By Jan Lopatka
BRATISLAVA, June 21 (Reuters) - The Slovak foreign investment boom is set to continue with the car industry providing the key momentum but other sectors joining the tide, government officials and business leaders said on Monday.
Slovakia is now in talks with investors who could bring up to six billion euros, said Roman Kuruc, the head of government investment promotion agency Sario.
The largest chunk -- about 40 projects worth some two billion euros -- is in the automotive industry.
"It is in the pipeline but I am not saying all these projects will stay in Slovakia. We are on the short-list with other countries," Kuruc told reporters on the fringes of a car conference in Bratislava.
Competition for export and growth-driving investments is tough among new European Union members in central Europe.
Slovakia, long ignored until ruling strongman Vladimir Meciar was voted out in 1998, has become the investors' darling thanks to state aid, the cheapest labour force in the region and a business-friendly tax reform. It will become world leader in car production per head when new factories of PSA Peugeot Citroen and Kia Motors come on line in 2006 and 2007. Together with Volkswagen AG's operation in Bratislava, they could ship around 750,000-800,000 cars a year.
AUTO FACTORY SUPPLIERS
Kuruc said the country could try to attract yet another assembly plant and was in discussions on that, but the main drive will come from suppliers coming to set up shop adjacent to the new assembly factories.
"At the moment it seems there will be 10 to 15 suppliers in this area (on the spot)," said Alain Baldeyrou, head of the PSA's 700-million-euro Slovak project.
He said that makers of some big and heavy parts such as seats, dashboards or bumpers, would need to be on site.
"For this part of supplies it is almost compulsory to be in the suppliers' park," he said.
He told the conference that commercial production in the Trnava factory north of Bratislava would start in April or May 2006 and output in the first year would be around 50,000 cars. Slovakia already has 130 car sector firms. The industry industry employs some 65,000 and accounts for 30 percent of exports. Sario's Kuruc said new projects could add another 6,000-10,000 jobs over the next few years.
The sector is led by Volkswagen's plant in Bratislava, which shipped 281,000 cars last year -- including Golfs, Polos and sport utility car Touareg -- and had turnover of 184 billion Slovak crowns ($5.57 billion).
Volkswagen Slovakia board member Manfred Bauder said he did not expect any production jump as the plant was already running near full capacity of 300,000, and in 2003 it still churned out old Golf versions which it no longer produces.
But he said he expected turnover to rise by about 10 percent this year as the company continues to shift toward higher value-added Touareg production. Bauder said he also expected to benefit from more suppliers moving into Slovakia.
The government is trying to diversify into other industries. Kuruc said his agency was in talks with forestry and chemical sector firms, and was trying to bring business service centres.