This month's Property Secrets Foreign Direct Investment (FDI) Monitor indicates no slowing of major blue-chip companies investing in a range of countries, both old and new to the EU. We've caught as much as we could, but if you know of any FDI we have missed, then let us know on the Forums - it's all relevant, interesting information for investors and commentators alike!

ROMANIA

Nokia officially announced its intention to invest EUR 60 m in the construction of a Cluj-based plant, which would be the company's 11th mobile device output facility globally. Nokia selected Cluj as the location for the plant because of the county's availability of skilled labor, its good logistics connections, overall efficiency, and long industrial tradition in the area. The construction works shall begin this spring, while the production is scheduled to start in the first half of next year. The Finnish corporation plans to recruit about 500 employees for the factory this year. In addition, the company is about to build an industrial village in the area where key suppliers and partners shall locate their operation.

The German retailer Kaufland opened a EUR 7 m hypermarket in Constanta and has scheduled to open another store in Romania this month. Kaufland has revealed it will invest some EUR 130 mln in Romania to open 16 outlets this year.
The company entered the market in 2005 and invested EUR 308 m in hypermarkets and central warehouse in Ploiesti.

German cosmetic and personal care products company DM, after having achieved approximately 30% revenue growth last year generated from the Central and Eastern European countries, has decided to open its first store in Romania this year.

The Estonian fashion retail chain Baltika will enter the Romanian market this year, the company's officials confirmed this month. Baltika will open its first store in Prague and has nine location targets in Romania for its expansion.

Real and Carrefour plan to inaugurate this autumn and, respectively, next summer, EUR 113 mln worth two malls located only a couple of hundred meters away from one another on Theodor Pallady Blvd, at Bucharest's exit to Constanta, Stefan Dumitrascu, Chief-Architect in charge of Sector 3 City Hall, states, quoted by Currier National. He adds that a Mega Image supermarket, as well as two 8-storey residential blocks and three 6-10-storey hotels each, is also scheduled to be built in the same area. In the opinion of Dumitrascu, the useable space in the area costs between EUR 150-180 per sq. m. The development of the three hotels is estimated at EUR 5-10 mln. The construction works of both malls shall be finished within 18 months.

In addition, Carrefour Romania, having total investment value in Romania of some EUR 220 mln, intends to open 4 outlets this year and 5 more next year in order to enlarge its network to 16 units. Two stores are scheduled for opening in Iasi, one in Cluj and the other in Bucharest. The retailer announced for next year the launch of outlets in Pitesti, Suceava, Oradea, Arad and Bucharest.

Coldwell Banker has entered the Romanian market and plans to open 20 offices in the country by 2010.

Azadea Group, one of the world's largest retail groups with a franchise portfolio of over 30 brands including Zara, Mango, Virgin Megastore and Sunglass Hut, plans to enlarge its existing network of Zara stores in Romania, due to be opened soon, by 42 units within the first half of next year.

Starbucks has opened its first chain in Romania with plans to open more cafes in the country. Starbucks will open two cafes in Romania this year. The first café will be situated in the Bucharest Mall, with the second in the Baneasa Business Center.

In the pipeline

Representatives of the telecommunication giant Ericsson has had talks with the Romanian premier Calin Popescu Tariceanu on the issue of building a global support center in Eastern Europe. The company has been looking at Iasi and Cluj Napoca.

HUNGARY

German food retailer Aldi GmbH will open the company's first stores in Hungary next year and plans to build a 400 store network.

CZECH REPUBLIC

The Czech government has announced that it has decided to sell a seven-percent share in the CEZ power company to private investors. The company enjoyed record profits last year of over a billion US dollars and Finance Minister Miroslav Kalousek says selling a seven percent share in the company now would add 36 billion crowns or 1.7 billion dollars to state coffers, which will be used for repairing the Czech Republic's roads and motorways. Despite the sale, the state will continue to have a controlling interest in CEZ as it will still hold more than 60 percent of the company's shares.

TURKEY

In the largest-ever investment by a Czech company in a foreign firm, Zentiva announced this month that it will acquire Eczacibasi Generic Pharmaceuticals (EGP), Turkey's third-largest drug company, for 460 million euros ($602.6 million/12.9 billion Kč).

The deal reflects Czech companies' growing awareness of the Turkish market's potential, with a population of 70 million and increasingly stable and modern regulations drafted in hopes of European Union membership.

POLAND

Poland and Ukraine won the race to host the European Championships in 2012 after beating off bids from Italy and Croatia-Hungary. This is seen as a driver of FDI into the country and will sustain economic growth in the cities hosting the games. The cities hosting games are Dnipropetrovsk, Donetsk, Kiev and Lviv in Ukraine and the six Polish venues are Gdansk, Krakow, Poznan, Warsaw, Wroclaw and Chorzow.

BULGARIA

Debenhams has announced its intention to expand into Bulgaria and Moldova under its franchiser in the region - RTC Holding. After leasing 2,500 sq. m in Bucharest Mall, Debenhams, is looking towards neighboring markets, and planning another two stores openings in the Romanian capital next year.

