The Slovenia Times Autumn Edition 2019

The Slovenia Times Slovenian Magazine in English Language Autumn Edition 2019, Volume 16, EUR 4.90

www.sloveniatimes.com

Dušan Mramor, Professor of Finance The economic policy of the EU needs to become a source of convergence, not instability

Stefan Krauter, Owner and CEO, Cargo-Partner.

Investment of EUR 28m in one of the largest logistics centres in the region

Lady Barbara Judge CBE, Chairman, Athene Capital, United Kingdom There should be a partnership between nuclear and renewables

Slovenia welcomes its latest sporting heroes.

A silver medal at the European Volleyball Championship 2019.

Cruising the vineyards, filling bucket after bucket… It’s harvest time!

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Editorial

Autumn Edition 2019 www.sloveniatimes.com

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Contributors Arun Sudi and Debabrata Das (S&P Global Ratings), Jurij Giacomelli, Barbara Pavlin, Tina Drolc, Ana Struna Bregar, Petra Godeša, Urška Lisjak, Sonja Klopčič, Jasmina Kozina Praprotnik, Tonja Blatnik (iUFC-Institute for Universal Future Communications)

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This year, the end of summer had Slovenians filled with enthusiasm and pride as our sportsmen reaped success after success – something that definitely brings Slovenians together in spirit.

The Vuelta cycling race in Spain, which spanned a period of three weeks, was seen by millions of sports enthusiasts all around the world. This year, the podium was dominated by Slovenians, with Primož Roglič taking first, and 21-year-old Tadej Pogačar third place. The Slovenian anthem echoed through the streets of Madrid and for a brief moment, the spotlight of the global media was placed on Slovenia.

The euphoria continued as the Slovenian volleyball won the semi-final in a packed to the brim Stožice Stadium in Ljubljana. The atmosphere was electric as the fans kept singing the Slovenian anthem, motivating each and every member of our volleyball team to expend their best efforts – which they did. Ultimately, the Slovenian volleyball team rewarded our nation by winning a silver medal at the final of the European Volleyball Championship in Paris.

Following years of hard work and training, Eva Terčelj’s dedication paid off at the Canoe Slalom World Championships where she won a gold medal. We also witnessed amazing performances by young climbers in Kranj.

Sports are also tightly linked to the economy and broader social affairs. This year, the Slovenian economy has recorded quite a few successes and we are slowly making our way toward achieving international recognition. This edition of The Slovenia Times is full of quality content which sheds light on the current state of economic affairs and various projections for the future – the economic analyses were drawn up by leading professionals from international companies, including S&P Global Ratings and DRBS – Insight beyond the rating.

You are kindly invited to read the interview with our former Minister of Finance and insightful analyst, Dušan Mramor. Another interesting read is the interview with the Chancellor of the University of Ljubljana which celebrates the 100th anniversary of its establishment in December this year. The interview provides insights into the circumstances surrounding the development of scientific talent in Slovenia.

The ties between talent, innovation and institutions are highly important. Read more about the significance of, and opportunities for, the development of Green Tech which is fast becoming a new pivotal industry in the global economy.

For a small and globally less-known country with just a little over two million citizens, each first-rate success is of utmost importance – after all, it proves that ceaseless efforts and talent are the key to achieving success on a global scale. Nevertheless, it is mandatory that the conditions are first met which allow for the development of talent, be it on an individual or team level.

However, we still have a long way to go to make the entrepreneurial environment in Slovenia more favourable for the development of businesses which will ascend to the very top of the European and global rankings.

Do not miss out on the daily news published at www.sloveniatimes.com, where you can also subscribe to our magazine – follow us on LinkedIn and Facebook, and look out for our tweets and updates.

Brane Krajnik CEO The Slovenia Times Autumn Edition 2019 | The Slovenia Times

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Contents Page 8

ECONOMY OVERVIEW

4 Economy Overview: Slightly reduced budget for next year; NLB bidding for Serbian No. 2 bank;

Petrol signs multimillion deal in Russia; Amber Rail Freight Corridor officialy launched; Medicop among the top five in the world; DARS shortlists Karavanke tunnel bidders for talks; Slovak developer to build apartment building in Ljubljana; Govt confirms package of tweaks reducing taxes on labour Photo: Nebojša Tejić/STA

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REGIONAL INSIGHT IN ASSOCIATION WITH S&P GLOBAL RATINGS 6 A Two-Speed Economy

ECONOMY

8 Companies moving to fill void created by Adria Airways

10 Interview: Professor Dušan Mramor, President of the think-tank, the Observatory of the Managers’

Association of Slovenia and full Professor of Finance at the School of Economics and Business of the University of Ljubljana Photo: Aljaž Hafner

Page 14

14 Interview: Professor Igor Papič, Rector, University of Ljubljana 16 Interview: Professor Miha Škerlavaj, PhD, Vice Dean for Research, School of Economics and Busi-

ness, University of Ljubljana 18 Cargo-Partner with a modern logistics centre near Brnik airport 20 Interview: Lady Barbara Judge CBE, Chairman, Athene Capital, United Kingdom 22 Interview: Gregor Benčina, President, Slovenijales Group; Vice President Center of Energy Ef-

ficiency Solutions; Initiator of GreenTech Slovenia 24 The costs and opportunities of the climate crisis for business 26 Interview: Luca Martini, Partner, Advisory Leader of PwC in South Eastern Europe 28 Interview: Marjan Beltram, Executive Director of Mobility at Nomago 29 The time is right for Circular Change Page 18

30 Resilient Cities: Between digital and physical world

INSIGHT BEYOND THE RATING WITH DBRS

32 Global Sovereigns: Bank Divestment in Slovenia is an Important Achievement

Photo: Miran Kambič

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Contents Page 20

LEADERSHIP CORNER

36 Interview: Mrs. Saša Fajmut, Vice-President of the Slovenian Human Resources Association 38 The AEIOU of Leadership

INTERNATIONAL BUSINESS PARTNERS 40 TOPIC: Some economies are already cooling down, some analysts are even predicting an eco-

nomic crisis for the next year. What are your forecasts and how should businesses prepare?

British – Slovenian Chamber of Commerce – BSCC, The German-Slovene Chamber of Commerce and Industry – AHK Slowenien, Advantage Austria, Italian Trade Agency (ICE), LuxembourgSlovenian Business Club (LSBC), American Chamber of Commerce – AmCham Slovenia: Slovenia increasingly attractive for foreign investors

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ACTIVE LIFESTYLE 44 The Karst Edge Run

SPORT 46 Slovenia welcomes its latest sporting heroes

Photo: Damien Bennett

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EXPERIENCE&LIFESTYLE SLOVENIA 48 Cruising the vineyards, filling bucket after bucket… It’s harvest time!

50 New environment-friendly LPP buses in Ljubljana 51 Together for Ljubljana, European Capital of Culture 2025 51 Continued good cooperation with Moscow 52 Slovenia - boutique destination for five-star experiences 53 Wines, that made it to the top

Photo: Anže Malovrh/STA

Page 48

EVENTS

Autumn Edition 2019 | The Slovenia Times

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Economy Overview

Slightly reduced budget for next year The government confirmed draft budgets for 2020 and 2021 after ministries reduced the planned expenditure for next year by a combined EUR 100 million, as ordered by Finance Minister Andrej Bertoncelj following a downgrade of Slovenia’s GDP growth forecast.

Announcing the confirmation of the draft budgets for the next two years, the government said it had increased expenditure compared to the previous years, while still following the principles of the golden fiscal rule.

Originally, the upper limit for expenditure for 2020 was set at EUR 10.45 billion, which is EUR 290 million more than planned for this year and the highest expenditure ever. In 2021, total expenditure in the state budget is planned to stand at EUR 10.455 billion.

The plans were made before the government macroeconomic think tank IMAD downgraded its gross domestic product (GDP) growth forecast for Slovenia from 3.4% to 2.8% for 2019 and from 3.1% to 3% for 2020.

NLB bidding for Serbian No. 2 bank NLB, Slovenia’s leading bank, has submitted a non-binding bid for a 83.2% stake in Komercijalna Banka, the second largest bank in Serbia, offering EUR 450 million, which is reportedly the highest bid among the three competitors.

According to unofficial information from the Serbian daily newspaper Danas, the other bidders are the Serbian bank AIK Banka (EUR 430 million) and Austria’s Raiffeisen Bank (EUR 390 million).

Komercijalna Banka is the largest stateowned bank in Serbia and second largest on the market, and the government expects EUR 500 million in proceeds from its sale, the paper added.

According to Danas, the bid from NLB is, considering that the state is not selling the entire bank, higher than expected. If the entire bank were sold, it would fetch around EUR 550 million or 80% of the bank’s book value.

The Serbian government owns 48.6% of Komercijalna Banka, and the plan is to buy a combined 34.56% stake from the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC).

The sale would then enter the next stage in November, when binding bids will be collected after due diligence at the bank. The entire procedure is expected to be concluded in 2020.

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The Slovenia Times | Autumn Edition 2019

Photo: Peter Černuta/STA

Petrol signs multimillion deal in Russia The energy company Petrol signed cooperation contracts with Russia’s T Plus Grupa and Schneider Electric at a Slovenian-Russian business meeting held in Moscow as part of Prime Minister Marjan Šarec’s visit to the country. Petrol will cooperate with the two Russian companies in energy efficiency. According to Petrol CEO Tomaž Berločnik, the projects will focus on optimisation of district heating.

The project with T Plus Grupa will be carried out in Izhevsk, and the other in Yekaterinburg, where Petrol will set up specialised software and provide IT support. "Thus we will reduce energy use and optimise operative costs," Berločnik explained. According to him, the two projects are worth "a few million euro" and potentially tens of million in the future.

The business meeting, hosted by Šarec, Economy Minister Zdravko Počivalšek, Foreign Minister Miro Cerar, Labour Minister Ksenija Klampfer and Russian Digital Development Minister Konstantin Noskov, featured nine other Slovenian companies that already operate on the Russian market.

Amber Rail Freight Corridor officialy launched The Amber Rail Freight Corridor, which connects industrial centres and inter-modal terminals in Poland, Slovakia, Hungary and Slovenia, was formally launched in a ceremony in Koper. It has been operational since January as the first rail freight corridor established on the initiative of member states.

The corridor connects the Adriatic Sea - with Koper being the only maritime port within the corridor - with the Poland-Belarus border, and its position represents an alternative to the transport routes between the north and south of Europe.

Gerhard Troche, the managing director of the project, said at the ceremony that the corridor was a platform which enabled all stakeholders to address joint issues and challenges. These include differences in work processes, technical differences or different transport rules in countries, which cause delays and problems in international rail freight transport, he added.

Economy Overview

Photo: Marjan Maučec/STA

Photo/render: Corwin

Medicop among the top five Slovak developer to build in the world apartment building in Ljubljana Medicop, a Slovenian manufacturer of medical equipment and ambulances, has inaugurated a EUR 7.5 million investment featuring a production facility and offices in Murska Sobota, its home town in the region of Pomurje. The 6,300-square-metre premises located in the city’s industrial area will increase Medicop’s capacities by 60%.

The investment received a state subsidiary of EUR 900,000 under the law on balanced regional development, which aims for all regions in Slovenia to be equally developed.

Medicop director general Peter Podlunšek said the company was just about to meet the pledge to hire 23 workers in exchange for the state aid.

Nineteen workers have been employed over the past year, which puts Medcop’s workforce at 98, he noted.

Medicop was set up by Podlunšek’s parents 40 years ago, and has witnessed fast growth by expanding to over 60 markets worldwide. The company consists of two divisions, one focussing on medical equipment and the other on equipping special vehicles, foremost ambulances. All its equipments is a result of its own R&D. Podlunšek said its clients as well as rivals put the company among the top five in the world.

Slovak developer Corwin is planning to build a housing estate in the Ljubljana borough of Šiška. Construction works on what is a EUR 45 million investment are expected to be launched in the first half of 2020 and the first residents could move in at the end of 2022. The Kvartet housing estate will be built by Šiška Rezidence, a Slovenian company owned by Corwin, near another larger housing estate, Celovški Dvori.

It will feature four 16-storey towers with a total of 221 flats, as well as areas for some 500 bicycles and an underground car park for some 300 vehicles. Playgrounds for children and a socialising area for residents are also planned in the green areas around the buildings, Corwin said in a release on Wednesday. Kvartet will feature one-, two-, three- and fourroom apartments, 33 apartments will be made to suit older people or the disabled, and all residents will have a view of the Alps.

Roman Karabelli, director of Corwin’s Slovenian subsidiary Corwin SI, sees Kvartet as a major investment to revitalise what used to be an industrial area near a new large shopping centre planned by retailer Spar.

DARS shortlists Karavanke Govt confirms package of tunnel bidders for talks tweaks reducing taxes on labour The national motorway company DARS has selected for further talks three out of the five bidders vying to build a second tube of the Karavanke tunnel, a key motorway link with Austria.

While Austria is well into drilling its half of the tube, Slovenia is now trying to choose the contractor for a second time. TV Slovenija said that DARS will be negotiating with Turkish builder Cengiz, a consortium of Kolektor CGP, Riko and Yapi Merkezi, a Turkish company, and Implenia Österreich, a consortium including Implenia Švica and CGP Novo Mesto.

After being chosen to build the tube in the first call last year, which was annulled by the National Review Commission because its offer had changed in the course of the procedure, Cengiz once again submitted the lowest bid of EUR 99.6 million. The consortium Kolektor CGP, Riko and Yapi Merkezi offered to build the 8-kilometre tube for EUR 121 million, while Implenia Österreich bid at EUR 121.5 million.

The government confirmed a package of tax tweaks that are meant to reduce taxes on labour to increase competitiveness. The list includes increased general tax credit and changes to the income tax brackets to reduce the tax burden on the middle class. On the other, the taxation of capital gains and rental income is to rise slightly. The changes, which the government wants passed in fast-track procedure so they can enter into force with the start of 2020, affect laws on personal income tax, corporate income tax and on tax on profit from disposal of derivatives.

Source: STA

Autumn Edition 2019 | The Slovenia Times

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Regional Insight in Association with S&P Global Real GDP Growth Recovered At The Start Of 2019

A Two-Speed Economy

This article is a fragment of the report: Economic Research: European Economic Snapshots

(Contribution to Q/Q GDP Growth)

Growth picked up in Q1, on the back of robust domestic demand and rising net exports as temporary supply chain disruptions seen in Q4 2018 faded.

Households consumption Investment Stocks and Statistical Discrepancies

Government spending Net Exports Real GDP

1.0 0.5 0.0 (0.5) Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 2018 Q4 2018

Q2 2019 (f)

Source: Eurostat, S&P Global Ratings, f - Forecast

Services And Industry Dichotomy Persists PMI readings show the domestic economy is still resisting the external trade slowdown that continues to depress activity in manufacturing.

RESEARCH CONTRIBUTORS Arun Sudi Debabrata Das

EZ PMI Composite EZ PMI Manufacturing EZ PMI Services

(Indices)

PRIMARY CONTACTS Sylvain Broyer, Frankfurt, Germany Marion Amiot, London, U. K. Boris Glass, London, U. K. Sarah Limbach, Paris, France Tatiana Lysenko, Paris, France

62 60 58 56 54 52 50 48 46 44 Jun-16

Dec-16

Jun-17

Dec-17

Jun-18

Dec-18

Jun-19

Source: Markit, Bloomberg

Eurozone Overview State of play The eurozone economy accelerated in the first quarter, expanding by 0.4% compared with an average of 0.2% in the second half of 2018.

Growth was underpinned by resilient domestic demand–consumer spending and investment contributed 0.5 percentage points to growth.

The strong labor market is lifting households’ income. The unemployment rate fell further to 7.5% in May, the lowest since 2008. Activity in services and construction remains dynamic. The external sector saw some positive movements in the first quarter, after a very weak 2018.

That said, the latest data suggests renewed weakness. Sentiment in the manufacturing sector has stabilized, but at low levels. The eurozone economy’s high integration in global value chains makes it vulnerable to the slowdown in global trade.

Outlook We expect GDP growth to slow to 1.1% in 2019, and then grow by 1.3% in 2020 and 2021. Germany and Italy, the industrial hubs of the eurozone, will continue to suffer from the global manufacturing slowdown. So far, the domestic economy has remained resilient to the external slowdown and should continue to fuel growth. Tight labor markets, rising wages, and low inflation will support consumer spending. Investment is set to decelerate, but will still find support in high capacity utilization and low

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The Slovenia Times | Autumn Edition 2019

borrowing costs. Given the downside risks to growth, the ECB will wait until at least the second quarter of 2021 to raise rates, keeping the euro weak.

Risks Risks to growth are tilted to the downside. An escalation of trade disputes, which could mean higher tariffs on EU cars, and a hard Brexit would all weigh on growth. On the positive side, the ECB’s likely new stimulus package would support financing conditions.

Germany State of play In the first quarter, the German economy rebounded by 0.4%, after remaining flat in the fourth quarter of 2018. Domestic demand was the main growth driver. The labor market is strong and unemployment has reached an all-time low of 3.1%. Accelerating wage growth supports household consumption, while investment largely stemmed from the booming construction sector. Only half of investment could be classified as productive. After a rebound in the first quarter, exports decreased in April, hinting that external trade weighed on growth in the second quarter. The dichotomy between strong internal and weak external demand persists. Although slightly up in June, manufacturing PMI remains in contractionary territory and a further fall in factory orders points to weakness in industry.

Regional Insight in Association with S&P Global Outlook We expect German economic growth to remain subdued amid weaker global trade, especially Chinese demand for equipment goods and cars, and heightened uncertainty. We forecast expansion of 0.6% this year and 1.1% in 2020. Given the economy’s dependence on its highly exportoriented manufacturing sector, a slowdown in external demand will continue to weigh on growth. Household consumption, supported by a strong labor market and dynamic wage growth will remain the main driver of growth. Weak external demand and uncertainties around the trade outlook will also depress business investment. This will exacerbate Germany’s long-term problem of underinvestment and constrain economic activity once demand accelerates again.

Risks Main risks are external, notably a hard Brexit and an escalation of trade tensions, such as the introduction of U.S. tariffs on EU cars.

France State of play In the first quarter, the French economy slowed only marginally, to 0.3% from 0.4% in the fourth quarter. Domestic demand propped up growth as external demand was weak against a backdrop of slowing global trade.

The data available so far suggests growth is likely to have remained stable at 0.3% in the second quarter. France is one of the bright spots in the eurozone. Sentiment surveys have rebounded across the board, reflecting resilience in economic activity. Consumer confidence has recovered from the yellow vests protest and is now at a 12-month high and the PMI in both industry and services is back above 50. In this environment, the labor market is tightening further. The unemployment rate reached a 10-year low at 8.6% in May and wage growth was above 2%, boosting household consumption.

business and consumer confidence were at multi-month lows in June. In April, industrial production fell for the second consecutive month and retail trade was flat.

Outlook We expect Italy’s economy to barely expand, with GDP growth of 0.1% in 2019 and 0.5% in 2020. External demand is likely to remain weak and the industry will continue to suffer from the global trade slowdown.

Domestic demand will support growth to some degree. Employment is stable, despite economic stagnation, while wages are still rising relatively rapidly. In 2019, consumers will benefit from low inflation and the government’s fiscal loosening. That said, investment is set to decelerate amid tighter financing conditions and weaker demand. In the longer term, low productivity will constrain growth, given that reforms are not on the table.

Risks Apart from uncertainty surrounding global trade relations, the length of the global manufacturing slowdown, and Brexit, uncertainty over government policy remains a risk to growth. Given high government debt, Italy does not have much room for maneuver.

United Kingdom State of play Surprisingly strong growth in the first quarter of this year, with GDP up 0.5%, continued to be underpinned by strong private consumption, as households continue to tap into savings to support spending. Activity was also characterized by extraordinary stockpiling in the manufacturing sector, which would normally boost GDP. But because extra stocks were largely imported, the combined contribution of stockbuilding and net exports was actually a drag.

Outlook

Outlook

We expect French GDP to grow by 1.4% in 2019 and 2020. The resilience of the domestic economy will continue to underpin growth. Good job creation, rising wages, the government’s fiscal support, and low inflation all support household spending. Firms’ investment is set to remain dynamic as they continue to benefit from tax cuts and low borrowing costs. They still report a high capacity utilization rate. Meanwhile, there are few signs that the weakness in global trade is receding. Yet, unlike its neighbors, France’s internal forces are likely to offset this external weakness. Household real disposable income is rising at its fastest pace since the financial crisis and faster than household spending, suggesting consumers have more space to loosen their purse strings.

