Interview: Vlaho Kojaković, Director,TriGranit Hrvatska If banks do not take on risk, the real-estate market faces problems
Croatian pharmaceutical industry Recognised globally but under cost and market share pressure in Croatia
Homeopathy - medicine for the 21st century The time of organic and non-toxic medicine is coming
INTERVIEW
PHARMACEUTICAL INDUSTRY
HEALTH
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Croatian Business & Finance Weekly Established in 1953 Monday / 29th March / 2010 Year III / No 0103 www.privredni.hr
S U P P O R T E D
::: news Government collateral for Uljanik credit Last week the government approved state collateral of €50 million for a long-term credit to the Uljanik shipyard. The collateral was given to the Croatian Bank for Reconstruction and Development and other banks in the country and abroad. It relates to direct long-term debt from five to eight years, depending on the condition of the financial market at the moment of signing the loan. Economic optimism growing High expectations over the next sixth months returned the Hendal-Lider optimism index (HLIPO) to the zone of economic growth, where it was last seen in November. However, negative surroundings do not give any reason to believe HLIPO will remain in that zone for long. In March, the index jumped to 79 percentage points, some 12.3 percentage points more than in February. After November 2009, it did not remain very long in positive territory. Therefore it is expected this trend will repeat itself, this time due to less than favourable macro-economic indicators, according to the statement from Hendal.
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pvinternational pv international C R O A T I A N
C H A M B E R
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PREPARING FOR THE TOURIST SEASON
Struggle for local visitors and higher tourist revenue We aim to maintain the share of foreign arrivals to Croatia above 2% of total European foreign arrivals as we did in 2009, says Minister Igor Vukić
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e have visitors, but we must try to obtain more from them, said the Minister of Tourism, Damir Bajs, before government members during his presentation of the programme for the 2010 tourist season. The Minister hinted at information according to which last year had been successful regarding the number of arrivals and overnight stays but poorer financial results were ultimately achieved. Hotels and tourist complexes had achieved a solid turnover, but visitors had spent less outside of their accommodation costs, in restaurants and shops. They also bought fewer souvenirs, said Bajs. “This year, we will try to entertain visitors much more than before, since they recorded negative results in terms of overnight stays last year. In addition to more advertising, service providers will be encouraged to adjust their prices to the real quality of their programme and market demand. The season will not be easy in any respect. This will be another year of last minute offers,” evaluated Bajs. This season, through the Croatian Tourism Association, the Ministry of Tourism invested €11.58 million in the promotion of tourism. Another €7.12 million was invested in joint marketing activities.
According to encouraging data on bookings, also mentioned at the tourism fair in Berlin, these actions are showing results. Bajs reminded that more aggressive marketing had started in September 2009 and
This year visitors will be more entertained positive results were thus expected. More mature markets, such as Germany, have been thoroughly processed. Interest in Croatia is growing in those countries where tourist visas have been cancelled
(China, Russia). Positive results are also expected from new markets, for example, Serbia and the Ukraine. The World Tourism Organisation predicts tourism to recover on a global level by 1%3%, whilst a mild increase of 1% is predicted for the European market. “We will try to maintain our share of foreign arrivals to Croatia above 2% as a share of European foreign arrivals, as we did in 2009,” says Minister Bajs. “It will not be easy since competitors are agitated. Italy, Spain and Greece will not allow themselves to register a deficit for the third consecutive year”.
2 VIEWPOINT
Privredni vjesnik Year III No 0103
STJEPAN PEZO, DIRECTOR, GALEB
REAL-ESTATE MARKET
Going back to the roots of the processing industry
HOUSING INVESTMENT PUT ON HOLD
Many have been asking whether we have reached bottom; the answer is NO. he Croatian textile industry, seemingly the most discussed, and in which the greatest efforts have been made in order to improve its status, is headed towards long-term non-sustainability. There are different reasons for this: monetary, fiscal and social policies as well as parafiscal duties. This has now reached the situation where the Croatian consumer pays around €0.03 to the state budget for each €0.01 of materials, nett labour costs and energy. Furthermore, the actual needs of the industry are not harmonised with scientific and educational institutions. There are almost no schools for this profession, or they are inadequately distributed. Working in industry does not suit everyone, and there is also lack of know-how, poor habits and frightened management. Poor habits are mainly reflected by the fact that the textile industry has been regarded for years as a ‘social case’, an “unwanted child”, thus creating apathy and shifting the blame to others. There is also fear from the Croatian version of democracy (everyone is careful of what they are saying to avoid stepping on someone’s toes “above”), new concepts, project, methods and young people more prone to risk-taking. The problem also lies in inconsistency and inefficiency. For example, the state introduced a strategy (a rare sectoral one), but the operational plan for implementation is not designed and everything remains unfinished. Most companies in the sector are treated by financial institutions as
Last year, some 4% more apartments were built compared with 2008, but 52% fewer apartments were finished
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unwanted children (policy: give some, hold some back, then give some again, but this is more expensive). Furthermore, services, which should protect legal competition, are not doing their job properly. This has all brought about a state of absurdity. Croatia has become a society in which nothing is worth producing. We have become incapable of living in our own country since it is too expensive. We have lost or are keeping all primary industry on life support machines in all industrial sectors. All cottonmills have disappeared. Ironworks are all faced with great problems, and it is almost impossible to expect them to survive. Growth in GDP has almost exclusively relied on consumption. Now, when it has halted, new real added-value seems as a completely abstract notion. Everyone is asking for state aid in one way or another. It seems no-one is able to function unless aided by the state. Many have been asking whether we have reached bottom. The answer is: no. There are always roots below the lowest branches. I think it is high time to start taking care of our roots while we can.
