Ivan Vidaković, Microsoft Croatia Director Small specialised software companies stand higher chance of global success
Five new investment project groups presented The launch value of projects for the next quarter is €1.78 billion via local participation
Only statistical growth in salaries this year Another year of being cautious and weaker demand for lending long-term
INTERVIEW
INVESTMENT
ANALYSIS
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Croatian Business & Finance Weekly Established in 1953 Monday / 21st March / 2011 Year IV / No 0145 www.privredni.hr
S U P P O R T E D
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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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TOURIST LAND ACT PASSED AFTER 20 YEARS
IRCRO projects worth €0.15 million New agreements were signed within the scope of the Research and Development Programme (IRCRO) in the Croatian Business and Innovation Centre (BICRO), governmental agency for the implementation of aid programmes for technological development. The agreements will serve as financial aid to small and medium-sized enterprises wishing to invest in research and development through partnerships with scientific institutions. Funds of over €0.15 million were allocated to companies Bioterra, Lens and Pro Integris for research and development activities. These comprise over 50% of total project expenses. HŽ Infrastruktura invests over €0.14 billion
This year, HŽ Infrastruktura will invest €0.14 billion in the renovation of railway tracks, of which €56 million will be provided by the state budget, €24.38 million from EU funds (Ipa and Ispa) and €61.37 million from credit lines. This is a significant increase in relation to 2010, when €83.2 million was invested. The largest investment (around €61.64 million) is intended for Corridors V.b and V.c, with €24.85 million being invested in Corridor X (Vinkovci-Tovarnik). Last year, HŽ Infrastruktura reduced the number of employees by 959 (to 7,735), with severance pay amounting to €8.5 million.
First concession for tourist land in Croatia Concessions on land for tourism will be granted for a maximum period of 50 years and companies obtaining them will be able to invest immediately fter 20 years, the Croatian government has decided to solve the problem of tourism and other construction sites that had not been valued during the transformation and privatisation period. It will do so by allocating concessions rather than outright selling. The Tourism Land Act will enable Croatia to continue managing this land, covering an area of 100 million m2 and preserving its natural resources, according to the statement of the Minister of Tourism, Damir Bajs, at a conference held
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recently. The new Act regulates almost 75% of land surrounding hotels and camps, enabling a new investment cycle. Bajs reminded that land for tourism is of prime interest to Croatia, in addition to forestry and agricultural land. Concessions on land for tourism will be granted for a maximum period of 50 years and companies obtaining them will be able to invest immediately. The model of allocating concessions will for the first time directly supports the tourism sector by increasing the quality level
and reducing seasonality. Minister Bajs pointed out that in doing
The new act regulates some 75% of land surrounding hotels and camps so both state and local administrations will gain, since 40% of pooled funds will be issued to the local administration, and 60% to the development and tourism fund.
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Privredni vjesnik Year IV No 0145
JULIJE KATANČEVIĆ, DIRECTOR, DEVELOPMENT AGENCY SI-MO-RA
Medical Tourism Cluster
Our plans have been given the green light To date our agency has worked on 29 local and international projects he development agency SI-MO-RA was founded in 2007 in order to motivate the regional and local economy. Since then we have been helping cities and municipalities, SME’s, craftspeople, co-operatives and non-governmental organisations to achieve their business projects. Our work has been recognised at county level also and within the region of Pannonian Croatia, where we have initiated joint projects. In co-operation with the Administration department for managing accession funds and subsidies we drew up the County development strategy and action plan for the strategy development for the period 2011-2013. Last year we directed all our activities into obtaining a certificate which guarantees foreign partners that our region is a Croatian Investor Friendly Region. Previous foreign direct investment into the companies Applied Ceramics, Pharmas and CMC Sisak confirms this area has been recognised as being investment friendly owing to prepared projects and the proactive leadership of the County. We expect new investment soon, especially in new technologies and products with higher added value. We secured €152,000 through the IPA programme for the creation of a new tourist project – the development of cycling tourism. The project will develop 340 kilometres of cycle paths in the border area between Croatia and Bosnia and Herzegovina, and the project will be completed in the area of the Nature Park Lonjsko polje and National Park Kozara.