The French distributor of liquefied petroleum gas (LPG) Rubis has announced its intention to acquire Royal Dutch Shell PLC's LPG operations in six European countries, including Bulgaria, the Czech Republic, Germany, Romania, Spain and Switzerland, for EUR 90m.

SLOVAKIA

The Slovak Academy of Science (SAS) and the Central European Park for Innovative Technologies (CEPIT) signed a Memorandum of Understanding on 19 March 2007 to build the largest science & technology park of Central Europe in Vajnory in Bratislava. The park will focus on the transfer of high technologies in the fields of microelectronics, bio- and nano-technologies and informatics from academia to the industry sector, while at the same time exploiting the potential of the universities and research centres in the Bratislava Region.

The SAS will be involved in the Technology Transfer Centre and the High-tech Application Centre. The CEPIT park is expected to provide work, study and housing facilities for some 30 000 people, 7000 of which will be employed in high-tech jobs by 2017. The first CEPIT facilities are planned to open in 2008. The park has an areas of 63 hectares and will cost about some EUR 400 million. Financing is available from the SAS budget, the EU's Structural Funds and the national budget.

The proposal to create the CEPIT park was first made about two years ago, but the idea was very controversial. The former government of Vajnory did not consider the project realistic and assumed that the investor was more interested in lucrative land holdings and real estate opportunities than in creating a technology park. However, when a new local government took office, attitudes changed in favour of the project. Bratislava's mayor has promised to build the necessary transport infrastructure, including motorway access and a connection with the city's tram system, by 2010. Justifying the decision to build the park, the mayor pointed out that Bratislava was excessively dependent on the car industry and needed to diversify its profile by developing high tech industries and establishing a knowledge-based economy.
(Source: Pro-Inno Europe)

Samsung Electronics wants to invest some EUR 125 million and employ about 1500 workers in a new plant in the village of Voderady in western Slovakia, 50 km north from Bratislava. If the initial stages prove successful, the investment will be increased to approximately half a billion euros. The plant would then become the largest Samsung unit in Europe, producing LCD modules for computers and television sets.

Samsung already runs a computer/TV production plant in Galanta in southern Slovakia, but LCD modules are imported from Asia. Samsung wants to benefit from the relatively cheap, but educated work force in Slovakia and at the same time avoid import duties by importing LCD modules into the EU. The Samsung plant in Galanta and Sony's plant in Nitra will be the main customers of Samsung's planned Voderady plant. Samsung's investment in Voderady is expected to have a considerable multiplier effect. Five major suppliers of Samsung announced that they will build a cluster of component plants around the Voderady factory, thus generating another 2800 jobs. Construction work in the 65-hectare industrial park is expected to begin in April 2007 and first LCD displays will be produced in 2008.
(Source: Pro-Inno Europe)

German energy firm E.ON, announced that it intends to invest €200 million (£135 million) in Trnava, in west Slovakia, to construct a new natural gas-fuelled power station.

The company is reportedly also negotiating with the Slovak government over developing other potential sites for the country's nuclear power programme.
(Source: The Czech Business Weekly)

BUSINESSES from Germany, the foreign country with the most investors in Slovakia, believe Slovakia's economy will develop favourably and want to keep investing here, reported a survey carried out by the German-Slovak Chamber of Industry and Commerce (DSIHK). The results of the survey, which polled 90 businesses with German capital in Slovakia, could show more good news in the year ahead. Almost half of the surveyed firms plan to increase investments in 2007 while 36 percent plan to invest the same volume as in 2006.

Also, 46 percent of the companies plan to increase the number of employees.Slovakia received the highest marks compared to Germany, China and other central and eastern European countries. The survey, which rated different facets of a country's business environment on a scale from one at the top and five at the bottom, gave Slovakia an average score of 2.01 followed by the Czech Republic at 2.17, Slovenia at 2.29, Poland at 2.67 and Hungary at 2.74. Moreover, 88 percent of the companies said they would choose to invest in Slovakia again.
(Source: The Slovak Spectator)

FDI Data 2006

Recently published data indicate that Foreign Direct Investment in Slovakia reached Sk58 bn (US$ 2.35) in 2006

Commentary

The big news stories from the past month came from Slovakia and Poland.
Slovakia again featured strongly in the news with the announcement that the Central European Park for Innovative Technologies is to go ahead. The park will attract highly skilled jobs creating links with universities in the Bratislava region and attracting students and employees to the area.

Poland and Ukraine, who will joint host the 2012 European Championship, are the first eastern European nations to hold a big international football tournament since the break-up of the Soviet bloc. This is seen as a great boost to the Polish economy and will support further FDI into the economy. Zyta Gilowska, Poland's finance minister, said the championship would help sustain growth in Europe's fastest growing economy (it expanded 5.8 per cent in 2006). "Euro 2012 organisation will certainly be a significant driver of sustaining economic growth,'' she said. "I think that we have five years of economic growth acceleration."