BRATISLAVA, Jan 24 (Reuters) - Slovakia offered incentives of up to 15 percent of the total investment by PSA Peugeot Citroen to attract the French car maker's 700-million-euro ($755 million) plant, a senior official said on Friday.
The 15-percent figure is the maximum allowed according to European Union competition law.
Europe's second-biggest car maker chose Slovakia last week over Poland, Hungary and the Czech Republic to build the assembly plant that should produce 300,000 cars per year from 2006.
Economics Minister Robert Nemcsics said on Friday Slovakia had offered various incentives, not only tax breaks, but also subsidies for creating jobs, that should amount to up to 15 percent of PSA's total investment in the central European EU-designee.
"The offered incentives are strictly in line with EU legislation," Nemcsics told a news conference after signing an agreement on investment cooperation with PSA.
The French automotive group, which sold 3.27 million cars in 2002 and is targeting sales of more than four million units in 2006, said cars to be made in Slovakia will not compete with those planned to be produced in the company's joint-venture with Toyota in the Czech Republic.
"There are lot of differences between the platforms, and there is no competition between the two types of cars," said PSA Executive Vice-president Jean-Marc Nicolle.
Nicole said the company has yet to decide how big a part of the 700-million-euro investment will be imported to Slovakia in the form of technology and what share will be invested directly in the country.
The local foreign exchange market has been eagerly awaiting details about the financing of the deal as a large inflow of foreign investment could cause a rise in the crown undesirable because it would hamper exports.
However, the Slovak central bank has said it wants large conversions of foreign funds into crowns to by-pass the foreign exchange market to prevent the local unit from firming on artificial one-off factors.
Nicolle also said the company had not decided yet on how to finance the Slovak investment.
A cheap skilled labour force combined with government incentives have made Slovakia one of Europe's most attractive locations for car producers and their suppliers.
German car maker Volkswagen has an assembly plant near the Slovak capital of Bratislava, just a half hour drive south from PSA's chosen site near the western town of Trnava. The Volkswagen plant is Slovakia's largest industrial firm and its biggest exporter.