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Drago Živković ast year, the Croatian realestate market decreased both in terms of value and the number of transactions. This could be the introduction to an even bigger drop this year. Data provided by the Central Bureau for Statistics point to a similar picture. It shows that there were 18.4% fewer constructions in January 2009 on a year-on-year level. Other, even more indicative data show that the value of new contracts in construction in the third quarter of 2009, halved compared with the same period in 2008. During 2009, 4% more flats were built than in 2008, but 52% (6,170) fewer apartments were finished than in 2008. In other words, investment that had been in place during previous years was realised, whilst new investment has dried up. A realestate price drop in Croatia is anticipated by 46% of real-estate agencies during the forthcoming year.
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14% difference in prices The same percentage will be faced with stagnation, whilst 7% anticipate a rise in prices. Those anticipating prices to drop, predict a fall of between 9% and
15%. According to the results of a survey conducted by the advertising portal CentarNekretnina. net on 40 agencies, almost half of those questioned (49%) consider that prices correspond to real values, whilst 39% think they are too high. They estimate the average difference between offered and achieved prices is 14%. When asked how much could investors reduce construction prices and at the same time maintain positive business, 21% of agencies responded averagely. Compared with housing construction, the market for business facilities has currently more stable prices, but development has almost completely stopped. According to data provided by the consulting agency King Sturge, the average price of renting industrial realestate in Zagreb ranges between 72% and 75% per square metre per year, which makes Croatia one of the most expensive countries in the region. Last year, around 60,000 m2 of new industrial property were built on the Croatian market. It is expected even less will be built this year. The majority of demand for storage facilities is still generated by retail, and will continue in the future according to King Sturge.
www.privredni.hr Business & Finance Weekly
( € 4.5
INTERVIEW 3
billion
total value of TriGranit current projects
( € 600
million
investment in the Arena Centre project
INTERVIEW: VLAHO KOJAKOVIĆ, DIRECTOR OF TRIGRANIT HRVATSKA
If banks do not take on risk, the real-estate market faces problems It is not necessary for people to become slaves to trying to pay for apartments whose value banks inflated out of all proportion. This takes away individual freedom. This is one aspect of capitalism which inhibits the development of a civil society tive, whilst 90% of the work is sourced locally. Therefore, we have a positive domino-effect on the Croatian production of concrete and cement.
Drago Živković riGranit operates in an area from Slovenia to Russia. It is developing a huge business-trade complex in Zagreb, which started with the construction of the Arena sports facility. The second phase involves the construction of a trade and entertainment Arena Centre, followed by the construction of an hotel, a conference centre and 185m tall business towers, according to the director of TriGranit Hrvatska Vlaho Kojaković.
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We directly employ 3,000 people and indirectly a further 2,000 What is the current total value of all TriGranit investment? It currently totals some €4.5 billion. This includes 17 projects in Russia, of which two are at the development phase. We have a project in Ljubljana, several projects in Poland and Hungary, two projects in Romania and this project in Croatia. We could add bank financing to this €4.5 billion, and so the figure becomes significantly higher. What is the current phase of the Arena Centre project and when will it be opened? The Arena Centre should open in October this year. Even though we are entering the market during a difficult period for retail sales, urban planning and architecture, the recession is slowly losing momentum. The vision of TriGranit as a developer is of a longterm nature. Our budget for this
entire project totals around €600 million. The Arena alone has cost some €80 million, the trade centre €244 million, whilst the third and fourth phases, which include an hotel and conference centre, are worth a further €300 million. This will probably be the largest direct investment in Croatia during the next several years. The project should be finished between 2013 and 2015. It is important to note that the capital from stockholders and banks is a foreign investment in its fullest sense, since they are not Croatian banks nor recycled Croatian money. The Arena Centre is built by the Croatian construction consortium, consisting of Međimurje construction, Tromont and Mucić & Co., and this is very important during the present crisis in the construction. We directly employ 3,000 people, and indirectly a further 2,000, plus the addition of another 2,500 people who will be working in the centre.