Although we expect net exports to recover in the second quarter, they will be constrained a generally weak external environment. Destocking in manufacturing will weigh on growth, with not much help from the much bigger services sector. Meanwhile, investment is still paralyzed by Brexit uncertainty. In fact, the economy could contract in the second quarter before returning to moderate growth thereafter. That said, the strength of the labor market and the ongoing rise in real incomes will make it possible for households to further increase spending and, hence, drive economic growth.

Risks On balance, most of the risks to growth are external. Global trade tensions could intensify and the outcome of Brexit remains unclear. On the upside, the ECB is likely to unveil more monetary policy easing, which would boost investment and construction.

Risks Our forecast reflects our view that the U.K. will not leave the EU without a deal and the transition phase it would trigger. Following the resignation of Prime Minister Theresa May and a likely more eurosceptic successor, downside risks to our forecast have increased. While a possible entrenchment of pessimism regarding trade across the world adds to the risks, a disruptive no-deal Brexit, whose risk which we see as high and worsening, continues to dominate.

Italy State of play Although the economy grew by 0.1% in the first quarter of 2019, this was not enough to offset the two preceding quarters of economic contraction. Domestic demand and net exports both contributed to growth, but the economy largely remains in stagnation. Household consumption was subdued, although net trade improved due to a moderate rise in exports and a 1.5% drop in imports. The latest surveys do not bode well for the second quarter. Manufacturing PMI remained in contractionary territory and the Istituto Nazionale di Statistica’s measures for both

Sources: Standard & Poor’s Rating Services and Eurostat.

Copyright © 2019 by Standard & Poor’s Financial Services LLC. All rights reserved.

STANDARD & POOR’S and S&P are registered trademarks of Standard & Poor’s Financial Services LLC. Autumn Edition 2019 | The Slovenia Times

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Economy

Photo: Nebojša Tejić/STA

Companies moving to fill void created

by Adria Airways The Belgian air carrier Brussels Airlines, part of Lufthansa Group, announced it would restore its Brussels-Ljubljana route after Slovenian carrier Adria Airways filed for receivership.

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The Slovenia Times | Autumn Edition 2019

The management of struggling air carrier Adria Airways filed for receivership after the government said it was not ready to invest in the carrier under the current owner and in its current financial state. On news of the receivership proposal, the Civil Aviation Agency stripped the airline of its operating licence and all flights have been cancelled.

The procedure, in which creditors will have three months to file their claims, will be managed by receiver Janez Pustatičnik. Passengers who had bought tickets for Adria’s flights which were subsequently cancelled have been urged to report their claims as well.

Those who bought the tickets with their bank card can ask their banks for a refund, the Market Inspectorate said today. If their motion is denied, they can turn to the Slovenian Bank Association.

The Slovenian flag carrier, which was sold to the German turnaround fund 4K Invest in 2016, said that the proposal had been filed due to insolvency and in line with legal provisions applying in such a situation.

Adria had been struggling with financial difficulties for some time, with the problems

Economy

Photo: Daniel NovakoviÄ?/STA

deepening further after the sale, even though the new owner announced growth, several capital increases and a new strategic partner. Adria ended up selling all of its planes, while several of those rented were confiscated in recent years by leasing companies due to unpaid debts. The company, which employs 558 people, also owes part of the August wages and has reportedly failed to pay the social contributions for September.

Government will do the necessary Following the collapse of flag carrier the government has endorsed changes to the aviation act that create a legal basis for the state to subsidise crucial air links with the country, if this proves necessary. In line with the proposed changes, the state could subsidise flight connections with Ljubljana if other airlines did not set up commercial flights.

In line with the proposed changes, subsidies would be possible for connections that are of vital importance for the country in terms of economic and social development. State in-

tervention in such cases is also allowed under the EU legislation. But Betroncelj added the legislative proposal was yet to be coordinated with the European Commission. A decree will need to be passed and a call for applications published to create equal opportunities for all, he noted.

The Infrastructure Ministry would be able to launch a procedure to set up an "obligatory public service" if no air carrier with a licence of an EU member state offered connections that are important for Slovenia for economic reasons. The necessary funds would be provided by the government.

The Belgian air carrier Brussels Airlines, also part of Lufthansa Group, is introducing six Brussels-Ljubljana flights a week. Adria’s routes will also be partly covered by the Hungarian low-budget carrier WizzAir, which cancelled its Ljubljana-Brussels link for the 2019/2020 winter season but will restore it as of 31 March 2020. Travel agency Nomago also decided to organise several charter flights to mitigate the effects of Adria collapse on conference tourism.

Source: STA

New carriers on the way to Ljubljana For now it seems that the Ljubljana airport operator, Fraport Slovenija, will manage to restore some of the crucial connections with Ljubljana. The German Lufthansa and its subsidiary Swiss International Airlines, both of which are members of the Star Alliance, will be offering flights connecting Ljubljana to Frankfurt, Munich and Zurich, in the winter season.

Autumn Edition 2019 | The Slovenia Times

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Economy

Dušan Mramor:

"The economic policy of the EU needs to become a source of convergence, not instability" A more decentralised system of economic policy in the EU is needed to decrease non-synchronous changes of economic activity among different member states.

By Jurij Giacomelli, Editor-In-Chief, Outlook President of the think-tank, the Observatory of the Managers’ Association of Slovenia and full Professor of Finance at the School of Economics and Business of the University of Ljubljana, Professor Dušan Mramor, has been the Minister of Finance in two governments of the Republic of Slovenia: that of Anton Rop (2002-2004), during which Slovenia joined the EU, and that of Miro Cerar (2014-2016). Both terms coincided with the country’s two historic breakthroughs: during his first mandate Slovenia joined the ERM2, the 'waiting room' to adopt the euro upon fulfilling the "Maastricht criteria", enabling the country to adopt the euro two years later, the first of the member states that joined the EU in 2004 to do so. During his second term, the government budget was brought back within the Maastricht criteria after years of economic downturn and struggles, while at the same time rescuing the banking sector. The Financial Times Banker Magazine named Professor Mramor the European Finance Minister of the Year 2016 for his contribution to Slovenia’s path out of the great economic crisis. In his recent contribution to the quarterly edition of Outlook 1, Professor Mramor highlights the inappropriate economic policy at the EU level which is resulting in much higher volatility in the economic performance of the so-called peripheral and "new" EU countries. He recalls the crucial moves in the economic policy of Slovenia which, in contrast to the recommendations of the EU policy makers and country 'supervisors', allowed for a counter-cyclical economic policy that eventually restored stability and has resulted in sustained economic growth above the EU average for several years.

Harmful effects of a pro-cyclical economic policy Professor Mramor’s analysis of the economic policies across six Slovenian Governments (2000-2018) shows how a few governments reacted in a counter-cyclical way to conditions of economic crisis or overheating: to crisis by responding appropriately to stimulate economic activity and preventing the harmful underutilisation of existing human and material resources, and to overheating by adopting appropriate austerity measures. Twice, however, Slovenian economic policy caused a deepening of the crisis by pro-cyclical restrictive measures and once by expansionary fiscal policy that substantially contributed to the overheating of the economy. In these three cases, a pro-cyclical economic policy lowered GDP in the long run. An extreme example was the period of pro-cyclical economic policy during the highly overheated economy of 2005-2008, and its subsequent catastrophic consequences in the period 2009-2014 and beyond.

"Leaving aside the question of how appropriate the economic policy of the EU and the eurozone was for Slovenia and which instruments the state had at hand to lead an appropriate economic policy before and after the accession to the EU and the ERM2 and the adoption of the euro, this issue proved to be extremely important," states Professor Mramor.

"With the adoption of the euro, Slovenia 'surrendered' monetary policy to the European Central Bank (ECB) which implements monetary policy according to the state of the economy of the entire eurozone. Of course, the economic situation in the eurozone countries with the largest weight, like

Short biography Dušan Mramor, born in 1953 in Ljubljana, is a full Professor of Finance and has twice served as the Slovenian Minister of Finance, and also in several prestigious positions. In the 1990s he was the first President of the Council of the Securities Market Agency and has been a council member of the National Bank of Slovenia, Vice-President of the Strategic Economic Council of the Slovenian government, and an adviser to the President of the Republic and to other expert academic and advisory panels. He has also served as a consultant to the World Bank and on the supervisory bodies of several companies and banks. Professor Mramor was the Dean of the Faculty of Economics (20072013) and Chair of the Board of the University of Ljubljana, as well as a Visiting Professor and has worked at several universities in the EU and the USA (for example, at Indiana University). An accredited senior appraiser with the American Society of Appraisers since 1995, Professor Mramor was also a Vice-President of the European Finance Association and the European Institute for Advanced Studies in Management.

Germany, France or Italy, is crucial to the decisions of the ECB".

"By joining the EU and the ERM2, Slovenia lost key effective economic policy instruments and was further affected by pro-cyclical fiscal rules and the pro-cyclical monetary policies at the beginning of the crisis. The result for the entire 13 year period was extremely poor, as the relative economic development of Slovenia in 2017 was at the same level (85% of the EU average) as at the time of the country’s accession to the EU in 2004. Consequently, Slovenia did not converge to the EU average, in part as a consequence of the wrong decisions Slovenia made.”

1 Outlook is an independent publication published by the Managers‘ Association of Slovenia intended to evaluate Slovenia‘s economic trends and economic policies in a European context and to position good managerial practices in the context of social development and welfare.

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The Slovenia Times | Autumn Edition 2019

Economy Interview: Professor Dušan Mramor, President of the think-tank, the Observatory of the Managers’ Association of Slovenia and full Professor of Finance at the School of Economics and Business of the University of Ljubljana

Q Has the monetary policy of the ECB been, so far, appropriate for Slovenia?

A This depends, first, on whether the monetary policy of the ECB is appropriate for the whole eurozone. At the beginning of the last major financial and economic crisis, the ECB conducted an inappropriate, pro-cyclical monetary policy as it initially responded to the crisis by raising interest rates; monetary policy changed completely following the change of the governor. With 'quantitative easing', the economic situation of the entire eurozone was addressed more appropriately, causing sharp criticism from the strongest member of the eurozone, Germany. With the departure from tracking primarily its needs and taking into account the economic circumstances, for example in France and Italy, the ECB’s monetary policy also became more appropriate for Slovenia.

Q Was Slovenia sufficiently harmonised at

most cases, the consequences are 'symmetrical', that is, in the same direction but much greater in Slovenia than in the eurozone, and in some cases, they are even 'asymmetrical', in the opposite direction. It turned out that the structure of the economy in Slovenia, characterised by the small size of the economy with industrial production comprising mainly components rather than finished products, the significant weight of tourism, and with an underdeveloped capital market, the country is much more exposed to the cyclical motion of the economy and various shocks.

Slovenia, according to its economic characteristics, belongs to the so-called peripheral EU countries which, in the case of large shocks, serve as a buffer for core countries. For example, core countries mitigate the overheating of their economies by capital outflows into real

Table 1: Variability of annual growth in economic activity (GDP, exports) of EU member countries in the period 2004-2018

Standard deviations in percentage points

Percentage variability by which economic activity in 'peripheral' and 'new' members is higher than in core members

Core members*

Peripheral members**

New members***

Peripheral members

New members

2.0

3.4

3.8

73.5%

93.0%

Growth of exports 5.1

6.7

7.2

31.9%

41.4%

GDP growth

Legend

its entry into the eurozone?

EU Member countries

A On joining the ERM2 and the adoption

Core *

of the euro, a number of analyses concluded that Slovenia’s 'convergence' towards the EU, and the eurozone was successful and that the ECB’s monetary policy was also suitable for the country. The crisis showed a completely different picture. One of Slovenia’s most prominent economists, Velimir Bole, warned very early on that we were overestimating the appropriateness of EU economic policy for Slovenia, while underestimating the significant impact on the reduction of the country’s ability to effectively conduct its own economic policy to address unsynchronised economic changes. So, we were unprepared to react appropriately.

Austria Belgium

Q Does the ECB’s monetary policy affect the so-called peripheral EU countries differently?

A The monetary policy of the ECB can be inappropriate for countries like Slovenia, even when it is appropriate for the eurozone as a whole, and even more so when it follows the needs of the most powerful members.

Economic shocks affect Slovenia differently. In

estate investments in peripheral countries.

For the latter, this means additional demand in already overheated economies. In recession, investors from core countries cease to invest or even begin to sell real estate. Financial institutions in peripheral countries, which usually have headquarters in core countries, withdraw financial resources from peripheral countries.

By doing so, they neutralise part of the negative economic changes at home, but they also cause major fluctuations in the economic activity of peripheral countries, or even a collapse of the real estate and financial institutions and a deepening of the downturn such as, for example, in Spain in the latest crisis. Table 1 shows the greater fluctuations in the economic activity of the 'old' peripheral and even more so, of the 'new' EU countries than of the core countries.

Peripheral**

New***

Sweden

Greece

Bulgaria

Hungary

UK

Finland

Cyprus

Malta

Denmark

Ireland

Czech Republic

Poland

France

Italy

Estonia

Romania

Luxembourg

Portugal

Croatia

Slovakia

The Netherlands

Spain

Latvia

Slovenia

Germany

Lithuania

Source: Eurostat

"Peripheral and 'new' countries should request that the methodology currently in place be abandoned or substantially altered, along with a number of other poorly designed rules regarding public finances which make it impossible to conduct the necessary fiscal policy to neutralise non-synchronous movements in individual countries."

Autumn Edition 2019 | The Slovenia Times

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Economy

Professor Dušan Mramor; Photos: Aljaž Hafner

Q How can the peripheral and "new" EU countries mitigate such exposure?

A In order to pursue an appropriate economic policy and achieve the greatest possible economic prosperity, such inadequacies of the ECB’s monetary policy should be replaced by stronger measures of fiscal policy in each member country. This may imply the need for an even more flexible fiscal policy than that available before becoming a member of the EU. However, the rules and methods of coordinating public finances of the eurozone and EU countries not only do not allow this but even lead to a pro-cyclical fiscal policy.

Q What are the criteria for EU convergence?

A In 1992, long before the introduction of the euro (1999), the EU had already identified the need to coordinate fiscal policies and introduced the Maastricht convergence criteria which a state must fulfil in order to join the eurozone. The Maastricht criteria were a response to the concern that an individual member of the European Monetary Union (EMU) might behave irresponsibly and other members would have to carry the burden. However, the finan-

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"Both monetary policy and the agreed fiscal policy limits in the EMU are mostly adapted to the needs of the core countries – we could even claim, to Germany."

cial and economic crisis of 2008 showed that these criteria were not a sufficient guarantee as a number of countries in the EMU became insolvent and needed help.

Q Were the Maastricht criteria too tight or perhaps dysfunctional, exacerbating the north-south divide and the fiscal policy of the EU? A The opinion in the EU was that troubled countries behaved irresponsibly. As most of them were from the south of the EMU, this

deepened the distrust between the north and the south, also referred to as Protestant versus Catholic countries. The north came to the aid of the countries in difficulty in various ways, but not without strict conditionality which has also had long-term negative consequences for those countries. On the other hand, the northern countries exacerbated the situation by upgrading the EMU’s institutions and its response systems to shocks by tightening the Maastricht criteria. The principle of mediumterm balanced public finances was introduced, comprising a specific methodology for calculating the permitted maximum annual deviation from the balanced public finances. The allowed deviation depends on where the country is in the economic cycle: in recession, a calculated nominal general government deficit is permitted, and a certain surplus is required in the upturn. It was also determined how a country must achieve the medium-term objective with its annual ‘fiscal effort‘, as well as the requirement of general government debt of less than 60% of GDP. All the key elements of these amendments were transferred to the EMU members’ legal order.

Q It seems as if both monetary and fiscal policy are attuned to the core countries?

Economy A Indeed! Both monetary policy and the agreed fiscal policy limits in the EMU are mostly adapted to the needs of the core countries.

However, these criteria do not address the relatively higher needs to respond to shocks and the larger fluctuations in the economic cycle in the peripheral and 'new' EU countries.

Q What were the consequences for Slovenia which found itself in the middle of a double-dip recession?

A Because of the difficult political situation at the time, we were the penultimate country of the EMU to transfer a key part of the Fiscal Rule into the domestic legal order. This delay caused a tremendous amount of damage due to the loss of confidence in Slovenia’s ‘capability’ to act. Therefore, to prove the opposite, Slovenia adopted the Fiscal Rule in the most restrictive form despite the need for flexibility. With the required two-thirds majority in the Parliament, the Fiscal Rule was written into the Constitution, the Fiscal Rule law was passed and the members of the Fiscal Council elected. Clear warnings concerning the inadequate formulation of the Fiscal Rule law were disregarded at that time.

If the Fiscal Rule had not been adopted, then the negative consequences for Slovenia would have been extremely high and the way out of the crisis would have been questionable.

Slovenia was already considered a high-risk country by financial investors. The additional negative opinion of the European Commission and the credit-rating agencies would have triggered a resurgence of the crisis due to the restricted access to financial markets.

Q Did the Fiscal Rule have such an effect across the entire EU?

A The public finance constraints determined by this methodology proved to work fairly well for the core countries, but did not for the peripheral and 'new' members of the EMU, and were the most damaging for Slovenia. For example, in 2016 Slovenia had deflation, stable labour costs, a huge surplus in the balance of payments and above-average unemployment.

The methodology led to a completely incorrect conclusion that the Slovenian economy was heavily overheated and that Slovenia should respond with a very restrictive fiscal policy by decreasing public expenditures in nominal terms. The case was so obviously illogical that even the European Commission agreed that the calculations should be ignored. If such a decision has not been made, the rapid recovery of the Slovenian economy would have been halted. This was not the only completely erroneous result of the methodology for Slovenia, in the years before the crisis the errors were even larger, but in the opposite direction.

Q Could we say that Slovenia was even lucky to represent only a ‘statistical error’ in the EU accounts, allowing the country to go its own way?

A We could say that! However, it was decisive that we, as policymakers, had our own analytical expertise to find the right answers.

Overall, at the least, I think we should not accept the criticism about irresponsible behaviour of peripheral and 'new' countries of the EMU. Slovenia successfully neutralised the significant economic impacts caused by the EU and EMU accession period before 2005, thus leading a responsible economic policy. You could even say that this is a textbook case. As Table 2 shows, at that time Slovenia achieved high GDP growth with significantly higher

macroeconomic stability, complying with fiscal rules on low public finance deficit and public debt, and exceeding the performance of several core countries, some of which even violated the fiscal rules.

Q So, how should EU economic policy change so that divergences do not persist?

A Together with other peripheral and 'new' countries, Slovenia should request that the current methodology, along with a number of other poorly designed rules regarding public finances which make it impossible for individual countries to conduct the necessary fiscal policy, are abandoned or substantially altered. Furthermore, a decentralised system of economic policy management in the eurozone needs to be developed in order to allow EMU members to neutralise non-synchronous changes of economic activity, independently, with effective economic policy instruments in a timely and appropriate manner. At the euro area level, however, it is necessary to strengthen the ability of the EMU to help member states in cases when, with full use of their available economic policy instruments, they cannot neutralise the shocks. This help should be immediate and unconditional. Before such a system is introduced some predetermined conditions should be met to avoid moral hazard."

"It was decisive that we, as policymakers, had our own ability to find the right answers."

Table 2: Slovenia and the ‘core EMU’: 2004 and 2017 2004

Public finance Public debt % deficit % GDP GDP

GDP growth %

GDP per capita at PPP 2017 EU28=100

Public finance Public debt % deficit % GDP GDP

GDP growth %

GDP per capita at PPP EU28=100

Eurozone

-3.0

68.4

2.3

110

Eurozone

-1.0

86.7

2.4

106

Germany

-3.7

64.8

1.2

119

Germany

1.3

64.1

2.2

123

France

-3.5

65.7

2.8

109

France

-2.6

97.0

2.2

104

Slovenia

-2.0

26.8

4.4

85

Slovenia

0.0

73.6

5.0

85

Source: Eurostat

Autumn Edition 2019 | The Slovenia Times

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Economy Interview: Professor Igor Papič, Rector, University of Ljubljana

We will study throughout our lives

By Barbara Pavlin

The University of Ljubljana, which this year celebrates the 100th anniversary of its establishment, is ranked among the top 3% of universities in the world and is recognised as one of the most important universities in the region.

According to Rector Igor Papič, integrity is what sets the University of Ljubljana apart from its competition.

