranty,
and other applicable data. All this information must be in Slovene and
attached to each product before reaching customers.

The Chamber of Economy issues a form (\"FORM A\") to prove Slovenian
origin of goods for preferential treatment according to preference
schemes. Certificates of origin of goods issued by customs authorities
and invoice declarations from exporters are used to assert preferential
customs treatment.

[Prohibited Imports]{.underline}

None.

[Standards]{.underline}

The Standardization Act provides a new approach to determining the legal
nature of standards and technical regulations. According to this Act, a
standard does not become a binding requirement unless so designated by a
competent ministry. Slovenia intends to harmonize its standards regime
with European Union legislation. Free movement of goods will be ensured
by the introduction of comparable procedures for evaluation of
conformity, conditions for mutual recognition of documentation, and
prevention of double testing and certification. For the time being,
Slovenia still applies regulations (except regulations on compulsory
standards) on the basis of the former federal (Yugoslav) Standardization
Act.

Goods and services imported for sale in Slovenia must comply with
prescribed standards and technical regulations and be certified by an
authorized institution. Where there is no authorized institution for
certification, the Standards and Metrology Institute of the Republic of
Slovenia will issue a certificate. Certificates issued abroad are valid
in Slovenia if the issuing authority and the local issuing institution
have a mutual recognition agreement. Health, veterinary, phytosanitary,
or ecological control is obligatory for some types of products such as
foodstuffs and animals.

Technical instructions, a written guarantee statement, and, if
necessary, instructions for use, must be enclosed with technical goods
and consumer durables imported into Slovenia. In addition, the importer
must guarantee the servicing of products and supply of spare parts. A
declaration consisting of the name and type of product, name of
manufacturer and other prescribed data should be affixed to the product.
The documents and the declaration must be written in the Slovene
language.

If a contract with a foreign person, regulations of a foreign country,
or a bilateral or international agreement require that goods to be
exported or imported be shipped with documents certified by a competent
authority, the Chamber of Economy of Slovenia or an authorized customs
organization is the competent authority. If the regulations of the
country in which the documents are to be used stipulate that the
documents have to be issued by a state body, the Ministry of Foreign
Affairs is the competent issuing authority in the Republic of Slovenia.

Information on particular Slovene standards and certification
requirements can be obtained from the Slovenian Standards and
Meteorology Institute (phone: (386)(1)4312322; fax: (386)(1)2314882).

**Chapter VII Investment Climate**

##### A.1 Openness to Foreign Investment

The Slovene view of foreign investment has evolved in recent years.
Although it was once widely considered to be a threat to the national
interest and culture, foreign investment is increasingly seen as a means
to import not only needed savings, but modern technology as well as
\"best practices." The last couple of years, 2001 and 2002, were
particularly important in improving the climate for foreign investment.
In legal terms, all business activities within Slovenia are now open to
foreign investors. However, there remain some limitations on share
ownership in certain sectors, such as broadcasting, communications,
insurance, and rail and air transport.

At the end of 2002, Slovenia's cumulative FDI reached Euro 3.854
billion. This increase came largely as a result of a record Euro 1.95
billion FDI inflow, nearly 5-times the previous year's figure. The
lion's share of the investments were the result of two major takeovers,
one by Swiss multinational Novartis worth nearly Euro 900 million for
Lek Pharmaceuticals, and the other by Belgian KBC's acquisition of a 34%
share in Nova Ljubljanska Banka (NLB). This is a welcome turn-around
after a sharply downward trend in previous years. Recent estimates
indicate that a single foreign acquisition of any private domestic blue
chip company could bring 2003 FDI inflows to over Euro \$1 billion. The
first quarter net inflow figure for 2003 of Euro 74 million indicates a
less favorable year. On the other hand, portfolio investment intensified
reaching twice 2002 first quarter levels, mainly fueled by investment in
government bills.

In recent years, Slovenia has adopted a number of measures to improve
the investment climate. These include: 1) the adoption of the Foreign
Exchange Act, thereby applying the national treatment principle in full;
2) the abolition of custody accounts; 3) the abolition of all
restrictions on portfolio investments as of June 1, 2001; 4) the
ratification of the Europe Agreement covering a whole range of FDI
liberalizing provisions; 5) the introduction of a governmental
counter-bureaucracy program; and 6) the implementation of various
promotion activities by the reinvigorated Trade and Investment Promotion
Office (TIPO). Recent TIPO activities have aimed at increasing the
accessibility of industrial land, introducing employment incentives that
are accessible to foreign investors, increasing the amount of
free-of-charge TIPO services for foreign investors, and improving the
image of Slovenia as an FDI location.

Despite these improvements, a number of practical impediments to
increased FDI flows persist:

(i) the legal framework regulating corporate activities is incomplete,
    with continued administrative barriers to business;

(ii) securing land and business premises, especially for industrial use,
     remains difficult;

(iii) the failure to begin a comprehensive restructuring process has
      prevented recently privatized companies from searching for foreign
      strategic partners; although there are some major development
      projects on the way which could result in the creation of brand
      new industrial parks.

(iv) Slovenia's ambivalent attitude toward FDI continues to create
     uncertainty for potential investors; and

(v) the GOS has yet to implement an aggressive FDI policy.

[FDI Promotion Scheme]{.underline}

The Government of Slovenia started a new FDI Promotion Program in 2001.
The Program's main objective is to increase annual FDI net inflow from
the current 1% of GDP (annual average over the last few years, though in
2001 and 2002 the share grew to 2.3% and 9.7%, respectively) to 3% of
GDP over the next four years. Results have been slow thus far, but the
upcoming privatization of several companies in the most promising
industries (telecommunications, energy, banking) may produce a very
positive trend. The Program has two specific goals. First, it aims to
make the most of Slovenia\'s comparative advantages, specifically: 1)
geographical location in the heart of Europe with good communication and
transport infrastructure; 2) relatively well-developed and
technologically advanced industry; 3) well-educated labor force; 4) the
relative openness of its economy; and 5) political and economic
stability. The second goal is to overcome the main weaknesses of
Slovenia's current policies related to FDI, as reported by foreign-owned
companies in a TIPO survey. The weaknesses most identified were the
Government's passivity in promoting FDI, the inaccessibility of building
sites for conducting business activities, the lack of financial
incentives for greenfield investors, and the low mobility of the labor
force.

[Financial Incentives]{.underline}

Companies with foreign direct investments in Slovenia may be eligible
for financial assistance in the form of grants from TIPO. Information
and application forms are available at TIPO. Incentives will be provided
to projects that create at least 100 new jobs. This requirement is
reduced to 50 new jobs in less developed areas and to 10 new jobs in the
field of R&D. The Government also provides free training and retraining
employment grants to employers who intend to hire unemployed persons.

## Local Incentives

Municipalities may offer different forms of incentives, which may be
negotiated on a case-by-case basis. These incentives may include, but
are not limited to, easy access to industrial sites, utility connections
and local tax holidays.

## FDI inflows 2002-2004

In 2001, various ministries prepared plans for the immediate (within the
next 18 months) privatization of state property in the energy, banking,
and telecommunications sectors. Privatization of the banking sector
began in early 2002 and the energy sector is scheduled for privatization
in the fall 2003. Plans for the telecommunications sector have been
delayed until at least 2004.

It is expected that FDI inflows will continue to increase as more
foreign investors will look to Slovenia to establish a regional presence
or to strengthen their position. FDI is expected to increase from the
following sources:

\(i\) Acquisitions of already privatized companies. These companies will
continue to work on the concentration of ownership;

\(ii\) Privatization of state-owned assets;

\(iii\) Expansion of foreign-owned companies. This has been the largest
source of new jobs in the manufacturing sector.

\(iv\) Privatization funds and other state-run funds will continue to
consolidate their portfolios as a way to increase liquidity;

(vi) New entries.

##### A.2 Conversion and Transfer Policies

Since September 1, 1995, Slovenia adheres to Article VIII of the IMF
Article of Agreement, thus committing itself to full current account
convertibility and the full repatriation of dividends. In practice, to
repatriate profits, joint stock companies must provide the following:
evidence of the settlement of tax liabilities; notarized evidence of
distribution of profits to shareholders; and proof of joint stock
company membership. All other companies need to provide evidence of the
settlement of tax liabilities and the company\'s act of establishment.

For the repatriation of shares in a domestic company, the company must
submit its act of establishment, a contract on share withdrawal, and
evidence of the settlement of tax liabilities to the authorized bank.

##### A.3 Expropriation and Compensation 

According to Article 69 of Slovenia's Constitution, the right to
possession of immobile property can be taken away or limited, with
compensation in kind or financial compensation under conditions
determined by law on the basis of public interest.

There are no current investment disputes in Slovenia. National law gives
adequate protection to all investments.

There is an ongoing dispute over property expropriated by the socialist
Yugoslav government after World War II. The 1991 Denationalization Act
allowed for claims to be submitted for recovery of such property. Of a
total 38,126 denationalization claims submitted, 482 were filed by U.S.
citizens. None of these U.S. citizen claimants were U.S. citizens at the
time the property was expropriated. All U.S. citizen claimants are
either individuals who acquired U.S. citizenship subsequent to their
property being expropriated, or the heirs of individuals whose property
was seized when the owners were not U.S. citizens. Of these claims, 276,
or 57%, had been resolved by the end of calendar year 2002.

##### A.4 Dispute Settlement

Slovenia is a signatory to the 1958 New York Convention on Recognition
of Foreign Arbitral Awards and the 1961 European Convention on
International Commercial Arbitration.

