At today’s AmCham Business Breakfast entitled “What Will 2023 Bring for Slovenian Business?” representatives of the Slovenian economy shared with us the actual situation, challenges, and opportunities of the current business environment. Our guests were Blaž Brodnjak, President of the Management Board, NLB and President, AmCham Slovenia; Nevenka Kržan, Member of the Management Board, Luka Koper; Marko Lotrič, Founder, LOTRIČ Metrology, and President of the National Council of the Republic of Slovenia. We were also joined by dr. Peter Wostner, Secretary, The Institute of Macroeconomic Analysis and Development of the Republic of Slovenia and editor of IMAD’s Productivity Report, which he presented to us at the event. For the development of the Slovenian economy and society, it is crucial to establish a long-term strategy and ensure adequate HR. The participants at today’s event agreed that this would only be made possible by a social agreement and changes in the field of taxes, education, investments, and innovation.

The mismatch between the reality of the economy & the constant changes in the tax environment, the lack of personnel, the flight of talent, and as well as the crisis of the health system were the common thread of this AmCham Business Breakfast. At the very beginning M.Sc. Ajša Vodnik, General Director of AmCham Slovenia and Vice President of AmChams in Europe, also emphasized the importance of the culture of dialogue and the power of relationships in business: “When we talk about the power of relationships, it is important that we in the business world, understand each other… I hope that 2023 will be not only a year of difficult decisions but also a year of smart reforms and a moment when the economy will show that we are a pillar of society and that ESG is not just letters but how we operate.”

The guests of today’s event agreed that all current discussions about reforms are essential but that the critical reform, which determines the interdependence of others and the business environment in Slovenia, is tax reform. Blaž Brodnjak illustrated this logic with the problem of the lack of ICT personnel and said that Slovenia is the only one in the Balkan region with such high taxation of highly sought-after professions and that the school system does not produce enough experts in terms of the needs of the market. Marko Lotrič also agreed that the Balkan area lacks professionals, while Nevenka Kržan pointed out the problem with long-term work permits and bureaucratic obstacles in hiring foreigners. Brodnjak proposed tax incentives and a system of rewarding highly sought-after staff for deficit professions as a solution. In this way, we could also attract staff from abroad because we got to keep in mind that the reforms do not have an immediate effect: “I highlight tax structures as crucial for the school system. In this way, it will become more agile in agreement with the economy … I agree that the state needs to support retraining to deficit professions. Educational reform is also necessary, but it is imperative to encourage retraining.”

The high frequency of tax regulations in Slovenia affects the (un)predictability of the business environment. “The tax environment and also other elements of the legislative framework that affect cash flows in companies is essential, something that every owner will look at,” said Nevenka Kržan from Luka Koper, emphasizing: “Our basic mantra is that the business company takes care of itself, not counts on state aid, but this also means that we could also count on stability. We always lack a long-term view; we are short-sighted.”

According to experts, internal ownership treatment is also at odds with tax logic and unconstitutional, with Lotrič raising the question: “What good is the law on internal ownership if every tax legislation runs us over?” Brodnjak suggested that in order to establish a balance in the various markets, it is necessary to sensibly tax property and balance the consumption of the tax treasury, whereby the social agreement is vital: “Slovenia does not respect the main social agreement – The Constitution of the Republic of Slovenia – including the left and the right.”

The realistic economic picture of Slovenia was presented to us by dr. Peter Wostner. Competitiveness in Slovenia progresses so slowly that we need to catch up with those in front while those behind us catch up with us. Suppose we want to be good at long-distance running – in that case, we need to go into digital transformation and a green transition, with Wostner also pointing out the importance of automating the processes of public systems. Even today’s consumer already appreciates ESG criteria, which have become an important purchase criterion. He emphasized that more decisive steps are needed for structural progress. He recognizes the critical reason that Slovenia needs to catch up in the fact that we are significantly underinvesting. Brodnjak also emphasized that the state still needs to establish a mechanism for developing the capital market. He concluded that today, with this mindset, we do not stimulate ambition, innovation, diligence, and thus progress and that decision-makers still need to recognize the economy as an essential subsystem of society. Lotrič added, “… we can unite and proceed from the trust. We will become another Switzerland only if we trust each other”.