Slovakia is a mini nation present in the centre of Europe. It is blessed by nature and has impressive mountain ranges, rivers and many other natural resources.
Moreover, the lifestyle in the country has fair standards. Business incentives in the country are highly remarkable. The country is home to many successful companies and is continuously growing.
If you are in search of a business location to establish or expand your business, then this article will help you. This article will highlight some benefits and drawbacks of establishing a business in Slovakia.
|Benefits of doing business in Slovakia||The Drawbacks of doing business in Slovakia|
|Investor friendly economy||Small Population|
|Gender equality||Strict business behaviour|
|Low crime rates||Getting credits|
Advantages of Doing Business in Slovakia
- Geographic Location:
Slovakia connects with many different country’s markets. It connects with European countries, Poland, Ukraine, Hungary and many more. This increases the exposure of services and industries to a large size market.
The purchase demand also increases, which makes the business economy stronger and stable. The neighbouring country’s relations help to expand and develop business at a rapid rate.
- Innovation and technology:
Slovakia has successfully developed advanced technology. The country is totally accessible with internet service throughout 365 days of the year.
This makes many procedures work at a rapid rate and connects the country at the fingertips. Telecommunication departments play a significant role in developing technology in the country.
- Well-Developed Transportation System
The transportation system is also well developed in the country, which makes it easy to travel from one city to another or even across borders.
Moreover, the pharmaceutical sectors are well developed, which makes the health care sector powerful. This increases the health score of the country, and citizens live a healthy life in the country.
- High education:
Slovakia has a high education system and provides a highly qualified workforce every year. The young graduates are highly advanced with technology and are dedicated to their respective roles.
They have skills in a variety of industries like engineering, biotechnology, pharmaceutical sector, manufacturing and many more.
- Skilled Workforce
The country grabs a rank at 6th position for manufacturing cars. This states that the workforce available in the country is not only knowledgeable but also dedicated to their respective roles. This attracts a large number of investors and business leaders to the country.
- Tax Policies:
Slovakia has business-friendly and investments friendly tax policies. The corporate tax, VAT, estate tax, residential tax, and more are meagre as compared to other countries.
Offshore companies can also be established in the country by foreign business owners. The government provides remarkable tax relaxation to foreign companies to develop in the country and attract the business owners and entrepreneurs to the country.
The tax policies also attract a large number of investors which helps in the development and growth of the economy. The government supports foreign business companies to develop and grow in the country.
Disadvantages of Doing business in Slovakia
- Starting with business:
Slovakia has many procedures and conditions to be followed before starting with business. The legalization of documents is carried out by visiting different government departments.
Government authorities conduct multiple inspections, and then legal documents are approved. The bank account is required to be opened by the name of the business in which you are working. These all methods take much time to get completed.
- Construction Pain:
Construction also requires government permission and the legalization process. Moreover, the physical presence of the owner is required to conduct the legalization processes.
Many government applications need to be filed for getting permission. Government officials carry out multiple inspections at the construction site. This causes a significant delay in the development and growth of the business.
The entire procedure with all document preparation takes 286 days to get completed.
- Trading across borders:
Trade across borders requires a lot of time and capital. It takes up to two weeks to complete the legalization process for both import and export of goods.
Moreover, 1500 USD is the cost for one container to transport, which is very high as compared to OECD norms. This leads to significantly less international trade and foreign currency exchange. It also causes a delay in supplying goods at a proper timeline.
- Getting electricity:
Electricity connection is also a business limiting factor in the country. It takes 158 days on average to get an electricity connection.
ZSE Distribucia is responsible for providing electric power to the company. Application is needed to be filed, which is followed by multiple inspections by the authorities.
After completing legal procedures, meter installation is done, and an internal wiring process is started. This all long process takes a lot of time for the company to develop and grow.
- Solving insolvency:
The company once caught in an insolvency whirl, then it became difficult for it to develop and grow in the country. It takes, on average, four years to get a satisfactory solution. Also, the recovery rate is too shallow.
The company faces a massive economic crisis which makes it challenging to develop with the same rate before insolvency. The recovery rate is quite less in comparison to the OECD norms.
This is a big drawback for business owners and entrepreneurs to continue business in the country.
- Enforcement of contracts:
Enforcing contracts is another time-consuming process in the country. There are 32 processes to complete for enforcement of agreements which takes an average of 550 days. This causes a significant delay in the development and growth of the company and business.
The cultural beliefs in Slovakia are somehow orthodox and stringent. They also believe in a hierarchy system, and country citizens are given more opportunities than foreign/non-resident citizens.
This creates an unhealthy environment for coworkers and breaks the trust and compassion of working and developing together.
- Change is Difficult to made:
Many a time change is not accepted in the traditional methods or strategies of business because it is kept forward by a foreign company in the business community. This overall causes damage and delay in growth and development of industries in the country.