Ivan Koprić, Professor, Law University and Dean, Society College, Zagreb On average, there are some 30% extra ‘job positions’
Repayment of tax by instalments Companies will not be excluded from public procurement processes says Minister of Finance
EIB in Croatia In the period 2001 to 2009 the EIB invested € 1.9 billion in Croatia; could be more this year
INTERVIEW
TAXATION
INVESTMENT
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Croatian Business & Finance Weekly Established in 1953 Monday / 1st March / 2010 Year III / No 0099 www.privredni.hr
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pvinternational pv international T H E
C R O A T I A N
C H A M B E R
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E C O N O M Y
FUNDS FOR ECONOMIC CO-OPERATION
Opportunity for a new generation of Croatian entrepreneurs Risk capital funds will be jointly ointlyy established by the government and private inves investors with equal shares Igor Vukić ntrepreneurs with potential projects that banks do not understand will soon be able to request funding from semi-state funds for economic co-operation. This concerns one of the measures for encouraging economic growth through risk capital funds, which will be jointly established by the government and private investors in equal shares. Over the next ten years, the government intends to
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The interest of foreign institutional investors is on the rise invest €0.14 billion and with private owners create an investment fund of €0.28 billion. “We wish to create a sustainable market for risk capital, which will motivate innovative entrepreneurs and increase the number of new jobs,” pointed out Prime Minister Jadranka Kosor in her announcement at the conference Private equity in South Eastern Europe held in Zagreb recently. Public tender The Ministry of Economy announced a public tender for participating in the establishment of new funds for economic co-op-
eration in which the share from private investors needs to be at least €10.27 million. The tender will be open until the end of the year, and the organised fund will have a life-span of 10 years. The Croatian Agency for Finance Services Control (HANFA) will select the fund managers. Investment decisions will be confirmed by committees, with a 3/4 major-
ity of investor votes. Compensation for the management will be 20% of total profits, and the rate of return for investors should be at least 8% per year. “Without government support it is difficult to develop the market for risk funds and this governmental move is certainly an important step in this direction,” evaluates Mirna Marović, President
Entrepreneurs march on Croatian entrepreneurs need to be more open to co-operation with investors, which also take the share of the company capital, thinks Emil Tedeschi, president of Atlantic. In this business culture, the German influence is predominant, and so people turn to banks for money, which do not care for small companies and start-ups. Entrepreneurs are also not keen on taking risks, adds Tedeschi. Business failure is regarded as a personal catastrophe and the entrepreneur is never seen on the business scene, whilst in the Anglo-Saxon culture, bankruptcy is regarded as a new opportunity.
of the Croatian Private Equity and Venture Capital Association tio (HVCA). According to her, it will be extremely important to attract foreign investors and considering the required level of con investment, this should not be an inv impossible mission. im Representatives of foreign funds Re are also optimistic regarding pooling investment capital for po this thi region. Even though this activity completely froze in 2008 tivv and 2009, the interest of foreign institutional investors is rising ins again, aga said Matjaž Schroll from the Templeton Group. The Israeli model The government model is basically similar to the successful Israeli YOZMA model, which has motivated the development of thousands of small companies since 1993. Risk capital funds now invest around $3 billion in them each year. Jigal Erlih, one of the founders of Yozma, evaluated that the state needs to secure funds with the greatest possible autonomy in terms of decisionmaking. The flexibility of making decisions is also important, especially with as little red tape complications as possible. Funds for economic co-operation could therefore offer opportunities for creating a new generation of Croatian entrepreneurs.
2 VIEWPOINT
Privredni vjesnik Year III No 0099
SANDRA MIHELČIĆ, OWNER, BUSINESS MEDIA GROUP, BEST YOUNG MANAGER - CROMA 2009
Boris Mesarić, Board President, Petrokemija
The dedication of the Prices of mineral small entrepreneur fertilisers increased If you are a small-sized entrepreneur, you can afford to make a mistake only once
n the world of small enterprise, an individual may be in charge of everything. The owner of a small company is in charge of marketing and the sales team since in many cases there is no marketing director. He also takes care of payments, is obliged to motivate employees and organise work. He is in everyday contact with customers, negotiates with suppliers, takes care of the quality of his products and services, co-operates with accounting services, since he does not have an accountant, and updates his web page. When the doors of his company close at the end of the day, a small entrepreneur takes his computer home and continues to write e-mails late into the night, he writes sales offers and memos in order to secure wages for his workers and earn money so he can pay his taxes. He worries about how to obtain his money since he is buried under general illiquidity; he ‘compensates’ goods since he cannot collect his debts and then thinks about what to do with it. Do you recognise yourself in this story? Do you think it can get worse?
