Slovakia to feel most pain from Trump car tariffs

The carmaking sector has a 44 percent share of Slovakia’s total industrial production and 35 percent of its exports. (AFP)
Updated 01 July 2018

Slovakia to feel most pain from Trump car tariffs

  • Slovakia boasts Germany’s Volkswagen — the country’s biggest private-sector employer — France’s PSA and South Korean Kia along with more than 300 automotive supply companies
  • Carmakers based in Slovakia have so far declined to comment on possible US tariffs

BRATISLAVA, Slovakia: As the world’s largest per capita car producer, Slovakia stands to be hit hardest if US President Donald Trump makes good on his threat to impose a 20 percent tariff on cars imported from the EU, analysts say.
Trump’s threat was the latest salvo in an escalating trade war that saw the European Union slap duties on US-made jeans and motorcycles in a tit-for-tat response to US tariffs on European steel and aluminum exports.
The specter of US tariffs that sent shares in Fiat Chrysler, Daimler and BMW tumbling on European stock exchanges also spooked Slovakia’s automotive sector.
It boasts Germany’s Volkswagen — which is Slovakia’s biggest private-sector employer — France’s PSA and South Korean Kia along with more than 300 automotive supply companies.
All told, they generate over 300,000 jobs in the eurozone country of 5.4 million. Jaguar Land Rover will also open a new plant in September.
This makes Slovakia the EU’s leading car and car part exporter to the United States in terms of share of GDP — and the most vulnerable to tariffs.
“The ratio of overseas car exports to Slovakia’s GDP is significantly the highest among all countries of the EU, with it being up to 1.7 percent,” the Slovak Institute for Financial Policy (IFP) said in a study.
“An increase in customs duties on car imports would have the biggest impact on Slovakia,” it concluded.
As the only Slovakia-based carmaker that exports directly to the US, Volkswagen — and its many local suppliers — will suffer the most should US tariffs be slapped on the high-end Touareg, Audi Q7 and Porsche Cayenne models produced at its Bratislava plant.
Overall, the carmaking sector has a 44 percent share of Slovakia’s total industrial production and 35 percent of its exports.
Last year, 1,001,520 cars rolled off assembly lines in Slovakia and exports were worth €3.7 billion ($4.3 billion).
Annual production has exceeded one million cars in each of the last three years and is forecast to grow by more than a third by 2020.
A 25 percent tariff on cars could cost Slovakia approximately €90 million, according to IFP calculations.
Tariffs would “definitely pose a challenge for Slovak carmakers reaching out to customers in the United States,” Jan Pribula, Secretary General of the Automotive Industry Association of the Slovak Republic (ZAP), said.
Slovak Economy Minister Peter Ziga has said that Bratislava would rally for unity across the EU in the interests of keeping the car sector tariff-free.
Carmakers based in Slovakia have so far declined to comment on possible US tariffs.
“As these plans are only speculations, we will not comment on them,” Volkswagen Slovakia spokesman Michal Ambrovic said.
The German company’s Slovak operation produced 361,776 cars last year, and 99.7 percent of its production was exported, with 20 percent to the US, according to an internal report made available to AFP.
Groupe PSA Slovakia, maker of Citroën C3 and Peugeot 208 in Trnava, also declined to comment on the tariff impact, but spokesman Peter Svec did say that its plant does not sell to the US market.
PSA produced 335,296 cars in 2017, 91 percent of its production was sold to customers EU countries, according to the company annual report.
KIA Slovakia spokesman Andrej SaHajj also confirmed that sales of its vehicles are restricted to Europe.


Saudi energy giant to invest $3bn in Bangladesh’s power sector

Updated 22 October 2019

Saudi energy giant to invest $3bn in Bangladesh’s power sector

  • Experts say deal will usher in more economic and development opportunities for the country

DHAKA: Saudi Arabia’s energy giant, ACWA power, will set up an LNG-based 3,600 MW plant in Bangladesh after an agreement was signed in Dhaka on Thursday.

The MoU was signed by ACWA Chairman Mohammed Abunayyan and officials from the Bangladesh Power Development Board (BPDB), officials told Arab News on Monday.

According to the agreement, ACWA will invest $3 billion in Bangladesh’s energy development sector, of which $2.5 billion will be used to build the power plant while the rest will be spent on an LNG terminal to facilitate fuel supply to the plant. Under the deal, ACWA will also set up a 2 MW solar power plant.

In recent months, both countries have engaged in a series of discussions for investment opportunities in Bangladesh’s industry and energy sectors. 

During the Saudi-Bangladesh investment cooperation meeting in March this year, Dhaka proposed a $35 billion investment plan to a high-powered Saudi delegation led by Majed bin Abdullah Al-Qasabi, the Saudi commerce and investment minister, and Mohammed bin Mezyed Al-Tuwaijri, the Saudi economy and planning minister.

However, officials in Dhaka said that this was the first investment deal to be signed between the two countries.

“We have just inked the MoU for building the LNG-based power plant. Now, ACWA will conduct a feasibility study regarding the location of the plant, which is expected to be completed in the next six months,” Khaled Mahmood, chairman of BPDB, told Arab News.

He added that there are several locations in Moheshkhali, Chottogram and the Mongla port area for the proposed power plant.

“We need to find a suitable location where the drift of the river will be suitable for establishing the LNG plant and we need to also consider the suitability of establishing the transmission lines,” Mahmood said.

“It will be either a JV (Joint Venture) or an IPP (Independent Power Producer) mode of investment, which is yet to be determined. But, we are expecting that in next year the investment will start coming here,” Mahmood said.

BPDB expects to complete the set-up process of the power plant within 36 to 42 months.

“We are in close contact with ACWA and focusing on the successful completion of the project within the shortest possible time,” he said.

Abunayyan said that he was optimistic about the new investment deal.

“Bangladesh has been a model for the Muslim world in economic progress. This is our beginning, and our journey and our relationship will last for a long time,” Abunayyan told a gathering after the MoU signing ceremony.

Economists and experts in Bangladesh also welcomed the ACWA investment in the energy development sector.

“This sort of huge and long-term capital investment will create a lot of employment opportunities. On the other hand, it will facilitate other trade negotiations with the Middle Eastern countries, too,” Dr. Nazneen Ahmed, senior research fellow at the Bangladesh Institute of Development Studies (BIDS), told Arab News.

She added that Bangladesh needs to weigh the pros and cons before finalizing such contracts so that the country can earn the “maximum benefits” from the investment.

“It will also expedite other big investments in Bangladesh from different countries,” she said.

Another energy economist, Dr. Asadujjaman, said that Bangladesh needs to exercise caution while conducting the feasibility study for such a huge investment.

“We need to address the environmental aspects, opportunity costs and other economic perspectives while working with this type of big investment. Considering the present situation, the country also needs to focus on producing more solar energy,” Dr. Asadujjaman told Arab News.