# Legal System

Slovenia has a well-developed, structured legal system. It is based on a
five-tier (district, regional, appeals, supreme, and administrative)
court system. These courts deal with a vast array of legal cases
including criminal, domestic relations, land disputes, contracts, and
other business-related issues and probate. A separate social and labor
court with regional, appeals, and supreme courts, deals strictly with
labor disputes, pensions, and other social welfare claims. Similar to
most European countries, Slovenia also has a Constitutional Court that
hears complaints alleging violations of human rights and personal
freedoms, expresses its opinions on the constitutionality of
international agreements and state statutes, and deals with other high
profile political issues. In keeping with European legal standards, in
1997 the Slovene Parliament established an administrative court to
handle disputes among local authorities, between state and local
authorities, and between local authorities and executors of public
authority.

The Parliament passed a law on Legal Proceedings in July 1999 to speed
up court proceedings. The new law stipulates a stricter and more
efficient procedure for serving court documents and providing evidence.
For commercial cases, defendants are now required to file their defense
within 15 days of receiving notice of a claim.

# 

# Arbitration

Unless the parties have agreed to binding arbitration for disputes, the
regional court specializing in economic issues has jurisdiction over
business disputes. However, the parties may agree in writing to settle
disputes in another court of jurisdiction.

The parties may also exclude the court as the adjudicator of the dispute
if they agree in writing that contractual disputes be solved by
arbitration, whether ad hoc or institutional. In the former case, the
applicable procedure and law must be determined. In the case of
institutional arbitration, the type of arbitration must be clearly
defined. The Permanent Court of Arbitration within the Chamber of
Economy is an independent institution that solves domestic and
international disputes arising out of business transactions among
companies.

The procedure before the Permanent Court of Arbitration at the Chamber
of Economy of Slovenia is governed by the Regulations on the Procedure
before the Permanent Court of Arbitration at the Chamber of Economy of
Slovenia. Arbitration rulings are final and subject to execution.

# Bankruptcy

Competition is keen in Slovenia and bankruptcies are an established and
reliable means of working out firms\' financial difficulties.

Slovene law provides three procedural methods for handling bankrupt
debtors. The first, Forced Settlements, allows the insolvent debtor to
submit a plan for financial reorganization with the Court. The Forced
Settlement Plan is then voted upon by the creditors and must be accepted
by those creditors whose claims represent more than 60% of the total
claimed. If the forced settlement is accepted, the debtor is excused
from the obligation to pay the creditor the amount that exceeds the
percentage of payment set forth in the confirmed settlement. The payment
terms are then extended in accordance with the conditions of forced
settlement. Confirmed forced settlement affects creditors who have voted
against forced settlement and creditors who have not reported their
claims in the forced settlement procedure.

The creditor or debtor may also initiate bankruptcy procedures. The
court names a bankruptcy administrator who sells the debtor's property
according to the bankruptcy senate president\'s instructions and
supervision. As a rule, the debtor's property is sold by public auction.
Otherwise, the creditors' committee may prescribe a different mode of
sale such as collecting offers or placing conditions for potential
buyers. The legal effect of completed bankruptcy is the termination of
the debtor's legal status to conduct business, and the distribution of
funds created from the sale of assets to creditors according to their
share of total debt.

The third method, bankruptcy as forced liquidation, is distinguished
from voluntary liquidation (without court intervention) as set forth in
the Law on Commercial Companies. Forced liquidation is imposed on a
debtor, for whom the law determines the liquidation procedure and the
legal conditions for ending his existence as a business entity. This
would occur, for example, if the management does not operate for more
than twelve months, if the court finds the registration void, or by
court order.

##### A.5 Performance Requirements/Incentives

No performance requirements are imposed as a condition for establishing,
maintaining, or expanding an investment.

However, the rigid procedures necessary to acquire work permits serve as
an impediment for foreign investors. It can take two to three months to
obtain a work permit. The Ministry of Labor has established a fast-track
procedure for foreigners who are registered in the court registry as
authorized persons or representatives of companies, managers of branch
offices and for foreigners who are temporarily sent to work in
organizational units for foreign legal persons registered in Slovenia. A
new Employment of Aliens Act introducing a fast-track procedure for
managers registered with the court registry and seconded workers went
into effect on January 1, 2001.

##### A.6 Right to Private Ownership and Establishment

Private enterprise and ownership are promoted and protected in Slovenia,
both by statute and the Constitution. As provided for in the Law on
Commercial Companies, all business activities within Slovenia are open
to domestic and foreign natural and legal persons who may establish
wholly or partially owned companies in any legal form provided by the
Commercial Companies Act (Limited, General, and Silent Partnerships;
Joint Stock Companies, Limited Liability Companies, and Partnerships
Limited by Shares; and Economic Interest Groups). Foreign investors may
freely invest in Slovene companies, but to complete a 100% takeover of a
Slovenian company, the foreign company must first register with the
Slovenian courts. Foreign investors are permitted to obtain concessions
for the exploitation of renewable and non-renewable natural and public
goods.

There are some restrictions on foreign investment in certain business
operations. Wholly owned foreign companies are not permitted to operate
businesses in the fields of military supply, gaming or insurance.
Majority foreign-owned insurance companies may not engage in
re-insurance. Some business endeavors have maximum foreign investment
limits, for instance, 49% in auditing companies, 33% in publishing and
broadcasting, and 20% in investment companies that deal with the
investment funds management. In all other fields, however, foreign
investors enjoy national treatment.

Foreign and domestic investors have the same reporting requirements to
the Bank of Slovenia.

Any company registered in Slovenia is granted the status of a Slovenian
legal entity under which they enjoy national treatment. Foreign
investors are subject to the same legal treatment as domestic companies
and enjoy the same rights and obligations. The registration process is
rather simple and usually takes between three weeks and one month to
complete.

Foreign-owned companies are entitled to own property in Slovenia. All
citizens and enterprises of the European Union or the U.S. have the same
purchase rights and rights of use of land and natural resources as
citizens and resident enterprises of Slovenia.

While the law provides for these rights, some foreign companies have
experienced unexplainable delays in obtaining land even after all the
necessary paperwork is in order.

Registered foreign-owned companies may be members of the Ljubljana Stock
Exchange.

Foreign shareholders are entitled to free and unrestricted transfer of
their profits abroad in foreign currency, providing that they meet their
tax obligations. The 25% corporate tax rate in Slovenia applies to
domestic and foreign companies and is among the lowest rates in Europe.

Credits and guarantees between residents and non-residents are regulated
by the Foreign Exchange Act. The law differentiates between commercial
and financial credits.

Commercial credits are those credits relating to trade and rendering
international services that involve a resident as one of the contracting
parties. Commercial credits include contractual trade credits (deferred
payments and/or advances) and their financing by banks. Factoring
operations are also considered to be commercial credits, on the
condition that the underlying operations from which the claims arise
have the nature of commercial credits. All others operations are
considered to be financial credits, including mortgage-backed and
consumer loans as well as financial leasing operations.

All credit transactions, except commercial credits with payment delay or
prepayments less than 12 months, must be in written form and contain all
obligatory parts of the credit business.

Authorized banks undertake credit operations with non-residents for
their own accounts and in their own name or in their own name and for
someone else\'s account. Residents other than banks undertake credit
operations with non-residents for their own accounts and in their own
name. Residents must make a report on all credit operations with
non-residents to the Bank of Slovenia.

The 1999 Law on Banking allows foreign banks to establish branch offices
in Slovenia. Since 1999, local borrowers have faced no restrictions
regarding borrowing abroad, which was strictly regulated before the new
legislation.

As of June 2001, all restrictions on portfolio investments by foreigners
in Slovenia have been abolished and the purchase of foreign equities by
Slovenes has been fully liberalized.

##### A.7 Protection of Property Rights

# Mortgages

There is no law, statute, or regulation that specifically deals with
mortgage banking services in Slovenia. However, the Government has
committed itself to creating a mortgage banking system to include
property assessments and deeds that will replace the current Land
Registry system. Currently there are no special mortgage banks in
Slovenia. Accordingly, Slovenian banks do not grant mortgage loans per
se, but provide loans that are secured by mortgages. Loans secured by
mortgages are frequently granted to corporate clients and entrepreneurs
and less often to private individuals.

In order for mortgages to be effective against any owner of real estate,
the mortgage must be registered in the Land Registry Book at the Land
Registry Office. The Land Registry Book was introduced within the
present territory of Slovenia in the 19th century and serves to inform
the general public of the owner of land, buildings, and parts of
buildings. Within the legal system, the Land Registry Book is connected
in part with substantive civil law, which regulates default procedures
on real estate.

The use of mortgages to finance real estate developments is uncommon in
Slovenia. Mortgages are used almost exclusively as collateral for
corporate financing of development projects. The creditor requires the
debtor to own, in equity, three times the amount of the loan. Once the
mortgage is consummated between the creditor and debtor, it is
registered in the Land Registry Book. If the mortgager defaults on the
loan, the law provides for a foreclosure procedure on the mortgaged
property.

# Intellectual Property

Slovenia has enacted highly advanced and comprehensive legislation for
the protection of intellectual property that fully reflects the most
recent intellectual developments in the TRIPS Agreement (Trade Related
Aspects of Intellectual Property) and various EU directives. Slovenia
negotiated its TRIPS commitments as a developing country and implemented
its commitments as of January 1, 1996. Slovenia is a full member of the
TRIPS Council of the World Trade Organization (WTO) and the World
Intellectual Property Organization (WIPO).

The 1995 Copyright and Related Rights Act deals with all fields of
modern copyright and related rights law, including traditional works and
their authors, computer programs, audiovisual works, as well as rental
and lending rights. The act also takes into account new technologies
such as storage and electronic memory, original databases, satellite
broadcasting, and cable re-transmission.

Slovenian intellectual property law is compatible with European Union
standards, with a few exceptions. According to its EU Accession
Strategy, Slovenia still needs to harmonize the duration of the
protection of audio-visual productions and introduce Supplementary
Production Certificates.