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IMPRESSUM: Privredni vjesnik Kačićeva 9 10000 Zagreb +385 1 5600020 uprava@privredni.hr www.privredni-vjesnik.hr/ subscription
The survival of the small entrepreneur strictly depends on his creativity, dedication and skills. What happens if a small entrepreneur does not pay his taxes on time? Will he be on the news, begging for the state to help him? No. Will he be in the media every day and talk about his business success? No. Will banks have faith in his entrepreneurial project if he knocks on their door? No. Will he obtain a major deal through a public tender? Not even that. Is this not sad and discouraging for small and medium-sized entrepreneurs, those that make up 99.4% of all registered entrepreneurs, 64.7% of total employees, 44% of GDP and 40.5% of total exports (data from 2008), and generators, who create new value with their ideas and vision, whilst living and working in the shadows. Small entrepreneurs are not interesting. They do not turnover millions, employ hundreds of people, export or produce much. They are the last in line to be paid, yet often, when all is summed up, they are very successful. Their results are excellent. They generate a surplus. They hire, pay wages and taxes on time. They win awards (foreign ones more often than local); they invent, build and are not surrounded by controversy. If you are a small entrepreneur, you can afford to make a mistake only once. After that, no one wants to work with you. Since Croatia is a small market where everyone knows everyone, good news spreads fast - and bad spreads even faster.
FOR PUBLISHER Nikola Baučić +385 1 4846661 uprava@privredni.hr
IMC MANAGER Dea Olup +385 1 5600028 olup@privredni.hr
EDITOR IN CHIEF Darko Buković +385 1 5600003 bukovic@privredni.hr
TRANSLATION Tr@duco traduco@zg.t-com.hr
EXECUTIVE EDITORS Andrea Marić maric@privredni.hr Vesna Antonić antonic@privredni.hr
COUNSELLOR, INTERNATIONAL OPERATIONS, LANGUAGE EDITOR Ray Fletcher fletcher@privredni.hr
Gas price increase and more use by agriculture encourage higher prices for fertiliser Igor Vukić etrokemija ended last year with a €36.06 million deficit. This year they anticipate an income of €0.31 billion and profits of €0.22 million. In order to increase production, Petrokemija needs to be competitive on the markets, both foreign and local, which are completely open, and unfortunately often exposed to underhand competition. In this aspect, we hope to operate without losses by balancing the price of raw materials with selling prices.
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What is the relationship between the prices of mineral fertilisers in Croatia and the neighbouring countries (Slovenia, Hungary, B&H, and Serbia). Currently, selling prices in Croatia and neighbouring countries are roughly on a par. We will develop export and local prices according to prices of raw material on the market (gas, phosphate, MAP, potassium chloride), and we will balance our selling prices with market conditions. What kind of a demand do you anticipate for your products in 2010? Last year was marked by a heavy fall in the consumption of mineral fertilisers, and hence a fall in selling prices. The reason was the global crisis, especially a serious fall in the prices of agricultural products. At a global level, food supply overall is at an extremely low and critical level, but there are signs that the market has now woken up and there is a trend towards price rises in agricultural products. This has also encouraged agricultural producers to increase production, and for that they will need mineral fertilisers. Therefore, selling prices for fertilisers have risen in tandem. In Croatia, despite the desire for increased fertilising, a financial
‘shortfall’ is nonetheless felt. After 2009 agricultural producers have been in a very difficult position due to the global crisis. The system of subsidises will certainly have a great effect, especially since banks are quite reserved when it comes to the agricultural sector. Petrokemija is thinking about, although in an extremely difficult financial situation itself, how to help Croatian agricultural
producers to obtain fertilisers in a timely manner, in necessary quantities and product line. How will the prices of gas and other raw materials for production reflect on company results this year? The prices for raw materials are rising, and the effect of gas prices is quite significant to our business, to the extent of 50% of total expenditure for Petrokemija. Therefore, the price of gas is the main factor in the business, and crucial for the business results of our company. We will try to cover increased expenditure Petrokemija by developing selling prices, but we are worried about how to maintain competitiveness on local and regional markets, since a great many producers of mineral fertilisers can obtain gas for lower prices on the spot market. This especially refers to non-regional producers (Russia, Egypt, and Libya) that have cheap gas, and represent our competitors in regional and other markets.
