Investment Promotion – How You Deliver the Message Matters

On Thursday, March 3rd, I attended an Invest in Slovakia session in New York City sponsored by the Slovak Government and KPMG.  The session was held at KPMG’s offices on Park Avenue. I often work with foreign governments to help them attract foreign trade and investment.

The event featured presentations by the Slovak Ambassador to the US, the former US Ambassador to Slovakia, the Slovak Minister of Economy, the CEO of the Slovak Investment Agency (SARIO), the Chief Commercial Officer of Citi in Slovakia, Executive Director of the American Chamber of Commerce in Slovakia and the Head of Transaction Services for KPMG in Central and Eastern Europe. All the presentations were cogent with clear, well-organized slides in business English.  A networking session followed the presentations. There was even a buffet lunch that was well beyond the usual turkey sandwich. All the presentations revolved around a central theme — if you are doing business in Central Europe, Slovakia is your destination because of its stability, location, business environment and ratio of labor productivity to labor cost.

When I compare the Slovakian presentations to other European countries further East, I recall Communist-style speakers, slides with mistakes, endless economic statistics irrelevant to business people, excuses for the political situation, and a depiction of the business environment as, “We have made many reforms. Our business environment is not nearly as bad as you might think.” Comparatively, many of these countries have larger and younger populations, more natural resources and seaports yet you would not think of them as superior investment destinations based on how and what they present. Slovakia is a small, landlocked country with limited natural resources but was presented in the most positive light possible.

The moral of the story is that it matters HOW you say it.

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Improving Global Economy Means Optimism for Eastern Europe Investment, Right? Maybe Not This Week … Criminal Image Issues

As optimism prevails for a global economic recovery, one would assume that the prospects for increased investment and commerce in Eastern Europe are on the rise. Prospects are likely on the rise but the recent news stories about trafficking, maltreatment of immigrants and organized crime hardly burnish the image of Eastern Europe as a place to do business.

Yesterday, a bomb exploded in a Sofia, Bulgaria building serving as the home of Galeria magazine. Galeria published a series of wiretaps on alleged nepotism and corruption among high-ranking officials, including the country’s prime minister, Boyko Borisov. The explosion, seen as an act of intimidation, detonated a few hours before the arrival of four EU commissioners in Sofia. A less exciting story on the same day was the news that Romania’s customs chief was being sacked because of corruption.

On Wednesday, we learned from The Economist that Afghan and African “asylum-seekers are subject to abuse, exploitation and torture” in Ukraine. Ukraine is a key transit point for illegal immigration to the European Union. CNN.com published a story on Monday calling Romania, the center of human trafficking in Europe.

That was just this week! Three weeks ago, three Albanians were killed in anti-government protests resulting from a corruption scandal.

This lawlessness, or at least perception of lawlessness, does matter. Romania and Bulgaria’s scheduled March 2011 entry into the Schengen zone, allowing free movement among the EU nations without visas or passports, has been blocked by France and Germany. Corruption, poor border control and illegal movement of goods and people were noted as causes for the delay.

As the economy improves and investment funds become available, in order to compete with markets in Asia and Latin America, Eastern Europe must improve governance and civil society in order to be perceived as a competitive destination. Looking at market size and growth rates, the region’s competitiveness compared to the BRIC or larger Asian countries is limited. One of Eastern Europe’s key competitive advantages should be lower country risk – European integration (NATO and EU), democratic governments, support for human rights, etc.

Recent incidents bring credence to the perception of the region as a risky place. In order to improve their global image as a place to do business, the nations of Eastern Europe have a tremendous amount of work to do at home.