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IMPRESSUM: Privredni vjesnik Kačićeva 9 10000 Zagreb +385 1 5600020 uprava@privredni.hr www.privredni-vjesnik.hr/ subscription
Schwarzwald Clinic Croatian style Reputable Croatian private clinics associated in a cluster initiate the construction of coastal medical resorts t is a known fact that medical tourism prolongs the tourist season, and March, April, May, mid-September, October and November are optimal months for visiting medical centres. Since a Mediterranean lifestyle is Croatia’s biggest selling point for medical tourism, members of the Medical Tourism Cluster are trying to motivate foreign businessmen to invest in the construction of medical resorts in Croatia. Three projects have already been signed with three foreign investors. The first project, worth €27 million, was signed with the Norwegian company Olympia Holding from Oslo, and it covers the construction of a medical resort in Cavtat which will combine medical and residential facilities. This is a socalled human approach to medicine, since such hospitals do not have the appearance of a hospital, but of an apartment complex, stated Damir Jandriček, strategic and investment director for the Medical Tourism Cluster. This closed-type complex will be located on an area of 47,000 m2, and in addition to residential and rehabilitation zones; it will also include shops
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We also managed to secure €2.8 million through IPA for two other projects: Local Partnership for Employment and Electronic Business. Last year, 119 entrepreneurs used our counselling service, and we designed 21 business plans and investment studies, which directly led to the employment of 77 new workers in the County. The total value of these plans and studies is €2.42 million, and banks have already given them the green light. Moreover, with the guarantee scheme of the County, managed by SI-MO-RA, five guarantees were issued last year with a total value of over €0.84 million. We also had 29 local, international and cross-border projects, where the Agency worked as the lead or associated partner. The problems we encounter when working with enterprises include lack of finance, but also basic know-how on projects. That is why our projects are primarily directed towards raising the level of know-how in the area of entrepreneurship.
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 Lučana Banek lucanab@gmail.com Mirjana Cibulka mirjana.cibulka@gmail.com
EXECUTIVE EDITORS Andrea Marić maric@privredni.hr Vesna Antonić antonic@privredni.hr
INTERNATIONAL OPERATIONS Ray Fletcher fletcher@privredni.hr
and restaurants. Organic fruit and vegetables will be grown on the site, and the resort will also employ local people and medical staff. The second project, worth €15.5 million, will be cooperation between the Cluster and Lošinj’s tourist company Jadranka as well as the European Bank for Reconstruction and Development. A medical resort will be built, as in the case of Cavtat and Mali Lošinj. The third project concerns the investor who purchased the Olimpya Hotel in Vodice, but Jandriček did not wish to elaborate on that matter. All medical resorts should be built within three to five years, pointed out Jandriček. Around sixty doctors, members of the Cluster, would like to be co-owners of these resorts or clinics, each with a 5% share in the ownership structure. Furthermore, the Medical Tourism Cluster, in co-operation with the Croatia Chamber of Economy, is working on a national quality certificate, crucial in negotiations with local and foreign insurance agencies. The standards covered by this certificate will be in accordance with EU quality conditions.
