BRATISLAVA -- South Korean automaker Kia Motors will start building its 1-billion euro plant in Slovakia next week, following a delay caused by problematic land purchases, a Slovak official said on Thursday, Oct. 7.
The government had missed the end-of-August deadline for preparing the site near the northern Slovak town of Zilina after several owners refused to sell their land for prices offered by the state.
But Stanislav Vinc, head of the state agency in charge of preparing the project, told Reuters that construction of the plant will begin in the next few days, after the state's building authority issues all needed permissions.
"Our deadline is Oct. 15 ... We are doing everything we can to make sure that the construction permission will be granted by then," Vinc said.
Progress on the project has been closely watched by financial markets because foreign direct investment inflows are one of the key factors behind gains in the Slovak crown currency this year.
The government had to approve expropriation of some land for the plant as owners' refusal had threatened to cause more delay. Local news agency Sita said on Thursday that some landowners planned to appeal against the construction permission, but Vinc said he expected work to go ahead as planned.
Slovakia has become a favorite location for car producers in the past few years due to its low-cost workforce, proximity to eastern and western markets and the flat 19-percent tax rate.
The car industry is already the country's main economic pillar. A Volkswagen plant currently produces 280,000 cars a year, and it will be joined by PSA Peugeot Citroen, which plans to make 300,000 units a year from 2006.
Kia expects to launch production in its Slovak plant in late 2006 or early 2007, starting with 200,000 vehicles a year.