The 1994 Law on Courts gives the District Court of Ljubljana exclusive
subject matter jurisdiction over intellectual property disputes. The aim
of the law is to ensure specialization of the judges and the speed of
relevant proceedings. There have been minor complaints by foreign
investors about the speed of the court system. Concerning the TRIPS
Agreement's enforcement provision, Slovene law provides for a number of
civil legal sanctions, including injunctive relief and the removal of
the infringement, the seizure and destruction of illegal copies and
devices, the publication of the judgment in the media, compensatory and
punitive damages, border (customs) measures, and the securing of
evidence and other provisional measures without the prior notification
and hearing of the other party. Furthermore, these infringements also
constitute a misdemeanor with a minimum fine of 400,000 SIT (approx. US
\$1,700)[^1] for legal persons and a minimum fine of 80,000 SIT (approx.
US \$340) for natural persons, provided that the reported offenses are
not criminal in nature. In such a case, the Slovenian Criminal Code
would apply, which may result in fines or in extreme cases,
imprisonment.

Since the enactment of the Law on Copyright and Related Rights Act,
there have been relatively few reported prosecutions for infringement
violations. Most notably are cases of computer software piracy. In 2002,
the Koper District Prosecution Office successfully completed a case
against a small computer company, which illegally installed software on
its customers' hard disk drives in 1997. Slovenia's Inspectorate made
116 checks in 2002 and started 23 legal cases. Inspectors found 476
illegal software programs or 14% of all checked. In 2002, nine positive
judgments were issued. Since piracy prosecution is still in the early
stages of implementation, Slovenia has dedicated resources to the
training of prosecutors and public authorities. As part of its strategy
for accession to the European Union, Slovenia also intends to address
the preservation of evidence in infringement procedures and border
measures by amending existing legislation. Moreover, the Ministry of
Culture established the Intellectual Property Fund, the Slovene
Copyright Agency, and the Anti-Piracy Association of Software Dealers
(BSA) to combat the problem of piracy in a collective manner.

# Patents and Trademarks/Licensing

The Law on Industrial Property grants and protects patents, model and
design rights, trademark and service marks, and appellations of origin.
The holder of a patent, model, or design right is entitled to:
exclusively work the protected invention, shape, picture, or drawing;
exclusively market any products manufactured in accordance with the
protected invention, shape, picture, or drawing; dispose of the patent,
model, or design right; prohibit working of the protected invention,
model, or design and legal transactions in respect of them, by any
person not having his consent.

The holder of a trademark has the exclusive right to use the mark in the
course of trade to designate his products or services. The authorized
user of a protected appellation of origin has the right to use the
appellation in the course of trade for marking products to which the
appellation refers.

The patent and trademark rights granted by the Law on Industrial
Property take effect from the date of filing the appropriate
applications. Patents are granted for twenty years from the date of
filing and model and design rights are granted for ten years. Trademarks
are granted for ten years, but may be renewed an unlimited number of
times. The term of an appellation of origin is unlimited. All patents
and trademarks are registered through the Slovenian Intellectual
Property Office with all registers open to the public. Patent and
trademark applications filed in member countries of the International
Union for the Protection of Industrial Property are afforded priority
rights in Slovenia. The priority period is twelve months for patents and
six months for model and design rights.

Any person who infringes upon a patent or trademark right may be held
liable for damages and prohibited from carrying on the infringing acts.

The Law on Industrial Property also provides for the contractual
licensing of patents, model and design rights, and marks. All license
agreements must be in writing and specify the duration of the license,
the scope of the license, whether the license is exclusive or
non-exclusive, and the amount of remuneration for the use if
compensation is agreed upon.

Compulsory licenses may be granted to another person when the invention
is in the public interest or the patentee misuses his rights granted
under the patent. A misuse of a patent occurs when the patentee does not
work or insufficiently works a patented invention and refuses to license
other persons to work the protected invention or imposes unjustified
conditions on the licensee. If a compulsory license is granted, the
patentee is entitled to compensation. Although Slovene industrial
property legislation complies with EU standards, Slovenia's accession
strategy focuses on aspects of its implementation. In particular,
Slovenia needs to address the exhaustion of patents, particularly in the
pharmaceutical sector.

##### A.8 Transparency of the Regulatory System

Foreign companies conducting business in Slovenia have the same rights,
obligations, and responsibilities as domestic companies. The principles
of commercial enterprise, free operation, and national treatment apply
to the operations of foreign companies as well. Their basic rights are
guaranteed by the Law on Commercial Companies and the Law on Foreign
Transactions.

Generally, the bureaucratic procedures and practices are sufficiently
streamlined and transparent for the foreign investor wishing to start a
business in Slovenia. In order to establish a business in Slovenia, the
foreign investor must produce a sufficient minimum amount of capital, 6
million SIT (approx. US \$25,420) for a stock company and 2.1 million
SIT (approx. US \$8,900) for a limited liability company, establish a
business address, and file appropriate documentation with the court. The
entire process usually takes from three weeks to one month, but may take
longer in Ljubljana due to backlogs in the court. Previously, the
registration process took up to a year, but Slovenia has made great
efforts to reduce the delay.

Slovenia signed a reciprocal taxation treaty with the U.S. in June 1999.
The rate of taxation of profits in Slovenia is lower than in the United
States. Slovenia introduced the Value Added Tax (VAT) in July 1999.

Slovenia continues to improve and update its laws relating to foreign
investors. As Slovenia moves closer to joining the EU, it will have to
accept and implement business practices and laws that are even more
\"foreign friendly\" and abolish any practices that discriminate against
foreign investors.

# Protection of Competition

The Law on the Protection of Competition prohibits acts that restrict
competition on the market, conflict with good business practices
relating to market access, or involve prohibited speculation. The law is
applicable to corporate bodies and natural persons engaged in economic
activities regardless of their legal form, organization, or ownership.
The law also applies to the actions of public companies.

Restriction of competition through cartel agreements, unfair competition
(i.e., false advertising, promises/gifts in exchange for business, trade
secrets, etc.), illicit speculation during times of irregular market
situations, and dumping and subsidized imports are all prohibited. The
Government may, however, prescribe market restrictions in the following
instances: in cases of natural disasters, epidemics, or in a state of
emergency; in cases of appreciable market disturbances due to the
shortage of goods; or when necessary to satisfy requirements for the
products, raw materials, and semi-finished goods of special or strategic
importance to the defense of the nation.

The Competition Protection Office (CPO) is charged with ensuring fair
competition in the marketplace. Investigations can be initiated by the
CPO or conducted at the request of private companies. The CPO can issue
a decree against any company found to have violated the Law on the
Protection of Competition, although the power to fine companies rests
solely in the hands of the courts. Any party trading in goods or
services on the market may initiate legal proceedings in cases of unfair
competition. Injured parties are entitled to compensation and the
injunction of the unfair acts. The court may issue a minimum penalty of
3 million SIT (approximately US \$12,700) against companies found to
have engaged in cartel agreements, abused a dominant market position,
committed an act of unfair competition, or engaged in illicit
speculation. The managers and directors of the sanctioned company may be
liable for a minimum fine of 250,000 SIT (approximately US \$1,060).
Self-employed persons found to have committed any of the legally
prohibited actions are liable for no less than 1 million SIT
(approximately US \$4,240).

While the CPO has issued a number of decrees against companies for
unfair practices, the courts have yet to issue a single monetary fine.
Some cases have remained in the court system for over two years after
the Office issued its final decree.

##### A.9 Efficient Capital Markets and Portfolio Investment

The financial sector remains relatively underdeveloped for a country
**with** Slovenia\'s prosperity. Enterprises rarely raise capital
through the stock market. The shallowness of the sector mitigates
against economies of scale and**,** despite shortcomings in the banking
sector, capital is cheaper to acquire through banks than through more
direct equity or debt sales.

# Banking

The banking sector in Slovenia is marked by a relatively high degree of
concentration (three banks account for half of total banking assets and
the top seven hold nearly 75% of the market), excessive capacity (20
banks, three savings banks, and 54 savings and loan undertakings operate
in a country of 2 million people), and a low level of services. As a
result, a number of banks are unable to exploit economies of scale and
have relatively low productivity levels. The consequences can be seen in
high margins and low returns on equity.

The balance sheets of Slovenia's banks are relatively strong, reflecting
an early and aggressive program of bank rehabilitation launched by the
Government in 1992. However, the wide differences between the balance
sheets of the largest and the smallest banks seem to indicate that the
ultimate consolidation of the banking sector is inevitable. The
Government has encouraged bank mergers as a means of dealing with the
sector\'s excess capacity, thus far to little effect.

In 2001, Societe Generale took over Slovenia's largest private bank, SKB
Banka. In October 2001, Italian banking group San Paolo IMI purchased
82% of Bank of Koper, the fifth largest bank. In spring 2002, the
Government succeeded in selling 34% of the largest commercial bank, Nova
Ljubljanska Banka (NLB), to the Belgian KBC Group, with another 5% sold
to the European Bank for Reconstruction and Development (EBRD). The
Government intends to invite fresh capital for NLB. The second largest
commercial bank, Nova Kreditna Banka Maribor (NKBM), remains state-owned
after failing to find a suitable buyer in April 2002.

New banking legislation authorizes commercial banks, savings banks, and
stockbrokerage firms to purchase securities abroad. Investment funds may
also purchase securities abroad provided that certain diversification
requirements are met.

# Securities Markets

The Ljubljana Stock Exchange (LSE) was established in 1990. A Commodity
Exchange (CE) was established in 1994, but ceased operation in 1998. The
LSE underwent its most rapid growth during the period from 1994 to 1997,
aided by the listing of new companies in the first phase of
privatization in Slovenia. The LSE serves more as a vehicle for
achieving the transformation of enterprises than as a means for raising
capital. The LSE's function in transforming enterprises is likely to
increase even more once privatization investment funds enter the market.
The assets of privatization investment funds were tied up in
privatization vouchers for several years because corresponding capital
was given only in spring 2002.