What is your experience with local contractors? This construction site is extremely well organised. It is a proven system in which prefabricated elements are produced outside the construction site, in the facilities of Mucić near Zagreb. Some 20 to 30 lorries visit the site each night, directly craning-in and installing elements within the construction. Nothing is stored, which is extremely cost-effec-
What about housing construction? Will TriGranit enter this area of the market? Not at the moment. I had said in my previous interviews three or four years ago that prices of flats in Croatia are not realistic. It is not necessary that people become slaves to try to pay for apartments whose value has been grossly inflated by banks since it takes away personal freedom. This is one aspect of capitalism which inhibits the development of a civil society. Spain and Greece have already been hit by the drop in prices for flats, below the loan value. If you paid €2,000 per square metre for a flat, I think its present value is now below €1,300, even though you continue to pay for it at the price of €2,000, and you might transfer this burden to your children. I think this has already happened in Croatia, only it is not so evident, considering there are not enough transactions, since everybody is waiting, the banks as well as the general public.
One-stop shop for big investment What is your experience with the Croatian administration compared with other countries in which TriGranit operates? We are definitely not ahead of everyone, but we are also not at the bottom. I think it is high time to finally finish the digitalisation of the land registry and books. Assisted by greater investment, the public sector of the bigger cities has learned how to co-operate with big investors. I also believe ‘one-stop shops’ should open for investment exceeding several million Euros. Glaziers cannot be treated equally to those who invest €100 million. Naturally, we are all the same under the law. However, I think it is crucial for the economy and the country’s well-being that the investor has the same access as that offered in the EU.
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Privredni vjesnik Year III No 0103
::: news Failed tender for the Institute of Immunology The Commission for the implementation of additional capitalisation advises that none of the five offers was found to be acceptable. Allianz ZB for mandatory pension fund management, Allianz ZB for voluntary pension fund management, Ivaccine, Novatech and Teuffel&Associates applied for the tender. They did not present their business vision for co-operation with the Institute, and they were not sufficiently transparent concerning their sources and origins of funding intended for additional capitalisation. The Commission suggested that the Institute, as a company of strategic importance to the healthcare system of Croatia, remains in state ownership and that funding is found for completing the investment in the shortest possible period and maintaining liquidity. Minister of Economy at WTO meeting The Minister of Economy, Đuro Popijač, participated at the first Revision report on the trade policy of Croatia, at the World Trade Organisation in Geneva. Popijač discussed the fulfilment of Croatian obligations to WTO, government measures for fighting the crisis and the candidate procedure for the EU. Trade policy for Croatia aroused great interest and 152 questions were taken from members. Croatia ranks 15th in mobile phone ownership According to research from the World Economic Forum, Croatia ranks 51 amongst 133 countries in ICT competitiveness. However, according to the number of owners of mobile phones, Croatia takes 15th position, and 31st according to the number of computers. The ranking regarding costs of landlines and mobile phones deteriorated. This year, the most competitive ICT country in the world was Sweden, progressing from second place. It is followed by Singapore and Denmark.
( €0.64 billion
year-on-year turnover of the pharmaceutical industry
CROATIAN PHARMACEUTICAL INDUSTRY
Recognised globally
Since all local producers manufacture generic medicines, they suffer the mo Jasminka Filipas n the background of the fiasco regarding pig flu, when many countries, encouraged by the media, lost great amounts of money by purchasing, but not using vaccine, and when globally known companies provoked rage regarding the entire pharmaceutical industry, the Croatian industry stayed out of public sight and is now experiencing problems caused by completely unrelated and different reasons. These mainly concern high levels of imports, the on-going price reduction of medicine and never-endingly long payment deadlines. Data from various sources show that Croatia had 49 different producers covering the healthcare system in 1996. Last year, there were only 30, and those who remain do not have the same market as in the past Data on sold packaged medicine show an even worse scenario: in 2005
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Croatia does not protect local production in the same way that EU country governments protect theirs
20,596,694 prescriptions were given for medicine. The number of prescriptions escalated to 43,183,562 fourteen years later. This shows that the consumption of all medicines, including imports, is consistently growing.
local producers sold 46,871.414 units of packaged medicine on the local market whilst foreign manufacturers sold 35,710.321. Only three years later the numbers from the local industry had reduced to 40,738.889, whilst imports increased to 50,542.376. Expressed in percentages, local sales registered a 13.9% drop, whilst imports climbed 29.35%. Data on the consumption of medicine is also indicative: in 1994, when there were around half a million refugees in Croatia,
Goal - to reduce consumption The Ministry of Health has been saying for many years that their goal is to reduce consumption. For this reason, they applied for the international tender for reference lists of medicine for the second consecutive year. However, it is particularly this that could encourage the further downfall of the local pharmaceutical industry. We understand from sources close to the Ministry that big global companies usually present
themselves on such tenders with ‘dumping price levels’, until local production falls to a low level or completely perishes. According to the source, the same companies then dictate all market conditions and significantly increase the prices of their medicine since they have no competition. These claims are, however, only rumours, and we do not wish to make further comment. The present prices of medicine are at the level of 70% of the prices in the EU. This is extremely low and highly unfavourable for producers. Prices have been decreasing year by year. No savings are possible in the budget since funding is mainly transferred to the Fund for expensive medicines. This means that the burden from cutting expenses falls on produc-
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( €0.25 billion imports ( 30 producers in the past four years
for healthcare system in 2009
y, pressurised in Croatia
ost from price reductions local and foreign producers are made clear. However, it is a fact that the financial and natural share of local producers is consistently dropping.
