Starting a business in the Slovak Republic is less costly than in most OECD countries, but burden on firms remain due to administrative requirements and the complexity of rules. In 2016, the government introduced the “Act on the Promotion of Small and Medium Enterprises” which includes specifications on SME coverage in regulatory impact assessment. Furthermore, since the beginning of 2017, a new corporate structure is in place, the “simplified joint stock company”, with minimum share capital of EUR 1. This company form is particularly well suited for venture capital and private equity investments as it enables to issue various classes of shares and agree beforehand on the exit from the company.
OECD SME and Entrepreneurship Outlook 2019
OECD SME and Entrepreneurship Outlook
Chapter 37. Slovak Republic
Figure 37.1. Structure and performance of the SME sector in Slovak Republic
Source: Charts A, C, D: OECD Structural and Demographic Business Statistics Database 2018, http://dx.doi.org/10.1787/sdbs-data-en; Chart B: Employer enterprise births, OECD Structural and Demographic Business Statistics Database 2018; and Financing SMEs and Entrepreneurs 2018: An OECD Scoreboard for bankruptcies; Chart E: OECD Structural and Demographic Business Statistics Database 2018, Employer Business Demography dataset.
SME business conditions and access to strategic resources
Institutional and regulatory framework
Market conditions
Almost half (45%) of the Slovak GDP depends on foreign markets, but exports are relatively concentrated and smaller SMEs are less trade oriented than in most other OECD countries. Under the EU OPRI, a national project to support SME internationalisation is in place. In 2015 the reform of the “Public Procurement act” became effective, with the objective of ensuring more fair and objective procurement and introduce Most Economically Advantageous Tender (MEAT). Additionally, the Public Procurement Office organises training for contracting authorities that also cover SME facilitation.
Infrastructure
While Slovak investments in transport infrastructure are relatively high, ICT investments are low by OECD standards. The Strategic Transport Development Plan (2016-30) – Phase II focuses on providing an even access to settlements and industrialised zones and supporting inclusive growth in all regions with the development of an integrated multimodal transport system. The government has also set the long-term objective of achieving access to high-speed internet connection with at least 30 Mbps for all households by the end of 2020. As of 2018, the European Investment Bank, through the European Fund for Strategic Investments, planned to finance EUR 475 million for transport infrastructure projects, set to trigger EUR 1.2 billion in investments..
Access to finance
Total SME lending has been on an upward trend since 2012 and credit conditions for SMEs have been gradually improving. Government policies supported this trend by providing loans and guarantees for SMEs through specialised state banks and through the Slovak Business Agency (SBA), such as with the micro-loans programme. Other financing instruments targeted at SMEs are being backed by the EU structural and investment funds (ESIF). These include the ESIF disbursement to support SMEs in the 2014-2020 period. The closure of the funding support from JEREMIE was a major cause of the reduction by 83% of venture and growth capital in 2017, as SMEs being funded under the 2014-2020 programme have not yet received support..
Access to skills
In the OECD area, the Slovak Republic ranks relatively low in terms of adult tertiary education and core ICT skills. At the same time, with the unemployment at historical lows, labour shortages are pushing up wages and attracting foreign workers, and in particular skilled workers. To enhance skills development, in 2015, the government put in place a reform, which introduces the provision of VET in a dual system based on collaboration between employers and vocational schools. It has also launched a pilot national project to collect data about graduates’ labour market performance.
Access to innovation assets
Affiliates of multinational companies in Slovakia favour technology import, while innovation and R&D investments remain weak in local SMEs, with medium- to low-tech manufacturing industries making larger contributions to BERD than high-tech, knowledge-intensive firms. Policies to support innovation in SMEs range from loans, guarantees and risk-sharing mechanisms offered by the Slovak Investment Holding, to competitive grants managed by the EU’s Operational Programme Research and Innovation (OPRI). Moreover, in 2016 the government introduced tax incentives on corporate income for business R&D and for intellectual property revenues and other profits (i.e. a patent box).
The full country profile is available at https://doi.org/10.1787/34907e9c-en
References
EIB (2018), The European Investment Bank in Slovakia: What We Do, http://www.eib.org/en/projects/regions/european-union/slovakia/index.htm.
European Commission (2018), Country Information - Slovakia - Digital Single Market, https://ec.europa.eu/digital-single-market/en/country-information-slovakia (accessed on 12 September 2018).
European Commission (2017), Slovak Republic - SBA Factsheet, https://ec.europa.eu/docsroom/documents/29489/attachments/25/translations/en/renditions/pdf.
Government of the Slovak Republic (2014), Strategic Document for Digital Growth and Next Generation Access Infrastructure (2014 – 2020), https://www.mindop.sk/ministerstvo-1/elektronicke-komunikacie-8/strategicke-dokumenty/sirokopasmovy-pristup/narodna-strategia-pre-sirokopasmovy-pristup-v-sr/narodna-strategia-pre-sirokopasmovy-pristup-v-sr-uznesenie-vlady-sr-c-136-2011.
Ministry of Transport (2016), Strategic Transport Development Plan of the Slovak Republic up to 2030-Phase II, Construction and Regional Development of the Slovak Republic, https://www.opii.gov.sk/download/d/sk_transport_masterplan_(en_version).pdf (accessed on 12 September 2018).
OECD (2018), Slovak Republic - Economic Forecast Summary (May 2018), http://www.oecd.org/economy/slovak-republic-economic-forecast-summary.htm (accessed on 12 September 2018).
OECD (2017), OECD Economic Surveys: Slovak Republic 2017, OECD Publishing, Paris, http://dx.doi.org/10.1787/eco_surveys-svk-2017-en.
OECD (2017), Public Procurement for Innovation: Good Practices and Strategies, OECD Publishing, https://doi.org/10.1787/9789264265820-en.
OECD (2017), Slovak Republic, Trade and Investment Statistical Note, http://www.oecd.org/investment/SLOVAK-REPUBLIC-trade-investment-statistical-country-note.pdf.
SARIO (n.d.), Support of Internationalization of SMEs, Slovak Investment and Trade Development Agency, https://www.sario.sk/en/support-internationalization-smes.