Professor Igor Papič, Rector, University of Ljubljana

Q This year, the University of Ljubljana is celebrating its 100th anniversary and while that may seem a lot, the University of Ljubljana is among the younger universities in the world. What are some of the University’s noteworthy accomplishments?

A I agree that 100 years is not a lot for a university, but it defines our university as mature.

100 years is enough for several generations of professors to retire and for the university to establish itself as a serious institution. However, I would like to point out that our university is, in fact, more than 100 years old. As stated in Encyclopaedia Britannica, the University of Ljubljana was established as early as 1595s as a Jesuit College. It took quite some time for the institution to finally establish itself as a university because it initially only implemented a high school program. Thus, we are not only celebrating the 100th anniversary of the university, but also 400 years of academic education.

Encyclopaedia Britannica clearly mentions the year 1595 and states that the university reopened in 1919. And as far as noteworthy accomplishments are concerned, there have been too many in the past 100 years. The bottom line is that we have progressed from a national university with five founding members to a large-scale, internationally acclaimed and comprehensive university with 23 faculties and three academies. What is more, the university is an influential stakeholder in terms of development and scientific research.

Q So, we could say that the vision of the university to become an esteemed, international and research-driven university that contributes to a higher quality of life by 2020 is coming true?

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The Slovenia Times | Autumn Edition 2019

A I believe so. To state some facts – the University of Ljubljana is one of the most successful members of the so-called EU13 in terms of project acquisition within the framework of Horizon 2020. We are the only national university with ERC Grants, which we are obtaining at an increasing pace, especially in the past couple of years. The University of Ljubljana also happens to be a member of the CE7 Group and the League of European Research Universities (LERU), which is the most prestigious network of European universities. In addition, we are also a full member of The Guild of European Research-Intensive Universities which, like LERU, is yet another family of highly successful European universities. I would also like to point out the EUTOPIA university alliance which is a project successfully implemented by our consortium in the first tender for the socalled European University Network. Not only were we successful in the consortium with the University of Warwick, the Paris Seine University, the Spanish University Pompeu Fabra, the University of Gothenburg and the University of Brussels Vrije Universiteit Brussel, we are the coordinator of the network.

We are definitely an important university in the region and whenever there are networks being formed, we are one of the first universities in the region, which makes us a highly interesting partner. Last summer, when we were submitting the applications for the first call for European Networks, we had four offers by different consortiums and associations.

We wanted to be an equal partner that would represent our own interests. I believe that one of the key factors in the consortium’s success was that we stated that future development should be based on equal development across all regions. I am absolutely against all attempts

by the most prestigious universities to lure our top experts to France or Germany. If we fail to establish an attractive working environment in Slovenia – and I am not just referring to money – then we probably all know what will happen. Instead of brain circulation, which is a prerequisite for the personal development of any expert, professor or researcher, we will end up with brain drain.

Q What about the post-2020 vision? Would it include what you just stated?

A As it is focused on the period until 2050, the concept of EUTOPIA definitely presents a vision for the future development of the University of Ljubljana. In addition to the equal development across all regions, our consortium places students at the forefront. We are convinced that, unlike today when students are mostly young adults, future studies will be lifelong undertakings. The third element is the so-called Society 5.0 or Society 2050. This is a new concept of development. We have had industrial revolutions before and we are currently somewhere in the middle of Industry 4.0.

The next revolution envisions a much greater involvement of social sciences and humanism in technological development. By 2050, we will have reached the stage of Society 5.0. This means we will move from Industry 4.0 towards a more sustainable social development – also in the area of technology. This means that technology should by no means be ruthless.

Q The University of Ljubljana is the largest and the central scientific research institution in Slovenia and one of the top 3% of universities in the world. The competition is fierce! What is it that sets the University of

Economy Ljubljana apart from its competition across the globe?

A As far as the ranking is concerned, we are on the charts. Each of them has its own characteristics. I believe that if someone were to speculate today and split the university in half, we could establish a technical university. This technical university would be joined by other institutions such as the Jožef Stefan Institute.

Such an establishment would rank far higher in the charts focused on publications and quotes.

However, I believe that the comprehensive aspect of the University of Ljubljana is one of its defining features. This means that we also implement certain study programs that are important because of the role that they play in society and not only because they provide staffing for the labour market. If I were to refer to Society 5.0, this is the direction that we are developing toward. Not each of us on our own, but with as many experts as possible tackling the same issue from different angles.

Q Why are partnerships with other universities important and what are the plans in this area? Where do you see new opportunities?

A Currently, the most important partnership is EUTOPIA. As we were drawing up the application for the call, we met with the rectors.

From the initial doubt, where nobody knew what this alliance would actually look like, we came to the conclusion that even if we were unsuccessful with the application, we would implement the project nonetheless. While there are certain European programs, such as Horizon 2020 and Erasmus which we all apply for, the content of these programs is decided upon by the European Commission, but when six universities join forces, they are free to define the program or fields of cooperation by themselves. What I am saying is that we are making a transition from quantitative cooperation to quality – to cooperation on various focus areas that a relatively low number of universities are interested in. Each of these universities is strong in one aspect, so what we are striving achieve is complementing one another.

ones. This third pillar helps us fulfil the shortterm role of the university in the society, which is to present the society that finances the public university with certain results today. However, education and scientific research are long-term activities. Perhaps the most important role is to educate future experts, but these will only reach the peak of their contribution to the society in 10–20 years.

Q What is your opinion about the establishment of so-called spin-off companies in Slovenia? The practice is quite common abroad. Also, what is your opinion on encouraging entrepreneurship among professors at faculties?

A Spin-off companies are a well-known concept in any foreign university environment. I was one of the people who initially struggled with windmills, trying to find a way to officially address this matter in Slovenia. This year, the first official spin-off company from the University of Ljubljana is celebrating its 10th anniversary. I wish that there were more of such companies, there are clearly not enough of them. Much of entrepreneurial activity also takes place without the university taking part in the operations, precisely because of the excuse that it may constitute a conflict of interest.

I am convinced that the mechanism for establishing spin-off companies is constructed in a way that enables each researcher or professor at the University of Ljubljana to, if they so desire, establish such a company without any hassle.

Q What seems to be the problem?

A I am speaking from my personal experience... On the one hand, there is an immense pressure with allegations of commercialisation, questioning whether professors employed

by the university should be allowed to work for the economy or external clients. We support this as it provides a substantial extra income for our faculties. By participating in various industry projects, I was able to invest in research equipment at my faculty, which is not available to students. Some will call this commercialisation – that an external stakeholder is dictating what our research should focus on. I cannot agree with the allegations that this is bad for the university. Regardless of how much extra money professors make, we are speaking about money that demanded hard work and dedication. I always say that it is one thing to use the budget, but it is far more difficult to tap into the economy.

Q While we are on funds and investments.

There have been complaints about investments in research equipment, stating that there are no systemic regulations, making investments in modern equipment quite difficult. Are you any closer to finding a solution?

A In recent years we were quite happy that we did not have to worry where we will get the money for our salaries. The problem pertaining to research equipment is a pressing matter which can partially be solved with schemes by the Public Research Agency, but I believe that the construction of new faculties is far more urgent. I am not sure as to how we will solve this problem. If we were to construct them with ordinary credit loans, the state would have to guarantee them for us, which would impact the fiscal rule, so there are many reservations as to how we should go about funding pressing matters. We need EUR 200 million which equals our annual education budget, excluding research. This would cover the current projects for the construction of new faculties.

Professor Igor Papič (in the middle), Chancellor, University of Ljubljana

Q Cooperating with the economy is highly important, not only for the staffing but also in other aspects.

A Aside from the two basic pillars of the university’s activity – namely education and scientific research – there is also a third important pillar. I am talking about the transfer of knowledge. And I am not referring only to the transfer of technology, but to a broader transfer of knowledge which includes not only technological innovations, but also non-technological Autumn Edition 2019 | The Slovenia Times

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Economy Interview: Professor Miha Škerlavaj, PhD, Vice Dean for Research, School of Economics and Business, University of Ljubljana

Innovation is about people and a strong organisational culture

By Tina Drolc, M.Sc.

Miha Škerlavaj, PhD, is Vice-Dean for Research and a Professor of Management at the School of Economics and Business, University of Ljubljana (SEB LU) as well as an Adjunct Professor of Leadership and Organisational Behaviour at the BI Norwegian Business School. He is a valued teacher, workshop facilitator and award-winning researcher who has been published in prestigious international research journals like the Academy of Management Journal, Harvard Business Review, Journal of Organisational Behavior, Leadership Quarterly, and Human Resource Management.

Professor Miha Škerlavaj, PhD, Vice Dean for Research, School of Economics and Business, University of Ljubljana

Q In 2016, you published a book (together with Professors Matej Černe, Anders Dysvik, Arne Carlsen) entitled "Capitalising on creativity: Fostering the implementation of creative ideas at work". What is the biggest challenge within the people-process-ideas triangle when building an environment where the potential of highly creative and possibly useful ideas establishes a competitive advantage for a company?

A There is an abundance of ideas floating out there in business. The true challenge of innovation comes when we need to implement those ideas, to move from fascination about something new towards something that will solve actual problems of real people. A special challenge is when ideas are extremely novel, different from what we have been used to doing so far, and that is exactly what our book focuses on – how to put these highly creative, highly novel, yet different and still potentially useful ideas into practice.

Q What about the conditions from the leadership side, where to start?

A That is part of the difficulty, it is a multilevel phenomenon that needs to be tackled on various levels. Even the level of society is important – some societies are more open to innovation than others. Then you need to understand the context within which you are operating and the organisational practices. In addition, the organisational culture – some organisations are used to dealing with innovation on a daily basis, others are not. Leaders, as the agents of change in an organisation, have a vital role to play: to connect good ideas, to link

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The Slovenia Times | Autumn Edition 2019

Economy together people who are willing to persist and fight for good ideas to make them possible and to implement them.

Q Many organisations struggle by having different generations in the workplace.

What is the key to managing multigenerational workforces in a world of age-diverse organisations?

A I think that generational differences are overrated. If you look at the existing research, you find many more differences between different personalities and the psychology of the individual, rather than simply their age.

Diversity clearly matters and this is from where ideas actually arise, and organisations must be able to create cultures that are diverse, inclusive and respectful of others’ opinions.

This is where you benefit at the front-end of innovation: you get ideas, you get perspectives.

In addition, you need to master the process of how you deal with sometimes even conflicting opinions. It is also important to take one step at a time and to also consider diversity across different ranks of the organisation. While dealing with radical innovation, it is crucial to have people from both the operational as well as strategic ranks working on these projects from the start, together with the users.

Q INSEAD recently published your case study on Outfit7 (together with Žiga Vavpotič and Spencer Harrison). What is its main message and why has the start-up succeeded?

A Outfit7 is a globally interesting phenomenon because of the way they approached starting the company. It was quite counterintuitive and perhaps still is these days, namely, that you kick off a business without having a product. Instead, they had a team that already had experience with each other. They knew each other, they knew how they work together, what their strengths and weaknesses are, and how they complement each other. They spent about half a year trying to figure out what it was they would be doing together. They tried a guide to Iceland, they tried a wealth-management app, all sorts of things relatively far from Talking Tom. They had a strong team and two founders: one who was really deep into HR and understanding how to build a strong culture and how to recruit the correct people, test them, and another who was a technological visionary who understood that the moment for such technology was right. Still, people before technology, which is what made them different and extremely successful.

Q You are involved in several international research collaborations and you have ac-

Organisations must be able to create cultures that are diverse, inclusive and respectful of others’ opinions. cumulated extensive practical experience through workshops, trainings and consulting assignments for clients in Scandinavia, Central and Eastern Europe, and China.

Does innovation management vary globally and, if so, how?

A Yes and no! There are some common traits of innovation management that I observe; for instance, as individuals we are all about purpose which drives our innovation and creativity, we like to do something meaningful. At the same time, the organisational context also matters.

Some organisational settings are simply much more open to innovation and others have been in a stable environment for a long period. However, national cultures are boxes that are too big; judging from some recent meta-analytical evidence, only 20% of cultural variance is located at the national level, and even 80% within countries. In plain language, if you really want to understand people and innovation you must look much deeper than country boxes allow us to.

Q What has inspired you the most, where have you fostered innovation the most?

A You find hubs of activity and innovation in the most unusual places. In Shanghai and Beijing, one is impressed by the scale and speed of how fast things are changing. We have excellent ideas in Slovenia; in Scandinavia, you encounter the most imaginative ways for solving real-life problems; in Africa, people can be innovative with very limited resources. It is part of the human system; we are very much driven to create and to develop something new.

I would definitely not stop in Silicon Valley. If your mind is open enough, you will find really interesting stories all around the globe.

Q How do you recognise talent and is Slovenia doing enough to attract it? It is not only organisations that compete for talent today, but also countries...

A Exactly. Despite the recent geopolitical turmoil, there is a strong awareness that capable and motivated people from around the world are the ones who drive business forward, lift economies and societies up to the next level, and are able to resolve many of the issues we are facing today. Smart policymakers and businesses are aware of this crucial resource and are doing everything in their power to shape attractive innovation policy mixes and attractive working conditions.

In terms of innovation policy mixes, everything from education, pension through to work–life balance matters. Here, a recent OECD study shows we have an excellent education system, with the exception of its internationalisation part. The sooner we accept that the English language is lingua franca that allows us to get our message across, the better. I firmly believe we will not lose our identity by opening up – in fact, the opposite will happen – it will reinforce our contribution to this global society by being a little more open and inclusive.

At least this is the experience we have at the School of Business and Economics at University of Ljubljana (SEB LU) and the experience of many countries, including Norway where I spent 5 years of my life.

Q As the Vice Dean for Research at the SEB LU, what would you highlight from the Faculty’s portfolio? Where do you see the SEB LU’s strengths in the area of research?

A We cover a broad range of disciplines within business and economics. An important topic is sustainable business and economics; we have made quite intensive contributions to the domain of innovation management. We also have a very strong and international group of scholars in logistics, dealing with supply chains and business process management; also top researchers in sustainable tourism. I would also say we have a lot to show in terms of competitiveness and international financial markets. There are exciting things happening in neuroscience and managerial accounting.

And I hope all my colleagues reading this interview who I have excluded from the list will not hold it against me. There is a genuine research buzz in the air at the SEB LU. I’d like to say that our strength is that we are close to where it happens, close to the challenges, needs and opportunities of business, and that is the part we aim to further strengthen in the future.

I would definitely not stop in Silicon Valley. If your mind is open enough, you will find really interesting stories all around the globe.

Autumn Edition 2019 | The Slovenia Times

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Economy

1

Cargo-Partner with a modern logistics centre near Brnik airport

By Barbara Pavlin

Austrian logistics company, Cargo-Partner, has opened a new, 25,000 square metre large storage space near the JoĹže PuÄ?nik Airport, Ljubljana.

The investment is worth EUR 28 million and is one of the largest logistics centres in the region.

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The Slovenia Times | Autumn Edition 2019

The iLogistic centre will service Cargo-Partner's clients in Slovenia and central and southeastern Europe. As Cargo-Partner owner, Stefan Krauter, said at the opening, the company decided to build in Slovenia due to the geostrategic position of the country between Asia and Central Europe, and because of their trust in the country's political and social environment.

Moreover, the Slovenian market lacks modern logistics services, he said, adding that the location itself also provides great potential for development in the region.

Despite the complexity and size of the facility, the building was completed in 11 months.

The final price of the complex was EUR 28 million, EUR 1.5 million more than initially planned. The centre is the biggest investment of Cargo-Partner in recent years.

An important milestone The iLogistic centre in Ljubljana was designed by the architect bureau, Protim, using the Building Information Modeling (BIM) model.

The centre was inaugurated at the end of August and will replace the company's three

Economy current storage facilities in Slovenia, which amount to a combined 6,000 square metres of space.

The new centre has 25,000 square metres of storage space and another 4,000 square metres of office space. "There is great interest in and demand for our services," said Cargo-Partner Slovenia boss Viktor Kastelic. "The new iLogistics Center represents an important milestone for the Cargo-Partner company in Slovenia and we are convinced that it will not only help boost the growth at the local level, but also in the wider region," Kastelic added.

Modern logitics services Cargo-Partner offers short- and long-term warehousing, and a full range of value-added 2

services such as collection and packing, labeling, rapid throughput, consolidation, commissioning, multi-channel distribution, eFulfillment solution (supply of online stores) and other logistics services. The new warehouse has 44 loading doors for trucks, with a storage capacity of more than 20,000 pallets. In addition, the site also provides 6,000 square meters of storage space for shelving on storage shelves and for value-added services, as well as 5,000 square meters of space for rapid throughput and storage of goods of exceptional dimensions. The high-shelf warehouse is a combination of an induction-guided, narrow-shelf and standard wide-shelf system.

The company has already signed new partners and the storage is filling up fast. As Kastelic believes, the facility will be full in about five to seven years when the company plans to expand the centre.

Kastelic believes that Cargo-Partner will increase its market share in Slovenia, which amounts to 21% in air cargo transport and 15% in naval transport. Cargo-Partner has been present in Slovenia since 1996 and currently has more than 100 employees in the country.

With the iLogistic centre in Ljubljana, the company has created 30 new jobs in and will create 100 new jobs in all, which is an important contribution for the Gorenjska region.

Photos 1 Cargo-Partner's iLogistic centre in Slovenia; Photo by Miran KambiÄ?

2 Mr. Stefan Krauter, Owner and CEO, Cargo-Partner; Photo by Esther Horvath 3 Mr. Viktor Kastelic, CEO, Cargo-Partner Slovenia; Photo by Ĺ˝iga Intihar 4 Cargo-Partner's iLogistic centre in Slovenia; Photo by Miran KambiÄ?

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Economy Lady Barbara Judge, a top commercial lawyer from New York, with dual citizenship, has had an extremely broad international career as a senior executive, chairperson and nonexecutive director in both the public and private sectors. During her career, she has been the first female director to be appointed to a British merchant bank, the first female executive director at Rupert Murdoch’s News Corporation and the Chairman of SOAS University of London, Europe’s leading institution for the study of Asia, Africa and the Middle East.

She has also been listed on Business Insider’s 100 Coolest People in UK Tech and presented with the Forward Ladies Lifetime Achievement award. Today, Lady Judge consults to a number of countries and companies on nuclear energy, both new builds and decommissions.

Lady Barbara Judge CBE, Chairman, Athene Capital, United Kingdom

Interview: Lady Barbara Judge CBE, Chairman, Athene Capital, United Kingdom

"There should be a partnership between nuclear and renewables"

By Tina Drolc, MBA

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Q In 1980, you were appointed as a member of the U.S. Securities and Exchange Commission in Washington, D.C. On behalf of the U.S. government, you negotiated to open the Tokyo Stock Exchange to foreign members in opposition to some financial commentators who believed that American investors would not be interested in Japanese stocks. How would you describe this achievement which is among the most significant of your career?

A You have to remember, back to the 80’s, the Japanese were very powerful. In those days they were like the Chinese are today. Japan was a new economy for the U.S. that had very interesting financial markets and companies, and American banks wanted to go there to see if they could do some business. At the same time, the Japanese wanted to go to America to list their stocks in the U.S. I thought it was important for Americans to be able to buy stock in other economies, and I believed other country’s investors should be buying stocks in America – all as a hedge against their own economies.

Surprisingly when I wrote an article expressing these views, I got criticism in the mail from some locals who said "Commissioner why do we care about foreign stocks. This is America, we have enough stocks here. Your job is to put people in jail not think about these other exotic ideas".

Notwithstanding, I and my team wrote some

Economy rules which permitted foreigners to list their securities on American stock exchanges and gave them three years to prepare their accounting statements appropriately. In exchange, the Japanese agreed to change their legal rules to permit foreign banks and brokerage firms to buy seats on their exchanges.

Many things happened in the markets thereafter, but international trading between America and Japan had begun.

Q You have had an extensive and broad career. Which industry has been the most interesting and why did you move from the United States to London?

A The nuclear industry, for me, is the most interesting. I was just visiting your nuclear power plant here in Slovenia and I was so impressed.

I believe that the world the needs clean energy and nuclear is the best source of base load generation which doesn’t emit carbon, and I like the industry and still advise countries and companies.

Why did I move from America to London, that is a different story! I moved to Hong Kong with my husband and I became a British banker. In those days, in the 80’s, Hong Kong was a very small place and run by the British, it was a very closed society and it didn’t matter how American I looked or acted – if I was a director of a British bank, then I was a British banker even if I did not look like a British banker! The British people that I met in Hong Kong were nice, very friendly and welcoming. When I went back to New York I didn’t like it nearly as much.

