Investment opportunities in Slovakia

In recent years, Slovakia has established itself as one of the most attractive countries in Central Europe for investors. Its developed, export-oriented industrial base, modern infrastructure, and access to the EU single market make the country a convenient location for both strategic and portfolio investments.

Slovakia's investment climate is supported by government incentive programs, a transparent legal environment, and a skilled workforce. Against this backdrop, sectors such as automotive, mechanical engineering, information technology, energy, and others are of particular interest. This article examines Slovakia's key investment opportunities and promising sectors capable of delivering long-term growth and stable returns for foreign and local investors.

Industries for Investment in Slovakia

Automotive Industry

The automotive industry has a rich tradition in the country. It has become a vital economic sector and a driving force behind the Slovak economy. It is currently the strongest sector in terms of its share of Slovakia's GDP, exports, and job creation.

With four major automakers (VW, Stellantis, Kia, and Jaguar Land Rover) and more than 365 local suppliers, Slovakia is the world leader in per capita vehicle production.

Furthermore, the Swedish premium car manufacturer Volvo has chosen Valaliki (near Košice) as the ideal location for its new, state-of-the-art manufacturing facility. With a production capacity of 250,000 electric vehicles per year, the plant will exclusively produce luxury SUVs.

The country enjoys a favorable geographic location for automobile production and sales: it is located near 12 automobile factories and serves 300 million customers within a 1,000 km radius, as well as 600 million customers within a 2,000 km radius. Slovakia is an EU member, so the automotive parts and equipment market is heavily saturated with products from countries such as Germany, Austria, and France. Competitive pricing and on-time delivery are crucial for foreign suppliers to succeed in selling to Slovakian automakers and their Tier 1 suppliers.

The development of applied R&D in the automotive industry is crucial for the industry's continued growth. Target opportunities include smart manufacturing (digitalized manufacturing, sensors, the Internet of Things, and automation), innovative materials (composite, organic, and memory), components, integrated solutions, related processes, 3D printing equipment, and waste recycling. Examples of companies active in R&D include Adient, Porsche, Matador Holding, Schaeffler, Hella, and InoBat.

Electric Vehicles

Of the four Slovak automakers, only Volkswagen and Stellantis produce electric vehicles. Of the 3.4 million cars on Slovak roads, only 3% are electric or hybrid.

Low interest in eco-friendly cars is due to their relatively high price, insufficient government financial incentives, a limited charging network, long charging times, limited range, the size of the sales and service network, and electricity prices. Of the total $753 million (€638 million) allocated under the decarbonization chapter "Green Energy" in Slovakia's EU Recovery Plan, $60 million (€51 million) is expected to be allocated to the development of electric mobility. The Slovak Electromobility Association predicts an additional 105,000 by 2030.

Medical Industry

Slovakia's medical industry is primarily represented by the production of pharmaceuticals, medical devices, and cosmetics.

Thanks to a strong focus on research and development, the pharmaceutical industry continually offers new and exciting investment opportunities.

Companies with R&D centers in Slovakia are making progress in areas such as medical 3D printing of prosthetics, the development of exclusively sterile materials, a new protein for repairing damaged DNA, and a trisomy test for non-invasive diagnosis of Down syndrome.

Electronic health services are only partially available in Slovakia. Electronic prescriptions are fully functional, while electronic health records and electronic examinations are only partially implemented.

Most private medical centers continue to invest heavily in new medical equipment. There are approximately 3,000 practicing dentists in Slovakia, most of whom are private practitioners who receive full payment for their services directly from patients. Private dental clinics are interested in staying up-to-date with the latest technological advances and acquiring new equipment to meet the needs of their clients. Particularly promising segments for foreign dental equipment suppliers are laser dentistry, implantology, and cosmetic/aesthetic dentistry.

Export opportunities exist in robotic surgical equipment, diagnostic equipment, telemedicine, virtual medicine (in pain management and mental health), and artificial intelligence (in the development of diagnostic systems/medical services, precision medicine, genomics, chatbots, mobile apps (ideally covered by health insurance), and cybersecurity.

The pharmaceutical and chemical industries offer opportunities for research and development of new innovative, generic, and biosimilar drugs, as well as export opportunities in digitalization, process automation, and training qualified personnel. The Ministry of Health operates a research and development incubator platform called Biohub, which can be a useful tool for finding potential business partners, exploring technology transfer opportunities, and/or attracting venture capital investment.