In 1997, LSE became a full member of the International Association of
Stock Exchanges (FIBV). In spite of the market boom in 2002, securities
markets remain relatively underdeveloped in Slovenia. Total LSE market
capitalization at the end of 2002 amounted to 2.174 trillion SIT
(approx. US \$9.6 billion), representing an increase of 64% over the
previous year. The significant growth doubled market capitalization in
percentage of GDP, raising the figure to 43%. The Slovene market is also
relatively illiquid, with total annual turnover of 22% of total market
capitalization.

The LSE has two official listings -- A and B -- depending on the amount
of a listing\'s capital, audited financial statements, size of the class
of securities, and securities distribution. The over-the-counter (C)
market has less stringent requirements.

In 1995, the Central Securities Clearing Corporation (KDD) was
established. It runs the dematerialized central registry securities and
trade clearings concluded on the LSE electronic trading system and
transferred to KDD automatically. The Securities Market Agency (SMA),
established in 1994, has powers similar to the SEC in the U.S. The SMA
supervises investment firms, the LSE, the KDD, investment funds, and
management companies and shares responsibility with the Bank of Slovenia
for supervision of banking investment services.

The LSE uses different dissemination systems, including real time
on-line trading information via REUTERS or the BDS System. The LSE has
also started publishing information on the Internet at
[http://www.ljse.si.]{.underline}

The LSE has attracted considerable attention from foreign investors due
to its good credit rating, the launch of a series of international bond
issues, the high quality of its traded firms, and Slovenia\'s
macroeconomic outlook. Regulations on portfolio investment have been
continually eased, with all restrictions on portfolio investment
abolished as of June 2001.

# Insurance

A high level of concentration characterizes the insurance sector in
Slovenia, with the largest company holding 43% of the total market in
gross premiums and the 5 largest companies accounting for 91% of market
share. Insurance companies invest their assets primarily in
non-financial companies, state bonds, and bank-issued bonds.

There have been significant changes in the legislation regulating the
insurance sector since 2000. The Ownership Transformation of Insurance
Companies Act, designed to accomplish the privatization of insurance
companies, was postponed several times due to ambiguity concerning the
estimated share of state-controlled capital. The management of the
largest insurance company, Triglav Insurance, brought a case to the
Constitutional Court, which ordered that new legislation be drafted.
Parliament adopted a new bill in May 2002 that was once again challenged
in the Constitutional Court. The case was finally resolved in October
2002, with the State granted an 85% stake in Triglav. The Government
expects to find an international partner for Triglav prior to EU
accession in May 2004.

Slovenia's largest bank, NLB, is expected to enter the Slovene insurance
market soon.

##### A.10 Political Violence

Except for a brief, 10-day conflict in 1991 over Slovene independence,
there have been no incidents of political violence in Slovenia. The
hostilities to the south in Croatia, Bosnia-Herzegovina, and Kosovo have
had only indirect effects on Slovenia's security and economic
conditions, primarily related to the influx of refugees. Slovenia
maintains normal diplomatic and commercial relations with all former
Yugoslav republics.

##### A.11 A. Corruption

Similar to many other European countries, Slovenia does not have a
bribery statute equal in stature to the U.S. Foreign Corrupt Practices
Act. However, Chapter 24 of the Slovene Criminal Code (S.C.C.), provides
statutory provisions for criminal offenses against the economy.
Corruption against the economy can take the form of corruption among
private firms or corruption among public officials.

The S.C.C. provides for criminal sanctions against officials of private
firms for the following crimes: forgery or destruction of business
documents; unauthorized use or disclosure of business secrets; insider
trading; embezzlement; acceptance of gifts under certain circumstances;
money laundering; and tax concealment.

Specifically, Articles 247 and 248 of the S.C.C. make it illegal for a
person performing a commercial activity to demand or accept undue
rewards, gifts, or other material benefits that will ultimately result
in the harm or neglect of his business organization. While Article 247
makes it illegal to accept gifts, Article 248 prohibits the tender of
gifts in order to gain an undue advantage at the conclusion of any
business dealings.

Public officials are held accountable under Article 267 of the S.C.C.,
which makes it illegal for a public official to request or accept a gift
in order to perform or omit an official act within the scope of his
official duties. The acceptance of a bribe by a public official may
result in a fine or imprisonment of no less than one year, with a
maximum sentence of five years. The accepted gift/bribe is also seized.

While Article 267 holds public officials accountable, Article 268 holds
the gift's donor accountable. Article 268 makes it illegal for natural
persons or legal entities to bribe public officials with gifts.
Violation of this article carries a sentence of up to three years.
However, if the offerer of the gift discloses such bribery before it is
detected or discovered, punishment may be omitted. Generally, the gift
is seized. However, if the offerer of the gift disclosed the violation,
the gift may be returned to him/her.

The state prosecutor's office is responsible for the enforcement of the
foregoing anti-bribery provisions. The number of cases of actual bribery
is small and is generally limited to instances involving inspection and
tax collection. Although the prosecutor's office may suspect bribery and
related corruption practices in government procurement offices,
obtaining evidence is difficult, thereby making it equally difficult to
prosecute. Corruption in Slovenia is on a relatively minor scale,
although 2001 saw Slovenia's first serious scandal involving a high
public official convicted of accepting a bribe.

##### B. Bilateral Investment Agreements

Slovenia has signed Bilateral Investment Agreements (BITs) with Albania,
Australia, Austria, Belgium -- Luxembourg Economic Union, Bosnia &
Herzegovina, Bulgaria, Chile, China, Croatia, Cuba, Czech Republic,
Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Hungary,
Iceland, Ireland, Israel, Italy, Kuwait, Liechtenstein, Lithuania,
Macedonia (F.Y.R.), Malaysia, Malta, Netherlands, Norway, Poland,
Portugal, Romania, Russian Federation, Singapore, Slovak Republic,
Spain, Sweden, Switzerland, Thailand, Turkey, Ukraine, the United
Kingdom, Uzbekistan, and Serbia and Montenegro. BITs are currently being
negotiated with Argentina, Belarus, Brazil, Canada, Cyprus, Indonesia,
Japan, Kazakhstan, Latvia, Morocco, Mexico, Republic of Moldova, and
Qatar. BIT negotiations with the US have stopped, as acceding EU
countries, have been discouraged from signing or encouraged to
renegotiate existing BITs with the U.S. prior to accession.

##### C. OPIC and Other Investment Insurance Programs

The U.S. Overseas Private Investment Corporation and Slovenia signed a
bilateral agreement on April 24, 1994. There are currently a number of
OPIC investment finance and insurance programs available in Slovenia,
including loan guarantees, direct loans, and political violence and
expropriation insurance.

The U.S. Export-Import Bank offers short-, medium-, and long-term
private sector as well as short-term public sector programs in Slovenia.
Slovenia is also eligible for U.S. Trade and Development Agency
Programs.

In July 1999, the Slovenian Export Corporation (SEC) and the U.S.
Export-Import Bank signed a memorandum on cooperation in financing,
insuring, and reinsuring exports to Southeast European countries.

# **D. Labor**

Continuing the positive trends in the Slovene labor market, the number
of employed persons grew by 0.7% in 2002, despite a drop in the year's
last quarter. Employment increased mainly in the services sector, while
it continued to fall in industry and mining.

The new Employment of Aliens Act came into effect in January 2001,
defining the terms under which a foreigner may seek employment in
Slovenia. In general, foreigners must acquire a work permit to gain
employment in Slovenia, although the law allows for exceptions for
foreigners with a work registration certificate. The law introduces a
quota system for work permits and simplifies the procedure for obtaining
work permits for foreigners who have worked and lived in Slovenia over a
long period of time. In 2002, approximately 37,000 work permits were
issued, below the quota of about 43,000, or 5% of the labor force.

Implementation of the Active Employment Policy and continued deletions
from the unemployment register resulted in a decrease in the registered
unemployment rate to 11.6% in December 2002. The 2002 average annual
rate was 11.7%, slightly lower than in 2001 when it reached 11.8%.
Unemployment as measured by a International Labor Organization (ILO),
remained at a record low of 6.4%. Despite a generally decreasing rate of
unemployment, the problem of structural unemployment persists. There is
also significant regional variance in this number, with large pockets of
unemployed concentrated in areas where heavy industry previously
supplied the Yugoslav and CMEA markets.

Slovenia wage-setting practice follows the "social partners" mode,
designed to contain upward pressure by centralizing wage decisions. In
practice, however, high wage expectations have pushed Slovenia's wage
levels far above those of its central European neighbors, reaching about
half the cost of Austrian labor. However, its well-educated labor force
and position as the most productive transition economy allows it to
remain competitive in niche markets.

Slovenia has adopted a new Employment Relationship Act that entered into
force in January 2003. The new act defines the working week as 40 hours
(made up of eight-hour days including a thirty-minute lunch break),
increases protection of critical working groups (including women and
children), and eases the conditions under which an employer may
terminate employees. The law is a highly successful compromise,
injecting some much needed flexibility into the labor market while
maintaining an appropriate level of protection for workers. In general,
employers are pleased with the easing of restrictions on employment
termination, as it should increase flexibility in the labor market.
However, the Act's additional benefits will present new costs for
companies and the economy as a whole.

Slovenia's labor force performs well in the higher value-added
activities that utilize its skilled technicians and engineers at a
somewhat lower cost than in the developed West. However, Slovenia would
benefit from stronger managerial skills, most notably in the banking and
insurance sectors.

##### E. Foreign Trade Zones

There are two kinds of Free Trade Zones in Slovenia: Free Economic Zones
and Free Customs Zones.

####### Free Economic Zones

Free economic zones (FEZ) exist in Koper and Maribor. FEZs may be
established by one or more domestic legal persons. The founders must
provide the resources necessary for the establishment and commencement
of operation, as well as suitable technical, organizational, ecological,
and other conditions for the performance of business activities.