www.privredni.hr Business & Finance Weekly
INTERVIEW 3
IVAN KOPRIĆ, PROFESSOR, LAW UNIVERSITY AND DEAN, SOCIETY COLLEGE, ZAGREB
WITH POLITICAL WILL REFORM COULD BE RAPID On average, there are some 30% extra ‘job positions’ in public administration Drago Živković he Croatian public administration is often a nightmare for both private individuals and entrepreneurs, as well as for the officials who work there. Many talk about reform, but one of the rare persons who actually give clear and realistic proposals is the professor at the Law University and Dean of the Society College in Zagreb, Ivan Koprić.
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The reform of public administration in Croatia basically refers to the question of the numbers employed. What are the key points of reform in your opinion? I agree this reform too often comes down to the question of the number of individuals employed, and latterly to the number of local administrative units. They are both topics to be discussed, but maybe not in the way they are now presented. You cannot merely blame people, but a series of more deeply rooted problems. That is why I would start with organisational measures. Co-ordinated action should be pursued in order to rationalise the organisational structure on one side, and then to design a new payment system, so that people could finally start receiving decent salaries. In our project of public administration reform, concluded at the end of 2008, we evaluated that there are on average some 30% extra ‘job positions’. This does not mean there are 30% more officials, since some positions are not occupied. For example, we have a ministry where there are only 55% occupied positions. A thorough revision should be made and afterwards existing workers should be distributed to new structures, offering them more appropriate salaries.
If you have an inefficient administration, and you need to get a job done, what else do you do but form another body Does this mean that 30% of employees should be redistributed? No. Rather 30% of ‘job positions’ should be redistributed, and probably around 20% of employees. The result would be a more efficient and cost-effective public administration, since one employee would cost as much as his salary. There are also many other expenses involved here, and it is unquestionable that money could be saved and these people could be distributed to bodies which have to be organised in any case due to the EU harmonisation. In other words, if we do not implement this reform, state administration might continue to expand? If you have inefficient administration, and you need to get a job done, what else will you do, but form another body. Many times I have heard ministers complain-
ing that, even with an abundance of staff, they can rely only on few people when a rapid response is required or do a job that requires expertise and knowledge of foreign languages. This shows people are not well prepared and they should be given additional training. If we were to suppose there is strong political will for this, when could the public administration reform be implemented? If strong political will existed, everything might be prepared and implemented within a year. You say, ‘if political will existed’. Does that mean it is lacking now? It is hard to say. We delivered the results of this project to the government at the end of 2008, according to the agreement with the World Bank. To this day, the
government has still made no decision nor have the government members been familiarised with the project. What is our public administration like in relation to surrounding countries, especially those in transition? The first thing we notice is that everyone works in their own way, since circumstances are quite different. According to certain elements, we are not too bad, and according to others, we are. If I had to mark Croatia on scale of 1 to 5, I would give it 2. In relation to Slovenia, we see they have managed to rationalise their organisational structure, and considering their size, we are quite similar in terms of the number of local units. Their problem is that they would like to organise second level units, but they have been unsuccessful. They are at least ten steps ahead of us according to administrative know-how, but regarding the modernisation of public practices, we are slightly ahead of them. In general terms, the Slovenian public administration is slightly more ordered than ours, and they could be awarded three on my scale.