Five foreign partners The Medical Tourism Cluster is an economic association of the most reputable Croatian private clinics. It includes 42 clinics and 60 doctors, and its goal is to open foreign markets and attract foreign clients. The Cluster is owned by some 10 clinics, whilst others are simply members. Five markets have been opened so far, with partners from Norway, Russia, Germany, USA and Great Britain. Subsequent to arrangements between partners, the first groups of 40 people are expected to arrive in September for the purpose of medical tourism. We will also soon offer charter flights from these markets, concluded Jandriček.
www.privredni.hr Business & Finance Weekly
INTERVIEW
3
( over 40%
local small business owners cannot afford computers
IVAN VIDAKOVIĆ, MICROSOFT CROATIA DIRECTOR
Lack of IT specialists Small, narrowly specialised software companies stand a higher chance of global success opined Boris Odorčić icrosoft Croatia was founded in January 1997. It is wholly owned by Microsoft and is in charge of the development of the Croatian market. Its primary tasks comprise the organisation of distribution channels, co-operation with large users, organisation of technical support, marketing and the legalisation and localisation of products. Ivan Vidaković was appointed as Microsoft Croatia Director about a year ago.
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What are your views on business in Croatia? The Croatian economy has been in continuous downturn over the last two years which has resulted in reduced investment in IT. Nevertheless, after the anticipated completion of negotiations with the EU and the external incentive triggered by the recovery of neighbouring economies, Croatia too will see recovery in 2011, albeit much milder than we would wish for. This will partly be a result of the election this year and analysts forecast any recovery only in the second half of the year. What is the Croatian software market like? The Croatian software market has always offered very creative and innovative solutions, ranking with best world solutions. The main challenge is the lack of a critical mass with the non-existence of large software companies competing with developed market products. Microsoft provides significant support to the development of a local software economy by supporting software start-ups, in order to improve the situation in Croatia. We have been doing this mainly through Microsoft innovation
centres (currently there are two in Croatia) and several more are anticipated. We are currently supporting over 180 start-ups. These are companies widely exporting
I believe that even the birds could sing about the lack of IT specialists their know-how and illustrating how committed work and cooperative partnership can lead to satisfactory economic potential. What is your assessment of Croatian IT specialists? Are there enough IT specialists in Croatia? Croatian IT specialists are good, but there are not enough. This is the main cause of the lack of critical mass. On the other hand, currently there is almost no job that could be done without the use of computers. Therefore, it is obvious that the absorption
capacity is insufficient. I have been pointing out the disproportion between university students of social studies and those studying natural sciences, with social studies prevailing for a long time. Unfortunately, there is high level of inertia within the system and there have been no major changes for decades. I believe even birds can sing about which faculties produce warehouse stock, and what specialists we are lacking. What IT segments and products can Croatia offer to the region, Europe and the world? Small, narrowly specialised software companies currently stand a higher chance for global success than “large” software companies, as I have already mentioned. This is partly a result of the fact that their narrow specialisation aims at very specific areas of service and can quickly find new users. They are able to adjust quickly because of their size and, if necessary, change their specialisa-
Aspects for concern What is there to worry about? “It is an obvious fact that the EU market will not merely bring us hundreds of millions of new potential users but also all the competition within these markets. According to the latest survey conducted by the Croatian Chamber of Economy, many Croatian craftspeople and small business owners lack both skills and financial facilities for computer purchase and that is worrying. Nevertheless, it is a significant opportunity for Microsoft and our partners.” tion or niche (not necessarily their technological platform). This can be clearly illustrated with the example of Croatian start-ups. The more such innovative and creative companies, the bigger the chance for mergers or acquisitions and for Croatian success beyond regional borders.
4 ::: news
Privredni vjesnik Year IV No 0145
FIVE NEW INVESTMENT PROJECT GROUPS PRESENTED
40 concessionaires Zagreb Airport
The value of projects for the next quarter is €1.78 billion launched by public companies with fore €0.5 million to aid Japan The government will take from the budget €0.5 million to help the Red Cross send assistance to the people of Japan, devastated by the earthquake and tsunami. Immediately after the earthquake, Croatia offered help in the form of rescue teams, blankets and other equipment, said Prime Minister Kosor. The government will also offer to treat the wounded in specialised clinics of KBC Rebro and seaside resorts for mothers and children. Podravka Poland receives recognition for successful business The company Podravka Poland has received two highly esteemed recognitions - Forbes Diamonds and Gazela Business, confirming its status on the Polish market – the status of a successful and prescient company. Dun&Bradstreet’s analysts and Forbes listed Podravka amongst the most successful companies in 2010. Furthermore, the Croatian Podravka Group achieved a nett profit of €11.5 million in 2010, after extraordinary items totalling €10.74 million. Food and drink sales amounted to €0.38 billion, 2% down when compared with 2009. Defined supplies of oil derivatives Mandatory oil and oil derivative supplies for Croatia will total 502,000 tonnes for 2011, according to the government decision. The decision was made based on annual supply, which totalled 2.6 million tonnes in 2010. This amount will be reduced by 14.8% in the calculation of supplies, the same amount of local production of oil derivatives from crude oil. The government prescribed that part of the mandatory supplies may also be stored as crude oil.
