Interview with, Matjaž Han, Minister of Economic Development & Technology, Slovenia

21 Dec Interview with, Matjaž Han, Minister of Economic Development & Technology, Slovenia

In 2022, growth should reach 5.4% year-on-year. Consistent with the rest of EU countries, inflation has also sharply increased. Last month Moody’s rating agency confirmed Slovenia’s credit rating as A3, maintaining its outlook as stable. What have been the major reforms introduced by your government this year to stabilize the Slovenian economy? What has been the role of your ministry in these reforms?

It would not be correct to talk about reforms because we are currently just putting out fires. We need to deal with the consequences of the energy crisis, and this is why we are accepting and adopting measures to ensure that the Slovenian economy remains competitive, that we have a predictable environment for our businesses, and that we ensure stable supply of electricity and gas for our companies.

The Slovenian government focused on two areas. First of all, was the assistance to Slovenian citizens. I think that we managed this very well. We managed to limit for them the prices of electricity and energy. We also ensured enough quantity of energy supply so that the Slovenians will not suffer from any shortages.

Now, the key focus is on the economy and the business sector. For the moment, we are a bit disappointed by the reactions at the EU level and the lack of solidarity among EU member states; if countries begin introducing their own measures and tackling the energy crisis by themselves this will not have a positive impact on the European economy overall. For the moment Slovenia is relying on the European scheme for the assistance to economy. This system allows us co-funding of electricity and gas for the economic sector. But we are realizing at the moment that the entry prices are still too high and they’re not at the level we would want them to be.

We managed however to lower the value added tax for electricity and gas for certain parts of the economy. We managed to regulate heating fuel, and fuel in general, outside the highways. We adopted special allocations to the most vulnerable groups or population. We also adopted a special act for co-funding the costs of electricity for those citizens that did not have any agreements for electricity for next year. The third area of focus was liquidity.

All these measures that we introduced helped our economy, and our citizens as well, and they managed to keep the inflation under control. All these costs for the economy and the citizens are now reaching billions of euros.

Slovenia’s Recovery and Resilience Plan is the framework in which the NextGen EU funds have been spent in your country. Like every other country in the EU, you also benefit from other funds via a partnership agreement with the EU under its 2021-2027 Multiannual Plan. What have been your key areas of priority under the Recovery and Resilience Plan? How is Slovenia benefitting from its partnership agreement with the EU?

I mentioned before the fires. This fire we will put it out, but we will have to build long-term stories of success. This is why our ministry prepared, under the Recovery and Resilience Plan, a set of projects worth over €400 billion. €200 million will go to investment into businesses. Slovenia is a well-industrialized country, and we have well-developed business sectors. Especially, the micro companies and SMEs play a vital role; all the statistics show a prevalence of micro companies and SMEs. This is our focus for the economy.

The aim of our projects is first to mitigate the consequences of the Covid crisis. In addition, we would like all these projects, by the end of 2026, to foster the green and digital transition for our companies. Maybe I could even see this energy crisis as an opportunity to move faster toward the green and digital transition because of economics itself.

For us, it is crucial to increase the added value of the Slovenian economy. On average, currently, the added value is €53,000 per employee. I wouldn’t want to speculate but we can get close to €100,000 per employee in a couple of years if we manage to do these projects well.

We can be very satisfied because the Slovenian economy is currently very solid and robust. We do not have a lot of debt, and it will be easier for us to move on compared to, for example, the financial crisis.

Another focus is to attract foreign investment to Slovenia. We believe that we will be able to attract additional foreign capital to Slovenia also in cooperation with the business and economic diplomacy at the Ministry of Foreign Affairs. We also want to show that our geostrategic location is a big advantage for foreigners. Slovenia is centrally placed within Europe: within 500 kilometers we can reach a €700 million market.

Another very important piece of information is that Slovenia ranks seventh among the safest countries to live; I think that we should be able to better seize this great asset. And, of course, our country is green and beautiful; we could go on and talk about all our natural beauties for hours.

Your ministry has set up several initiatives to boost Slovenian businesses, including the Program for Investment Promotion and the Internationalization of the Slovenian Economy which runs until 2026. What are the key priorities of the Program? Which sectors are you targeting and to what extent can the US be a partner in this?