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Privredni vjesnik Year III No 0099
*news GNP Decline of 4.4 % in Q4 According to the Central Bureau of Statistics, Gross National Product showed a decrease of 4.4 %. GNP has now been decreasing over four successive quarters. However, the latest decline was lower than expected. Regarding 2009 on a year-on-year basis, GNP decreased by 5.8 %, over 2008. Exports Increase, Imports Decline Total exports in January 2010 amounted to €0.59 billion, according to the interim report from the Central Bureau of Statistics. This is an increase of 13.16 %, over the same period of the previous year. Imports totalled €0.96 billion, a decrease of 8.3%. The overall foreign trade deficit totalled €0.37 billion, a decrease of 30% in comparison with January 2009. The export/import ratio stands at 61.7%, although it stood at 50% in the same period last year. Average Salary Falls by €3.15
The Central Bureau of Statistics reports the average monthly nett salary for December 2009 stood at €734.52, which is a nominal decrease of 0.4% on a monthly basis and 0.9 % on a year-on-year basis. The average gross salary for December 2009 totalled €1,066, monthly decrease of €3.40 and of €11.64 on a year-on-year basis. Budget Deficit Hits €0.26 Billion In January, total budget income amounted to €1.05 billion, a 3.6% decrease compared with the same period of 2009. According to the Ministry of Finance, expenditure increased by €1.32 billion, which amounts to around 9%. Excise taxes showed the highest rate of reduction, by 24%. Personal income taxes reduced by 7%, corporate income tax by 9.5% whilst payroll taxes decreased by 8%. The Ministry of Finance claims the budget is still sustainable.
ĐURO ĐAKOVIĆ MONTAŽA
FOCUS ON EU MARKETS Eleonora Dukovac onsidering the present economic situation in both the country and the wider region, this year Đuro Đaković Montaža will be active mainly in EU markets, especially regarding projects relating to the construction of new energy plants and reconstruction of those currently existing. “During 2010, we plan to conclude several big projects in Germany concerning the Neurath and Datteln thermal power plants. We will also manufacture and deliver air channels and smokestacks for the Polish Belchatow 5 thermal power plant. Regarding the local market, the plan is to finish work in the petroleum refinery Rijeka, the rigging of high and low-pres-
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sure pipelines in the hydro cracking unit”, says Vlatko Blekić, Board President of ĐĐ Montaža. He adds that the Croatian market suffers from a lack of investment from state companies, such as HEP, HAC, HC and Ina. Therefore, their current share of the Croatian market is 10%, as opposed to its former 40%. Bridges on hold After Plomina 2, not a single thermal power plant has been constructed. Work on the Pelješac Bridge and Corridor Vc have stopped, whilst Ina has only partly modernised its plant, notes Blekić. ĐĐ Montaža counts on the new launching on the European market of rigging, supported by their majority owner Bilfinger Berger AG,
a German group with over 60,000 employees and an annual turnover of some €10 billion. When the German company bought ĐĐ Montaža, it announced that this shipping company would become the centre of excellence for South Eastern Europe. Projects in Lebanon For the past few years, Montaža projects have included new facilities in thermal power plants in the EU, projects in existing thermal power plants in Croatia and refineries in Rijeka as well as rigging of new plant in Sisak. There are also construction projects covering road overpasses on the Beli Manastir-Osijek-Svilaj motorway (Corridor Vc) and rigging lines for cement production in factories in Hungary and Lebanon.
TOURISM AND TRADE
EGYPTIANS WISH TO INVEST IN CROATIAN HOTELS Egypt is one of the rare countries with which Croatia’s trade balance is in surplus ourism, especially health tourism, followed by pharmaceuticals and the energy industry, are some of the sectors with great potential for working relationships between Croatian and Egyptian companies, according to the CroatianEgyptian business forum held in the Croatian Chamber of Economy recently. A presentation of the Croatian economy was held for some thirty business people from Egypt, headed by Moustafa Moussa, president of the Cairo Chamber of Trade. Representatives from
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Croatian companies used it as an opportunity to talk with potential Egyptian partners from related sectors. The Egyptian delegation included representa-
tives of Orascom Telecom, which plans to invest into establishing a bank. The companies Arafa and Sakkara wish to invest in hotels, whilst the Naeem Bank is seeking contacts with representatives of investment funds. According to Dunja Konjevod, Vice-President of the Croatian Chamber of Economy, Egypt is one of the rare countries with which Croatia’s import/export ratio is in surplus. In 2009, total two-way trade totalled $110 million, of which $97 million referred to the value of Croatian exports to Egypt. (I.V.)
