Slovenia - Market ChallengesSlovenia - Market Challenges
More than 25 years after abandoning communism, Slovenia has yet to complete vital structural economic reforms and reduce state involvement in the economy, which remains at least 50 percent state-owned despite pledges to the EU to increase the pace of privatization. Many Slovenians remain resistant to privatization and foreign acquisitions of state-owned firms, despite general awareness of foreign direct investment’s (FDI) importance to economic growth, job creation, and innovation. Potential investors in Slovenia still face significant challenges, including a lack of transparency in economic and commercial decision-making, time-consuming bureaucratic procedures, opaque public tender processes, and an often-inconsistent taxation and regulatory structure. Key reforms, such as privatization, increased openness to foreign investment, more transparency in public procurement, pension reform, and business and investor-friendly changes to the labor and taxation code, would make Slovenia’s economy more competitive and increase opportunities for trade and investment.
The workforce is highly skilled and educated, but relatively high social welfare and income taxes coupled with an opaque tax system can make it expensive to hire new workers. Slovenia has taken positive steps to privatize some state-owned companies and implement limited tax reform, but many private sector contacts assess the pace of the reforms as too slow. Judicial backlogs sometimes prevent legal disputes from being resolved in a timely manner, although a March 2018 European Commission assessment noted that the total backlog decreased by 13 percent in 2017 compared to 2016.