Igor Vukić ender documentation for the concession of Zagreb Airport has so far been purchased by 40 interested companies, as has recently been stated by Prime Minister, Jadranka Kosor Presenting five new groups of investment projects which are to be launched next quarter, the PM Kosor used Zagreb Airport to illustrate foreign and local investor interest in the projects which should mitigate the consequences of the big economic crisis. “It clearly proves we are on the right path and indicates investor confidence in Croatian stability and economic prospects. Investment projects and the conclusion of negotiations with the European Union are our priority measures for recovery from the crisis,” pointed out the Prime Minister. The value of projects for the next quarter stands at €1.78 billion. These projects are launched by public companies and both foreign and local investors’ participation is expected. Investors are expected to engage numerous lo-
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cal contractors and impact on the decrease of high unemployment level. An element of investment, for example, in the construction of the waste water drainage system in Slavonski Brod, with a value of €28.77 million, will be using money from European funds under the Ipa programme. The main investor for the construction of a new block for the thermal power plant Plomin 3 will soon be selected via an international public tender. According
to the Prime Minister, priority will be given to the bidder with sound financial planning, whose technical effects will impact on a reduction of the emission of glass house gases. Ombla tender almost completed Investment projects for the first quarter are meeting the set deadlines, as announced by the PM. The reconstruction of Šibenik and Dubrovnik harbours has started. A
Law amendment for effective investment Domagoj Milošević, VicePresident of the government for investment, offered an additional explanation on the various ways of encouraging foreign investment. How will investors for Brijuni Rivijera be found? We are working on the acceleration of this project which has been in planning for several years. Three years ago, there were partners interested in the project and these will be reinvited to participate in the tender. Brijuni Rivijera, in addition to involving companies in construction, should also provide a significant contribution to employment. In the first part
of the project, which is to commence in the next quarter, we are planning the long-term employment of over 1,000 workers, directly in hotels and marinas and indirectly in companies which will be the suppliers. How will investors join the project? Through tender for the concession to construct and to management rights; we are not talking about land purchase. Is there any other incentive for investors? Several laws, such as legislation concerning forests, water, construction and additional incentives
for big investors, will be amended to enable investment in various sectors. We have been constantly analysing possible obstacles to investment and will amend our legislation accordingly.