ers of generic medicines since it is these medicines whose prices have been particularly dropping. Since all local producers manufacture generic medicines, they suffer the most from price reduction, says Teo Rakočević, in charge of strategic management in Jadran Galenski Laboratory, a company that exports to 22 countries. Rakočević warns that drugs are only one area of consumption in the health care system, and that too little is written about the necessary radical reform of the entire system, since it is not rational. This is pointed out by an excessive share of costs in GDP. He ventures that in Croatia prices of medicine on lists are regulated by the Regulation of the Croatian Institute for Health Insurance (HZZO), and positions of both
Fighting for the market It is evident we have been buried by foreign producers and that we need to invest greater efforts in order to obtain affirmation with our doctors, pointed out Rakočević, hinting to the selection of doctors when prescribing certain medicine. It is a public secret that often there are ten producers of the same medicine, but under a different name, and that some doctors prefer only specific producers. In terms of payment deadlines, Rakočević points out these range from 220 to 240 days in specific cases. The deadline is only 30 days in certain other countries, and 120 days in very rare cases. The situation on the Croatian market is completely unacceptable. The government and related ministries need to take all steps in order to fix illiquidity in the health care sector and to make payment within the agreed deadline. Since producers are the last in line to receive payment, they carry the heaviest load of illiquidity. They need to go into debt in order to achieve their development plans. With constant pressure on prices, business is becoming more difficult every year, says Rakočević. Wasted efforts It is a known fact that the Croatian pharmaceutical industry has been fighting in vain with prices and payment. Moreover, the state determines payment deadlines in addition to prices. Suffice it to say that the reduction in prices has cost us €20.5 million in the past few years. Last year, for example, we lost another €4.66
million. Prescription medicine in Croatia is around 30% cheaper than in neighbouring countries and payment deadlines have been reduced from 300 to 250 days, points out the spokeswoman from Belupo, Snježana Foschio Bartol. She confirmed data on the drop in market share of local producers, and an increase in foreign ones. She points out that present Croatian producers of medicines and medical products employ 5,386 workers with an annual turnover of €0.64 billion. They pay €35.62 million in contributions to the state budget. Over the past four years the value of exported goods stood at €0.25 billion, to 21 world markets. Simultaneously, they face illiquidity and underhand competition. The state is expected to co-operate more actively in the creation of health policy, more precisely, in recognising the importance of local products to Croatian healthcare. Croatia does not protect its medicine production as other regional or EU countries do. The price criterion as the only condition for including drugs on the list of HZZO, causes great pressure and price reductions, primarily with local
producers of generic medicines, whose financial market share has been cut almost by half, whilst the natural market share of local producers still stands at 50%. In other words, in order to achieve profits for both owners and employees, significantly more packages need to be sold to achieve the same financial effect, points out the spokeswoman of Belupo. The director of corporate communications from Farmal, Danijela Gašparović, shares this opinion. The current situation on the market of pharmaceuticals is very difficult since healthcare problems are solved only by applying constant pressure on reducing the prices of medicine every year. On the other hand, payment deadlines exceed 200 days, says Gašparović. Through the Croatian Chamber of Economy and the Croatian Employer’s Association, the Association of local producers of medicine and medical products is trying to reach those institutions that determine prices, but it seems their efforts are in vain. You need to look at Slovenia and how things are ordered there, and to see their prices and their payment deadlines, said Gašparović.
The big ones dominate The global crisis has influenced the business of many industries, including pharmaceutical producers which, in order to grow and preserve their market position, reduce costs by reducing the number of employees and contributions to R&D. Pharmaceutical companies turn increasingly more to pharmerging markets of China, Brazil, Mexico, South Korea, India, Turkey and Russia, which have been experiencing greater economic development. The biggest generators in these markets will obtain greater access to generics, innovative medicine, improved and more accessible primary protection. Today, multinational pharmaceutical companies use their potential for introducing new original and generic drugs. At the same time, they are trying to put smaller national companies in an inferior position, where it is difficult to survive. In a few years, this could result in the fact that the market for generic medicine is dominated by only five global producers.