The following activities may be performed within free zones: production
and services; wholesale trade; banking and other financial services; and
insurance and reinsurance regarding the above mentioned activities.

After obtaining an appropriate tax authority decision, users of FEZs are
entitled to the following tax allowances:

-   VAT exemption for imports of equipment, production materials, and
    services necessary for export production or performance of other
    permitted activities;

-   A reduction in corporate tax rates from the normal 25% to 10%;

-   A tax allowance amounting to 50% of invested resources on
    investments in tangible assets in the FEZ; and

-   A reduction in the taxable base amounting to 50% of the salaries of
    apprentices and other workers formerly unemployed for at least 6
    months.

The agreement on establishment of free economic zones is subject to
governmental approval within 30 days of submitting the application. The
founder must also obtain an operating license and a customs authority
decision on the fulfilment of conditions for performing customs
inspection in the free zone.

According to the Economic Zones Act, the Parliament adopted the Decree
on Economic Zones, outlining the procedures for obtaining all necessary
permits for the establishment and operation of FEZs.

Foreign persons may only establish FEZs through forming a company
registered in Slovenia. Foreign persons may, however, operate in FEZs by
concluding a contract with the domestic company that established the
particular free economic zone.

The application for establishment of free economic zones must be filed
with the Ministry of Economy. In addition to the information required by
Article 7 of the Free Economic Zones Act, the application must contain a
sufficiently detailed description of intended activities to enable an
economically viable decision regarding the establishment of the FEZ and
the effective customs supervision of business operations. Properly
completed applications are forwarded to the Ministry of Economy,
Ministry of Finance, and Customs Administration for further
consideration.

Before commencing operations, the customs authorities inspect the FEZ
premises for the purpose of ensuring conditions for effective customs
control and approving the method of keeping the records of goods as
prescribed by the Free Economic Zones Act. Tax authorities then issue a
decision entitling the FEZ operator to favorable tax treatment (reduced
profits tax, VAT exemption).

####### Free Customs Zones

Slovenia's Free Customs Zones (FCZs) are located in Celje, Ljubljana,
Maribor, Nova Gorica, Sezana, and Koper.

FCZs may be established by one or more domestic legal persons after
obtaining governmental approval and may be used by their founders or by
other domestic and foreign legal persons by contractual agreement.

Under the Customs Act, subjects operating in FCZs are not liable for
payment of customs duties, nor are they subject to other trade policy
measures until goods are released into free circulation.

Duties and rights of users include the following:

-   separate books must be kept for activities undertaken in FCZs;

-   users may undertake business activities in a FCZ on the basis of
    contracts with the founders of FCZs;

-   users are free to import goods (customs goods, domestic goods for
    export) into FCZs;

-   goods imported into FCZs may remain for an indefinite period, except
    agricultural produce, for which a time limit is set by the
    government;

-   entry to and exit from FCZs is to be controlled;

-   founders and users must allow customs or other responsible
    authorities to execute customs or other supervision; and

-   for the purposes of customs control, users must keep records of all
    goods imported into, exported from, or consumed or altered in FCZs.

The Customs Act also allows the establishment of open FCZs regulated by
more liberal provisions regarding their organisation and customs
authorities supervision.

In such FCZs, users may undertake the following activities:

-   production and service activities, including handicrafts, defined in
    the founding act or contract, and banking and other financial
    business transactions, property and personal insurance and
    reinsurance connected with the activities undertaken;

-   wholesale transactions; and

-   retail sales, but only for other users of the zone or for use within
    the FCZ.

Customs authorities must be previously notified of the performance of
the above-mentioned activities. Activities in FCZs must not endanger
health, life, or the environment. Goods that leave a FCZ may be
re-exported from the customs territory or taken to another part of the
customs territory after payment of customs duties.

## **Purchase rights** 

Businesses incorporated or founded in Slovenia have equal purchase
rights and land and natural resources use as Slovenian enterprises
regardless of the amount of foreign owned share capital. Businesses not
incorporated or founded in Slovenia have the same rights if they have
subsidiaries /enterprises with headquarters in the EU and all
transactions are justified by the primary activity of the business.
Businesses not falling into either of the above categories should
contact TIPO for further information.

Private citizens belonging to the EU may purchase or sell land and
acquire rights to natural resources, provided they have maintained a
permanent residence in Slovenia for three years prior to the date of the
transaction. In 2003, all EU citizens will be granted these rights
regardless of the location of their permanent residence on a reciprocal
basis.

**[Key business locations]{.underline}**

Slovenia has recently developed sites designed for greenfield
investments. Most of the newly developed industrial zones have direct
access to highways and rail service. The infrastructure in place is well
developed. In some instances, prices for fully equipped land in
industrial zones may be acquired at a reasonable rate since
municipalities and the State often subsidize infrastructure and land
costs. Above all, local authorities are interested in new employment
opportunities. In Lendava, a town located in the eastern part of the
country, price per square meter of land is around EUR 5, while prices in
Greater Ljubljana or major industrial areas vary from EUR 25-90.
Potential investors may also count on a full range of free services and
concessions provided by local development agencies for start-ups. The
assistance may also include assistance in completing all the necessary
paper work (permits) and in some cases, organizing and financing
construction in line with the investors' requirements.

+----------+----------------+-----+------------+----------------------+
| Are      | T              | P   | Size       | Contact              |
| a/Region | own/industrial | ric |            |                      |
|          | park           | e\* |            |                      |
|          |                | /sq |            |                      |
|          |                | m   |            |                      |
+----------+----------------+-----+------------+----------------------+
| Pomurje  | Lendava        | 5   | 50         | Lendava Public       |
|          |                |     | hectares   | Development Fund     |
+----------+----------------+-----+------------+----------------------+
| Pomurje  | Murska Sobota  | /   | 55         | MURA (Regional       |
|          |                |     | hectares   | Development Agency)  |
+----------+----------------+-----+------------+----------------------+
| Podravje | Slovenska      | 25  | 25         | Municipality of      |
|          | Bistrica       |     | hectares   | Slovenska Bistrica   |
+----------+----------------+-----+------------+----------------------+
| Podravje | Lenart         | 25  | 25         | Municipality of      |
|          |                |     | hectares   | Lenart               |
+----------+----------------+-----+------------+----------------------+
| G        | Jesenice       | 70  | 40         | RAGOR (Regional      |
| orenjska |                |     | hectares   | Development Agency)  |
+----------+----------------+-----+------------+----------------------+
| G        | Bussiness zone | /   | Small      | Protim Ržišnik &     |
| orenjska | Šenčur         |     | business   | Perc                 |
+----------+----------------+-----+------------+----------------------+
| S        | Celje          | 55  | 25         | Municipality of      |
| avinjska |                |     | hectares   | Celje,               |
|          |                |     |            |                      |
|          |                |     |            | Celje Regional       |
|          |                |     |            | Development Agency,  |
+----------+----------------+-----+------------+----------------------+
| S        | Arnovski gozd  | 80  | 50         | Celje Regional       |
| avinjska |                |     | hectares   | Development Agency   |
+----------+----------------+-----+------------+----------------------+
| Bela     | Metlika        | 10  | /          | Municipality of      |
| Krajina  |                |     |            | Metlika              |
+----------+----------------+-----+------------+----------------------+
| Bela     | Črnomelj       | 10  | 30         | Rudnik Kanižarica    |
| Krajina  |                |     | hectares   |                      |
+----------+----------------+-----+------------+----------------------+
| Bela     | Semič          | 7   | 10 hectars | Municipality of      |
| Krajina  |                |     |            | Semič                |
+----------+----------------+-----+------------+----------------------+
| Central  | Logatec        | 90  | 70         | Tim Impex            |
| Slovenia |                |     | hectares   |                      |
+----------+----------------+-----+------------+----------------------+

\*Estimations

Source: TIPO 2002, Hypodomi Ltd, 2002, Gom Limburg 2002, Finance 2002

##### F. Foreign Direct Investment Statistics

Total inward FDI at the end of 2002 amounted to Euro 3.854 billion,
while total outward FDI reached Euro 1.397 billion.

###### Inward Foreign Direct Investment by End of 2002 by country 

Country Total Value Share of

(EURO mil) Total (%)

Austria 1243.9 32.3

Switzerland 442.2 11.5

Germany 412.7 10.7

France 377.4 9.8

Italy 284.7 7.4

Belgium 178.8 4.6

Netherlands 140.6 3.6

Czech Republic 125.8 3.3

Ireland 121.5 3.2

Luxemburg 120.9 3.1

United Kingdom 83.6 2.2

USA 74.9 1.9

Total 3,854.1 100.0

###### Foreign Direct Investment by End of 2002 by sector 

Sector Total Value Share of

(EURO mil) Total

Financial intermediation, not insurance 816.7 21.2

Mfr. chemicals & chemical products 542.5 14.1

Other business activities 448.0 11.6

Wholesale, commission, not motors 319.8 8.3

Mfr. of pulp, paper & paper products 221.6 5.7

Mfr. of rubber & plastic products 198.0 5.1

Mfr. of machinery & equipment nec. 160.4 4.2

Post and telecommunications 129.7 3.4

Mfr. of motor vehicles, trailers etc. 53.2 1.4

Total 3854.1 100.0

###### Outward Foreign Direct Investment by End of 2002 by country 

Country Total Value Share of

(Euro mil) Total (%)

Croatia 510.7 36.5

Bosnia and Herzegovina 155.8 11.2

Netherlands 102.9 7.4

Yugoslavia 96.1 6.9

Poland 94.6 6.8

Germany 78.1 5.6

Austria 62.8 4.5

Macedonia 60.3 4.3

Russian Federation 53.4 3.8

USA 23.9 1.7

Romania 23.6 1.7

Total 1397.3 100.0

###### Outward Foreign Direct Investment by End of 2002 by sector

Sector Total Value Share of

(Euro mil) Total (%)

Mfr. chemicals & chemical products 244.0 17.5

Other business activities 215.9 15.5

Retail trade, not motors; repairs 139.5 10.0

Mfr. of machinery & equipment nec. 114.2 8.2

Mfr of food products & beverages 104.1 7.5

Financial intermediation, not insurance 91.5 6.5

Manufacture of textiles and leather 61.3 4.4

Wholesale, commission, not motors 50.4 3.6

Mfr. of electrical machinery etc. nec. 45.4 3.2

Mfr. Of motor vehicles, trailers 42.8 3.1

Support transport; travel agencies 42.5 3.0

Total 1,397.3 100.0

List of Major foreign investors:

The following is a short list of U.S. firms holding investments or
present in Slovenia.