I grew up there, but in New York all that people were talking about then was money; how big your apartment was, how many square metres it was - the whole society was about money.

I had a young son and I did not want him to think that success in life depended on how much money you had. Then, I remembered the Brits from Hong Kong who did not talk about money and so I thought maybe we should go to Britain where we had many friends and my son would grow up with better values. I really moved because I didn’t think the values in NYC where I lived were good for young children; probably not good for anybody.

Q In 2002 you became a Director of the UK Atomic Energy Authority and have been the Chairman since 2004. Currently, you are a member of the UK Nuclear Development Forum. What is important to ensure that nuclear energy is available in this century in a sustainable manner, where safety should also be an important factor?

A It is important that all nuclear power plants have a high nuclear safety culture. Today, the big focus is on climate change, sustainability,

I think, there should be a partnership between nuclear and renewables, that together they provide energy 24/7. low carbon and clean energy. Nuclear, as we all know, produces energy around the clock, 24/7 and without carbon. Indeed, we all know that energy from the sun and wind are very good ideas, however, it is not always sunny and also the wind does not always blow. Furthermore, if you allow only for sun and wind, there will be times when there will be no sun and wind and when you try to turn on the lights they will not go on. So, I think, there should be a partnership between nuclear and renewables, that together they provide energy 24/7. For some reasons I do not understand, many people who are in the renewables business look at nuclear as a competitor rather a collaborator which seems very strange to me. I think we should talk more about the good things that nuclear has done.

As mentioned, in beautiful Slovenia, you have a first class nuclear power plant with high safety standards and you have very impressive people running it. You have a great place to have nuclear energy in Slovenia, it seems to be working extremely well and I have heard that you are thinking of building a second plant. For nuclear energy it is important to have the right geography, the right technology and the right people, and in Slovenia you have all those things.

Q How safe is a nuclear energy?

A Nothing is totally safe, but nuclear has a much better safety record than any other energy source; coal, oil, gas, solar, etc.

Q When you moved to London, you spent a decade working in private equity and took up the crucial role as the first Woman Chair of the Pension Protection Fund in 2010 and 2013. How do you see a pension system in the future as it already quite a serious global challenge?

A The population in developed countries is declining and people are living much longer. People used to die at 70 or 80 and now somebody born today will surely live over 100 years. The existing population is getting older, there are less babies being born, which means there are less people working to meet the pension needs of the older people and the older people are living longer. Accordingly, I believe that the only answer to the current pension problem is: work longer, save more and expect less..

Q Being an activist for women in business, do you think that women leaders are born or made? How strong is the culture or environment factor?

A I do not think leaders are born, I think they are made – women or men. To some degree, some people are more outgoing than other people, but I do not think you can put it all down to genetics. What women leaders need is some sort of coaching; they need mentors and teachers, because even women with leadership potential will never do it alone. They need people who will give them confidence and teach them tricks about how to sit in the front of the class instead of the back of the class, raise their hand and ask the question... it does not come naturally to everybody. For women to be leaders they need role models. If they do not have their own role model or support system, they will not know how to do it. I have spent a lot of my life mentoring women and I say to them there are little tiny things that make a difference: sit in the front, not the back; ask a smart, short question before the first third of the meeting; and say who you are and where you come from.

In addition, women need to look professional to instil confidence in others. I believe that anybody can be anything they want to be. They should focus, learn and decide who they want to be, and then pursue their dream.

Q Regarding Brexit. You called for Britain to establish a post-Brexit EU trade deal prior to leaving the Union, followed by a transitional period and tariff-free EU-UK trade thereafter. Do you believe this is still possible? What is your perspective on Brexit?

A I said that at the very beginning. Today I do not believe it is possible anymore. I do not think we can get a soft Brexit. People have hardened their positions and I think that is very sad, I am worried a great deal about it. Now nobody knows what is going to happen and people are afraid - they are afraid in England and they are afraid outside of England. What will happen to trade, medicine, science, everything. The one thing I do think is that we need to get on with it, because uncertainty is making the situation worse. We need to get organised and make a fair deal, if we can!

I believe that the only answer to the current pension problem is: work longer, save more and expect less.

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Economy

Gregor Benčina, President, Slovenijales Group; Vice President Center of Energy Efficiency Solutions; Initiator of GreenTech Slovenia

Interview: Gregor Benčina, President, Slovenijales Group; Vice President Center of Energy Efficiency Solutions; Initiator of GreenTech Slovenia

Investments in sustainability are value creation investments and not an unnecessary cost

By Tina Drolc, M.Sc.

The term, sustainable development, began to gain wide acceptance in the late 1980s, after its appearance in Our Common Future, also known as The Brundtland Report. The result of a UN-convened commission created to propose "a global agenda for change" in the concept and practices of development, the report signaled the urgency of re-thinking our ways of living and governing, (OECD Insights, Sustainable Development: Linking Economy, Society, environment).

Mr Gregor Benčina highlights that significant public and private investments are and will be needed to fight the climate crisis, and he goes on to say that people would like to eat healthier food, breath fresher air and drink spring water.

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Economy Q The global economy is faced with slow growth, while the uncertainty provoked by the continuing trade tensions has been jeopardising our economic future. Is sustainability the right answer to build the economy of the future?

A In recent decades life, due to the use of technology, is getting faster and faster, the world population is increasing, as is the need for natural resources and pollution. The human use of the planet has got to the stage where it seems that nature is saying “enough” and therefore the transformation towards a more sustainable way of living is necessary. On the other hand, the growth which we have experienced in recent years is coming to its end and we will need to find new ways to be successful.

Taking both facts into consideration lead us to the answer that a shift towards the creation of a sustainability-based economy is the necessary and smart option, which could also be an important business driver for the future.

The climate crisis represents a big threat to the world if we do not react, but on the other hand, it represents a big opportunity for those who will be active in the field of creating a new, more sustainably--based world. The good thing is that we have crossed the point where the investment toward sustainability is now seen as value creation investment and not as an unnecessary cost.

Q OECD analysis shows that climate finance provided and mobilised by developed countries for developing countries reached USD 71.2 billion in 2017. The goal is to reach USD 100 billion in annual climate finance by 2020. According to the OECD Secretary-General, Mr. Angel Gurría, “we must urgently step up our efforts to provide public climate finance and improve its effectiveness in mobilising private finance”. What are your thoughts?

A Significant investments are and will be needed to fight the climate crisis, public finance as well as private. The numbers, which are many times mentioned, are in the range of few hundred billion euros and it seems that those investments will not only contribute toward saving the planet, but will also create good returns. The goal of the public sector should be to create the economic environment where pollution will have its price, which will be paid by the polluters, and then we will get much different competitiveness. For example, today, price-wise, nothing can match plastic but, on the other hand, we see the kind of damage that the plastic is causing to our planet.

Just imagine the case where we would add to the cost of the damage that the plastic is doing, to all the products made of plastic, we can be

sure that, in such conditions, plastic would be a very expensive material and we would prefer to use sustainable/recyclable substitutes made from renewable sources.

Q How can two megatrends: digitalisation and sustainability walk hand in hand? What are the digital enablers for sustainable infrastructure / Green Tech?

A Digitalisation makes things easier and more efficient, while sustainability re-creates our way of living. When we combine both, we get GreenTech, the knowledge and technologybased economy which follows sustainability principles and does not harm the environment.

GreenTech is not showing what is wrong, it is showing how to do things right. GreenTech is the answer and a positive approach to the climate crisis.

It is hard to imagine, but 30 years from now we will live a much more different life than today and it will be even more different than the life we lived 30 years ago. I would just like to point out that 30 years ago there was merely the use of the internet and mobile phones. In a period of 30 years, we will use things that today we cannot even imagine, and all those things will be created in the segment, which is today called GreenTech.

Q You said that GreenTech is an opportunity for Slovenia. How supportive, in practice, is our legislative, economic and political environment? How is the broader community accepting GreenTech? At the end of the day it is an investment, however, longer term, a profit.

A Slovenia is a very green country with good infrastructure and highly skilled and knowledgeable people, with some actions we can become a role model and later, based on open market principles, we can help others and the market for this will be high. The ones who will move first will get the sweetest share, legislation change and green tax reforms could be a very good start, as with those two administration can show the way to the business.

I am sure that people would like to eat healthier food, breath fresher air, drink spring water, move around with cleaner cars and live in a more sustainable environment, especially if all of these would be cheaper than other options.

Moving towards a carbon free society will be a process, which has already started, but the way to reach the goals is going to be a long one.

The goal of the public sector should be to create the economic environment where pollution will have its price, which will be paid by the polluters.

signed a partnership agreement. What does the agreement mean for Slovenia?

A CER, with its activities, is definitely taking the leading position in the field of a positive approach toward a more sustainable economy.

Our campaigns stretch far beyond our events and as such we are desirable partner to many institutions and events such as, for example, the Bled Strategic Forum and the Managers Association Congress.

With the launch of the GreenTech initiative we have made another big step which has been recognised, not only by Slovene companies and institutions, but internationally as well.

We can be very proud that in the last year we have established many contacts with different global players and that they see a reliable partner for the region of South East Europe.

In this regard, we have signed the MoU with the Prince Albert II of Monaco Foundation which, for many years, has been one of the most active institutions in the field of Climate Change and Biodiversity preservation. For CER and Slovenia it means opening a new horizon and enables access to many new sources and knowledge databases on the one side, as well as another channel to communicate our activities, strategy and findings. In addition to this, we are discussing and working on some common projects which might be very impactful in the near future.

Q To strengthen environmental and economic ties, on 3 September, the Center for Energy Efficient Solutions (CER) and The Prince Albert II of Monaco Foundation Autumn Edition 2019 | The Slovenia Times

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Economy to real estate, infrastructure, the hindrance of business operations, and in threats to national health. The climate crisis also addresses critical geostrategic issues, where the probability of war and social upheaval cannot be excluded.

Clean air, water, soil, food, and healthy people, are becoming the most valuable assets.

Ambition and stability of politics

Ana Struna Bregar, Executive Director at the Centre of Energy Efficient Solutions; Photo: Marolt

The costs and opportunities of the climate crisis for business Companies often underestimate the costs caused by climate changes, including the comprehensive value chain, which they depend on. They should have various efficient resilience scenarios.

By Ana Struna Bregar, Executive Director at the Centre of Energy Efficient Solutions In 2019 we have faced record temperatures everywhere around the world. Weather disasters have been the cause of several deaths and major material damage. Not a day goes by without news warning us of a climate crisis.

Either related to natural disasters and their consequences, or in terms of activities related to the fight against the climate crisis. Both political as well as scientific reports clearly show that climate changes are happening - and what follows may even get worse, unless urgent international systemic political measures are adopted. The consequences of the past political

and economic inactivity related to environmental protection have now become evident.

Based on the report from an influential non-government organisation CDP, the climate crisis will most likely cause 1 trillion USD of damage to the largest global corporations in the next five years.1 Since 1980, the number of registered losses from weather conditions has tripled. Losses due to insurance cases have increased from an annual average of 10 billion USD in the 1980s to approx. 50 billion USD in the last decade.2 Costs of disastrous climate crisis consequences are on the rise, which applies

Based on the report from an influential non-government organisation CDP, the climate crisis will most likely cause USD 1 trillion of damage to the largest global corporations in the next five years.

The consequences of the climate crisis do not end on the border of one country, therefore global measures and common goals are necessary. Two significant international documents were adopted in 2015, namely, the UN 2030 Agenda - Sustainable Development Goals and the Paris (climate) Agreement, which was the first universal and legally binding global climate agreement, setting the goals to limit the increase of global warming. More than 190 countries signed this ambitious agreement. It pledged to include rules for achieving a reduction of global warming into the countries’ national legal systems. The approach of countries to setting the rules for reducing greenhouse gas emissions varies, since measures are drastically interfering with the performance of their economies. The most ambitious countries have already amended their legislations by entering commitments for carbon or climate neutrality (Norway 2030, Sweden 2045, UK 2050, France 20150), two countries have already declared carbon neutrality (Bhutan and Suriname), many countries are still discussing the commitments, and many more cities, companies, and individuals are also adopting the carbon neutrality commitment.3

Opportunity of a climate-neutral economy Due to the climate crisis, and major pollution of the environment, we are witnessing dramatic global changes in every single sector of the economy. The pressure from clients, competitors, employees, courts, investors, and society as a whole, for restructuring of politics and the economy, is increasing.

We are facing new disruptive innovations, which are implementing new market and value rules. They are significantly changing the way companies and industries operate, as well as altering the consumer habits. These challenges are putting societal stability at risk but at the same time creating new opportunities.

The transition to a climate-neutral and circular economy is the only option for the future, and is the largest project of our society. Every

1 Climate change will cost companies $1 trillion, 2019 https://edition.cnn.com/2019/06/04/business/climate-change-cost-companies/index.html 2 Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board "Breaking the Tragedy of the Horizon – climate change and financial stability", 2015 https://www.youtube.com/watch?v=V5c-eqNxeSQ&t=199s 3 https://en.wikipedia.org/wiki/Carbon_neutrality

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Economy human activity needs to reduce the consumption of natural resources, emissions, and waste, and has to be energy efficient. The emissions must carry a price that will have an impact on our behaviour. It is urgent to restructure policies into more stable and ambitious ones: the restructuring of companies and organisations into less environmentally burdensome entities.

And finally, we as individuals need to change our habits.

New, environmentally less burdensome technologies are necessary (services, products, and processes) along with the shift of assets into the development of a green economy.

Following the UN Environment Programme Finance Initiative assessment, annual costs of adjusting to the climate crisis would amount to 140-300 USD trillion by 2030, and 280-500 USD trillion by 2050.4

Accelerating a climate-neutral economy Accelerating the development of a climateneutral and circular economy, which will be responsive, smart, and balanced, requires applying appropriate incentives in various areas (appropriate regulatory environment, green tax reforms, green finances, innovation, technologies, business models, efficient reporting and measurement of impacts, changes to the educational system, etc.).

Many companies have already identified benefits and advantages when they transitioned to an environmentally neutral economy (financial, environmental, commercial, knowledge, experience, and brand). The biggest achievements in reducing greenhouse gas emissions and improving energy efficiency are most evident in sectors with the greatest power-intensive processes (energy, mobility, construction, agriculture, and manufacturing).

This is primarily the consequence of the following factors: • the tendency to become independent from fossil fuels • the increase of energy prices and the prices of the CO2 emissions, • increased subsidies for new green technologies, • and often because of the public pressure.

New companies working in the areas of renewable energy sources and other clean technologies (water, alternative energy sources, emissions, waste, etc.) are on the rise globally.

However, a climate neutral economy is not restricted only to the sectors mentioned above.

Source: ©United Nations / UN Actions portfolios - https://www.un.org/en/climatechange/un-climate-summit-2019.shtml

Every single company and organisation should act in a more sustainable way (environmentally, socially and economically).

All "green, clean, environmental, lowcarbon, etc." technologies (services, products, and processes) have one common characteristic, which is to help protect the environment, increase standards, and ensure a higher quality of life. They create new, greener and fairer workplaces and demand new competencies and urgent changes to educational systems. Green technologies are becoming more attractive for capital investors and funds, which will only accelerate their further development.

The data from the Global Cleantech Innovation Index 20175 shows that the leaders in development of clean technologies are Denmark, Finland and Sweden. In these countries, there is a significant increase of investment funds, especially pension funds, investing in clean technologies. In addition, these countries are also the leaders in investment and revenue gained from innovations in the area of clean technologies and commercialisation of clean technologies. They also have the highest number of public companies in the area of clean technologies. Clean technologies are rapidly developing also in China and India. However, we cannot overlook that investments in the development of green technologies are still the largest in the US, despite their political disapproval.

Transparent reporting of companies - financial stability of companies Companies often underestimate the costs caused by climate changes, including the comprehensive value chain, which they depend on.

They should have various efficient resilience scenarios. After all, a company’s financial stability, which depends on climate changes,

A new agenda for Europe: Business priorities to deliver a prosperous, climate neutral economy University of Cambridge Institute for Sustainability Leadership (CISL); The Prince of Wales’s Corporate Leaders Group (2019), Cambridge, UK

is crucial for investors who are assessing the company’s long-term viability. 6 In order to prevent misleading practices or "greenwashing," the importance of transparent reporting by companies regarding successful implementation of sustainability goals is becoming more significant. There are various guidelines and standards that are being developed for sustainable - climate resistant business. Investors and companies are actively promoting them because they have realised that they are positively changing ways of reporting, operating, and comparability of companies.

Following the UN Environment Programme Finance Initiative assessment, annual costs of adjusting to the climate crisis would amount to 140-300 USD trillion by 2030, and 280-500 USD trillion by 2050.

4 https://www.unepfi.org/news/themes/climate-change/unep-fi-launches-paper-on-adaptation-finance-for-the-global-commission-on-adaptation/ 5 https://www.cleantech.com/2017-global-cleantech-innovation-index-a-look-at-where-entrepreneurial-clean-technology-companies-are-most-likely-to-emerge-from-over-the-next-10-years-and-why/ 6 Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board "A new Horizon" 2019 https://www.bankofengland.co.uk/speech/2019/ mark-carney-speech-at-european-commission-high-level-conference-brussels

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Economy Interview: Luca Martini, Partner, Advisory Leader of PwC in South Eastern Europe

Appetite to invest is important and it goes where the talent and ecosystem is

By Tina Drolc, M.Sc.

Italian by birth, Luca Martini has worked across Italy, Germany, North Africa, Spain and Australia. As of 1 July 2018, Mr Martini took up a new position at PwC Romania and South East Europe. With over 25 years of consulting experience across some of the biggest and most notorious firms, he is a veteran of strategic consulting. Luca Martini explains that Slovenia should be linked strongly with big countries, also from the perspective of the upcoming crisis.

agement and supervision. Another big one is marketing cost optimisation, not cut them, but again, transform and mix – e.g. digital, more focus, etc. Secondly, you need to think about the operations: using robotics and digitalisation, to optimise your value-chain. All of that can’t be done in a hurry.

Q How will the escalation of trade disputes and a hard Brexit affect the economy and the companies in the South Eastern Europe? Which sectors / industries are the most sensitive and why?

A Here, I will not add any value, because eveLuca Martini, Partner, Advisory Leader of PwC in South Eastern Europe

Q According to S&P Global, the eurozone economy’s high integration in global value chains makes it vulnerable to the slowdown in global trade. What should businesses do to prepare for uncertain times?

A The economy will definitely slow down, we do not know when and to what extent, but it will. In these conditions the first thing a business should do is transform the cost structure; you have to be more efficient than your competitors and you cannot do so when the boat is sinking, you have to start before, have more time to do "the right things". This means working together with your providers, instead of squeezing them; rethinking and leaning the organisational structure, for example reducing span of controls and management supervision time – e.g. 20% of department costs are man-

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rything has been written and I truly believe that reason will prevail and some agreement will be done. I cannot believe that goods like drugs, fresh food and the basic supplies will not be available to the UK without an excruciating import process. That is impossible and for sure, a series of bilateral agreements will solve the issue. All in all, I am fairly optimistic about the outcome of Brexit. The key question is whether other countries, due to populism and populist political parties, will prevail, this could put European framework under the additional pressure.

Q How do you see the ECB’s role in these uncertain times?

A Every single one of us waking up in the morning should say "thank you Mr Draghi".

The key action that the ECB is doing is simply amazing, because banks can actually lend, can help companies to survive, to grow, to invest because of that. As the economy is slowly heading south, we needed a boost and promptly, ECB acted; why not repeating what has been

successful in the recent past? The key question again is, if the things worsen, are we scratching the bottom of the barrel, are there other leavers? We do not know, but for sure, so far, so good.

Q The GDP of Slovenia represents 0.09% of the world economy and Slovenia’s economy is still expanding, although with lower growth rates. In light of the upcoming economic crisis, are there any differences among small and big countries?

A I like to recall one episode from a few years ago: three prime ministers ago, the PM of New Zealand, John Key, a former investment banker and very reputable politician at the very beginning of a conference spelt out a crisis that looked like a war: unemployment, bankrupted companies, etc. disaster. And he said: "this was the effect of a simple, fluctuation of the Chinese economy. So, imagine, how good could be the impact for our economy if we are tightly linked to China". It is a good lesson for us, if you look at the key markets of Slovenia: the most important territories for Slovene CEOs: Croatia, Germany and Serbia. If you look at China, Italy,

All in all, I am fairly optimistic about the outcome of Brexit.

The key question is whether other countries, due to populism and populist political parties, will prevail, this could put European framework under the additional pressure.