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Privredni vjesnik Year III No 0103
HOMEOPATHY - MEDICINE FOR THE 21ST CENTURY
THE TIME OF ORGANIC NONTOXIC MEDICINE IS COMING
According to data provided by the World Health Organisation, homeopathy ranks second according to the number of users. In Croatia, regulation covering this profession is still under preparation Eleonora Dukovac orld homeopathy week and the 235th anniversary of the birth of Dr. Samuel Hahnemann, father of homeopathy, will be held from 10 to 16 April in Zagreb, organised by the Croatian Association for Classical Homeopathy. A series of lectures are scheduled by qualified homeopaths and several round tables, with a goal of introducing the general public to the values of this unconventional method of treatment, which is becoming increasingly popular in Croatia. More than two centuries old, homeopathy ranks second in the world, according to the number of patients. Hence the reason why it is called the medicine for the 21st century. According to this data, Chinese
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traditional medicine ranks first, followed by phytotherapy. Classical medicine takes fourth position. Homeopathic drugs were first applied in Croatia by Dr. Stanislav Župić in 1920. Comprehensive treatment system Homeopathy treats the individual, not the disease, and is far more than merely removing local pain. This comprehensive system of treatment systematically affects the cause and contributes to healing according to the principle of ‘simila similibus curenture’ – like cures like. It is concerned with the art of treatment. The approach is individual and suited to modern people. A homeopath prescribes homeopathic preparations which act as impulses. They stimulate self-healing forces
Croatian homeopaths practice abroad In Great Britain, Sweden, Belgium, Denmark, Ireland, Norway, Netherlands, Finland, Estonia, Spain, Greece, Iceland, Israel, Lichtenstein, Malta, Poland and Portugal, qualified homeopaths give treatment equally as medical practitioners who subsequently studied homeopathy. According to law, a homeopath in Germany needs to be registered and his work is partly covered by health security. The status is also regulated in the United Arab Emirates three U.S. states, India, Ghana, Mauritius, New Zealand, the Republic of South Africa and many other countries. “In Croatia, homeopathy is not an official profession. However, in England I am a doctor of homeopathy,” explains Jadranka Zebec, stressing that patients should always ask a homeopath about his educational background.
within the organism, encourage the defence mechanisms and affect mental, emotional and bodily levels. They are non-toxic. They do not cause addiction, and they are energetically valuable and efficient. The method is scientifically proven, explains Jadranka Zebec, president of the Croatian Association for Classical Homeopathy. She ventures there is a huge difference between allopathic (classical) medicine and homeopathic, in that as homeopathy treats people, and not the disease. “Today, people do not want to be just a number in the charts. They demand more for their health, tending to opt more for homeopathy, but also similar unconventional branches of medicine. The mechanistic view of human health is no longer satisfying and does not enable individual or global progress. People are becoming more aware of the need for natural and nontoxic drugs, which is quite evident by data, according to which 60%-80% of the world population first opt for one of the methods of complementary medicine,” says Jadranka Zebec. The right to choose She points out that homeopathic and classical medicines complement each other perfectly, and experts are co-operating more often, which gives the best re-
sults. She has been introducing the public to the values of classical homeopathy for eight years. Amongst other things, the Association advocates legalisation of the homeopathic practice in Croatia. They want homeopathy to be accepted, officially recognised and legally regulated. This is why they have been preparing and finalising for years a bill on homeopathy, in compliance with European legislation. In addition to regulating the status of the profession, they wish to secure patients the legal right to select the type of treatment, and that homeopathic treatment is at least in some part covered by the healthcare system. Zebec reminds that the World Health Organisation published a document on traditional/ complementary and alternative medicine (T/CAM) in 2002, demanding registration and licensing of practitioners from governments. The homeopathic calling, according to standards for classic homeopathy of the European Council, is acquired at one of the renowned world colleges, which includes certain examinations from the field of classical medicine. Even though studying classical medicine is not a precondition for homeopathy, more often practitioners of classical medicine opt to study homeopathy.
www.privredni.hr Business & Finance Weekly
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EU FUNDING TO FARMS
20,000 FARMERS REGISTERED IN ARKOD uring the previous month, 20,000 Croatian farmers were registered in ARKOD, a new system that registers the actual use of agricultural land in Croatia. Registrations have been highest in Požega and Slavonia, where almost 60% of all farms have been registered, followed by Karlovac (47%) and Lika and Senj (43%). ARKOD represents an update of the current Register of Farms. This more intensive registration within ARKOD is the result of greater efforts of the Payment Agency in Agriculture, Fisheries and Rural Development, as well as partner organisations, the Croatian Agricultural Agency and the Croatian Institute for Agricultural Consulting Services, for the process of implementation of the informative campaign in counties. ARKOD registration is free of charge, and is provided by 550 staff of the above institutions.
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Recently, three more counties have joined the scheme: Bjelovar – Bilogora, Koprivnica Križevci, Osijek and Baranja, and now ARKOD is being implemented in 14 counties. The joining of the remaining counties, as well as Zagreb county, which has the highest number of farms (over 15,000), is expected during April 2010. The introducing of ARKOD is a precondition for the closure of the 11th negotiating chapter Agriculture and Rural Development, and the new system will be applied when Croatia joins the EU. It will enable farmers to submit applications for EU funding more easily, as well as giving a more transparent way of how state subsidies are used. In order for Croatia to be ready at a given moment to receive funding intended for further development of local agriculture, it is necessary for farmers to register in ARKOD, since the present funding system will no longer be valid. (J.V.)