Amway

ANR-Amer Nielsen Research

Caterpillar

3M

Coca-Cola Corporation

Cysco

Deloitte & Touche

DHL International

DuPont

Eli Lilly

Ernst & Young

Emerson Electronics

Goodyear

Henkel Ecolab

HP-Compaq

IBM Slovenia

Johnson & Johnson

Marsh

Masterfoods

Merck Sharp & Dohme

Microsoft

McDonald's

Motorola

Oracle Corporation

Pfizer Corporation

Philip Morris

Pricewaterhouse Coopers

Procter & Gamble

Schering-Plough

Wrigley

Western Wireless International

Xerox

The following list is a brief list of firms headquartered in countries
other than in the U.S., holding major investments in Slovenia.

Alcan, Canada

Belisce, Croatia

Bramac International, Austria

Brig&Bergmeister, Austria

Chiorino, Italy

Citroen, France

Danfoss, Denmark

Debitel AG, Germany

EBRD, United Kingdom

EGO, Switzerland

E. Leclerc, France

Faurecia, France

GKN, United Kingdom

Grammer Automotive, Germany

Grupo Bonazzi, Italy

Hella, Germany

Henkel Central, Austria

Horizonte Enterprise Development, Netherlands

IBRD, United Kingdom

Imperial Tobacco, United Kingdom

Inexia AB, Sweden

ISS Central Europe, Austria

IHC Holland, Netherlands

KBC, Belgium

KM Moebl, Germany

Lafarge Perlomooger, Austria

Mannesann Rexroth, Germany

Messer Griesheim, Germany

Mobilcom, Austria

Nijaz Hastor, Bosnia and Herzegovina

Novartis, Switzerland

Novem, Germany

Pfledider, Germany

Podravka, Croatia

Renault, France

Rexel, France

Roto Frank AG, Germany

San Paolo IMI, Italy

Safilo, Italy

Siemens AG, Germany

Societe Generale, France

Sodexho Alliance, France

Spar, Switzerland

STE Troyes, France

Styria Federn, Austria

TCG Unitech AG, Austria

Vogt, Germany

Wieneberger, Austria

**Chapter VIII Trade and Project Financing**

The banking sector in Slovenia remains fairly rudimentary. Unlike many
of the transition economies\' banking industries, Slovenian banks have
rather strong capital bases and robust loan portfolios. The prime
weakness of Slovenian banking is a lack of dynamism. Banks are limited
to a narrow range of traditional activities and have yet to engage in
new consumer services, investment banking, and management of more
complex financial instruments. Nevertheless, the financial statements of
Slovenian banks are in compliance with international standards and
audited by internationally recognized auditors. In practice, this means
that identifying financing for domestic projects can be problematic.
Banks typically seek 100% collateral in most lending.

Since the entry into force of the Europe Agreement, and the
intensification of discussions in Brussels over EU membership in early
1999, Slovenia has taken some important steps to free up its financial
markets. A combination of market forces and changes in Bank of Slovenia
regulations and national legislation are moving this sector in a more
globally oriented direction. In the future, it will become easier and
more transparent to make both portfolio and direct investments in
Slovenia and to conduct many financial operations, including banking,
securities brokering, and undertaking various credit transactions. The
banking sector is also showing signs of stirring from its relative
torpor, as pressures to consolidate its myriad banks build, Slovenia's
largest bank, Nova Ljubljanska banka, is privatized, and privatization
plans for the second-largest bank progress.

There are no referential interest rates in Slovenia such as, for
example, LIBOR. Prior to the abolition of all short-term financial
transactions of less than one year starting July 2002, interest rates
were set using the tolar indexation clause (TOM -- base interest rate) -
a monthly-assessed arithmetical average of the inflation rate over the
proceeding twelve months. The Consumer Price Index (CPI) is used as a
measure of inflation.

Other sources of financing are available, although only for a limited
range of activities. The U.S. Export-Import Bank provides medium-term
and long-term loans and guarantees, and OPIC offers loan guarantees and
direct loans. The European Investment Bank and the International Finance
Corporation are involved in funding large infrastructure projects, while
the European Bank for Reconstruction and Development provides financing
for banking sector privatization.

In July 1999, the Slovenian Export Corporation (SEC) and the U.S.
Export-Import Bank signed a memorandum on cooperation in financing,
insuring, and reinsuring exports to Southeast European countries.

**U.S. Trade and Development Agency (TDA)**

TDA is an independent U.S. government agency that promotes American
private sector participation in developing and middle-income countries,
with special emphasis on economic sectors that represent significant
U.S. export potential. Through funding of feasibility studies,
orientation visits, specialized training grants, and various forms of
technical assistance, TDA helps U.S. businesses compete for
infrastructure projects in emerging markets. TDA assists in building
mutually beneficial partnerships between American companies and local
project sponsors that result in increased U.S. exports and the
completion of high quality, successful projects in host countries. In
Croatia, TDA has recently financed projects in the sectors of power,
telecommunications, transportation, as well as increased activities in
supporting private sector projects.

Contact: Mr. Ned Cabot, Regional Director

1621 N. Kent Street #200

Arlington, VA 22209-2131 USA

Tel: (703) 875-4357

Fax: (703) 875-4009

**Overseas Private Investment Corporation** **(OPIC):**

**OPIC** is a self-sustaining federal agency that sells investment
services to small, medium, and large American businesses expanding into
emerging markets around the world. OPIC's three main activities are risk
insurance, project finance, and investment funds. OPIC financing through
the investment guaranty program and the direct loan program cannot
exceed US \$200 million. The OPIC sponsored equity funds make their own,
commercially based investment decisions while fulfilling OPIC's policy
mandates. The most important fund for the region is the US \$150 million
Southeast Europe Equity Fund (SEEF) managed by Soros Private Funds
Management.

Contact: Mr. James Gale, Investment Development Manager

1100 New York Avenue, N.W.

> Washington, D.C. 20527, USA
>
> Tel: +202-336-8629
>
> Fax: +202-408-5145

**Southeast Europe Equity Fund (SEEF):**

SEEF is the result of an OPIC initiative to accelerate private sector
investment in the SEE region. Following a competitive tender process,
OPIC selected Soros Private Funds Management, LLC ("SPFM") to sponsor
and manage the fund. SEEF makes direct equity and equity-related
investments in attractive privately owned or privately managed companies
operating in nine countries and territories in the region (Albania,
Bulgaria, Bosnia and Herzegovina, Croatia, FYR Macedonia, Montenegro,
Romania, Slovenia and Turkey). The total capital of the fund is US \$150
million, including a US \$100 million loan commitment from OPIC. The
fund seeks to liquidate its holdings within 3 to 5 years through sales
to strategic or financial buyers or through public offerings.

Contact: Mr. David L. Mathewson, SEEF Manager

> 888 Seventh Avenue
>
> New York, NY 10106, USA
>
> Tel: +212-333-9727
>
> Fax: +212-397-0139

**International Finance Corporation (IFC):**

IFC is a member of the World Bank Group**.** IFC offers a full array of
financial products and services to companies in its member countries
including long-term loans, equity investments, quasi-equity instruments
(subordinated loans, preferred stock, income notes), guarantees and
standby financing, and risk management (intermediation of currency and
interest rate swaps, provision of hedging facilities).  The IFC Office
in Zagreb, as a part of Southern Europe and Central Asia Department
(SECA), works in the region of rapid economic transformations, where
partnership with other institutions and access to financing and
expertise are urgently needed to ensure privatization and financial
restructuring success.  In Croatia, IFC has committed eight projects
with total financing of US \$123 million equivalent, including US \$33
million in equity and US \$90 million in loans.

Contact: IFC -- Belgrade

Ivana Milutinovica 96

11000 Belgrade, Serbia

Tel: +381-11-3023-761

Fax: +381-11-3023-733

**European Bank for Reconstruction and Development (EBRD):**

The EBRD seeks to help 27 countries implement structural and sectoral
economic reforms and competition, privatization, and entrepreneurship,
while taking into account the particular needs of countries at different
stages of transition. As a guideline, the standard for minimum
involvement for the Bank is Euro 5 million, though this may be reduced
if the project has fundamental benefits for the country. The EBRD has
established links with a variety of financial intermediaries to provide
financing for projects that are too small to be funded directly. This
allows the Bank to support SMEs, which are vital for generating a strong
private sector. In Croatia, the EBRD has approved US \$599.1 million of
loans and US \$92.4 million of equity for 39 projects, with 66.5% of the
total financing approved for the private sector.