www.privredni.hr Business & Finance Weekly
5 UNEMPLOYMENT GROWING CONSISTENTLY
interested in
eign and local investors’ participating like and gain experience in looking for new jobs. The leader of the group is the Agrokor group which has already published an advertisement looking for 1,000 workers of various qualifications. According to Gordan Radin, a member of the Agrokor Board, workers of various qualifications will be employed and not on a seasonal basis. “We employ some 3,000 seasonal workers every year. Nevertheless, here we are talking about out-of-season employment of people with various qualifications who will gain the opportunity to find out strategic partner has been chosen for Rijeka harbour. The FilipinoAmerican company ICTSI will invest €70 million in the first tranche of the construction of the terminal in Rijeka harbour. It will increase the shoreline by some 300 metres and have a significant impact on the annual capacity of container traffic. A similar tender finalisation is in hand for the construction of the electric power station Ombla near Dubrovnik and the construction of new Janaf oil terminals at Omišalj and Sisak has commenced. The outset of reconstruction works on the KriževciKoprivnica railway is anticipated in May. “I anticipate the same work dynamics for projects of the second quarter;” pointed out the Prime Minister. She added that the government will assist the more rapid completion of private investment prepared by local entrepreneurs. They offered assistance in the implementation of the programme for economic recovery. At the recently held meeting at the Ministry of Economy, a group of some sixty employers reported on the programme “Work against the crisis” which will employ young unemployed people for a three-month period to give them the opportunity to better understand what the world of work is
Investors are expected to engage with numerous local contractors about working in a big company. Some of them will have a chance to remain and most of them will gain useful experience for their further career development,” stated Radin. Three month contracts This employment will be paid by Agrokor and worker will get three months employment contracts. Agrokor will not use state subsidies or funds recently released by the Croatian National Bank. According to Radin, Agrokor has secured foreign financing and will not be using the “Rohatinski money”. The ‘Agrokor initiative’ has been joined by other successful Croatian companies such as Pliva, Atlantic Group, IGH Institute, Dukat, Viro, Franck, Zagrebačka pivovara, Žito, Karlovačka pivovara, KTC, Kutjevo, Mlinar, Sapoina, Tehnika and Vindija amongst others. Advertisements for the employment of qualified but inexperienced staff will be published on the Posao.hr portal and other sites specialised for employment.
336,411 unemployed in February According to the Croatian Employment Agency, there were 336,411 unemployed people, some 2,033 more than in January. Moreover, almost 3,000 people were deleted from the Agency register in February, having failed to report on time and refused offered work. On a year-on-year basis, negative trends continue to decrease, with the annual growth rate standing at 5.9%, after 8% in January. However, when one considers the base effect and the fact that the unemployment rate continues to increase on a year-on-year level, the recovery of the labour market (excluding seasonal effects) is not likely to occur before the last quarter of this year. The number of unemployed has been rising (on a year-on-year level) for almost two years, and 74,000 newly unemployed people have been registered during that period, which is an increase of 28%, according to RBA analysts. The Agency February data imply that the number of people who lost their jobs fell by 17.4%, which is somewhat expected, given that companies reduced their capacity to an appropriate
level during the past two years. However, 20.7% of people who failed to find work immediately after finishing their education, is grave enough to cause additional concern. These data point to two trends, according to analysts. To a great extent companies stopped dismissing staff since those that survived managed to consolidate their business. Notwithstanding that fact, due to the uncertain speed of any recovery, employers remain unwilling to employ more people, which makes hiring too weak to boost a recovery of the labour market. Finally, movements in the real sector have failed to produce the need for hiring new workers. (V.A.)
ATTORNEYS HESITATE TO REVEAL INFORMATION
Fight against money laundering intensifies The prescribed regulation according to which attorneys are obliged to reveal confidential information on their clients, subject to investigation in order to prevent money laundering, violates the constitutional right of independent and autonomous bar, according to the statement of participants of the 29th Days of Croatian Attorneys. The Croatian Bar Association (HOK) had already submitted an application to the Constitutional Court to evaluate the controversial provisions of the Money Laundering Act, but the decision is still awaited. During the process of passing this Act, HOK pointed out these
same objections, but they were rejected on account of the fight against money laundering being more important than attorneyclient confidentiality. Attorneys also complained that the legal regulation for fighting money laundering, which also includes nine other regulations in addition to the Act, is too complicated and expensive, especially for independent attorneys. Irina Jelčić, attorney from Zagreb, stated there were 298 cases with suspicion of money laundering and terrorism financing between 2009 and 2011. Surveillance was performed in 889 cases, after which 43 complaints were filed, with fines paid totalling €125,000. (D.Ž.)