Meeting of entrepreneurs from Croatia and B&H
ProWein 2010
Dalmatia on Jahorina Great interest in Croatian wines T
he Business Forum and bilateral meetings of around 100 entrepreneurs from these two countries was held on March 25, in Sarajevo, organised by the Foreign Trade Chamber of B&H and the Agency for Export Promotion B&H, the counties of Split and Dalmatia and the Croatian Chamber of Economy office in Split. Thirty-six mangers came from Croatia, mostly from the areas of catering, tourism and consulting. Presentations from representatives of tourism, hoteliers and agencies were especially significant. In the Vučko Hotel on Jahorina, over a Dalmatian dinner of fish specialities, this was the first promotion this year of the Croatian tourist programme to B&H. The discussion was used as an opportunity to point out problems in business and trade caused by the recession, which reflected in the fall in the for-
eign trade. Last year, Croatian exports to B&H showed a negative of 34.7%, whilst imports dropped by 18.4%. Data from January are also not overly optimistic: Croatian imports to B&H dropped by 14.8%, whilst imports collapsed by 22%. (Z. L.)
Over 150 of Croatian wines were presented at the International Fair of Wine and Spirits ProWein 2010 rganised by the Croatian Chamber of Economy, in co-operation with the Ministry of Agriculture, Fisheries and Rural Development, 28 exhibitors presented over 150 wine varieties at the International Fair of Wine and Spirits ProWein 2010 in Düsseldorf, Germany. “This Fair is crucial for Croatian wine production, since it is a chance to present Croatian wines to a foreign audience. We hope our representation at such an important fair will increase the export of Croatian wines to foreign markets, especially Germany, where we normally export 28% of total wine. After B&H, Germany is the second largest market for Croatian wines,” said Milica Rakuša Martulaš, Director of Trade Sec-
O
tor in HGK. Export trends have been favourable since Croatian wines have been slowly climbing to a higher level and quality over the past several years. Therefore, ProWein, the leading international fair for wines and spirits, was a chance to create new business contacts and increase exports. The Fair is the leader concerning trends and products, and the theme this year was wine in business. This year, 3,300 exhibitors from 50 countries exhibited, which was visited by 35,000 business people. (K.S.)
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Privredni vjesnik Year II No 0103
CROATIAN FOREIGN CURRENCY MARKET Currency
Kuna exchange mid-rate
AUD CAD JPY CHF GBP USD EUR
4,917507 5,292001 5,873247 5,077745 8,072124 5,429296 7,261683
Source: HNB
EUR
Magma repurchase worth €5.5 million Last week, Magma successfully repurchased its ninth tranche of commercial bills worth €5.5 million. The repurchase was partly achieved by an increase in the existing tranches of commercial bills and the issuance of the 14th tranche. The next tranche is due in July and will total €4.2 million. The new 14th tranche amounts to €2.5 million, and is due March 18 2011. The tranche will be included in the Official market of the Zagreb Stock Exchange, with Privredna banka Zagreb as agent.
USD
5.44
23.3.
24.3.
25.3.
26.3.
CHF
5.10
7.27
5.42
5.08
7.26
5.40
5.06
7.25
5.38
5.04
7.24
5.36
5.02
7.23 22.3.
WEEK ENDED MARCH 27, 2010
::: news
7.28
5.34 22.3.
23.3.
24.3.
25.3.
26.3.
5.00 22.3.
23.3.
24.3.
25.3.
26.3.
MONEY
TOTAL LIQUIDITY REACHES €30.62 BILLION
T-HT buys Combis for €25.5 million The Croatian Telecommunications bought Combis, IT system integrator. The contract was signed recently. The purchase price was between €25.5 million and up to a maximum of €31.5 million, depending on achieved business results for 2010 and 2011. The acquisition is part of the strategy of T-HT, with the goal of becoming a significant provider of information and communication technologies and services. Combis has 280 employees, and according to preliminary, unrevised results for 2009, it achieved consolidated profits of around €45.2 million.