Contact: Mr.Murat Yildiran, Acting Head of Office

> EBRD -- Ljubljana
>
> Trg republike 3
>
> 1000 Ljubljana, Slovenia
>
> Tel: +386-1-426-3600
>
> Fax: +386-1-426-3636

**Export Import Bank (Ex-Im Bank)**

Ex-Im Bank of the United States is an independent U.S. government agency
that helps finance the overseas sales of U.S. goods and services. Ex-Im
Bank finances the export of all types of goods or services, including
commodities, as long as they are not military-related (certain
exceptions exist). Major programs of the Ex-Im Bank include: working
capital guarantees covering 90% of the principal and interest on
commercial loans to credit-worthy small- and medium-sized companies in
need of funds to buy or produce U.S. goods or services for export;
export credit insurance policies to protect against the political and
commercial risks of a foreign buyer defaulting on payment; guarantees of
commercial loans to foreign buyers of U.S. goods or services covering
100% of principal and interest against both political and commercial
risks of nonpayment; and direct loans that provide foreign buyers with
competitive, fixed-rate financing for their purchases from the U.S. Over
60 years, Ex-Im Bank has supported more than US \$300 billion in U.S.
exports.

Contact: Ms. Margaret Kostic, Director-SEE Initiative

> Structured & Trade Finance Division
>
> U.S. Embassy Zagreb
>
> Ulica Thomasa Jeffersona 2
>
> Zagreb, Croatia
>
> Tel: 385-1-661-2477
>
> Email: Margaret.Kostic@exim.gov

Mr. Efe Cummings

> Export-Import Bank of the United States
>
> 811 Vermont Avenue, N.W.
>
> Washington, DC 20571
>
> Tel: (202) 565-3556

Email: Efe.Cummings@exim.gov

**Chapter IX Business Travel**

[Business Customs]{.underline}

During the period of socialism, the former Yugoslav federation was not a
fully integrated part of the Eastern bloc. It had a unique
\"self-management\" economic system where management decisions were made
at the firm level and frequently reflected market responsiveness. As a
result, Slovenian business managers are quite familiar with
market-based, Western-style economic philosophy and customs.

The management style in Slovenia tends to concentrate decision-making at
the senior level. The delegation of authority in companies is relatively
poor. Thus, in principle, a negotiation should not be considered
concluded until confirmed by the general manager or a clearly
acknowledged decision maker. Slovenes place a premium on personal
contacts and correspondence and visits play significant roles in the
conduct of business. Clarity and continuity in communication are
important.

[Travel Advisory and Visas]{.underline}

No travel advisories have been issued for Slovenia. Visas are not
necessary for visits of less than three months. A visa to remain in
Slovenia for an extended period of time must be applied for outside of
the country. An entry visa for the purpose of work, education, training,
or other professional activity can be obtained at any Slovenian Embassy
or Consulate. Similarly, a business visa can be obtained on an
exceptional basis (such as foreign investment, bilateral contacts, etc.)

[Holidays in Slovenia]{.underline}

Jan 1 and 2 - New Year's Day

Feb 8 - Slovenian Cultural Day

April 20/21 - Easter Monday

April 27 - Resistance Day

May 1 and 2 - Labor Day

Jun 25 - National Day

Aug 15 - Assumption Day

Oct 31 - Reformation Day

Nov 1 - All Saints' Day

Dec 25 - Christmas Day

Dec 26 - Independence Day

[Business Infrastructure]{.underline}

[Transportation]{.underline}

Ljubljana is accessible by air. Ljubljana-Brnik is an international
airport located 27 kilometers outside of the capital city. The airport
is serviced by the national carrier, Adria Airways, as well as other
international airlines including Aeroflot, Czech Airlines, Yugoslav
Airways, Montenegro Airlines, and Swiss International Airlines.

Slovenia's transportation system is good. Highways connect most cities
and numerous border crossings into neighboring countries are easily
accessible. Air travel within Slovenia is not available, but is not
necessary given the small size of the country. Rail is a popular and
convenient form of travel. Major cities in Slovenia have efficient
public transportation systems, relying mainly on buses. Tokens for buses
and trams can be purchased at newspaper stands or post offices. Fares
can also be paid in cash at a somewhat higher rate. Taxi service is
readily available at designated taxi stands or can be requested by
telephone. Taxis are metered and a 10% tip is customary.

[Language and Communications]{.underline}

The official language in Slovenia is Slovene, a southern Slavic language
with some resemblance to Croatian or Serbian. Slovene is written in the
standard Roman alphabet. Most businessmen in Slovenia speak at least one
foreign language, English being the most common. German is also useful
in some parts of the country and Italian is sometimes spoken in the
Italian border area. When necessary, translators can be hired at the
Slovene Association of Conference Interpreters (phone: (386)(1)2317862;
fax: (386)(1)2320131).

Slovenia has efficient postal and telephone services. Fax machines are
widely used. E-mail is increasingly available. Telephone calling card
services are not available in-country and long-distance charges tend to
be high, even by European standards. In many areas only pulse telephone
lines are available, though tone-dialing availability is increasing.

The dialing code for Slovenia is 386, followed by the appropriate area
code: Ljubljana (1), Maribor (2), Celje (3), Kranj (4), and Nova Gorica
(5). Codes for GSM mobile phones are 31, 40, 41 and 70. To dial
internationally from Slovenia, you must dial 00 plus the country code.
Directory assistance is 1188.

[Accommodation and Food]{.underline}

Comfortable accommodation is available in all major cities in Slovenia.
Office space or housing can be rented through a specialized local agency
or from individual advertisements in local daily newspapers. A list of
real estate agencies is available from the American Embassy, Ljubljana,
as is a list of English speaking physicians.

The food is typically of high quality and variety, and the cost varies
from inexpensive to moderate. Credit cards (MasterCard, Visa, American
Express and Diners Club) are widely accepted.

# 

# 

# 

# 

# 

# **Chapter X Economic and Trade Statistics**

[Appendix A. Country Data]{.underline}

Population 1,995,033

Population Growth Rate - 0

Religion predominantly Roman Catholic

Government System Parliamentary democracy

Languages Slovene; Italian, Hungarian in two localities

Work week 40 hours

[Appendix B. Domestic Economy]{.underline}

2001 2002 2003(Est)

GDP Growth Rate 3.0 3.2 3.1

GDP per capita USD 9,443 11,022 12,901

Government Spending, percent of GDP 42.8 42.4 42.8

Inflation 8.4 7.5 5.5

Unemployment 6.4 6.4 6.3

Foreign Exchange Reserves USD mil. 5,738 8,152 na

Average Exchange Rate for 1 USD 242 240 222

Foreign Debt in GDP 34.4 40.0 41.0

U.S. Economic Military Assistance na na na

Foreign Debt 6,717 8,799 na

Source: Bank of Slovenia, May 2003; Spring Report, June 2003 (IMAD)

[Appendix C. Trade]{.underline}

(in Euro millions)

2001 2002 2003(Est)

