Not many countries can use their name in a form of word play to try to attract foreign investors. Slovenia does so unashamedly. Its “I feel SLOVEnia” slogan is displayed proudly by the country's investment promotion agency on its website and marketing materials.

There appears to be plenty that people love about Slovenia. Not only the picturesque, mountainous landscape and quaint towns, but also the fact that the World Bank, in its latest Doing Business survey, ranked the country 29th worldwide in terms of business climate. And if that is not enough, Slovenia benefits from infrastructure, governance and stability that makes it more comparable to western European countries than with many of its Balkan neighbours.


Off the radar

Yet investors seem largely immune to Slovenia's charms, according to data from greenfield investment monitor fDi Markets, with such investments peaking at 20 projects in 2010 and going into decline ever since.

The country's small size is a factor in this performance. At 2 million people, Slovenia's total population is roughly the size of Prague's or Warsaw's metropolitan area. But according to Zoran Vaupot, dean at the faculty of business of the Catholic Institute in Ljubljana, this is not the only problem when it comes to investing in the country.

“For decades now, a big portion of public opinion has been strongly opposing FDI, seeing foreign investments as a threat to Slovenian national interest,” says Mr Vaupot, who adds that, as is the case of other former Eastern bloc countries, this sentiment has been particularly strong when it comes to privatisation.

But unlike in other post-communist countries, the controversy over FDI is far from over. “Elsewhere the debate is: how to attract FDI? In Slovenia the debate is still: should we attract FDI at all?” says Mr Vaupot. 

Opening up to foreign investments

There might not be agreement among Slovenians about the merits of FDI, but the current centre-left coalition government, led since 2014 by the prime minister Miro Cerar, has been welcoming to foreign involvement in the country's state-owned firms, says Nada Drobnic, a tax partner at the Ljubljana office of KPMG.

“FDI inflows were very modest up to 2013, but have slightly improved in the past two years, mostly due to privatisation,” she says, pointing to successful sales of companies such as Adria Airways, the country's largest airline, Nova KBM, one of the country's largest banks, and Zito, a food producer. She also highlights the ongoing privatisation processes of companies such as NLB, the biggest bank in Slovenia, and Cimos, an automotive equipment producer.  

Yet, while this type of FDI might be more open to foreign investors than ever, the question still remains as to whether the country can attract more investors to greenfield projects, given that labour wages in Slovenia are the highest among all new EU members, according to 2014 study published by German Federal Statistics Office. 

Here, though, there is also good news for investors, according to Miroslav Marchew, director of PWC Slovenia, a local office of the global advisory. “Potential investors point to the fact that the biggest problem when it comes to investing in Slovenia is costly burdens on employment,“ says Mr Marchev. “It is expected that the anticipated new tax reform will take that into consideration and will aim toward the reduction of labour costs.” Whether it will be enough for investors to fall in love in Slovenia remains to be seen.