www.privredni.hr Business & Finance Weekly
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( some €0.8 billion
owed by companies with one to five employeees
( €1.5 billion of debt
relates to companies with no employees
FINANCE MINISTER IVAN ŠUKER CONCERNING VAT AND TAX REPAYMENT
Repayment of tax by instalments Agreement on repaying tax by instalments assumes a mechanism for insuring repayment has been established no assets, Šuker responded that due to the low level of business ethics, entrepreneurs should run more effective checks on those with whom they work. He corroborated this with data on illiquidity: half of unpaid accounts, valued at €3 billion, relate to companies having no employ-
Igor Vukić company which has arranged with the tax administration to repay tax by instalments, is eligible to apply for public tenders and procure the job. This interpretation has been made by the tax administration of the Ministry of Finance and has been sent to the Office for public procurement. This was revealed by the Finance Minister, Ivan Šuker, recently during a meeting with representatives from the Croatian Employers’ Association. He explained that the agreement on the repayment of tax due, in instalments, assumes that a mechanism for repayment has been established and that a company should not be disqualified from public procurement processes. The Minister confirmed to entrepreneurs that a tax inspector will be sent to each company requesting a VAT refund of over €6,850 to verify the validity of the request. He explained this through numerous attempts of tax frauds through
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Šuker: “If a tax inspection lasts for more than a month, you can contact my cabinet to see what the problem is” connected companies. “If a tax inspection lasts for more than a month, you can contact my cabinet to see what the problem is,” said Šuker to employers. “Perhaps your company did everything within the law, but it is possible that your business partners were being devious,” said Šuker. He announced a stricter Distraint law to better protect creditors. He also suggested a meeting between
entrepreneurs and the Minister of Justice and the President of the High Commercial Court in order to discuss the Distraint law and its application. What is the purpose of a bankrupt company with no assets? When employers said bankruptcy is often not a solution since companies who are sued have
ees. A further 30% (some €0.8 billion) is owed by companies with one to five employees. According to Šuker, state road companies for should start paying their bills faster, since Ina has begun settling its debts from previous years. This is also visible in the growth of budget income from duties on petrol which Ina has also started paying on a more regular basis.
JANUARY INFLATION RATE STOOD AT 1.1%
FURTHER DECELERATION IN CONSUMER PRICE INDEX ccording to latest data of Central Bureau of Statistics, the Consumer Price Index decelerated again in January. By this measure the inflation rate for January stood at 1.1%, when compared with the same period in 2009. In terms of consumer spending, alcoholic beverages and tobacco products saw the largest price growth at 8.5 %, mainly due to an increase in tobacco prices by 11.9 %, followed by costs for housing, water, electricity, gas and other fuel, which increased by 5.2%. Regarding this final as-
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pect, it should be noted that gas prices increased by 18.7% and liquid fuel by 19.2 %, when compared with the same period last year. Only clothing and footwear as well as food products and nonalcoholic beverages saw an annual decrease of 4.8% and 2.6%, respectively. “Due to a decrease in personal consumption, the increased VAT rate and the introduction of excise taxes, have not yet resulted in more prominent growth of inflationary pressure”, according to RBA analysts. However, in the period to come inflation-
ary pressure is expected to grow as a result of an electricity price increase. Rising costs might have a knock-on effect on the prices of other goods and services as a reaction to the forthcoming increases. RBA experts point out that increasing costs of energy are to be expected due to increased gas costs, which is the principal basis for electricity production. The costs of electricity are also expected to rise in the near future, as the result of synchronisation with average EU prices. (V.A.)