Information and Communications Technology (ICT)

Slovakia is experiencing high demand for information and communications technology (ICT) products and services, thanks to ongoing investment by the central government, municipalities, banks, private companies, and financial institutions. Market demand extends to expanding 5G cellular coverage and internet networks, cloud storage, cybersecurity solutions, and the maintenance of existing network equipment and software. Automotive manufacturers, engineering companies, and energy generation and distribution companies are also contributing to the growth of the ICT sector by implementing Industry 4.0 and manufacturing technologies.

The best prospects in the field of business process technologies are associated with the implementation of artificial intelligence, hardware and software for remote work using audio and video communications, cybersecurity solutions, comprehensive customer service solutions based on artificial intelligence and virtual call centers, cloud data storage systems and application software, specialized software, solutions for electronic distribution channels providing all the basic functions of retail, comprehensive information systems for electronic payments and electronic card services, decision support information systems, information systems for management personnel, and comprehensive information systems for insurance companies.

The best prospects in the field of communication technologies are associated with high-speed Internet for virtual remote work, smartphones, tablets, cloud technologies, wireless services based on the WAP protocol, as well as equipment and 5G solutions. Opportunities are also opening up for alternative internet service providers and other new services, such as virtual call centers and distance learning.

The best prospects in digital equipment and systems are in cloud data transmission systems, thin workstations, data transmission equipment, packet switching and routing equipment, key circuit switching systems and equipment, data transmission and network equipment, systems and application software, dial-up and leased line services, streaming, cable and digital television, set-top boxes, and digital presentation technologies.

The development of digital technologies in the audio, information technology, telecommunications, and consumer electronics markets is driving demand for the latest innovations in both the residential and commercial sectors. Internet services offered by Slovanet, T-Com, O2, Orange, UPC, and SWAN typically include a three-in-one package (Internet, TV on demand and VoIP).

The consumer electronics and entertainment devices segment of the audiovisual technology market is the largest and fastest-growing segment in the sector. Among televisions, there is a trend toward large digital LED, OLED, and QLED TVs with 8K and 4K resolutions, equipped with DVBT-2, DVBS, and DVBC receivers. Popular products include 4K OLED, QLED, and LED TVs, set-top boxes, HiFi audio equipment, and digital satellite receivers. In the business segment, popular AV products include electronic display systems and signage, projectors, and control systems. Demand for wireless/mobile/portable devices is growing rapidly.

The telecommunications sector also offers significant opportunities for the development of 5G networks and the sale of innovative peripheral products and services. The four largest mobile operators in Slovakia are Orange, Slovak Telecom, O2, and Swan. Slovak Telecom is the main provider of fixed-line telephone services.

ICT consulting, virtual web conferencing solutions, virtual education and training services, and audiovisual teleconferencing equipment are all promising value-added services, as many small and medium-sized businesses, as well as large companies, are implementing the latest virtual teleconferencing solutions to enable remote work and communication with their customers. Examples include cloud storage, thin office models, telecommuting, virtual web conferencing, and virtual exhibition solutions.

Energy

The most important planned energy project is the construction of a new nuclear power plant with a capacity of 1,000 to 1,700 MW of the "third generation+" type, a pressurized water reactor (PWR), and a minimum design life of 60 years. JESS (Jadrova a Energeticka Spolocnost Slovenska) plans to build a new nuclear power plant in Jaslovské Bohunice, utilizing the existing infrastructure network. The Slovak Ministry of the Environment approved the environmental impact assessment for the new nuclear power plant in 2016. The project is currently approximately halfway through the preparatory phase, which will conclude with the selection of a specific technology provider, including the selection of a suitable investment and financial model.

The Slovak government has expressed interest in expanding its presence in both civil and nuclear energy. In July 2023, the Slovak state-owned nuclear company JAVYS signed a memorandum of understanding with the American Westinghouse Electric Company for the potential development, construction, and operation of AP1000 large reactors and AP300 small modular reactors, which could potentially be used in the construction of new nuclear power plants in Jaslovské Bohunice and elsewhere in Slovakia. Slovakia also plans to issue licenses for the construction and installation of large wind turbines.

Demand is growing for photovoltaic power plants and rooftop solar panels.

There is also the possibility of supplying hydrogen production and storage equipment. The Slovak government plans to provide EU funds totaling USD 990 million (EUR 954 million) for hydrogen production.