Presentation on theme: "Ing. Tomáš Dudáš, PhD.. Introduction Investment promotion – the sum of all government activities with the goal to try to attract foreign direct investments."— Presentation transcript:
Introduction Investment promotion – the sum of all government activities with the goal to try to attract foreign direct investments
The basic types of investment promotion activities Main objective: to improve a country’s image within the investment community as a favorable location (image-building activities) to generate FDI directly (investment-generating activities) to provide services to prospective and current investors (investment service activities)
Tools of image building Advertising in the general financial media Participating in investment exhibitions Advertising in industry or sector specific media Conducting general investment missions in other countries Conducting seminars on general investment opportunities
Tools of direct FDI generation Direct mail or telemarketing campaign Industry or sector specific investment missions abroad Industry or sector specific investment seminars Engaging in firm-specific research followed by “sales” presentations
Services to prospective and current investors Pre-investment counseling and services business matchmaking, domestic market information, advice on employment conditions, finding suitable sites, advice on financial services, feasibility studies, environmental impact studies … Post-investment services assistance with registration, legal assistance, assistance with work permits, customs assistance, help with selecting local personnel…
Investment promotion agencies (IPA) Relatively new institutions, but their number was growing fast in the recent two decades Ex. SARIO, Czechinvest, PAIZIZ, Invest in Germany… Today we can find around 160 national IPAs and approx. 250 regional IPAs Usually they are public institutions
Financial incentives Fiscal the goal is to decrease the level of taxation of the investor Financial to goal is to give direct financial aid to the investor Other incentives usually indirect ways to help the foreign investor
Examples of incentives Tax discount or tax holiday Subsidies for new workplaces Subsidies for training of the new employees Subsidized loans to finance the investment Subsidized land/free land transfer Building of the necessary infrastructure Special economic zones Industrial parks …
Investment incentives in Slovakia Four types of projects eligible for incentives industry technological centers centers of strategic services Investment incentives are region based The primary role of the investment incentives should be the motivation of investors to place their new projects in the so called disadvantaged localities, i.e. the regions with higher unemployment, lower infrastructure quality, etc.
Maximum amount of the aid approved by the EU The percentage expresses the so called intensity of the aid, i.e. the maximum proportion of the eligible costs, which may be approved for the investor in the form of particular investment incentives.
Investment incentives in Slovakia Key Slovak legal regulations: Act No. 231/1999 Coll. on State Aid Act No. 561/2007 Coll. on Investment Aid Act No. 595/2003 Coll. on Income Tax Act No. 5/2004 Coll. on Employment Services Bylaw No. 342/2008 Coll. issuing the investment aid application form Important European regulations: Treaty on establishing the European Community Regulation (EC) No. 800/2008 Guidelines of the Commission on National Regional Aid for the Years 2007 2 2013
Industry The conditions for the so called industrial investment projects are the strictest ones
Technological centers Basically the technological centers are the establishments in which the company performs activities leading to the improvement of the production process and its quality, in other words perform research and development. But production does not fall within the technological centre scope of activities. The investor must expend at least 1 327 756.75 EUR (approx. 40 mil. SKK) on the fixed assets acquirement to be allowed to apply for the State aid concerning the technological centre establishment. Similarly as in the case of the industrial projects at least 50% must be covered by own equity. Furthermore the company must employ at least 60% of employees having university education.
Shared Services Centers These are places where the company provides the services with the high added value supporting the employment of qualified experts, centers for the development of computer software, customer support centers and so on as the centers of strategic services. Such centers are named the „shared services centers“. In the case that the investor shall decide to apply for the regional aid for such kind of a project, it must expend minimum 1 161 787.16 EUR (approx. 35 mil. SKK) on the fixed assets acquirement, whereas at least 50% must be covered by own equity, and employ at least 30% of university educated employees.
Large Investment Projects The investments with eligible costs exceeding 50 million EUR constitute a special situation. The European legislative considers such investments as the so called large projects and determines stricter rules for them. Maximum aid amount = R * (50 + 0.50*B + 0.34*C)
Forms of investment incentives Cash grant Fax relief Contribution to new jobs Transfer of the State/municipality property to the investor at the discounted price
Method and time frame of the investment aid approval