Vesna Antonić
Hospitalija issues bonds worth €7.7 million Hospitalija issued bonds with a lifetime (repayment date) of seven years, worth €7.715 million. It has thus refinanced the due tranche of commercial bills issued in December 2009. This move will enable the further successful business of this company, which achieved the highest level of profitability in its history during a critical 2009. It finished the year with €12.47 million profit and €1.86 million operating profit, which represents an EBITDA of 15%.
he value of M1 money supply in January increased for the third consecutive month, and by almost €0.14 billion in relation to December 2009. M1 money supply, which encompasses cash in banks and deposits amounted to €6.59 billion at the end of January. This increase has been almost totally caused by growth in deposits, which reached €4.56 billion at the end of January, whilst cash in circulation dropped to €2.03 billion. On a year-on-year basis the fall in money supply was 16th
For 16 consecutive months money supply has fallen
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consecutive month, but the rate of fall-off has slowed considerably. For the first time since October 2008, deposits registered growth on a year-on-year basis (1.2%), considering that they registered a 10.8% fall year-onyear in January 2009. Simultaneously, the decline of cash outside banks, which started in August last year, intensified in January, amounting to 11.2%. Total liquidity (M4), increased in January by €53.7 million on a monthly level, reaching €30.62 billion. Year-on-year M4 registered a mild increase of €0.27 billion or 0.9%. Savings and time
deposits (in kuna) dropped to €5.15 billion, some 24.5% less than January 2009, and represents the lowest level since May 2006. Foreign currency deposits in the same period increased by €2.33 billion (14.3%). At the beginning of the year, it appeared that the downward trend in money supply was slowing, particularly M4 which gained on a year-on-year basis. However, regarding expectations for the real sector and the labour market, we do not see a basis for their more significant recovery, certainly not during the first half of 2010, point out RBA analysts.
www.privredni.hr Business & Finance Weekly
WE PRESENT 9
NEBESKI DAR, SESVETE
AGRICULTURAL CO-OPERATIVE POTOMJE, OREBIĆ
No need to export When a finance expert starts producing wine, the result can only be lucrative
Crystals in the service of health Their range consists of crystals and other health products he powerful creation of nature transformed into precious and semi-precious stones, known as crystals, impressed Andrea Božanović, who is surrounded with many natural crystals from Africa, Madagascar and America in her wellness store. In Nebeski dar (gift from heaven) in Sesvete, visitors are greeted with formations of various crystals: globes, eggs, pyramids, pebbles and clusters. There are even some rare varieties, such as Boji stones, ocean jasper and suguliths. Modern accoutrements such as mobile phones and computers radiate and transmit electromagnetic waves which have a disturbing effect on our energy field. Fortunately, nature has rewarded us with crystals, whose organic energy helps to restore our natural and healthy state. Wearing crystal jewellery is a simple and practical way of maintaining health and a strong energy field around our body, explains Andrea Božanović, owner of Nebeski dar, which is also a book store selling books from various fields of literature on improving the quality of life.
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Internet shopping Nebeski dar was founded three and a half years ago, motivated by personal needs for change
and improvement. “The idea emerged from a long-term interest for the powerful potential hidden in all of us, and great love, amazement and respect for nature. Our aim was to offer to the general public a range of quality products, which could improve their quality of life, and raise awareness about the importance of taking responsibility for personal health and general wellbeing. We are happy to introduce people to the beauty and powerful energy of crystals, which is still rather unknown and insufficiently explored, as well as to see their joy when they start to feel the benefits of the crystal”, says Božanović. She announced they intend to expand their range with new crystals and other products for healthier and more comfortable lives. The aromatic corner of the shop houses incense sticks from India, an essential wellness product which purifies space from negative energy. They also offer ayurvedic soaps made from medicinal herbs, flowers, fruit, essential oils, palm, coconut and olive oil as well as glycerine. Through their online store with detailed descriptions and authentic photographs, they have made their products available throughout Croatia and further afield. (E.D.)
finance expert from Pelješac, Ivica Radović, commercialised his family tradition of wine production in 1997 when the Agricultural cooperative Potomje was founded. The Co-operative was founded by seven co-operative workers, and its main activity was wine processing and marketing under the trade mark of Radović wines.
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Radović now plans to expand the cellar since the present 1,600 m2 have become too small Potomje has four employees and four wine varieties on the market: Dingač, Postup, Plavac and Rukatac. Before he opened his accounting service and started to produce wine, Ivica Radović had worked for a number of years as finance director of the Orebić, hotel and tourism company. He was also the manager of the famous Dingač co-operative. Radović owns over two hectares of vineyards planted in the optimal locations of Pelješac, Dingač and Postup. Total production ranges between 50,000 and 60,000 bottles, depending on the yield, of which 20,000 bottles cover the supreme Postup and Dingač wines. Several
years ago Radović launched limited reserves of Dingač that are served only in some top restaurants or in up-market wine shops. “We mainly market our wines in Croatia. There is no need for us to penetrate foreign markets, except for our almost insignificant share of Dingač in several neighbouring countries. Furthermore, they are listed on wine maps of all elite hotels in Dubrovnik, as well as five-star hotels throughout Croatia.” Expansion of the cellar Although this is not the time for capital investment, Radović plans to expand his cellar, since the present 1,600 m2 have become too small, and there is no room for larger tourist groups. He is currently more preoccupied with irregular payment. “If we add the drop in sales of wine in Croatian restaurants to this problem, it is possible that many of us will find it difficult to survive on the market”, he explains. Radović is constantly planting new vineyards, but he feels it is not good that most subsidies for planting permanent plantations are directed towards bigger systems. Time will show whether this is a smart move. “I believe it would be better to allocate subsidies to small farms that are more capable of managing,” opines Radović. (J.V.)