6 WE PRESENT OPG ĆORIĆ, PETRINJA
Privredni vjesnik Year III No 0099
ZDRAVI I VITKI, ZAGREB
An entrepreneurial dream Success is that enjoying food is good for you
Lavender on a plate Lavandeto, the first Croatian biscuit with lavender is ready for the market riving moths away from wardrobes was once the sole use for lavender. Today it is used in the beauty industry and more increasingly in the food industry. Danijel Ćorić, manager of the family owned farm (OPG) Ćorić from Petrinja, which cultivates, ecologically produces and sells lavender products under the brand Lavander, says their plantation now contains of 12,000 lavender shrubs (Lavandula hybridis), planted on 2 ha. It was planted in 2004 on ecologically clean soil which had been uncared for and uncultivated for many years. The beginning was
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The restaurant on the farm of the Ćorić family opens in May offering delicacies with a taste of lavender difficult as usual, yet the family was driven by the desire to turn this abandoned property into a farm that yielded profit. “We opted for lavender since it requires less work and a smaller surface area for sustainable production than fruit orchards and vineyards. However, less work does not mean any work, as many would
like to think”, he points out. Proper care is required for protection against invasive weeds, which is the biggest problem in eco-production. Lavender stew Basic lavender products include dried flowers and oil, whilst soaps, ethereal oils, scent bags, pillows, aromatherapy products, smelling salts, creams, biscuits and cakes are considered to be secondary products with added value. It is the product line of OPG Ćorić that actually consists of those products with added value. Recently, they have been competing with new small farmers who have been selling their products at extremely low prices. “Whoever buys lavender once, does not buy it again for a year. These goods must have their price, rather than being sold at a giveaway price,” he points out. Moreover, their business is also oriented towards rural tourism. “Currently, we have high hopes for Lavandeto, the first Croatian lavender biscuit ready for the market. In May, we will open our doors to the first visitors to our restaurant on the farm, where we will sell our products and offer lavender specialties, such as jams, biscuits, stews, salads and aromatic beverages and wines”, concludes Ćorić. (B.O.)
ome 20 years ago, obesity was mostly considered an aesthetic problem. The nutritionist Ljiljana Močinić, MSc, knew from personal experience that obesity is harmful to self-confidence and quality of life. She wanted to help herself and succeeded. Thereafter, she started to help overweight people, and after a year she left
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The quality of medicinal herbs from which they make tea is very important her position in a pharmacy and dedicated herself to offering services in her own salon. Ljiljana Močinić has been retired for 10 years, and Sanja Močinić now manages Zdravi and vitki (Healthy and Slim) in Pula on the principles of her work. Her son Boris manages the company of the same title, whose unit Studio for body nurturing Močinić is one of the most well-known for its slimming treatments. Nutritionism reflects the combination of food and man, or rather the link between food, health and illness, says Mrs Močinić, pointing out that the food we eat is good, but that eating habits are equally important as enjoying food. En-
joying food is neither sin nor disgrace, but contributes to health and long life if the choice of food is right. Everything that is chemical and inorganic is not suitable for the human organism. We change eating habits The entire philosophy is in changing eating habits, particularly controlling what we consume. It is not necessary to deprive yourself of delicacies, but we need to consume them in moderation. The combination of refreshing tea with a selected combination of food is a way to healthy slimness, says the director of the company Boris Močinić. There are two problems with medicinal herbs, he says. One is quality, since it can vary, and the other is securing supplies, since most herbs are available only once a year. They have managed to solve this problem in co-operation with the company Suban, which has been acquiring top quality herbs throughout the whole year, for over 15 years. The company Zdravi i vitki offers efficient treatment against weight excess and cellulite. The first treatment has a tradition of over 20 years and consists of auricular piercing (ear piercing), medicinal herbal tea and personalised eating instructions. (PV)
www.privredni.hr Business & Finance Weekly
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CROATIAN FOREIGN CURRENCY MARKET Currency
Kuna exchange mid-rate
AUD CAD JPY CHF GBP USD EUR
4,761320 5,055302 5,985458 4,968249 8,151739 5,342054 7,270536
Source: HNB
WEEK ENDED FEBRUARY 27, 2010
EUR
7.32
USD
5.40
23.2.
24.2.
25.2.
26.2.
5.00
7.31
5.38
4.99
7.30
5.36
4.98
7.29
5.34
4.97
7.28
5.32
4.96
7.27 22.2.