Economy Russian and the US, only 6% of Slovene CEOs look at those as the key markets. The recipe for your question is: look around! The quality of Slovenian products in high and why are we not attacking Italy which is only around the corner? We just need to change a few names… so there is some truth here. According to the former PM, Slovenia should be linked strongly with big countries and by the way, China is a big buyer of food.

Q Digital platforms, artificial intelligence and robotics are transforming entire industries and sectors. Can you share some recent best practices where technology created new value propositions, new businesses and new market opportunities?

A Three players that I really love to talk about

are: Ping An, the largest private company in China, one of the largest global insurances, the second one is Amazon and the third one is Alibaba. Ping An started as an insurer, but the CEO was obsessed with innovation and digitalisation and he is still there as Chairman, pushing the organisation towards the next level of digital innovation. They have, having around US $700 billion of assets under management, US $0.5 trillion of assets in the bank and the largest non-banking lender in China. Starting from a simple insurer. They create a satellite of a businesses around the core business, leveraging the customer base and providing with additional services adjacent to insurance. As an example, they built the largest digital wealth management platform in China. They built "Good Doctor", the medical AI powered app with 250 million users, and finally they invited a tech driven B2B – the Ping Connect platform that serves different companies in China.

Amazon strayed into new markets and it is now a leader in the digital grocery market in the US. They capture 30% of online grocery spending with revenue of US $10 billion. And if you look at their strengths, they are investing in different technologies and finally, not only their B2C side, but their B2B – the Amazon web services are the second largest IT platform on the planet; 21.4 billion Microsoft, 20.8 billion Amazon web services. It is a cloud-based platform providing a wide array of services to companies like analytics, application integration, virtual reality, cost management, customer experience, digital analytics, machine learning and security systems - everything paid "per use". The ability of the company to change is amazing.

Then Alibaba. It is an amazing ecosystem, initially created in a simple way to connect buyers with the sellers and then they discovered as technology advanced, they could actually change all functions (marketing, finance, etc.) through digital technologies. They are the B2B

Every single one of us waking up in the morning should say "thank you Mr Draghi". The key action that the ECB is doing is simply amazing, because banks can actually lend, can help companies to survive, to grow, to invest because of that.

Amazon equivalent. They created ancillary digital business to capture the whole value chain, creating different applications such as Alipay, Taobao mobile marketplace, etc; they are transforming the grocery industry. If you look for Hema, they have actually transformed the retail experience. Apart from the unique shopping experience resembling floating markets, it is very sophisticated: the prices change literally by the hour, according to demand; 60% of purchases are carried out though the app, and in half an hour the products are shipped to your place. Now, they also have a good alliance with Starbucks in delivering coffee.

Now, the common denominator of these three examples is vision, ambition of the people at the top – because they were obsessed with "let’s be bold, let’s digitise, let’s create new things" and scale them up, over and over investing in scale, and finally they were really able to sell their stories to different stakeholders thus obtaining support in those investments. Successful companies are the ones

who best engage different stakeholders and get the endorsement they need (return profile, resources, etc).

Q Almost 30 years worth of consulting experience you have worked across Italy, Germany, Spain, North Africa, Australia, Asia Pacific and in Latin America. Nowadays, South Eastern Europe. How do the abovementioned areas tackle innovation?

Who does it the best and why?

A Australia has not had a crisis for more than 27 quarters in a row, eventually because of China. Management could focus on innovation and transformation without major distractions. Israel is a fantastic example and to me, it is a combination of talent, capital and innovation infrastructure fueling innovation. That’s exactly what you would find in the US. In fact, capital is crucial and the appetite to invest is important and it goes where the talent and fertile innovation ecosystem is.

The ex PM of New Zealand, John Key, a former investment banker and very reputable politician at the very beginning of a conference spelt out a crisis that looked like a war: unemployment, bankrupted companies, etc. disaster. And he said: "this was the effect of a simple, fluctuation of the Chinese economy. So, imagine, how good could be the impact for our economy if we are tightly linked to China".

Slovenia should be linked strongly with big countries and by the way, China is a big buyer of food.

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Economy Q You have an extensive background in the field of tourism. What makes an excellent tourist experience? How vital is transport in this equation?

A As with anything in this day and age, an excellent tourist experience has everything to do with what we call customer experience in general: how well travel can be conducted, what kind of information travellers get, how smooth their travel is and so on. In my opinion, transport is key. At Nomago, we say that your vacation starts once you walk out of your front door, which means we include traveling to your chosen destination in the vacation time. It has to be well organised, smooth and cater to the passenger’s needs.

Q How progressive is Slovenia regarding transport? What are the main challenges in the region?

Marjan Beltram, Executive Director of Mobility at Nomago

Interview: Marjan Beltram, Executive Director of Mobility at Nomago

Transport is key

Q Nomago and similar companies are making bus travel trendy again. What are the benefits of such a way of travelling?

By Petra Godeša

A Travelling by bus has really made a come-

Converting passion in an international company has proven to be a successful strategy for Marjan Beltram, the Executive Director of Mobility at Nomago. The biggest travel organiser, as they call themselves, was built on the foundations of several transport and travel companies – such as STA Travel, the travel agency Marjan and his wife Anuška created 18 years ago.

Mobility was always intertwined with exploration, the main reason why traveling will never go out of style.

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A Slovenia is one of the few countries with a really well-organised, safe, cheap and convenient public transport system. Passengers can travel not only between larger cities but can also use buses or trains to visit smaller towns and villages. This isn’t very common elsewhere.

Besides, tourists who travel to Slovenia by plane can see a lot of Slovenia just by using our system of public transport.

In my opinion, one of the biggest issues is the Schengen system and the closing of the borders within the Schengen system. This creates unnecessary traffic jams and hinders mobility. I would say that, at this point, the issue is political rather than operational.

The Slovenia Times | Autumn Edition 2019

back in recent years. It definitely has its benefits – for one, it’s environmentally much friendlier than many other means of transport, and unlike air travel, it delivers you right in the centre of the city you want to visit. In the coming years, we will see a massive change in short to medium travel of up to 600 kilometres towards mass land transport with buses that are a very good alternative to air travel.

Q Sustainability is becoming an urgent priority in the 21st century. Will the future bring more or less traveling, regarding the imprint that many journeys leave on the planet?

A People will always travel, but the way we travel will definitely change. I predict less oneman-band travel, there’ll be more shared and mass transportation, and on ultrashort hauls

50 people on 1 bus take approximately 50 cars off our roads. buses, shared transportation and trains which will replace planes.

However, air travel will still be the backbone of long distance travel and people will always, not only dream of, but also visit exotic faraway destinations. Aeroplanes will remain the most suitable means of transport to fulfil this need.

Q What is the 50:1 initiative?

A The 50:1 initiative is an initiative we created in Nomago because we feel that changing people’s habits by getting them to use public transport more would benefit our environment greatly. Traffic jams are something we can’t prevent just by building one more lane on our highways, but we can prevent them by convincing people to take the bus to work instead of their cars. And the numbers 50:1 in the initiative mean exactly that – 50 people on 1 bus take approximately 50 cars off our roads.

What we also encourage is for the government and companies to change their policy and include a part of the time their employees spend on public transport into the working hours, since they could actually use it to finish some work tasks. I’m sure that way more people would decide to use public transport, since they spend at least an hour (but usually more) on their way to and from work.

Q Planes are still leading the way for longer distances. As an executive director you travel a lot, what are your secrets for a swift and comfortable journey?

A At Nomago, we’re all about good customer experience and that’s what I’m looking for when I’m travelling myself. Since I like everything to run smoothly because I am usually in a hurry, I appreciate a good and seamless transport experience, and there are some operators that just never let me down such as, for example, Air France. I enjoy Air France’s Sky Priority service which proves a smooth airport and travel experience.

Q Where will your next far-off destination be?

A My family and I love New York any time of the year, but this incredible city is especially charming during the autumn months. This is where we’re heading next and we can’t wait for the Air France plane to take us there again!

Economy

The time is right for

Circular Change By the editors

Since 2016, the Ljubljana-based stakeholder engagement platform, Circular Change - "The best entry point for your circular economy journey" – has been encouraging different stakeholders to embrace a circular transition and implement circular change. By sharing best practices, connecting and promoting Slovenian and other regional circular frontrunners in Brussels and globally, the platform has become recognised as a true "hotspot" for the circular economy.

An ever-growing network of competence partners is the result of a continuous stream of lectures, workshops and speaking opportunities, from Norway to Japan and Chile.

Content Partner at the Bled Strategic Forum 2019 The 2019 Bled Strategic Forum was all about (re)sources and global sustainability.

The Founder and Director of Circular Change and Chair of the CG of the European Circular Economy Stakeholder Platform, Ladeja Godina Košir, hosted two panels at the Forum.

Three eminent thought leaders Professor Jeffrey Sachs, Dr Andrea Illy and Dr Janez Potočnik, contributed to the panel dedicated to sustainability. The second panel, Climate Change – Saving the Planet by Going Circular, called upon nine panellists to introduce ongoing projects on the circular economy.

This is the year of Circular Innovation Today’s understanding of innovation is mindful of resource use and eco design. The circular economy is becoming part of major international innovation competitions and Circular Change is supporting these initiatives by serving on several international juries. Ladeja Godina Košir is a member of the jury for the 2019 European Social Innovation Competition, focusing on "challenging plastic waste". A lot of innovative, creative and ambitious solutions have entered the competition and from 30 semi-finalists, including three Slovenian projects, 10 finalists have been chosen. The winner will be announced at the awards ceremony in Brussels on 24 October. Mrs Godina Košir is also the President of the Jury for the EFQM Innovation Challenge - Sharing/Cir-

opment Program in Serbia, Circular Change hosted a two day workshop covering all the stages for developing a national roadmap and empowering the members of the inter-sectoral working group to "break the silos mentality" and begin collaborating for a concrete plan on how to proceed. The following week a Serbian delegation with representatives from the government and regional waste treatment sites, visited Ljubljana and Maribor to learn how Slovenia managed to achieve a high rate of separately collected municipal waste and to visit the cutting-edge waste treatment facility RCERO Ljubljana and Snaga’s new sorting plant in Maribor. In October, Circular Change will host another workshop in Belgrade on systems thinking for the circular economy, part of the Academy Circular Economy 2.0 for SMEs. Mrs Godina Košir will also speak at the Economic Conference Montenegro 2019, on 24 October, at the panel Green Economy and Sustainable Development.

And there’s more to come this fall for the CC platform

cular Economy. The jury seeks projects that • Attending the annual meeting of the Eureally made a difference by creating new opporropean Circular Economy Stakeholder tunities for sustainable development, reducing Platform – setting the agenda for cooperawaste, driving greater resource productivity tion with the new Commission, Brussels and delivering a more competitive economy. • Joining the study tour in the USA through The winners will be announced at the EFQM the project Post-Carbon Cities of TomorForum, on 23 October, in Helsinki. row by the Ecologic Institute – empowering local bottom-up initiatives though the Circular Change connecting exchange of knowledge and experience, USA • Lecturing at the Circular Economy Sumcircular dots in the Western mer School in Brindisi, Apulia region Balkans • Speaking at the COP25 meeting sideCircular Change has nourished relations with event in Santiago de Chile, Chile key circular change makers in the Western Balkans and has advocated for the development of You can be the leader of circular circular economy initiatives, focusing on the transformation! strong creative potential of the region. After authoring the Roadmap Towards the Circular Are you about to start a circular economy proEconomy in Slovenia, the platform has become ject? Are you looking for inspiration and expert a knowledge hub in collaborative roadmap knowledge? Do you need international partdesign. With representatives of the Serbian ners? To contact Circular Change, simply write government, Circular Change is drafting their an email, to join@circularchange.com, or visit circular economy strategy. As part of the pro- the website, circularchange.com. ject, organised by the United Nations Devel-

Autumn Edition 2019 | The Slovenia Times

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Economy Smart Cities 2019

Resilient Cities:

Drones are still an emerging technology, but we can already think of the services they could be able to provide, like emergency responses or transporting goods. Olivier Usher is Research & Impact Lead at Nesta Challenges, part of Nesta, the UK’s innovation foundation.

Between digital and physical world

Q Cars had an enormous transformative effect on our society century ago. Do you believe that drones would affect our society, infrastructure and regulation to the same extent as cars did in the past or even more?

By Urška Lisjak

A The future of drones might end up looking

The international conference, Smart Cities 2019, presented the actions of municipalities and cities in case of natural disasters and unexpected events.

At the conference, Slovenian and foreign speakers defined the current situation and sought opportunities to improve responsiveness and safety in urban areas.

The conference was organised by SRIP Smart Cities and Communities (Jožef Stefan Institute) in cooperation with the City of Ljubljana and the Association of Urban Municipalities of Slovenia.

like the future of cars and cities – it could be very transformational. We could see the technology rolling out on a very large scale and really changing the way we live in cities. Equally, it might not. There is another extreme where the public has scepticism about drones, pushes back and we only see certain, quite critical, niche services delivered by drones. My view is that we will probably land somewhere between those two extremes because exactly where we land really depends on politics, policy and economics, as well as on what we want to see as citizens, more than it does on the development of the technology itself.

Q You mentioned different cases of use in the health sector. What would be the most important benefits drones could bring to the health sector in the future?

A The Flying High project, a project with five

Q Are Slovenian cities prepared for unexpected events?

A At the conference, Nevenka Cukjati, General Director of the SRIP Cities and Communities Operation, stated a concern; we often think about our cities’ responsiveness to unexpected events only when it is too late. To ensure security, cities need to seek new measures and solutions, and take advantage of all opportunities that information and communication technology (ICT) have to offer. "Connecting and creating synergies between cities, municipalities and the state is essential in achieving and ensuring resil-

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The Slovenia Times | Autumn Edition 2019

ience in case of unexpected events. Understanding and designing the Smart Cities and Communities Strategy should become the fundamental direction and a guide of all subsequent governmental processes. Cities, municipalities, companies, public research institutes and universities, and all SRIP PMiS members are aware of the need for further activities and the related coordinated action in the field of European and Slovenian smart specialisation strategy," she explained.

Oliver Usher, NESTA, UK: Flying High – a collaborative approach to shaping the future of drones and cities

UK cities, explores three different use cases which will potentially have quite a significant impact on the health sector and on people’s healthy lives. The first one of those is around emergency response drones. That is, for example, a drone flying to the site of a car accident or a fire to get immediate situation awareness to first responders who arrive at the scene. This has potentially quite a profound impact on how quickly people get sent to a hospital or how quick the response is sent to the incident site.

The other two we looked at were on logistics in the medical sector. For example, transporting supplies such as blood or samples. There are two very different ways that could play out and they are potentially complementary. One of them is around the way medical logistics work within cities. We are talking about short distance transport to potentially quite high value medical items or urgent medical items. Drones might fly between city centre hospitals which are perhaps a few kilometres away and they can hop over the traffic as well as do things quicker.

This also potentially unlocks broader change in the way the medical logistics system works. It might allow you to centralise pathology laboratories in one location in the city for potential productivity gains or changes in efficiency

Economy of service. The other case we looked at was in the context of more remote communities. We worked with Southampton, a city on the south coast of England that faces the channel to the Isle of Wight, a quite heavily populated island which doesn’t have a bridge going to it. There, the local health services are quite excited about the possibility of using much heavier cargo drones to transport larger volumes of medical items on a more scheduled service between hospitals on the mainland and the hospitals on the island. This potentially unlocks delivery of quite critical medical items to remote communities that currently might not have as good medical services as city centres do.

Q What would be the first step to be taken by our governments for the real change to begin?

A It’s a lot about testing and building the evidence base and about demonstrating. That does two things. If we give companies that want to try out some of these socially beneficial drone use cases, an opportunity to test and demonstrate their services, then, first of all, they can build up their technology, service and demonstrate for the purposes of getting regulatory approval that their service is safe. At the same time, you can build public visibility of what you’re doing and show that it’s not actually terrifying. Providing this kind of an experimental environment is something that governments can really do.

Allan Mayo, UK: Developing Smart, Sustainable and Resilient Cities: the integrated Greenwich Approach As a civil servant at the Department of Business, Innovation and Skills (BIS), Allan was responsible developing the UK Government’s smart city strategy which was published in October 2013, and gave support to BSI to develop the first suite of smart city standards. He joined Digital Greenwich to help develop the Borough’s Smart City Strategy which was launched on 22 October 2015.

example, there are lots of smart cities, but nobody wants to live there. It’s about the quality of design and designing the city for the flaneur, the stroller. This means that you walk through the city and suddenly see a wonderful new area and it uplifts the spirits. In my opinion, it’s a combination of architecture, design and the digital technology which together will make for a smart city.

Q What are the results of your Greenwich Smart City strategy so far?

A In the first instance, we are building the city or building this borough. In a way it is still an experiment. We recognised two or three very important themes. One I mentioned is transport. We are building an autonomous vehicle testbed to understand better how autonomous vehicles might become the Uber of tomorrow.

This is in the process of being built so there aren’t any results yet, except for that we know from our survey with the residents that they are very interested in this and they see it as something exciting for Greenwich. The second big experiment is around the Sharing Cities European project where we’re bringing in renewable energy, a water source heat pump from the Thames, and linking that to citizens in council blocks, in social housing with refurbishment of these blocks, making them more energy efficient, putting in smart grids and smart sensors to manage the energy. Also, then, linking that with electric vehicle charging, electric bikes and trying to understand how all this data can come together in a way which improves the energy efficiency of the entire community.

That is underway, so there are only preliminary results. The third main theme of our strategy is about digital connectivity itself. The future will lie with fibre, fibre to the premises as the

basis for accessing broadband. Everybody talks about 4G or 5G, but it’s not just antennas, it’s also the backhaul of that data to the data centre that needs fibre. That is being planned, the strategy is there, the council is just about to decide the way forward on that. These are just three examples of how we’re taking forward in a very ambitious way: autonomous vehicles, integration of data, fibre to the premises.

It’s a combination of architecture, design and the digital technology which together will make for a smart city.

Q What are the foundations of a "Smart City"?

A The foundation of a smart city are the people and making sure that everybody has access to digital technology and has the skills to access digital services. Digital skills and digital connectivity are fundamental. However, we often put too much focus on the digital – it is the design of a city that makes for a smart city.

We should design cities in a way which we call a "20 minute city" which means that you can get anywhere you like in 20 minutes without getting in a car. On the other hand, cities have to uplift their spirit. A city is not smart if it’s drab concrete block after block. In China, for Autumn Edition 2019 | The Slovenia Times

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Global Sovereigns | Bank Divestment in Slovenia is an Important Achievement

Global Sovereigns

Bank Divestment in Slovenia is an Important Achievement DBRS considers the completed sale of Nova Ljubljanska Banka (NLB) and the expected sale of Abanka to be important achievements for the Republic of Slovenia (A, Positive). The divestment of these banks is an important step in the government’s efforts to reduce the historically high direct involvement of the state in the economy, improve the performance of the economy, and adhere to commitments made with the European Commission. Also positive for Slovenia, these developments have occurred in the context of improved financial sector and macroeconomic results.

Key Highlights: • DBRS considers the completed sale of NLB and the expected sale of Abanka important achievements.

• The bank divestment plan is important in diversifying the ownership structure of the banking sector and reducing risk to the sovereign.

• Even following the bank divestments, state involvement in the economy remains high.

• Further acceleration in the privatisation effort and enhancement of the productivity of the SOEs could lower the economic, fiscal and financial risks for Slovenia.

The Bank Divestiture Plan Emerged from the Crisis The global financial crisis severely affected the Slovenian banking sector and came with significant economic and fiscal costs. In 2013, weaknesses in the Slovenian financial sector, coupled with crisis-related economic stress, required the recapitalization of Slovenia’s three largest banks, all of which were state owned. NLB received the largest transfer of €1.6 billion in 2013, following earlier transfers of €250 million in 2011 and €383 million in 2012. The total cost to the government of all

recapitalizations, as well as additional costs associated with managing the crisis, was high.

Government debt increased from 46.6% of GDP in 2011 to 82.6% in 2015.

Slovenia has made significant progress on part of its agreement with the European Commission (EC) for the approval of state aid to the banks in 2013. It has sold 12 of the 15 companies under the Slovenian Sovereign Holding (SSH) that was created to manage the privatization of companies identified by the National Assembly. DBRS does not take the view that wholesale privatization of the large SOE sector would guarantee improved economic efficiencies or increased inward direct investment.

There may indeed be reasons to maintain public ownership of enterprises, in energy and transport sectors in particular, where the mandate is the effective delivery of goods and services over the maximization of profit.