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WE PRESENT
USLUGA, PAKRAC
Privredni vjesnik Year IV No 0145
VIBOR, ŽRNOVNICA
Unique ecological products Vibor mainly grows olive trees from cuttings but is also one of the first producers of kiwi fruit cuttings in the area
A good basis for children’s imagination Positive technical aspects of large wooden toy production and equipment hildren need very little for outdoor fun; merely several forts and towers, slides and similar equipment. Colourfulness and variety are imperatives for children, whilst their parents need safety of use. Usluga from Pakrac can meet all these needs. They have been developing and broadening their product range for 15 years covering different types of playgrounds and functioning through difficult times without a halt. It has equipped playgrounds throughout the country, as well as selling its products in Bosnia and Herzegovina and Serbia. The most usual customers are utility companies in many Croatian towns as well as tourist companies wishing to entertain the youngest visitors and keep them in good spirits.
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Exports to Italy this year, followed by exports throughout the EU “This year we are planning exports to Italy, followed by exports throughout the EU,” anticipated Marijan Turuk, the coowner of the company, together with Antun Irić. They employ 20 staff and hold various attestations and certification for the production of children’s equipment and children’s safety (ISO 9001, ISO 14001) as well as cer-
tification of product regularity. Currently their range has entered the final stage of certification of final products to penetrate EU markets. In addition to equipping children’s playgrounds, the company also produces other utility equipment such as litter bins of all types and dimensions, a wide range of park benches, flower gardens, planters, wooden rocks, bridges, crossings, kiosks, summerhouses, children’s playhouses and children’s houses. Show-jumping equipment Their product range also comprises stakes for propping up young trees and round logs for paving paths and other surfaces. Over several years of working with wood, they have developed different programmes for the deep protection of wood through pressure impregnation. Wood has positive technical aspects for large wooden toys and accessories in addition to being ecologically acceptable, as Usluga has pointed out. Impregnated wood is the most widely used, followed by thick, waterproof veneer sheets and thick layered beams glued using waterproof glues, as wood and wooden materials are easily mechanically processed, meeting the necessary ergonomic needs. Parents can remain calm – children’s imagination will have a good basis. (I.V.)
ibor was founded by Vibor Mihanović, a veteran kiwi cuttings producer in the area. The company currently mainly engages in the production of olive tree cuttings, using the knowledge of the most reputable specialists. This year, at the recently held Zlatna kuna award ceremony, it received support from the Croatian Chamber of Economy for the project of cuttings production and the revitalisation of growing of buhač (a Dalmatian natural pesticide) and capers as unique and local Dalmatian ecological products. Buhač growing originated in 1840 in Dalmatia; twenty years later, buhač powder was exported to the USA. At the beginning of the last century it was planted in Dalmatia on an area of over 2,000 hectares. In 1934 Dalmatia was the second producer globally after Japan. Currently, Kenya is the biggest producer. Growing buhač has very good potential, since it is an ideal protection from harmful insects when ecological production is required, which is increasingly widespread, as it contains pyrethrum, a natural plant insecticide. Caper is one of those plants whose fruit is an unavoidable spice in gourmet circles. Vibor is a rare, if not exclusive, producer of caper seedlings in Croatia. “This implies that Croatia can, thanks to its favourable climate and unpol-
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luted environment, enhance the production of these two products and become a European eco-farming centre,” pointed out Siniša Miličić, Head of sales and marketing at Vibor. 12 types of olive tree cuttings In addition to growing caper and buhač seedlings, Vibor olive tree cuttings have become its primary product. It produces 12 types of olive tree cuttings as well as those for fig and rosehip and seeds and
Vibor produces around 30,000 olive tree cuttings annually seedlings of ornamental plants and flowers. The founder of Vibor is one of the first producers of kiwi cuttings in the area; cuttings are still mainly grown in plastic tunnels. 30,000 olive tree cuttings are produced over some 2.5 hectares of plastic tunnels and hot houses annually. “Our cuttings can be found in most garden shops. All cuttings and seedlings have a declaration issued by the Institute for Seed Production and Grafting and by the Institute for Plant Protection in Farming and Forestry in Croatia. Regular customers can agree in advance on the production of a specific type of seedling or cuttings,” concluded Miličić. (J.V.)