CHF
5.30 22.2.
23.2.
24.2.
25.2.
26.2.
4.95 22.2.
23.2.
24.2.
25.2.
26.2.
EIB in Croatia
::: news
STABLE LEVEL OF LENDING
Atlantic Profits up by 24 % In 2009, Atlantic generated a nett profit of €13.32 million, an increase of 24% when compared with the previous year. Total income came in at €0.30 billion, an increase of 10.1% with the operating profit increasing by 18.9 % to €21.07 million. The Croatian market accounts for 60 % of sales and the international market provides 40%. Germany remained the largest external market.
In the period 2001 to 2009 the EIB invested € 1.9 billion in Croatia
Lada Stipić- Niseteo espite the global financial crisis – or, perhaps partly for that reason – the European Investment Bank (EIB) invested € 415 million into Croatia. The sum of € 330 million in 2009, or twice the figure of EIB total investment for 2008, is primarily intended for supporting small and medium entrepreneurs. During the financial crisis, the EIB has implemented the same strategy both to EU members and partner countries, especially to candidate countries whose investment is mainly to support and accelerate cohesion with and integration into the Union. According to the EIB Vice-President, Mathias Kollatz-Ahnen who is responsible for granting loans to Croatia, the European
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Investment Bank aims to provide Croatia with the same or even a slightly higher level of lending, when compared with the previous year. The majority of funds will be distributed to small and medium entrepreneurs through five Croatian banks which have traditionally co-operated with the EIB for a number of years. Currently, the final stage of loan approvals does not include any new projects or loan packages. This does not relate to loans for a trade centre in Split and the EIB share in the Fund for Renewal of the Energy Industry Infrastructure in SE Europe. Resumption of projects Last year, preparatory plans for the extensive modernisation of the Croatian railways system was announced, which included the construction of the rail link
Rijeka – Zagreb - Hungarian border. The EIB was willing to invest, long term, an amount of around €1 billion. The project is to be resumed although its implementation has been postponed due to the financial crisis. During the period 2001 to 2009, the EIB invested €1.9 billion into Croatia, the majority of which was assigned to major infrastructure investment in road construction and the gas network. The major advantage of EIB loans lies in the fact that end-users benefit from the same terms as those in the EU. This, above all, relates to low interest rates combined with a long grace period. End-users are, in return, obliged to present creditworthy projects which are required to undergo very strict EIB verification procedures.
Ericsson - Income down, Dividend up Last year, Ericsson Nikola Tesla booked an income of €0.19 billion, a decrease of 22% when compared with 2008. According to the accounts, commissions fell by 21%, to €0.19 billion, and nett profit was finalised at €17.58 million, a 37% decrease in comparison with 2008. Operating costs were reduced by 15.4 % or €15.05 million. Profit from financial activities increased from €6.73 million to €8.37 million. Ericsson plans to pay out a normal dividend of €2.74 per share and a bonus dividend of €13.70 per share. Croatia osiguranje notes a 9.6 % Increase in Health Insurance Premiums
The health insurance arm of Croatia osiguranje generated a gross profit of €0.78 million in 2009, which is an increase of 39% over 2008. Gross insurance premiums rose by 9.5%, amounting to €13.28 million.
8 *news Uniline Grants Franchise to Europcar Uniline, one of the leading incoming tour operators, has signed a franchise contract with Europcar, one of the major European rent-a-car companies. This contract enables Europcar’s international clients to rent a car in Croatia in any branch office of their choice as well as the other way around. Thus, Europcar is to make its offer available at all Croatian airports and major cities whilst Uniline will upgrade its service with more than 500 different car brands. Gold Medal for Kutjevo Graševina de Gotho
The top-graded wine at the 17th International Wine-growing, Vine and Fruit-growing Fair in Slavin Orahovica, was Kutjevo Graševina de Gotho, 2008 vintage. 100 different wines from continental Croatia and Hungary entered the competition. Kutjevo wines are awarded gold medals at this fair on a fairly regular basis, especially in the category of ice wines. Podravka Restaurants Ranked among 100 Very Best
Podravska klet and the beer cellar Kraluš, both owned by Podravka, have re-entered the list of 100 leading Croatian restaurants. Since 1996, both have been listed among the very best Croatian restaurants on a number of occasions. Hence, Podravka restaurants will be presented in the guide through top-quality representatives of Croatian gastronomy entitled “One Hundred Leading Croatian Restaurants”.