However, DBRS considers the recent divestments in the banking sector to be important in (1) diversifying the ownership structures in the banking sector and (2) reducing risk to the sovereign.

The pace of bank sales has increased over the last year. The government relinquished 65% of the largest bank NLB with an IPO in late 2018 and another 10% in June 2019. This sale of 75% of NLB generated nearly €800 million. The 2015 sale of 100% of the second largest bank Nova KBM (NKBM) brought in €250 million.

The new NKBM investors1 recently committed to purchase Abanka, the third largest bank, for €444 million. That transaction is pending approval, but is expected to close by the end of

2019. As a consequence of the sales, the share of the two main banks, NKBM and NLB, will now be just under half of the national banking sector. These sales significantly reduce the state’s ownership in the banking sector to about 12% (the state still owns development bank SID and a quarter of NLB), down from more than 50% in 2013. Subsidiaries and branches of various large European banks represent the remaining two-fifth of the banking sector.2 By significantly reducing its ownership of these banks, the Slovenian government is much less exposed to potential calls for capital to support these banks. The first line of defence is now private capital. If a privately-owned bank needs more capital, it can call on its investors first. Achieving these sales is important because support for state owned banks contributed to higher public debt in the last decade. In addition, risk in the sector is lower.

The banking sector’s resilience has improved with tougher regulation, increased capitalization, better funding, and stronger asset quality. For NLB in particular, financial metrics are sound. It is profitable and has high regulatory capital ratios. Reflecting investor confidence in the bank, its share price increased 25% in the six months following the November 2018 IPO.

The State’s Involvement in the Economy Remains High As of 2018, and prior to the recent bank sales, SOEs were present or dominant in several key sectors, such as energy, manufacturing, transportation, telecommunication, tourism, insur-

1 Apollo Global Management owns 80% of NKBM and the European Bank for Reconstruction and Development holds the other 20%.

2 BKS Bank AG, SKB Banka, UniCredit, and Intesa SanPaolo are other banks that hold material market share.

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The Slovenia Times | Autumn Edition 2019

Bank Divestment in Slovenia is an Important Achievement | Global Sovereigns tinue to improve once recent bank divestitures are included.

Contingent liabilities to the Slovenian government remain above 50% of GDP, according to the EC’s definition of total outstanding liabilities of entities classified outside general government. Even though contingent risk has declined significantly since 2013 and while a significant amount of state guarantees are directed to non-economic entities,5 the state’s involvement in the economy is the highest among Slovenia’s eastern European peers and is expected to remain elevated.

Exhibit 1.

Book Values of Equity of State-Owned Enterprises in Slovenia, 2018 (Prior to Bank sales)

Transport 6,30%

Tourism and Economy

37,90% 40,20%

Energy Sector

Privatization Results of NonBank SOEs have been Mixed Finance

Privatization is no panacea. The mismanagement of an enterprise can occur irrespective of its ownership structure. The privatization of state-owned enterprises does not guarantee improved business management, financial results, or effective delivery of goods and services. The government expects bank divestments and the sale of Ljubljana Airport to be examples of successful efforts. Time will tell.

Yet, there are several cases in Slovenia where privatization was incomplete or has not yet proved an obvious economic success, including the attempt to privatize Telekom Slovenia and the privatization of Adria Airways.

For Slovenia, improving the performance of its SOEs is an important way to increase the contribution of these entities to its economy.

Source: Republic of Slovenia Statistical Office (SiStat), DBRS.

to comply with its objectives. OECD literature links privatizations with management reshuffling, a fresh injection of capital and ideas, and a more efficient allocation of labour. The workforce employed by SOEs in Slovenia has declined in a meaningful way. Total employment in SOEs declined to 68,000 in 2017, from 86,000 a decade earlier. Thus, employment in SOEs has declined to 8% of total employment (Exhibit 2). DBRS expects that figure to conExhibit 2.

Employment in Public Slovenian Corporations (% of total employment) 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0%

2017

2016

2015

2014

2013

2011

2010

2009

2008

2007

2006

0.0% 2005

ance and banking (Exhibit 1). Even after the bank divestments, there are still more than 100 SOEs in Slovenia. Many are deemed "strategic" by the government, or vital for the economy.

Indicative of the extent of the government’s direct involvement, one third of the workforce is employed by the state, of which one-fifth is employed by the public sector and one-tenth by state enterprises.3 State employment in Slovenia is among the highest in Europe.

The SOE sector’s financials have historically underperformed private sector peers. SOEs in Slovenia have been more indebted, as measured by debt leverage ratios, compared to SOEs in peer countries and compared to privately owned companies in Slovenia. SOEs have been roughly 70% less profitable, according to the IMF. They have also been less efficient in deploying their resources and less productive, according to the EC’s State Owned Enterprise Report.4 It should be noted that the objective for SOEs is not typically profit-driven and it may make sense that an SOE underperforms its private sector peers. To some degree, this weaker performance reflects the nature of these enterprises in serving the purposes of the state, rather than optimising performance and maximizing returns. It is not always clear if the provision of products and services is best done by the state versus the private sector.

However, privatization in theory can improve corporate governance, and increase efficiencies and the effectiveness of the enterprise

2012

15,60%

Source: Eurostat, DBRS.

3 European Commission report: State-Owned Enterprises in the EU: Lessons Learnt and Ways Forward in a Post-Crisis Context, July 2016 4 European Commission report: Slovenia: State -Owned and State- Controlled Enterprises, Vol 10, Issue 3, June 2013 5 Largest guarantees: DARS (motorway company), EFSF (European financing facility, BAMC (bad bank), Slovenia railways, universities, the regional development fund.

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Global Sovereigns | Bank Divestment in Slovenia is an Important Achievement There is some evidence that Slovenia has made progress in corporate governance and enhancing the financial performance of its SOEs since 2014, when the SSH was established. While finding evidence of improvements in corporate governance in the data is difficult, Slovenia has outperformed its peer countries in recent years on the OECD Governance of SOE indicators.6 Furthermore, the financials of Slovenia’s SOEs have improved. The total return on equity (ROE) of the government’s portfolio of SOEs amounted to 6.3% in 2018, according to the SSH Group annual report, up from 1.1% in 2014.

Macroeconomic Performance in Slovenia Is Strong Despite the still extensive role of the state sector and its SOEs in Slovenia, the economy has been among the strongest performers in Europe over the last few years. Growth has

averaged above 3.5% per year since 2014, with output expanding by 4.9% in 2017 and 4.5% in 2018. DBRS attributes many factors to Slovenia’s improved economic dynamism, including cyclical external and domestic factors, as well as improved confidence associated with the strengthened financial sector and progress on privatization. Due to a confluence of factors, the Slovenian economy has seen a rise in productive investment in the last five years.

From 2014 to 2018, gross capital formation increased by 27%. From the 1Q 2013 to 1Q 2019, productivity as measured by output per employed person increased by a healthy 8.5%.

The favourable economic conditions have also improved public finances. In a turnaround from a fiscal deficit of 5.5% of GDP in 2014, the fiscal position reached a 0.7% surplus in 2018. The improvement in the public debt ratio has been equally as impressive. Following its peak at 82.6% in 2015, the debt to GDP ratio declined by 12 percentage points to 70.3% in

2018. Privatizations also support debt reduction as 90% of the proceeds from divestitures are directed by law towards the reduction of public debt. The remaining 10% is transferred to a special account for the demographic fund.

Thus far, the state budget has received roughly €1.5 billion from sales, of which around €1.0 billion stems from the sale of shares in state owned banks. This does not include dividends payed to the government. In DBRS’s view, further acceleration in the privatisation effort and enhancement of the productivity of the SOEs would lower the economic, fiscal and financial risks for Slovenia.

6 See IMF Working Paper: State-Owned Enterprises in Emerging Europe: The Good, the Bad, and the Ugly, WP/17/221, October 2017

Co-Head of Sovereign Ratings, Global Sovereign Ratings info@dbrs.com

Vice President, Global Sovereign Ratings info@dbrs.com

Senior Financial Analyst, Global Sovereign Ratings info@dbrs.com

The DBRS group of companies consists of DBRS, Inc. (Delaware, U.S.) (NRSRO, DRO affiliate); DBRS Limited (Ontario, Canada) (DRO, NRSRO affiliate); DBRS Ratings GmbH (Frankfurt, Germany) (CRA, NRSRO affiliate, DRO affiliate); and DBRS Ratings Limited (England and Wales) (CRA, NRSRO affiliate, DRO affiliate). For more information on regulatory registrations, recognitions and approvals, please see: http://www.dbrs.com/research/highlights.pdf. © 2019, DBRS. All rights reserved. The information upon which DBRS ratings and other types of credit opinions and reports are based is obtained by DBRS from sources DBRS believes to be reliable. DBRS does not audit the information it receives in connection with the analytical process, and it does not and cannot independently verify that information in every instance.

The extent of any factual investigation or independent verification depends on facts and circumstances. DBRS ratings, other types of credit opinions, reports and any other information provided by DBRS are provided "as is" and without representation or warranty of any kind. DBRS hereby disclaims any representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability, fitness for any particular purpose or non-infringement of any of such information. In no event shall DBRS or its directors, officers, employees, independent contractors, agents and representatives (collectively, DBRS Representatives) be liable (1) for any inaccuracy, delay, loss of data, interruption in service, error or omission or for any damages resulting therefrom, or (2) for any direct, indirect, incidental, special, compensatory or consequential damages arising from any use of ratings and rating reports or arising from any error (negligent or otherwise) or other circumstance or contingency within or outside the control of DBRS or any DBRS Representative, in connection with or related to obtaining, collecting, compiling, analyzing, interpreting, communicating, publishing or delivering any such information. Ratings and other types of credit opinions issued by DBRS are, and must be construed solely as, statements of opinion and not statements of fact as to credit worthiness or recommendations to purchase, sell or hold any securities. A report with respect to a DBRS rating or other credit opinion is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. DBRS may receive compensation for its ratings and other credit opinions from, among others, issuers, insurers, guarantors and/or underwriters of debt securities. DBRS is not responsible for the content or operation of third party websites accessed through hypertext or other computer links and DBRS shall have no liability to any person or entity for the use of such third party websites. This publication may not be reproduced, retransmitted or distributed in any form without the prior written consent of DBRS. ALL DBRS RATINGS AND OTHER TYPES OF CREDIT OPINIONS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AT http://www.dbrs.com/about/disclaimer. ADDITIONAL INFORMATION REGARDING DBRS RATINGS AND OTHER TYPES OF CREDIT OPINIONS, INCLUDING DEFINITIONS, POLICIES AND METHODOLOGIES, ARE AVAILABLE ON http://www.dbrs.com.

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Leadership Corner connected world, thanks to the internet. This means that if you are unhappy at work, you can immediately post it on social media. This impacts the company’s public image and business results. Thanks to Facebook and Instagram, we are constantly surrounded with images of happiness at home and at work. No-one wants to work for a company where there is bad climate.

One negative event, published on social media, can have a huge impact on company’s effort to attract and retain the best people. So, now, it’s finally the time when companies are starting to turn inwards and really (not just on paper) deal with employee well-being, quality of people management and building a positive company culture.

Q We hear a lot about organisational culture and its impact on employee satisfaction and business results. What is it and how can companies change it?

A Organisational culture is different from

Mrs. Saša Fajmut, Vice-President of the Slovenian Human Resources Association; Photos: Žiga Intihar

Interview: Mrs. Saša Fajmut, Vice-President of the Slovenian Human Resources Association

The future is bright By the editors

A In the early 1990s we thought we had everything figured out. People worked from 8am to 4pm and then turned off their computers and went home to relax. The only news we heard was on TV and the radio, and Information flow was relatively under control. The purpose of going to work was to earn money and feed the family. It was great if you had good colleagues

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Q Besides culture, what are the biggest challenges that leaders now face?

A The business environment has become in-

In this interview with Mrs. Saša Fajmut, Vice-President of the Slovenian Human Resources Association, we discuss global workforce trends and their impact on the way we will live and work in the future.

Q Mrs Fajmut, let’s begin by going back in time. How did people work and live 30 years ago, before the fourth Industrial Revolution?

company to company. It is defined by the typical way people behave in an organisation. It can also be described by "how things are done around here". Are people nice and friendly in your company or do you hear yelling and constant criticism? Does everything take time or do things get done quickly? Are people whispering behind your back or you can freely speak your mind, even to the top management? That’s culture! It can be your biggest asset or your biggest problem. Nevertheless, it is created top-down by the way management behaves and treats people. So when you want to change organisational culture, you know where to start.

at work, but the boss was stereotypically someone who gave you orders and you silently hated him/her. If you were lucky, you worked in a job you liked, if not no-one really cared.

Your personal development? That was science fiction and seemingly had nothing to do with business.

Q But that’s still the reality in many companies...

A Unfortunately yes. The difference between now and then is that today we live in a hyper-

credibly challenging. Due to living in a VUCA (Volatile, Uncertain, Complex and Ambiguous) world, business strategies need to constantly adapt to the market situation, and they need to adapt fast. In reality, this means that people need to change. But we know that changing a person is one of most difficult things in the world. People like stability and don’t like to change their habits. We don’t even like to take a different route to work, so how can we adapt to a different mindset overnight and do our work differently than yesterday?

Q True. If companies and their employees don’t adapt to the market situation they are soon out of the show. How can HR professionals help to create a work environment where people give their best and companies win the marketplace?

Leadership Corner

People like stability and don‘t like to change their habits. We don’t even like to take a different route to work, so how can we adapt to a different mindset overnight and do our work differently than yesterday?

A We need to realise that workplaces are becoming an ecosystem. People want to work for a purpose, not just for money, and they want to have fun. This goes especially for Millenials and Gen Z which will soon represent 50% of our workforce. These generations want flexibility, recognition, personal growth and an answer to the question "why". And they want everything fast. Old-school bosses who give orders, do not care about people’s motivation and expect loyal workers in return, have huge problems managing the youngsters.

The only way that organisations can build market-oriented ecosystems is by liberating employees to give their best (which is directly connected to quality of leadership). This is the reinvention of the majority of traditional HR practices, but those who will not adapt will simply lag behind and lose the battle for talent.

Q What exactly do you mean by "liberating employees"?

A Keep it simple, bring it back to the people.

For knowledge workers, this means flexible work time, working from home, but most importantly exploiting and developing what they do best. This is the only way to reach the maximum level of productivity. However, you need highly competent and servant leaders to manage such a workforce.

On the other hand, blue-collar jobs are less flexible in terms of work time and location. But while manual work is being rapidly replaced by robots (making simple tasks and jobs disappear), new and complex jobs are being created daily. So, I would say that the fear of losing thousands or even millions of jobs is unnecessary. Only boring jobs will disappear. In my opinion, the future is bright!

Q What competencies will we need in the future?

A The main challenge today is to develop our competencies in order to handle complex jobs.

We need to invest into our critical thinking, social and emotional intelligence, as well as people management skills, since everything else will be replaced by AI. The Slovenian school and social systems are unfortunately lagging well behind in support this much-needed skills development. A good example is the Finnish school system where children are taught by topic, not by subject allowing them to analyse

events from different perspectives and develop complex, critical thinking skills from early childhood.

Q Research shows that technology is increasing with unprecedented speed, but human productivity is only slowly growing.

Interestingly, we have so many productivity tools, apps etc., but the amount of work done is basically the same as 30 years ago.

How do you interpret this paradox?

A Easy. How many times per day do you look at your mobile phone? Research shows that we check our phones over 50 times per day or every eight minutes. How much deep work can you do in eight minutes? Not much. We are constantly bombarded with mails, messages, social media notifications, news. Yes, the speed of communication has increased dramatically, but on the other hand our ability to do deep, focused and value-added work is decreasing. It is easier to be in "reply-mode", which is cognitively non-demanding and does not require high concentration. To gain a competitive advantage we need to find what makes our employees disconnect from devices and keep them in the "flow" (i.e. in a feeling of energised focus, full involvement and enjoyment at work). That’s how we will boost our people’s productivity, not by forcing some archaical performance management procedures.

Q Last but not least, how is your work and life style changing?

A Personally, I do not work from 8 to 16h.

Sometimes I work less, sometimes more. I work whenever I am most productive; it can be at 4am or 10pm. I allocate my time and energy

Saša Fajmut, M. Sc., MBA, Director Leadership Services Adriatic at Amrop and General Manager at FranklinCovey Slovenia. She holds a Master‘s Degree in Clinical Psychology and an Executive MBA.

very carefully. My usual work day is very busy with meetings and so I decided to keep one day per week meeting-free. It is when I do deep, meaningful work. This is crucial to keep myself out of daily, urgent tasks and to do important, strategic work.

As a counterbalance to my busy worklife I spend my free time with my family and friends, reading books, enjoying music and doing sport. I especially like rock-climbing in the mountains. This is where I recharge my batteries, sharpen my focus to the maximum and get the best ideas. But most importantly, there is no signal (she laughs).

We need to realise that workplaces are becoming an ecosystem.

People want to work for a purpose, not just for money, and they want to have fun. This goes especially for Millenials and Gen Z which will soon represent 50% of our workforce. These generations want flexibility, recognition, personal growth and an answer to the question "why".

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Leadership Corner one. Love is expressed with respect, encouragement, support, nurturing, compassion, inspiration and enthusiasm.

The metaphor the AEIOU of leadership uses to illustrate all five dimensions of conscoius leadership. The powerful sound and vibration of vowels is reflective of the effect that leaders have on the people around them with their energy and vibration. Vowels are the carriers of syllables and, together with consonants, they form shorter or longer strings, either accented or not. Syllables dictate the rhythm and compose words. Words form sentences that carry meaning, purpose and message. This is analogous to how modern leaders act: they connect between themselves and with co-workers so that they all assume an important role, create in their own rhythm and find meaning in their work and in collaboration with others. Together, they innovate products, services and solutions for the prosperity of all. The AEIOU is indeed an acronym of five powerful words: aroha, eb, ikigai, oikos and ubuntu.

Aroha: Leading with the Energy of Love

Sonja Klopčič; Photo: Barbara Reya

The AEIOU of Leadership With love for 4P’s: profit-people-planet-purpose

By Sonja Klopčič

As individuals and as families, we do not imagine not worrying about our homes, but when Siberia and the Amazon burn, when the glaciers melt, it seems as if this does not concern us, as if all this is happening somewhere else, on the another planet.

If we want to bequeath our planet with decent living conditions to our descendants, we need to drastically transform the economy. I believe that this can only be done by conscious leaders who perceive the world as a unified whole, who place their role in a wider context and are aware that their decisions directly affect the quality of many people’s lives. Such perception goes far beyond the narrow under-

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standing of responsibility as being connected only to the material resources of an organisation, the results in a profit and loss account, and balance sheet. Conscious leaders do not manage their organisations solely as business ventures, but also as platforms for fulfilling their mission and the mission of their employees, thereby contributing to the welfare of the community. They know that their responsibility extends far beyond the limits of the organisations they manage.

They strive for 4P’s: profit, people, planet and purpose. But I add to this a fifth dimension of conscious leadership: leading with the energy of love towards everything and every-

Leading propelled by the energy of love is respectful towards everyone and focused on integrity. The leap from rational thinking to seeing with one’s heart – as put by Antoine de Saint-Exupéry in The Little Prince – is a formidable challenge that only a few leaders can take on. However, it is precisely this shift – from an intellectual grasp of concepts and the search for causes to a loving and respectful embrace of the unified whole and all there is – that holds the key to acting with the energy of love. When we act with the energy of love, we accept everything as is, support it as such and gently nudge it towards improvement.

The Maori word aroha is composed of a further four words: aro, ro, ha and oha. Thus, it is multi-layered and rich in meaning. Aro represents thought, life principle, also focus; ro means internal, introspection; and ha is life force, breath, energy. Oha corresponds to generosity, progress, abundance and health.

Aroha is therefore a more than appropriate word to capture all the nuances of what leading with the energy of love means.

Eb: Interconnectedness and Interdependence In natural ecosystems, changes and disturbances are a normal occurrence. Systems always respond by trying to restore biological balance. In nature, this process continues until equilibrium is reached, as allowed by the climate conditions in a certain area.

Leadership Corner Links between living organisms and the environment also bear relevance to business communities. A business ecosystem is an interdependent community that provides products and services which generate added value. Customers are just as much a part of the ecosystem as are suppliers, manufacturers and other stakeholders. The members of the ecosystem develop their abilities and roles together and align themselves. They progress towards a shared vision, coordinate their contributions, and find roles that are mutually supportive.