www.privredni.hr Business & Finance Weekly
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CROATIAN FOREIGN CURRENCY MARKET Currency
Kuna exchange mid-rate
7.397
5,186476 5,323120 6,423352 5,796314 8,428171 5,232846 7,374650
AUD CAD JPY CHF GBP USD EUR Source: HNB
EUR
WEEK MARCH 19, 2011
USD
5.33
15.3.
16.3.
17.3.
5.90
7.392
5.31
5.85
7.387
5.29
5.80
7.382
5.27
5.75
7.377
5.25
5.70
7.372 14.3.
CHF
18.3.
5.23 14.3.
15.3.
16.3.
17.3.
PBZ ANALYSIS
18.3.
5.65 14.3.
15.3.
16.3.
17.3.
18.3.
::: news
Only statistical growth in salaries this year We expect another year of being cautious and weaker demand for lending especially long-term verage nett salary in 2010 stood at €717.80 (when taking the crisis tax into consideration). This is a real downfall by 0.8% over 2009, or nominal growth of 0.3%. The fall of nett salaries would have been even higher had the Act on Income Tax not been changed, which is implied by data according to which gross salaries reduced by a real 1.5% in 2010 and the fact that Croatia started to register real international growth of salaries in July, when amendments to the law came into force and the lower crisis tax rate was abolished, explains PBZ analyst Ana Lokin.
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Average nett salary in 2010 stood at €717.80 She also underlines that these are the reasons we can expect statistical growth of salaries in 2011, which will be higher due to the low basis of 2010, as in the period between July and December. Regarding the high unemployment rate, any pressure from employees to raise salaries does not exist. Increased costs of
raw material and energy under conditions of lower income and the possibility of transferring costs to buyers
does not offer most companies significant room for increasing salaries. Another downfall in salaries This is why this year we expect to register nominal growth of nett salaries from 2% to 3% on a year-on-year basis. In real values, we anticipate another downfall in salaries as a consequence to a higher average inflation rate of approximately 3%, says Ana Lokin. This would make 2011 the third consecutive year of decreased nett salaries, which might reach a significant 2.5% within three years. If we add the high unemployment rate, the deferral of pension harmonisation in 2011 and union estimations according to which tens of thousands of workers do not receive salaries, then we can expect another year of weaker demand for lending, especially long-term with savings increasing, which will fail to lead to higher personal consumption. This is visible in the consumer sentiment index from the Croatian National Bank and the survey conducted by Gfk, according to which almost 80% of households have insufficient income, underlines Ana Lokin. (V. A.)
Ministry of Finance repays Eurobond Last week, the Ministry of Finance repaid the entire amount of €800,625,000 of the Eurobond issued in 2001. This amount was partly provided by allotted savings from 2010 and credit packages with foreign and local banks contracted in February of this year, according to the statement issued by the Ministry of Finance. Erste Bank: lower interest rate on Swiss francs From May 1, Erste&Steiermärkische Bank will decrease interest rates by 0.3 percentage points on existing housing loans and property construction expressed in Swiss franks. After this deduction, the lower interest rate will be 4.80% and will be applied on annuities due on June 1, 2011. Favourable loans from Prva stambena štedionica The offer of promotional loans from Prva stambena štedionica (The First Housing Savings Bank) will last until June 30. Loans are arranged without compensation, with lower interest rates and longer repayment periods. The green loans from Prva stambena štedionica are intended for increasing energy efficiency, and will now be approved with an interest rate of 4.50%. Bridging loans will be approved with an interest rate of 5.10%.