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Privredni vjesnik Year II No 0103
::: news
FIFTEEN YEARS OF ALTPRO
Belje takes over Moslavka Ratarstvo The Belje company has taken over Moslavka Ratarstvo from Potok and the Factory of Cattle Feed from Popovača, according to a statement issued by Belje recently. Creditors of the companies participating will give collateral in compliance with the Law on Stock Companies, if they apply within six months from publication in the court register where the company is registered. Creditors of the company have that right only if they can prove that the merging of these companies does not jeopardise the fulfilment of their claims.
Competitiveness proved on six continents
Silver medal to Agrolaguna wine This year, at the Bacchus wine contest in Madrid, the wine Castello Festigia from the cellar of Agrolaguna won a silver medal. The contest was held between 18 and 21 March, sponsored by the International Wine Organisation, the federation of the most important wine contests. The wines Merlot Festigia and Cabernet Sauvignon Festigia from the Agrolaguna cellar won a gold medal in Italy 2009 in Bergamo, and bronze medal from ‘Decanter’ in London. Quality language providers The pan-European association of providers of language services, European Association for Quality Language Services (EAQUALS), which promotes quality in language institutions, was presented in Zagreb on Friday at a meeting of the Society for Foreign Languages in the Croatian Chamber of Economy, which was accepted as an associate member of this organisation. Eaquals maintains an up-to-date approach to the latest activities in the field of foreign language teaching and provides its members with life-long studying. It evaluates and inspects schools with various criteria: curriculum, lesson plans, compliance with EU guidelines, facilities, administration, teaching performance, the satisfaction of students and employees, and demands constant improvement.
Products and solutions for railways are recognised in many EU countries, Australia, Brazil, Republic of South Africa, USA, Indonesia, India, Thailand, Israel, Turkey and many others
Jasminka Filipas ecently, the Altpro company from Zagreb celebrated its 15th anniversary in the Croatian Chamber of Economy. Its name became wellknown throughout the world in 2003. Since 1995, the company has been developing and producing equipment for railway vehicles and its infrastructure. It has developed some 700 products and complex devices, whose market price can reach €60,000.
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Supported by HGK “Our products have recently conquered our sixth continent and our 32nd country. We signed a contract in Australia regarding the modernisation of level crossing systems. Our location in the Technological Park in Zagreb represents the greatest concentration of high-tech developers. It is interesting that Croatian Railways (CR), despite our significant position on the world market, have shown no interest in our products. However, the recent changes in board members and departmental heads within the CR infrastructure, level crossings and traction have significantly changed the situation. I think our products will find their way to Croatian railways”, noted the director of Altpro Zvonimir Viduka.
The company’s export offensive has always been supported by the Croatian Chamber of Economy (HGK). As the president of HGK Zagreb Office Zlatan Fröhlich said during the ceremony, Altpro is an example of company excellence, which has greatly contributed to the economic development of Zagreb and beyond. Hence the reason why the Chamber will suggest this company be awarded by the City of Zagreb. Today, Altpro employs 42 staff and is highly regarded as a successful Croatian exporter, particularly in the area of high technology. Crisis and recession notwithstanding, their business year has been extremely successful, since they submitted more offers than in any previous year. In addition to Australia, their products and solutions are recognised in many EU countries, Brazil, Republic of South Africa, USA, Indonesia, India, Thailand, Israel, Turkey and many others. International innovation awards This company’s work has been rewarded by many prestigious awards, especially gold medals won at international fairs. They also gained three gold medals at fairs in Pittsburgh (2003, 2005, and 2008), London, Moscow (2004 and 2007), and several times in Zagreb and Belgrade.
From 2006 to the present their new product, an axle counter type BO23 for track sections, has won gold medals at fairs in Romania, Germany, Belgium, Malaysia, Poland, Serbia, USA and Croatia to mention a few. As the only producer in this region of Europe, Altpro has been listed in the Railway Directory in 2003 (the world guide of the railway industry). All strategic products important for the safety of transportation have been tested in compliance with IEC regulations, CENELEC standards and UIC reports in authorised institutions. Altpro has also received a certificate on safety standards in compliance with EU standards, and is the only company to be granted such a certificate in a country outside the EU. The list of their achievements is too long to fit into a newspaper article, although it should be mentioned that last year, when many companies stopped or halted investment, this company invested €0.38 million in development and employed an additional five new workers. Equally, it secured new markets in a year of global and local economic crisis. At the beginning of this year, it started exporting its products to Poland, Portugal, Vietnam and Morocco amongst others. It is currently undergoing the homologation process in Russia, Slovakia, Slovenia, Italy, Indonesia, USA and Thailand.