We want to move a step forward in terms of internationalization of the Slovenian economy. We have a lot of experience, and based on all our export oriented businesses, this could be another driver for future growth. This is why we want to promote investments further and the internationalization as efforts in order to make this breakthrough.

The program for the promotion of investments and internationalization is divided into three areas: green, creative, and smart. Of course, it focuses on sustainability, innovation, and digitalization. In Slovenia, we have many propulsive businesses in these areas and a lot of knowledge that we need to seize.

When it comes to internationalization, we want to make sure that the export is not only EU-oriented. We are striving to diversify exports also on markets outside the EU. Of course, the United States represents a market that is very attractive and interesting for Slovenia. We want to make sure that our economic business diplomacy is used to increase the number of exporting businesses to the US. We want to make the right investments into new technologies so that our businesses will be positioned better in global value chains. To do that, we need to raise the level, the presence and visibility of the Slovenian economy. There is no car in the world currently that does not have an element made in Slovenia; at least one part of any car in the world is made in Slovenia.

So far, tourism has recovered over 2022 in Slovenia, with visitor numbers up 64% year-on-year for the January-September period. What are the strengths of Slovenia’s tourism sector? What measure did your ministry and the Slovenia Tourist Board put in place to help the sector recover from the pandemic?

Tourism is a very important sector for Slovenia. We have everything we need to be able to count on tourism. Our ministry is currently going over a transformation. It will be transformed into the Ministry of Economy, Tourism and Sports. These three areas are very intertwined in Slovenia. Within this transformation we will look for synergies in order to produce better results. Slovenia is an excellent country when it comes to active tourism and sports tourism.

We are the seventh safest country in the world. Slovenia ranks among the ten most sustainable destinations, according to the Conde Nast Traveler magazine. Another magazine, National Geographic, ranked Slovenia among the 25 most extraordinary destinations for nature.

In gastronomy, we have some of the world’s most famous chefs, like Ana Roš, whose restaurant ranks among the highest-level gastronomic destinations. We want to maintain our status of being great organizers for business and sports events alike. Interesting, this year and next year, we have and will be hosting the Volleyball World Championship, the European Women’s Handball Championship, and the 43rd FIS Nordic World Ski Championships in Planica in 2023.

In addition to that we have a lot of important global events, like the Bled Strategic Forum, every year. We also have some top sports ambassadors that are well-known stars in sports, like Luka Dončić and Goran Dragić, the basketball players in the NBA. Of course, we cannot not mention Tadej Pogacar and Primož Roglič, the world-famous cyclists. We could spend hours because we really have a lot of top athletes.

Next year, on the seventh of April, we will have a big event in Dallas, which will host the match between Dallas and Chicago. This will also be combined with a presentation of Slovenia in order to raise this visibility of the country. This will be a major event for Slovenia in April 2023.

SMEs make up more than 99% of all companies in Slovenia. Which incentives have you put in place to facilitate start-up development? I know there is a stakeholder called Slovenia Enterprise Fund for example, which is important in incentivizing SMEs development.

Recently we are seeing a growth of small businesses. Slovenia is a business nation. SMEs are very important, not just for economic growth, but also for the creation of new jobs. 67% of all employees are employed in SMEs in Slovenia. SMEs in 2021 contributed 20% of the value added to the GDP. This is why we will continue promoting them, encouraging them, and also supporting them for innovation. SMEs already receive more funding from the state compared to large corporations, and we will continue incentivizing them in this way and promoting their internationalization.

Since I became minister, I have learned and got to know businesses that are, so to speak, sleeping beauties in Slovenia. They employ 300-400 people, and they have immense potential. When the new legislation is adopted, we will focus on the effects that the legislation will have on SMEs.

Do you have any final comments? 

We know what the current situation is in Europe and globally. We know that this crisis is more or less the result of the Ukraine war situation. I wish for this aggression to stop as soon as possible so that the economy can breathe normally without restrictions, and then the governments could focus on development projects and the transformation of the European and the global economy so that we preserve our planet. Of course, competitiveness is number one in the economy, but we should keep a close eye on our planet in order to ensure that future generations can enjoy it as we knew it.