Privredni vjesnik Year II No 0099
15th International GAST fair, Split 3-7 March 2010
AN INCREASE OF 5% IN EXHIBITORS t the 15th GAST fair in Split, there will be 1,273 exhibitors from 15 countries: Bosnia and Herzegovina, Slovenia, Macedonia, Italy, Germany, France, Austria, Belgium, Serbia, Indonesia, India, Albania, Poland, Montenegro and Croatia. In addition to its 15th anniversary, this year’s GAST fair is special since there has been a 5% increase in exhibitors, the crisis notwithstanding. In economic circles, GAST is recognised as the place to prepare for the forthcoming tourist season, a position it has held for several years. “In this time of recession and economic plunge we regard it as great success that this year we have managed to increase the number of exhibitors by 5% over last year. This fair is the
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place to exchange important information and create partnerships and excellent deals”, pointed out Sanja Vuković, Director of the company Sajam Split (Split Fair). The GAST fair is the leading gastronomic and tourist event in Croatia, where entrepreneurs from related activities meet and close deals prior to the tourist season. It encompasses a series of specialised fairs: 15th Foods Fair, 15th Beverages Fair, 15th Hotel and catering equipment fair, 5th Coffee fair, 5th furniture fair Furnitura, 15th wine fair Dionizijana, 4th Saturn – tourism fair and project GAST around the world. In a completely new departure this year, the furniture fair Furnitura will be represented, offering a series of events, professional conferences and exhibi-
tions interesting to professional audiences of hoteliers, architects, designers, as well as for a wider audience who wish to learn about the local wood industry. The profusion of professional programmes consists of competitions and evaluation of product quality, as well as a series of charities, whilst special attention will be paid to various professional economic conferences. (J.V.)
adriatica.net wishes to become the lead seller of Croatian tourism
DIRECTION TOWARDS BRANDS Tourist group managed to raise around €24 million of fresh capital Sanja Plješa he additional capitalisation of tourist group adriatica.net raised a total amount of €29 million, of which €24 million relates to fresh capital, whilst €5 million concerns a debt-equity swap of Croatia osiguranje property. Eight companies from the private sector and one state-owned company now participate in the new ownership structure. The Agrokor consortium is the largest shareholder with 20.27%, by investing €6 million in fresh capital, followed by AWT, Croatia osiguranje and Slobodna Dalmacija, each with 16.9%, HUP Zagreb with 10.13%, and Jolly and Saponia, each participating with 8.45%. Former owners of adriatica.net, EPH and Emporion, each maintain a 1% share of ownership. One of the goals of the consortium is to develop tour operations, which will not turn adriatica.net into a national tour operator, but into a leading company regarding the sales of Croatian tourism, and
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Croatia as a tourist destination. It will continue to direct its future business towards the adriatica. net brand, and four organisational units - Kompas tourist agency
This year they anticipate a 10% income growth or some €275 million over 2009 from Ljubljana, Atlas from Dubrovnik, Jolly Travel from Belgrade, and Kompas International for the international network, said the Board President of adriatica.net Boris Teški. He also pointed out they were expecting
a further round of capitalisation, when several other companies will join the ownership structure. This will enable funding of development projects for adriatica. net, for example, the development of the tour operations business, stressed Teški. The media speculated that the owner of Agrokor, Ivica Todorić, entered the ownership structure in order to assist the former co-owner, Ninoslav Pavić. The president of the Supervisory Board of adriatica.net, Ljerka Puljić, dismissed speculation, pointing out the heads of each company, who had become new shareholders of this group, have interest in the new consortium. Even though tourism is not the core business, from now on this sector will be highly positioned in their business. Annual reports for adriatica.net from last year are still not complete, but Teški evaluates the company had €260 million in income last year. This year, they anticipate a 10% income growth or some €275 million in relation to 2009.