The emphasis is on the ability to collaborate and inclusive models. Competition among stakeholders is morphing into collaboration.

"Playgrounds, not battlegrounds, are the training grounds of creativity and inclusiveness," illustrated the difference in our perceptions Ladeja Godina Košir, founder and executive director of Circular Change.

Our connectedness and interdependence is even better encapsulated in the Mayan word eb, which has several meanings. Eb is a road, grass, abundance, growth, harvest, vital energy, the spiral ladder of life. Eb is the connection among people, places, dimensions and worlds.

It was because of this very profound symbolism that I included eb in the five dimensions of modern leadership.

Ikigai: Meaning and Mission Ikigai was coined from two separate Japanese characters: iki (life) and gai (value). It is hard to find a literal meaning but it roughly translates to "the meaning of life". It stems from the understanding that the sum of small joys in everyday life results in a more fulfilling and meaningful life.

Ikigai is where the four primary elements converge: mission, passion, profession and vocation If managers see their vocation as their mission through which they can, as leaders, influence the development of the people they lead, as well as affect the wellbeing of the community through their organisation – they found their ikigai.

is converted into money so that a person can satisfy his or hers existential needs. The second economy, by contrast, is chrematistics – accumulation of wealth as an end in itself. Money is invested in goods with the sole purpose of earning even more money – hoarding money just for the sake of it. Aristotle warned that amassing money as an end in and of itself is an unnatural activity that dehumanizes those who practice it. All too often the concept of the economy is exploited to justify chrematistics.

The spirits of oikos, however, instills in an economy the rules of mutual respect, fairness, accountability and taking care of everyone.

Ubuntu: Relationships Based on Trust We influence ourselves and the people around us with our thoughts and actions, and our intention alone can infuse a moment with beauty or bitterness, open or close the doors of opportunity, create favorable circumstances or barriers, deepen a relationship or merely scratch at its surface.

As a synonym of building relationships, I chose the word ubuntu that comes from South Africa. It says that I am who I am because you are who you are. We become who we are as a result of our relationships with other people. The power of the word ubuntu was carried into the world by Nelson Mandela and Desmond Tutu who used it to foster forgiveness, thereby setting the foundations for connecting the black and white inhabitants of the South African Republic.

4 P‘s are reachable with practicing the timeless wisdom of indigenous people By linking the selected words aroha, eb, ikigai, oikos and ubuntu into the AEIOU of Leadership, we can also symbolically interconnect all the continents or the entire world; just as the interlaced Olympic rings united the five continents under the guidance of Pierre de Coubertin. The interlocked rings of the Olympic symbol represent coexistence, mutual respect and friendship among nations, from the five continents of the planet Earth, depicted in different colors. Blue is Europe, black is Africa, red America, yellow Asia and green Australia with Oceania. These are also the continents where from originate the words which convey the ancient wisdom of their first, indigenous inhabitants. The words aroha – love, eb – interconnectedness, ikigai – mission, oikos – responsibility for the well-being of all people, and ubuntu – relationships, together as AEIOU represent a universal collection of five dimensions for conscious leaders from around the globe.

Five different ancestral traditions, who survieved through time and across geography, are here and we can use them for the benefit of all.

The Four P’s – profit, people, planet, purpose - are reachable through practicing oikos, eb, ubuntu and ikigai. Leading with love, aroha, can make it happen.

Oikos: Responsibility for the Wellbeing of All People The word economy traces its origins back to the Greek language. It derives from the words oiko (house) and nomo (laws, rules). In his work Politics, Aristotle describes two kinds of economies. The first, or the actual one, is based on oikos. This is economics in relation with human needs, where people are producers because they require certain things in order to survive.

This is natural economics whereby a product Autumn Edition 2019 | The Slovenia Times

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International Business Partners

TOPIC:

Some economies are already cooling down, some analysts are even predicting an economic crisis for the next year. What are your forecasts and how should businesses prepare?

British – Slovenian Chamber of Commerce – BSCC

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Brexit is one of our main focuses. As the date of the UK’s exit from the EU (31st October) approaches, the British government is still working to negotiate a withdrawal agreement with the EU. On the other hand, a lot of effort is being put into contingency plans for a no-deal scenario to make this transition as frictionless as possible.

In the analysis of the consequences of different Brexit scenarios on the internal market and trade relations with the United Kingdom, published by the Slovene Ministry for Economic Development and Technology, the

impact for Slovenia may be relatively small. According to that study, Slovenia’s GDP may drop by about 0.03% in 10 years (hard Brexit) or not be affected at all in the case of a 'soft' Brexit.

Business needs certainty from the government on the future and, in the meantime, we advise companies working with the UK to prepare for a no-deal Brexit scenario by checking information at www.gov.uk. Companies exporting to the UK should be in touch with their local distributors to register through the simplified tariffs procedure.

In the longer term, the potential for trade and investment between the UK and Slovenia remains strong. The UK market remains the fifth largest in the world, the second largest in Europe and a place where the ease of doing business is one of the highest in the world.

We will continue to help Slovenian exporters to enter the UK market and continue building strong trade relations between Slovenia and UK. Our role in supporting British exports to Slovenia will be through various market visits from UK business. We will focus on attracting more investment from the UK to Slovenia. We continue to help Slovenian start-ups and fastgrowing companies set up in the UK and go global from there.

International Business Partners

The German-Slovene Chamber of Commerce and Industry – AHK Slowenien The German Economy Award 2019: from left to right - Uwe Miess, Unihem; prof. dr. René Schmidpeter, the World Institute for Sustainability and Ethics in Rising Economies; Gertrud Rantzen, AHK Slovenia; Dr. Bernhard Hauer, German Embassy Ljubljana

Germany’s real GDP growth rebounded tangibly from a near-recession in late 2018 to 0.4% in the first quarter of 2019. The normalisation of automotive sales had an appreciable effect across the board in exports, investment, private consumption and inventories. On the other hand, domestic demand is proving resilient and should support a recovery in the second half of the year.

Overall, real GDP is now forecast to increase by 0.5% in 2019 and by 1.4% in 2020, slightly less than expected in the spring. The stronger-

than-anticipated outcome in the first quarter explains the unchanged annual figure for this year, despite the downward revisions for the rest of the year. Economic activity will receive an additional boost of almost 0.4% in 2020, thanks to a significant working day effect. Core inflation (excluding energy and unprocessed food) is expected to stay unchanged in 2019 and marginally increase in 2020, driven by solid wage growth and consumer demand.

It is certain that the competition in the automotive industry in Slovenia will increase

because of long-term contracts and the legally defined minimum wage, this also applies to the cost intensity. This will reduce the profit, employment and the size of the investments. Our advice to Slovenian companies would be to pay attention to their efficiency, meaning the duration of the production and the whole process until the sale on the market. In addition, dispersion is key. Therefore, the companies should not depend on only one supplier. The education of employees is important to achieve greater added value and productivity.

Advantage Austria

170 participants, including executives of Austrian subsidiaries, investors, business partners and high-ranking politicians from the region, discussed on 15th and 16th May 2019 at AUSTRIA CONNECT Southeast Europe 4.0. in Bled - How Digitalisation is Shaping the Future of Business.

By Stefano La Croce, Deputy Director ADVANTAGE AUSTRIA Slovenia Austria’s economic growth is not unaffected by the current international downturn. After a long period of upsurge, the Austrian industry faces a decline triggered mainly by a drop in exports. Nevertheless, household consumption continues to rise robustly, supported by con-

stant employment and wage growth. Overall, economic growth in Austria is expected to slow to an annual average of 1.7% in 2019 (2018 + 2.7%) and to stabilise at 1.5% in 2020.

Austrian companies are still very competitive but they are not spared by negative international developments. If sales fall, companies need to find a way to reduce their costs. However, before reducing their workforce, companies should consider other measures. There

are no immediate signs of a global recession comparable to the 2008 economic crisis. When the next upswing comes, companies will need their highly trained and experienced employees again. It will also remain crucial to explore foreign markets which still show growth potential. ADVANTAGE AUSTRIA, Austria’s trade promotion agency, helps identify new export markets and find reliable business partners all over the world.

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Economy Business Partners International

Italian Trade Agency (ICE) The risks and the worries concerning the global economy - rising debt levels, slowing GDP˝growth, USA-China trade war, with China facing a possible economic deceleration in 2020 - are eroding confidence and investment.

All these factors, as recently pointed out by the OECD, may have strong repercussions and endanger future growth prospects. Slovenia had solid growth in 2018 and with its real GDP growth of 4.1% was among the fastest-growing economies in the euro area, but a slower export demand would affect both exports and business investment, leaving domestic demand as the main driver of growth. The cycles of expansions and recessions are, of course, alternating throughout history and the growth

boost from the previous years is indeed cooling down, nevertheless a severe fear of a new, deep recession in Slovenia might be too pessimistic.

The indebtedness of the Slovenian economy is much lower than before the last crisis. In such Chamber of Commerce Luxembourg selected LSBC for the b2fair Business Award for constant support in building partnerships.

Luxembourg-Slovenian Business Club (LSBC)

By Iztok Petek, Nataša Zajec We are all aware of the fact that economic growth is not a linear but rather a cyclical phenomenon. Experience shows that, for some companies, crisis is an opportunity to stand out.

Some think that those processes are so inevitable that the next crisis is even predictable. This is why we should not be surprised but prepared. In LSBC we are noticing that in the times of crisis, enterprises are more proactive when looking for new opportunities and are more keen to accept LSBC’s innovative strategies. However, we have all learned that internationalisation is most effective in the long run. Usually, it takes years for productive partnerships to begin and trust cannot be built overnight. LSBC has always been advocating sustainable growth over profit for every price, but it means investing time and money to build up a strong network.

Following the above belief, we have, after many years of persistence and lobbying, managed to convince the Luxembourg Chamber of Commerce to bring a delegation of Luxembourg companies to Slovenia. The delegation visit will happen in December 2019. This will be a fantastic opportunity for Slovenian companies to establish close connections to one of the world’s major business hubs – Luxembourg.

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a situation, companies should consider competitive repositioning: flexibility, innovation and diversification of financial resources, and customers are among key factors to minimise many potential risks.

International Business Partners

Slovenia

increasingly attractive for foreign investors

American Chamber of Commerce – AmCham Slovenia

The 5th Investment and Development Conference Slovenia Business Bridge, organized by AmCham Slovenia in Ljubljana, brought together 500 businessmen, investors, government representatives and diplomats from all over the world.

The attendees at the conference agreed that Slovenia is becoming an increasingly attractive country for foreign investors. On the sidelines of the conference, AmCham also celebrated its 20th anniversary.

The conference started with the business breakfast discussing challenges of management of family companies, and continued with a panel discussing strategies by investors.

The event was opened by the Slovenian Minister of Economic Development and Technology Zdravko Počivalšek, who emphasized that "as many as 83% of Slovenian companies, especially small and medium-sized enterprises, are family-owned enterprises". He also pointed to the "precious entrepreneurial know-how" which was passed from one generation to another in family companies. With that in mind, added Minister Počivalšek, "the country will continue to have an ear for family-owned businesses."

One of the greatest challenges they face is investments, as sooner or later it will be hard to maintain growth without external capital injections, while the entry into ownership by third persons frequently leads to changes in management, he added.

The business breakfast saw the panellists conclude that family businesses represent an important part of global economic growth, and that their growth is not incompatible with the commitment to fundamental values.

Challenge: Staying true to the values Weiler Corporation general manager Chris Weiler said that enabling appropriate growth while staying true to the fundamental values

was indeed a challenge. This may be done with the correct selection of partners and by checking whether the values are reflected in acts, he added.

Staying true to the fundamental values does not mean that someone who is not a family member will never be the general manager, he said, adding that he did not have the right to stay at the helm of the company for good.

Gregory Ingram of the investment management company KGAL said that sometimes decisions which were not to everybody's liking, but which brought results ten years, must be made. One always needs to think longterm and take care of employees this way, he added.

Tomislav Perović of Rothschild Global Advisory agreed that a family company could also be well managed by external staff, but warned that the generation gap was one of the greatest challenges for successful transformation of such companies.

Also focusing on the issue of inheritance was Miha Žerko of the technology company SRC, who said, based on his personal example, that the initial alienation of the "family member" from the family company could be key for success.

"Had I not taken a different business part for a few years, I would not be able to successfully take over the family company later. You have to prove yourself that you can succeed on your own," he concluded.

Satisfied foreign investors A number of successful investment stories were presented at the conference. "I'm very happy with the investment, which has doubled," said Michal Kedzia of the Polish fund Enterprise Investors, the owner of the sports goods retailer Intersport. Also satisfied is Andrea Moneta of the US fund Apollo, which acquired the NKBM bank in 2015 and the Abanka bank this year. "It was a lot of work, but the result is very good," he said, adding that the fund was thinking about investing in other industries in Slovenia.

Ajda Cuderman, the director of the SPIRIT public agency for investment promotion, the partner of the conference, noted that the value of foreign direct investments had doubled in recent years, standing at EUR 15.1 billion last year.

"The existing investors see a lot of opportunities for increasing the volume of business in our country," she said, adding that she believed that educated and trained staff was the biggest advantage for Slovenia. But this is where foreign investors actually see the biggest weakness. »Availability of qualifies workforce and too high taxation of wages,« said Kedzia when asked what were the biggest disadvantages of Slovenia. Slovenian Finance Minister Andrej Bertoncelj agreed that taxation of labour in Slovenia is too high, and announced further tax policy changes in 2020.

Source: STA

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Active Lifestyle Economy Today, however, we can run on it and experience very special nature.

The Karst Edge Run By mag. Jasmina Kozina Praprotnik

An Invitation to run from Zazid to Rakitovec and back on the Karst Edge The Karst edge is a landmark between the Mediterranean and continental Slovenia. On its southern side there lays Istria, on its northern side are Karst, Brkini and Čičarija. It is an extension of the Alps, which goes from the Italian Devin above Trieste, through Slovenia and finishes before the Croatian port town of Rijeka. The Edge is up to 500 metres high and has several shelfs. Its edges are made of limestone, its steps are fertile plains. It has several peaks, including Slavnik and Žbevnica. The highest peak is at the end of the edge: Mount Učka, which rises from the coast to an altitude of 1400 metres above sea level.

As a natural border that is difficult to pass, it was also suitable as a political border. In the past it was the dividing line between the Patriarchate of Aquileia and the Habsburg Monarchy, later between the Venetian Republic and the Austro-Hungarian Monarchy.

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A pleasant starting point for the run is the village of Zazid, which lies at an altitude of 387m. The village has old names - Xaxid, Saxetum, Villa Saxida, dating from the Greek and Roman periods. Cicero wrote: Saxetum locus saxosus - Zazid, a stone place. The village was surrounded by a defensive wall in the Middle Ages, so the name Zazid was originally derived from the meaning of the village behind the wall. From Zazid we head to Rakitovec, which is - 5 kilometres away - the last village in this part of Slovenia. The Rakitovec railway station is also the last Slovenian stop on the Kozina-Pula route and is here often dug into solid karst stone. Just a few steps on there is the Slovenia-Croatia road border crossing. In the centre of the small village there is muddy water and maybe it was because of that water that they built the village here. In these germs the watertight layer retained water even during the dry summer months. In the village there are some interesting houses with a characteristic wooden balcony - baladur and a typical bulging extension, above which is a chimney.

We continue through those houses and up to the Karst Edge. On our seventh kilometre, the macadam trail will lead us to the Kavčič and Lipnik hills, where the landscape is something special. From some points it could be quite similar to that on the moon. Interesting hills invite us to conquer them and enjoy an even more beautiful view, but we can also immediately run along the softly laid path on the shelf of the Karst Edge back towards Zazid. This unusual land is difficult to describe, the best is to experience it, smell it and feel it under our feet, all 14 kilometres that are offered to us this

time, or more, if we choose to climb up towards Kavčič and Lipnik.

After lunch in one of the very tasty local restaurants I recommend a visit to Hrastovlje, which is well know because of its Holy Trinity Church, whose interior is all painted with famous frescoes, the most prominent of which is the mortuary dance. The message of the fresco is that we are all equal before death. How true, but until then it is all up to us how to make our life more or less satisfying and interesting.

Not far from the church stands a statue of an Istrian woman. The sculptor, Jože Pohlen, made it on the occasion of the 500th anniversary of the creation of the frescoes (1492 - 1992).

The woman is called Šavrinka and she has a load on her head, a basket of produce she was bringing to sell in Trieste. Despite the baskets weight, or precisely because of it, she walks upright, as if she had a city lady’s hat on her head.

She walked a long way, and was thus strong, enduring, courageous and wise: in Trieste she learned languages and trading skills. Along with the earnings she brought urban habits and culture to her village home. From that grew her confidence and determination. Let’s step on some of her paths, as she, undoubtedly, sometimes also runs on them.

How to get to Zazid?

Leave the coastal highway at the Črni Kal exit and drive along the former main road towards Koper. After about 1 km you will reach the Y intersection. Turn towards Pula here. After 500 metres turn left, there will be signs for Zazid and other places through which you will drive (Predloka, Loka, Bezovica, Podpeč). Take the local narrow road for about 7 km through these places and reach Zazid. Park before the village sports park.

Sport

Slovenia welcomes its latest sporting heroes Commenting on Slovenia winning another silver at the European Volleyball Championships, the Slovenian media note that the latest success completes the picture of a small nation with a major sport potential, and that Slovenia is undoubtedly a sports phenomenon.

Photo: Anže Malovrh/STA

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In the commentary daily newspaper "Delo" notes that the statistics on the medals won at major tournaments suggest that Slovenia is losing a very small share of its sport talent.

"The objective that talents do not fall through the cracks should be a general national objective.

Not only in sport but in education, science, development, business and art as well."

The paper adds that people show respect to the national volleyball team, to athletes who have showed collective intelligence and precise anticipation of where danger comes from.

"There is no room in volleyball for superstar narcissism, because only intelligent hard work and sacrificing oneself for the success of the team counts."

Delo adds that the president’s initiative to celebrate a national sports day will now be on the agenda, noting that it is coming from the political arena, the arena where the most of the talent gets lost.

"There are no average ones on the winning podium in sport. In Slovenian politics there are," the Ljubljana-based paper concludes.

The Maribor paper "Večer" meanwhile says that Slovenia is undoubtedly a sports phenomenon, with the crossroads of the Alps, Balkans and Mediterranean being self-confidently written on the global sports map.

The small size does not limit Slovenia any more, and it actually can be an advantage, because there is no imperative to win, while if you succeed, you become the hero of the entire nation.

"If there is anyone left who would like to underestimate the importance of sport, as if it is only a game, the past few days were the proof that there is no better glue to bring the nation together," the paper concludes.

Slovenian government will award men’s national volleyball team with a EUR 50,000 grant since it considers the medal to be an exceptional sports achievement.

"The men’s volleyball team’s silver medal won at the European Championship is one of the exceptional achievements in sports which promote Slovenia in the world and enable the country to showcase itself in tourism and economy," the government said.

Source: STA Photo: Tomaž Bregar/STA

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Experience&Lifestyle Slovenia

Photo: Marijan Močivnik

Cruising the vineyards, filling bucket after bucket…

It’s harvest time!

By Tonja Blatnik

In Slovenia, self-sufficiency in wine was 91% last year, with an average consumption of 33 litres per citizen. We are obviously nation of wine-makers and wine-lovers - and the harvest is without doubt the most special moment in this story.

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Imagine yourself wearing with a hat, holding a pair of scissors and a basket in your hands.

Taking your position in charming vineyard where the interplay of soil and climate seems simply perfect for the wine. But not any kind of wine – you, being part of the team – strive for the idea that only the best is good enough.

The formula is rather easy. The best wines trace their origins to excellent grapes and rich soil, an enthusiastic and knowledgeable winemaker with a courageous vision and many, many helping hands which is especially important at the time of the harvest. Unlike elsewehere in the world, in Slovenia most harvests are still manual. "The increase in machine harvesting is significant, but the share is still small, under 20% of all vineyaeds," stresses Matjaž Lemut, TILIA estate – House of Pinots. It is interesting, however, to note that it is becoming more and more present with the smaller winegrowers, who hardly organise harvesting during the week with the free labour of acquaintances. All participatns are aware that harvesting is also hard work, more enjoyable however, in higher quality vineyards where the winegrowers take care of the quality, improving the health of the grape clusters, taking care that at harvest time they are open and bright spot. "In such circumstances, a good harvester can harvest over 500kg in eight hours," claims Lemut, and adds that nowadays the usual workload is four to six hours.

