With a population of just over 2.1mn, Slovenia is one of Europe’s smallest countries, but its Finance Minister Klemen Boštjančič believes that gives the country an edge in today’s fast-changing global environment. 

Commenting on Slovenia’s advantages as an investor destination in an interview with bne IntelliNews, Boštjančič first lists the country’s skilled workforce and its geographic position. 

“The number one advantage is that we have a highly educated and skilled workforce (particularly in the fields of engineering, IT, mathematics and manufacturing), and we have a strong tradition in innovation and R&D,” said Boštjančič, speaking on the sidelines of the European Bank for Reconstruction and Development (EBRD) annual meeting in London in May. 

“Second is the geographical position. Slovenia is in the centre of Europe just north of the Adriatic Sea, so we have certain logistical advantages. We have good infrastructure – not just roads and the port of Koper, but also our digital infrastructure is among the best in Europe.” 

Another factor is the corporate income tax regime that the minister describes as "quite generous” as well as widely used investment allowances. 

When it comes to attracting investors, Boštjančič adds, “being small and agile is absolutely an advantage.” 

This has become important in recent years, when Slovenia, like other countries worldwide, has had to adapt to one crisis after another. “We are not that dependent on only one industry, which is an advantage,” the minister said. “The second thing is Slovenian industries tend to be capable of adapting quickly when they see an opportunity.” 

A strong pharma sector 

Demonstrating the government’s ability to act quickly to secure investments, he gives the example of Swiss pharmaceutical company Sandoz’s recent decision to invest approximately €600mn in a new production facility in northwest Slovenia, close to the Hungarian border. To seal the deal, Slovenia opened a pharmaceuticals faculty at the local university in Maribor to support the company’s workforce needs. 

Sandor thus joined two existing pharma majors in the country, local Krka and Swiss multinational Novartis. “Investment into pharmaceuticals and biotech is one of our priorities, if not the first priority of our country. Our pharmaceuticals sector has always been large and it is growing,” according to Boštjančič. 

“Novartis and Sandoz are today very big in Slovenia. They keep on investing, they have built major production facilities and their R&D centres are in Slovenia. They are very positive about the Slovenian investment environment. They are examples of excellent cooperation between the local community, government and foreign investors.”

Also among the key sectors in Slovenia are IT and manufacturing, including in the automotive industry. While Slovenia does not host large car factories – Renault’s Novo Mesto plant is a notable exception – it plays a critical role in global supply chains for specialist automotive components. 

“The automotive industry was always one of the most developed sectors in Slovenia. We don’t have big automotive plants except Renault, but where Slovenia was always very strong is our supplier network of automobile plants, which is integrated into global supply chains. We have a lot of very innovative companies in components. The sector amounts to approximately 10% of GDP,” commented Boštjančič. 

Investing in tech … and people 

This responsiveness is underpinned by Slovenia’s workforce and investment into innovation and R&D. “We believe the first priority for long-term growth – not just in Slovenia but every Western country – is through added value,” Boštjančič told bne IntelliNews. “That’s why the government took the position three years ago that we will invest a lot into R&D. We are investing 25-30% more every year. By 2026, direct government investment in R&D will be more than double what it was at the beginning of this government.”

Attracting and retaining talent is another pressing concern for Slovenia, as in many European countries. In response, the government recently introduced special tax incentives for skilled workers under the age of 40, both from abroad and among the Slovenian diaspora.

“Last year we introduced a new law to try to attract a younger, skilled workforce to move to Slovenia. The battle for talent today is the most important of all. Slovenia was always attractive for people from the countries of former Yugoslavia, which was our pool of talents, but today this is not enough, so we launched this special taxation initiative for under 40s to come to Slovenia,” said Boštjančič. 

Another important factor in attracting talent, the minister pointed out, is lifestyle factors, with Slovenians motivated to move back to their home country less by high salaries than by the availability of housing, a good work-life balance and low crime rate. 

Green transition 

Slovenia has long prided itself on being a ‘green’ country; over 60% of its territory is covered in forest, one of the highest percentages in Europe. However, the country faces challenges in its energy transition as it seeks to leave coal behind and invest into both renewables and nuclear capacity. 

Boštjančič acknowledges the country’s challenges with energy projects. Slovenia is receiving investments via the Just Transition Fund to support the transition of coal mining areas to greener economies. He describes the expanded Šoštanj thermal power plant (TPP) as “one of Slovenia’s bigger strategic mistakes”, and says: “Now we have to invest a lot into the transition of this energy project through the promotion of renewable projects.”

However, while solar power systems are becoming popular in Slovenia, but the potential for wind is “not particularly large”. 

Accordingly, Ljubljana now has to make a decision on investing into a second nuclear power plant, aside from the existing Krško NPP. According to Boštjančič, the final decision will probably be made in two years. 

“The demand for energy is growing rapidly like everywhere else and I believe it will be difficult to meet without nuclear energy,” he said. “All over the world the attitude to nuclear energy is changing. Today it has become much more acceptable, and in a good part of the world it is now considered as green energy.” 

On a positive note, the minister says that while there used to be “quite a lot of scepticism” about the green transition, “now a lot of companies see it as an opportunity, not just a necessity.” 

Financial innovations 

The emphasis on sustainability also extends to Slovenia’s financial markets. Slovenia is advancing its green finance agenda with a range of measures, such as launching sovereign sustainability bonds and creating a framework for sustainability-linked debt instruments.

“When issuing a sustainable bond where part of the interest rate depends on meeting sustainability goals, it’s actually putting your words into life,” said Boštjančič. 

“It’s similar to the Resilience and Recovery Facility, which also supports the green transition, and it’s an instrument I really like. I was very loud about this at the European Commission. It’s a carrot and stick principle and I really love it.” 

According to him, “there is a lot of demand for such instruments”, although he points out it can be difficult to find enough projects to finance. 

Looking more broadly at Slovenia’s financial situation, Boštjančič comments: “Our economic situation is good and there is no doubt our Treasury is the best in Central and Eastern Europe.” 

Slovenia was quick to return to the international capital market this year, issuing a €1bn, 30-year bond at the beginning of January. The country also issued its first sovereign samurai bond on Japanese market in 2024, and according to Boštjančič, the government is now considering a panda bond.

Again, he stressed that the country’s small size has pushed it to innovate when raising finance: “We are really innovative, putting lot of effort into the liquidity of our bonds. As a small country, our bonds are less liquid than bigger countries’ bonds but we do a lot to boost liquidity and we have been very successful during the last few years.”