Total Slovenia Exports 10,347 10,962 11,400

Total Slovenia Imports 11,344 11,571 11,700

U.S. Exports 333 333 340

U.S. Imports 273 297 310

Source: IMAD Spring Report, June 2003

[Appendix D. Investment Statistics (see ICS)]{.underline}

**Chapter XI U.S. and Country Contacts**

[Appendix E: U.S. and Country Contacts]{.underline}

Embassy of the United States of America

Ambassador Johnny Young

Beryl Blecher, Regional Senior Commercial Officer

Silvio Gonzalez, Economic Officer

Marko Mlakar, Commercial Specialist

Prešernova ulica 31, 1000 Ljubljana, Slovenia

Phone: (386)(1)200-5528, 200-5500

Fax: (386)(1)200-5529

Web site: www.usembassy.si

The Multilateral Development Bank Office

U.S. Department of Commerce

14^th^ and Constitution, NW, Washington, D.C. 20007

Phone: (202)482-3399

Fax: (202)482-5179

Web site: www.mac.doc.gov/eebic/finangov/mldb.html

U.S. Department of Agriculture

Foreign Agricultural Service

Trade Assistance and Promotion Office

Phone: (202)720-7420

Web site: www.fas.usda.gov

U.S. Department of Commerce

Central and Eastern Europe Business Information Center

Jennifer Gothard, Desk Officer for Slovenia

Washington, D.C. 20230

Phone: (202)482-2645

Fax: (202)482-3898

Web site: www.iep.doc.gov/eebic/ceebic.html

[Business Associations]{.underline}

American Chamber of Commerce in Slovenia

Mr. Janez Moder, Secretary General

Pod hribom 55, 1000 Ljubljana, Slovenia

Phone: (386)(1)581-6285

Fax: (386)(1)581-6287

E-mail: info@amcham.si

Chamber of Small and Medium-Sized Enterprises

Mr. Miroslav Klun, President

Celovška cesta 71, 1000 Ljubljana, Slovenia

Phone: (386)(1)519-3182

Fax: (386)(1)505-9270

Slovenian Chamber of Commerce and Industry

Mr. Jožko Čuk, President

Dimičeva 13, 1000 Ljubljana, Slovenia

Phone: (386)(1)589-8413

Fax: (386)(1)589-8100

Web site: www.gzs.si

U.S. Business Council for Slovenia

Gary J. Wolf, President

Noel J. Burkhard, Administrative Officer

7 Broadway, Suite 1028

New York, N.Y. 10004

Phone: (212)439-9025

Fax: (908)439-9105

[Slovene Government]{.underline}

Bank of Slovenia

Mr. Mitja Gaspari, Governor

Slovenska 35, 1000 Ljubljana, Slovenia

Phone: (386)(1)471-9000

Fax: (386)(1)251-5516

Web site: www.bsi.si

Development Corporation of Slovenia

Franc Herman Šimnovec, Director

Dunajska 160, 1000 Ljubljana, Slovenia

Phone: (386)(1)589-4800

Fax: (386)(1)589-4819

Embassy of the Republic of Slovenia

Dr. Davorin Kračun, Ambassador

1525 New Hampshire Ave. N.W., Washington, D.C. 20036

Phone: (202)667-5363

Fax: (202)667-4563

Institute for Macroeconomic Analysis and Development

Dr. Janez Šušteršič, Director

Gregorčičeva 27, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-2112

Fax: (386)(1)478-2070

Web site: www.sigov.si/zmar

Ljubljana Stock Exchange

Dr. Draško Veselinovič, General Manager

Slovenska 56, 1000 Ljubljana, Slovenia

Phone: (386)(1)471-0211

Fax: (386)(1)471-0213

Web site: www.ljse.si

Ministry of Agriculture and Forestry

Mr. Franci But, Minister

Dunajska 56-58, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-9103

Fax: (386)(1)478-9013

Ministry of Agriculture, Forestry and Food

Veterinary Directorate

Mag. Simona Salamon, Chief Veterinary Officer

Parmova 53, 1000 Ljubljana, Slovenia

Phone: (386)(1)300-1300

Fax: (386)(1)431-5320

Web site: www.sigov.si/vurs

Ministry of Agriculture, Forestry and Food

Phyto-Sanitary Department

Mrs. Joži Jerman-Cvelbar, Department Head

Parmova 33, 1000 Ljubljana, Slovenia

Phone: (386)(1)436-2297

Fax: (386)(1)436-3343

Ministry of Culture

Ms. Andreja Rihter , Minister

Cankarjeva 5, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-5900

Fax: (386)(1)478-5901

Web site: www.sigov.si/cgi-bin/spl/mk/eng/indexe.htm

Ministry of Defense

Dr. Anton Grizold, Minister

Kardeljeva ploščad 2, 1000 Ljubljana, Slovenia

Phone: (386)(1)433-1111

Fax: (386)(1)431-8164

Ministry of the Economy

Dr. Tea Petrin, Minister

Kotnikova 5, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-3311

Fax: (386)(1)433-1031

Web site: www.sigov.si/mgd/mgd-ang.html

Ministry of Education, Science and Sport

Dr. Slavko Gaber, Minister

Zupančičeva ulica 6, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-5507

Fax: (386)(1)478-5669

Ministry of Environment, Spatial Planning and Energy

Mr. Janez Kopač, Minister

Dunajska 48, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-7400

Fax: (386)(1)478-7422

Ministry of Finance

Dr. Dusan Mramor, Minister

Zupančičeva 3, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-5211

Fax: (386)(1)478-5655

Web site: www.sigov.si/mf

Ministry of Foreign Affairs

Dr. Dimitrij Rupel, Minister

Gregorčičeva 25, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-2000

Fax: (386)(1)478-2340

Web site: www.gov.si/mzz

Ministry of Health

Dr. Dušan Keber, Minister

Štefanova 5, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-6001

Fax: (386)(1)478-6058

Ministry of Health

Department of Health Inspection

Dr. Dunja Sever, Chief Health Inspector

Parmova 33, Ljubljana, Slovenia

Phone: (386)(1)436-3402

Fax: (386)(1)436-3351

Ministry of Health

Food Department

Dr. Anton Svetlin, State Secretary

Štefanova 5, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-6001

Fax: (386)(1)478-6058

Ministry of Information Society

Dr. Pavel Gantar, Minister

Langusova 4, 1000 Ljubljana, Slovenia

Phone: (386) (1) 478-8283

Fax: (386) (1) 478-8142

Website: www.mid.gov.si

Ministry of the Interior

Dr. Rado Bohinc, Minister

Štefanova 2, 1000 Ljubljana, Slovenia

Phone: (386)(1)472-5111

Fax: (386)(1)426-1141

Web site: www.mnz.si

Ministry of Justice

Mr. Ivo Bizjak, Minister

Zupančičeva 3, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-5211

Fax: (386)(1)251-0200

Web site: www.sigov.si/mp

Ministry of Labor, Family and Social Affairs

Dr. Vlado Dimovski, Minister

Kotnikova 5, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-3450

Fax: (386)(1)478-3456

Ministry of Transport

Mr. Jakob Presečnik, Minister

Langusova 4, 1000 Ljubljana

Phone: (386)(1)478-8000

Fax: (386)(1)478-8139

National Customs Administration

Mr. Franc Košir, Director

Šmartinska 130, 1523 Ljubljana

Phone: (386)(1)540-1044

Fax: (386)(1)540-2155

Web site: www.sigov.si/mf/angl/apredmf6.html

Office for Protection of Competition

Mr. Andrej Plahutnik, Director

Kotnikova 5, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-3597

Fax: (386)(1)478-3608

Office for Protection of Intellectual Property (SIPO)

Dr. Erik Vrenko, Director

Kotnikova 6, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-3120

Fax: (386)(1)478-3110

Web site: www.sipo.mzt.si

Slovenian Export Corporation

Mr. Marjan Kramar, President

Ul. Josipine Turnograjske 6, 1000 Ljubljana, Slovenia

Phone: (386)(1)426-2238

Fax: (386)(1)425-3015

Standards and Metrology Institute

Dr. Ivan Skubic, Director

Kotnikova 6, 1000 Ljubljana, Slovenia

Phone: (386)(1)478-3000

Fax: (386)(1)478-3196

Statistical Office of the Republic of Slovenia

Ms. Irena Krizman, Director

Vožarski pot 12, 1000 Ljubljana, Slovenia

Phone: (386)(1)241-5100

Fax: (386)(1)241-5344

Web site: www.sigov.si/zrs

Trade and Investment Promotion Office

Mr. Matej Kovač, Director

Kotnikova 28, 1000 Ljubljana, Slovenia

Phone: (386)(1)4783557

Fax: (386)(1)4783599

Web site: www.investslovenia.org

[Accounting]{.underline}

PricewaterhouseCoopers d.d.

Mr. Marko Rus, Director

Parmova 53, 1000 Ljubljana, Slovenia

Phone: (386)(1)4750-100

Fax: (386)(1)4750-109

Deloitte & Touche d.o.o.

Ms. Alenka Podbevšek, Director

Dunajska cesta 22, 1000 Ljubljana, Slovenia

Phone: (386)(1)307-2800

Fax: (386)(1)307-2900

[Commercial Banks]{.underline}

Nova Ljubljanska banka d.d.

Mr. Marko Voljč, General Manager

Trg Republike 3, 1000 Ljubljana, Slovenia

Phone: (386)(1)425-0155

Fax: (386)(1)252-3522

Web site: www.n-lb.si

SKB Banka d.d.

Ms. Cvetka Selšek, General Manager

Ajdovščina 4, 1000 Ljubljana, Slovenia

Phone: (386)(1)433-2132

Fax: (386)(1)230-2808

Web site: www.skb.si

**Chapter XII Market Research and Trade Events**

[Appendix F: Market Research]{.underline}

Due to the limited staff resources, market research services are not
available from the American Embassy in Ljubljana. The following are a
few market research agencies in Slovenia:

ACNIELSEN d.o.o.

Ms. Sonja Rutar, General Manager

Cesta na Brdo 10a, 1000 Ljubljana, Slovenia

Phone: (386)(1)2427500

Fax: (386)(1)2427515

Gral ITEO d.d.

Mr. Slavko Mihelič, General Manager

Kotnikova 28,1000 Ljubljana, Slovenia

Phone: (386)(1)472-0900

Fax: (386)(1)472-0960

MIT

Mr. Marko Korač, President

Koseska cesta 8, 1000 Ljubljana

Phone: (386)(1)5819235

Fax: (386)(1)5819244

[Appendix G: Trade Event Schedule]{.underline}

# 2003 Trade Fair Events is the following:

March 4-9 Alpe Adria - Home (Ljubljana)

March 20-23 Alpe Adria- Tourism, sports & recreation, fishing and
hunting

March 20-23 Photographic fair (Ljubljana)

April 8-12 MEGRA - International Fair for engineering and building
materials (Gornja Radgona)

April 9-11 Tele INFOS-Telecommunications and IT(Ljubljana)

April 19-27 International Motor Show (Ljubljana)

April 22-25 Everything for the Child and Family (Celje)

May 13-18 International nautical exhibition (Portorož)

June 4-8 Culinary art (Ljubljana)

June 4-8 Wine Ljubljana-International Viticulture and Wine Making Fair
(Ljubljana)

Aug 23-30 Agriculture and Food Industry (Gornja Radgona)

Sep 10-17 International Craftsmanship Fair (Celje)

Sep 16-20 Fashion Fair (Ljubljana)

Oct 7-10 International exhibition of professional electronics
(Ljubljana)

Oct 20-24 Inter INFOS-Computer hardware and software (Ljubljana)

Oct 22-26 Nature-Health (Ljubljana)

Nov 3-9 Ljubljana Furniture fair (Ljubljana)

Addresses of fair organizers:

**Ljubljana**

Ljubljanski sejem d.d.

Dunajska 10, 1000 Ljubljana

Tel: (386)(1)473-5331, fax: (386)(1)473-5232

Infos d.o.o.

Lepi pot 6, 1000 Ljubljana

Tel: (386)(1)425-0769, fax: (386)(1)252-2487

Cankarjev dom

Prešernova 10, 1000 Ljubljana

Tel: (386)(1)476-7100, fax: (386)(1)251-7481

**Celje**

Celjski sejem d.d.

Dečkova 1, 3102 Celje

Tel: (386)(3)543-3000, fax: (386)(3)541-9164

**Portorož**

Marina Portorož

Cesta solinarjev 8, Portoroz

Tel: (386)(5)676-1100, fax: (386)(5)676-1510

**Gornja Radgona**

Pomurski sejem d.d.

Cesta na stadion 2, 9250 Gornja Radgona

Tel: (386)(2)561-000, fax: (386)(2)561-488

**Maribor**

Sejmar d.o.o.

Pristaniška 8, 2000 Maribor

Tel: (386)(2)251-2051, fax: (386)(2)251-4825

Step d.o.o.

Kersnikova 5, 2000 Maribor

Tel: (386)(2)251-0671, fax: (386)(2)251-0692

[^1]: Exchange rate calculated at SIT236 per US \$1.