Experience&Lifestyle Slovenia Slovenian hands-on harvest experience Taking an active part in a harvest has a deeprooted tradition in Slovenia and it is probably the most recognisable social work that has survived in the countryside. Very much like mowing, harvesting corn, picking and tapping corn, preparing firewood for the winter… Many tasks have has been replaced by machinery, but the grape harvesting tends to minimise damage to the crop due to its sensitivity to the later quality of the wine. Hand picking is still very much appreciated. In larger vineyards, friends and acquaintances, traditionally enlisted to help, are now replaced by hired seasonal labour, while in smaller vineyards the harvest represents a special social gathering, taking place during the weekend. Lemut estimates that, "at least 40% of Slovenian vineyards are probably still harvested in such an way. While the final part of such a social occasion is the coming together again on St. Martin’s Day, when the winemaker usually invites the harvest workers to praise the new wine."

Slovenia, argues that the true winegrower recognises the way nature works in a given year.

"You try to identify with nature, not fight it." 2019 was unpredictable, with multiple-face changes, however nature has allowed a fairly calm and predictable harvest. Also wine growers in Brda, another famous wine growing district in Slovenia, are satisfied with this year’s grape harvest, despite the overall numbers being lower than expected, the wine is expected to be of excellent quality.

Also wine tourism is taking an important part, the grape harvest season is the most exciting and rewarding time to plan a wine tour.

Wineries come to life. Being empowered by their rhythm, with your hands on the grape, brings a very unique pleasure. The "final countdown" is coming together again, on St. Martin’s Day, November 11th, when the winemaker invites the harvest workers to praise the new wine. After all, the quest for meaning in life can be tiresome. But perhaps there is more simplicity that we seek? Drinking good wine, with good food in good company could rank highly. Perhaps re-listen to the song Shallow by Lady Gaga and Bradley Cooper, "…are you happy in this modern world?" Sometimes, traditions are not to be forgotten, nor modernised.

2019 promises excellent wine This year harvesting, as always with most Slovenian winegrowers, began in late August or early September. Lemut, whose estate lies in Vipava Valley, the fertile and wine-rich part of Photo: Marijan Močivnik

Autumn Edition 2019 | The Slovenia Times

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Experience&Lifestyle Slovenia

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New environment-friendly LPP buses in Ljubljana

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One of the sustainable measures of the European Mobility Week in Ljubljana this year is the acquisition of 33 new environment-friendly LPP buses.

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The fleet of the public company Ljubljanski potniĹĄki promet has increased by 17 single lowfloor buses and 16 single suburban high-floor buses. With the acquisition of the new buses we are increasing our capacities in the morning rush hours which is especially important for the busiest lines on which the new buses are going to operate.

The Mercedes Benz Citaro NGT Hybrid buses have an engine using natural gas as fuel and, in addition, an electric engine. These are

We have also reinforced the suburban passenger traffic fleet with new buses. Among them there are three 15-metre Setra S 419-UL buses and thirteen 12-metre Iveco Crossway Line buses. Both bus types use diesel as fuel and have the EURO VI engine.

The arrival of new buses is a solid step on the path to a comprehensive renewal of the LPP fleet. With modern buses using natural gas as fuel we are increasing the quality of urban life in Ljubljana, as we are reducing noise levels and making air cleaner.

The Slovenia Times | Autumn Edition 2019

the so called "soft" hybrids, namely, as they are slowing down, the electric engine acts as an electric power generator. When the bus drives off from the station, the electric power from the capacitor starts the electric engine which supports the classical gas engine. The buses are distinguished by low fuel consumption, which means lower emissions of CO2 and other harmful gases produced during combustion. They are equipped with state-of-the-art systems which are built into such buses.

Experience&Lifestyle Slovenia

Together for Ljubljana, European Capital of Culture 2025

On 13 September 2019, we signed a Cooperation Agreement for a joint project, namely, the candidacy of the City of Ljubljana for the title European Capital of Culture 2025 (ECC 2025), in which 26 municipalities in the Ljubljana Urban Region are participating.

The agreement is a result of great cooperation and relationships between mayors in the Ljubljana Urban Region.

The signed agreement is the cornerstone of the first pillar of the European Capital of Culture, and a successful execution of the project will have a positive result on the whole region, not only on the development of culture but also of other areas closely connected to culture.

all mayors in the region are unanimous in every decision, even at confirming the conclusion on the joint candidacy for the title Ljubljana, European Capital of Culture.

The signing of the cooperation agreement between municipalities of the Ljubljana Urban Region means that Ljubljana’s candidacy for the title ECC 2025 enjoys wide and strong support and a strong commitment of all municipal bodies within the region.

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Strong support for the candidacy At the signing of the agreement, Mayor Zoran Janković underlined the great cooperation between municipalities in the Ljubljana Urban Region which shows that the Central Slovenia Region is connected in terms of existence and development. He expressed his pleasure that

Continued good cooperation with Moscow This is the continuation of good cooperation between Ljubljana and Moscow based on the Protocol of Friendship and Cooperation between the cities signed in 2000.

In the Programme of Cooperation for 2019– 2021 we defined following priority areas of cooperation: city administration and economy, science and entrepreneurship, culture and art, tourism, sports, education and social protection of citizens.

In the Programme of Cooperation we came to an agreement to carry out Ljubljana Days in Moscow in May next year and set other bilateral forms of cooperation between the cities.

Within the scope of the visit Mayor Zoran Janković also attended the unveiling of the monument for Slovenes fallen on the Russian territory during the First and Second World War at the Victory Park in Moscow.

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On 10 September 2019, Mayor Zoran Janković and Mayor of Moscow Sergey Sobyanin signed the Programme of Cooperation between the Government of Moscow and the City of Ljubljana for 2019–2021.

Photos 1 Tekst; Photo by Nik Rovan 2 Tekst; Photo by Nik Rovan 3 Tekst; Photo by Nik Rovan 4 Tekst; Photo by Maksim Mišin

Autumn Edition 2019 | The Slovenia Times

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Experience&Lifestyle Slovenia Slovenia has been an independent country for less than 30 years, it was previously a part of Yugoslavia when tourism focused on mass tourism.

In those times it was probably the only possible way to earn a living from tourism When the industry was an important part of the national economy and job creation. With independence, the country soon realised it could not continue with mass tourism, which it had being successfully doing for the previous 30 years. It is obvious that to makei the huge change from mass tourism to boutique tourism that also focuses on sustainability takes a lot of time and resources.

and personal service in a high quality and sustainable environment. In addition, guests expect innovative solutions where gastronomy plays a vital role.

Meeting and incentive travel has not been overlooked in the new strategy. International clients organising meetings and incentive travel are constantly seeking new countries and destinations that offer boutique services and experiences with more and more emphasis on sustainability. It is fortunate that Slovenia is still perceived as an emerging and new country for international meeting and incentive planners.

Although Slovenia is relatively small in geographic size, it has a rich and diverse offer, it can be said that the Slovenia is a big natural park where tidiness and cleanliness play an important role. Foreign guests will find three geographic and three climate regions, but also three wine regions, all on a small piece of land with thousands of years of history. In addition, hospitality is written in the DNA of a Slovenian.

Slovenia is an amazing country for meetings and incentives. Four experience regions, containing 34 major destinations, offer endless

Slovenia is an amazing country for meetings and incentives. Four experience regions, containing 34 major destinations, offer endless opportunities for boutique experiences. A great advantage in Slovenia is that visitors can easily combine two or even three geographic regions in one program.

Slovenia boutique destination for five-star experiences

By Miha Kovačič

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The Slovenia Times | Autumn Edition 2019

We are fortunate that the current national strategic vision for tourism is "A global green boutique destination for demanding guests who are seeking a diverse and active experience, peace of mind and personal benefits". For the first time, the national government’s tourism document contains the word "boutique", enabling the national tourism organisation to start promoting Slovenia as a boutique destination. People that work in Slovenia’s tourism industry know very well that it will take a lot of time before Slovenia will truly become what is stated as the strategic vision in the national tourism strategy. It is important for the country and the ndustry that the government has recognised that this is the right direction for the development of tourism in the country. The Slovenian tourist board is taking the right steps by identifying boutique tourism products and actively promoting them on the global market, encouraging others to follow this path with both brown and green field investments. We already have great and successful stories in different parts of Slovenia. including several glamping locations in different areas of Slovenia, Hotel Cubo, Nebesa, Pule Estate, Lepa Vida, Dobra Vila, Vila Planinka, Sunrose 7 and many others.

It is also necessary to understand that boutique destinations must not only provide great boutique hotel experience. Guests seeking a boutique experience expect to get premium

opportunities for boutique experiences. A great advantage in Slovenia is that visitors can easily combine two or even three geographic regions in one program. Not many destinations have this possibility. Slovenia does not only have a great offer in the capital and developed tourism destinations, there are amazing boutique products and experiences in all parts and corners of the country. Most experiences are closely connected with the local environment and cultural heritage. From the mystic Alps to the wine regions, the magical Karst, the Mediterranean, the lowlands, Styria, Carinthia and Prekmurje.

The definition of incentive travel by SITE (Society of Incentive Travel Excellence) is "Incentive travel is a global management tool that uses an exceptional travel experience to motivate and/or recognise participants for increased levels of performance in support of organisational goals".

An exceptional travel experience can also be understood as a boutique experience. Incentive travel planners are constantly looking for boutique experiences that incentive travel participants have not experienced before and that it is not possible to buy on the market.

One of the global trends in incentive travel, according to SITE, is authenticity. Slovenia, with its rich cultural heritage and boutique offer in all parts of the country, proposes genuine and authentic experiences that are exceptional and cannot be experienced elsewhere.

Experience&Lifestyle Slovenia

6th SALON OF DECANTER AWARD WINNERS 2019

Wines, that made it to the top

By Tonja Blatnik

The Decanter World Wine Awards (DWWA), the brainchild of legendary British wine expert, Steven Spurrier, is the world’s largest and most influential wine competition. In September, the 6th Salon of DWWA took place in Brdo, where wine-lovers were able to taste wines from 42 winemakers from Slovenia and the surrounding regions, and over 100 Decanter award-winning wines.

The wine business, where all of our senses are stimulated, seems to be a charming detour from the oh-so-boring business arena. At first sight! Despite all of its obvious charms, it is a business as all others. The world of wine is no less cruel and competitive, and the way to the very top is just as hard to reach. For example, this year close to 17,000 wines competed for Decanter World Wine Awards, and only 148 wines were awarded with a Platinum medal and 480 with Gold! Thanks to Robert Gorjak,

owner of the Belvin wine school, wine lovers from Slovenia had a great opportunity to 'enter the room of medals, where each and every wine got a Decanter medal'.

"The goal of the Salon was to show the importance of achieving a Decanter medal around the world and how this can positively affect tourism and the eno tourism of Slovenia," stressed Michela Nassiz, Account Manager at Decanter Media Brand for Italy, South Africa, Slovenia, Georgia, Bulgaria, Israel, Jordan, Egypt, who opened the ceremony. Decanter is the market leader, known as the worlds 'best magazine' available in 99 countries, with total circulation of 41,000 hard copies, and also a wineauthority that runs the world’s largest wine competition – the so-called Decanter World Wine Awards (DWWA) with over 280 judges.

One of them is also Gorjak, the first Slovenian, who took over this respected function in 2005.

Gorjak comments that he is truly happy to gather an impressive number of wineries (42!) from North Macedonia, Serbia, Montenegro, Bosna and Hercegovina, Croatia and Slovenia for the occasion of the 6th Salon. "We have further augmented the value of the Decanter awards and awarded wines. Wineries can be really confident to display their awarded wines as the quality was recognised be highly competent judges, some of the best in the industry."

ernet Franc blends," says Nassiz. And what is her advice for Slovenian winemakers? "Travelling and investing to promote a single brand around the world is very expensive and mostly impossible for small wine producers, but if you have the right support of the local authorities and the government, and the most important element, the possibility to invest together to highlight the same territory, that is the key of the success."

Wines from the Balkans are heaven for open-minded wine lovers The special part of the 6th Salon was a workshop titled Pearls of Balkan – Surprises or Reality, led

by Igor Luković from Serbia. Gorjak stressed that, "the wines of the Balkans, no matter the definition, is a rather vast area with huge geographic and climatic versatility." If we add several dozens indigenous grape varieties and very importantly, ever improving winemaking practices, what more would you ask for? "I firmly believe that most wine-lovers start with local wines (if they exist), and then go to the classics. Would you stop there? If one is really curious, the Balkans has many truly exciting wines to offer."

Wine tourism is growing on a global scale The well-organised event highlighted the established quality of the awarded wines. The presence of local authorities was fundamental as well. Dr. Aleksandra Pivec, Minister for Agriculture, Forestry and Food, stressed that winemakers are ambassadors of quality.

"Slovenia has all the conditions for wine business on a high level, and our Ministry offers a hand in order to improve the future position in the global wine industry." Michela Nassiz, who has been in the wine and spirit industry for 23 years, is convinced that wine tourism is vital for the winery business. "Slovenia has potential in this industry because is a beautiful country. It is known for the high quality wines and the great respect for the territory with the distinct and exciting wine production areas, stunningly beautiful hilly vineyards envied by many."

The right marketing campaigns through the right marketing tools will improve massively the Eno Tourism. For example, 81% of Decanter readers are wine-travellers and they appreciate our Travel Guide inserts. "They know Slovenia for its white wines: like the well-known Rebula from Brda, for its versatile styles (maceration, amfora,) Furmint from Stajerska, and are also aware of the Chardonnay, Malvazija and for the tradition to blend white wines. But we know, as well, the Teran (Refošk) in Carso area and the Cab-

List of wineries presented at Salon

Autumn Edition 2019 | The Slovenia Times

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Events

Halloween in Kranj When: 25. 10. 2019 - 31. 10. 2019 Where: Kranj In the last days of October both children and adults can try their courage in the tunnels beneath the old town of Kranj! Between the 25 and the 30 of October, a fairytale world emerges there and it is only visible to children.

In the dark tunnels, they can experience magical adventures, with which they can overcome their fears and much more. Much more horror will come to the tunnels on 31 October, when are opened to adults. Dark shapes will be wandering through them and lurking behind corners. Do you dare to take this walk through the tunnels?

Taste Radol’ca When: 25. 10. 2019 - 01. 12. 2019 Where: Radovljica The range of cuisine in Radovljica and its surroundings has long been regarded as topquality and genuinely local. Taste Radol’ca restaurants use locally-produced ingredients to create typical Gorenjska dishes. In the green woodlands and countryside healthy produce is grown, which talented chefs incorporate into exceptional dishes inspired by local tradition.

Taste Radol’ca restaurants can be recognised by the sign on their entrances, whilst local dishes are marked in their menus by a small printed Radol’ca bee. Taste Radol’ca chefs take their inspiration from the environment in which they grew up. In places, the traditional method of preparation has been preserved, whilst elsewhere traditional dishes are given a make-over and are revived in a unique way.

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The Slovenia Times | Autumn Edition 2019

24th Volkswagen Ljubljana Marathon When: 26. 10. 2019 - 27. 10. 2019 Where: Ljubljana The Volkswagen Ljubljana Marathon has become well-known as a running and sporting event. Every year the streets of the capital Ljubljana are flooded by runners. The numbers show that the interest in this type of recreation and socializing has been increasing. Every year the organizers, of the Volkswagen Ljubljana Marathon try to do their best. New records and increasing numbers of the participants are quite telling in this sense.

The two main races held as part of the event, a marathon (42km) and a half marathon (21km), are accompanied by recreational runs of varying lengths and degrees of difficulty, a half-marathon inline skating race, and a half-marathon handcycling race so that over the event weekend, runners of all ages are able to find something suitable for their fitness level.

The Ljubljana Marathon, founded in 1996, attracts massive numbers of runners to the streets of Ljubljana in late October each year and it continues to grow in popularity. While originally it was mainly intended for the local runners, it soon grew into an internationally recognized competition.

Wine Route in the Tunnels under the old town of Kranj When: 08. 11. 2019 - 16. 11. 2019 Where: Kranj Winegrowers from Slovenian winegrowing regions and culinary delights await you in the tunnels under the old town of Kranj. So far, over 130 different wine producers have already presented themselves here. The variety of excellent wines is well complemented by cheese, pastries and meat products. There is also an entertainment program and live music. In addition to this the participating wine-growing regions will also present their tourism, their gastronomic specialties and their culture. Each year, the event attracts more than 4.700 lovers of fine wines. Since both visitors and restaurateurs were interested in celebrating St. Martin’s Day a little while longer, we decided to organize the event on two weekends: Friday, the 8th, and Saturday, November 9th, and Friday, the 18th, and Saturday, the 16th of November.

November Gourmet Ljubljana When: 02. 11. 2019 - 30. 11. 2019 Where: Ljubljana Taking place at an exclusive venue, the final event of the festival, scheduled for the last weekend in November, will give a new dimension to the Taste Ljubljana brand and will include a spectacular cooking show.

During the festival month, the Taste Ljubljana Culinary Tour, the Ljubljana Wine Experience, and the Beer Lover’s Experience of Ljubljana organized by Ljubljana Tourism will be complementing the event programme.

You can soak in the atmosphere of this culinary-themed November in selected restaurants offering the November Gourmet menu with locally-sourced dishes, typical of the season around the Feast of St. Martin, and great wines from Slovene winemakers.

Slovenian Wine Festival When: 14.11.2017 Where: Ljubljana, Cankarjev dom (cultural and congress centre)

St. Martin’s Day - Jeruzalem Slovenija celebrate When: 08. 11. 2019 - 11. 11. 2019 Where: Ormož In the month of October, harvests come to end, and in the first days of November, our region literally comes alive. To us, St. Martin’s Day is the biggest local holiday, it is bound up with tradition, viticulture and wine-making, it is connected to gratitude and happiness for everything we produced and experienced during the past year. The most wonderful thing is we can share this joy with you, visitors from far away. In the display of the customs and traditions, including humour and hilarity, you will come to know our character–the character we inherited from our ancestors that makes us who we are.

Slovenian wines are not commonly known in all parts of the world, but thanks to their diversity and excellent flavours, they attract a lot of attention wherever they are exhibited.

The premium wines presented at the Slovenian Wine Festival are available for tasting to anyone, from connoisseurs, experts, and traders to the general public.

Visitors to the festival include members of the hospitality industry, hotel and restaurant staff members in charge of wines, businessmen, journalists, traders, wine bar owners, winegrowers, winemakers, sommeliers, oenologists, members of winegrowers’ and winemakers’ societies, wine fraternities and other wine-related associations, wine knights and wine queens, and other lovers of fine wines.

The march of the Parkeljni (devils) When: 24.11.2017 Where: Podkoren, Kranjska Gora

St. Martin’s festival in the Karst When: 10. 11. 2019 Where: Štanjel, Sežana St. Martin’s Festival is known for entertainment, culinary exploits and, of course, tasting of Karst wine varieties. There is a hop-on-hopoff bus service that takes you from one open wine cellar to another. The tasting of young wine and excellent Karst dishes will surely amaze every visitor to this special culinary event.

During St. Martin’s Festival, you can find a rich culinary offer in many farms along the Karst Wine Route and an interesting programme is also awaiting you in Sežana and Štanjel.

LIFFe Ljubljana International Film Festival When: 13. 11. 2019 - 24. 11. 2019 Where: Ljubljana, Cankarjev dom (cultural and congress centre)

So many Parkeljs from all sorts of places you have never seen. An increasingly popular event, named by organizers The Hike of the Parkelj (Krampus) of Three Lands/Fire spectacle in Podkoren, is expected to become a real festival.

The Parkeljs are mythical creatures, terrifying black men, going from house to house, frightening children. It originates from pagan times, when these evil spirits became companions and helpers of St. Nicholas: in accordance with Christian values, the saint rewarded the good children, and Parkelj (Krampus) frightened the naughty ones.

This rich and interesting tradition was turned into a proper event, slowly growing into a real international festival of Parkelj (Krampus).

Slovenia’s biggest international film festival comparable to some of Europe’s main film showcases features outstanding achievements in global cinematography and major festival prize-winners (Cannes, Rotterdam, Berlin, Amsterdam, Vienna, etc.).

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BEYOND AI: HOW NEUROSCIENCES AND BIOLOGY WILL CHANGE OUR WORLD AND HOW LEADERS SHOULD GET PREPARED FOR IT

Dominique Turcq World Renowned Expert in Neuroscience and Artificial Intelligence November 8, 2019 Annual International Presidents’ Forum IEDC-Bled School of Management

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