8 ::: news Exports to Belgium exceeds 43% Despite the rise in value, trade between Croatia and Belgium is far below its potential and possibilities, with sufficient room for development of economic cooperation and investment. This is a statement from the seminar Belgium - your business destination at the heart of Europe held in the Croatian Chamber of Economy recently. Trade between Croatia and Belgium is consistently rising. It totalled US$399 million in 2008, but in 2009, it was somewhat lower due to the global crisis, but registered growth in 2010, when Croatian exports to Belgium increased by 43%, whilst imports declined. CCS invests €25 million to the economy of Karlovac The Zagreb company CSS has invested €25 million in the development of an economic zone in Karlovac, which marked the end of the first investment cycle in this zone. The investment will continue until the end of the year when the construction of the Store Land shopping centre will begin. In addition to direct investment in the development of the economy of Karlovac and creating 100 new jobs, CSS invested over €3 million in the infrastructure of the economic zone. Internet takes over sales of tourist packages
Specialised internet portal for conference-type and business tourism www.poslovniturizam. com published its research on the rôle of the internet in the sale and marketing of tourism services. The research was conducted by an on-line survey, encompassing sales and marketing managers from 95 hotels in Croatia. The results point to an increasingly important role of the internet in the hotel business, whilst its complete dominance over other types of sales is expected to occur during the next five years. According to hoteliers, the internet would then become the leading marketing and sales channel.
Privredni vjesnik Year IV No 0145
SARAJEVO BUSINESS FORUM
Projects completed between two Forums Organizers of the Sarajevo Business Forum (SBF), the main International Investment Conference of the region, introduce some of the projects presented at SBF 2010, which have been achieved ohammad Amah Alfaresi, a Kuwaiti businessmen who visited Bosnia and Herzegovina last year for the first time solely to participate at the Sarajevo Business Forum 2010, has already invested into several projects presented at the International Investment Conference 2010. ITC Constructor Group d.o.o Sarajevo, founded by ITC Kuwait and owned by Mr. Alfaresi, invested 7,500,000 KM in the project “Educational hostel for men and women” near Sarajevo. Construction of this hostel is still in progress. ITC Constructor Group also invested in the project “Bosnadrvo d.o.o”, a wood processing industry located in Kakanj. The Procedure of Company establishment has been completed and the project is currently in the preparatory phase of business expansion. The same company invested in the project “ITC Sarajevo Resort”, a complex of 30 vacation houses with a playground for children, boulevards, horseback riding paths and a personal safety team. The project “Butmir – Building of Mala Aleja, Sarajevo, Ilidza” with a value of 6,200,000 KM has also seen investment by ITC Constructor Group. The building is already completed and completion work on the façade and interior is under way.
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LATIVA Company, also owned and directed by the same Kuwaiti, Mohammad Amah Alfaresi, invested into the project “Investment in specialised beekeeping Co-operative APIMED”. This project, for which an investment of two million KM is needed, is currently in the preparatory phase of business expansion. LATIVA invested in the project “Poultry production investment in BH”; the poultry industry could be developed in many BH municipalities. The project initiator has sought, via SBF 2010, an investment for a feasibility study for 2 million KM. LATIVA Company contributed the amount and a feasibility study is being carried out. Shakeb Elahi, CEO of Ardent Trading, a Dubai businessman and well-known trader in pharmaceutical products has also visited Bosnia and Herzegovina for the first time in order to participate at SBF 2010. Ardent Trading recently signed a Memorandum of Understanding for the establishment of business cooperation with a pharmaceutical company from BH. These two companies will sign a Co-operation Agreement with a value of several million Euros at the forthcoming SBF 2011. Taking account of the Confidentiality Agreement signed between these two companies, SBF is unable to reveal details about this project, yet it is significant that Ardent Trading will become the
exclusive representative for this BH pharmaceutical company in GCC countries, Pakistan, Bangladesh and several other South Asian countries. Ardent Trading has accomplished this significant business project as a result of contacts established during SBF 2010. Sarajevo Business Forum 2010 has also served as a platform for the implementation of one of the most important multimillion media projects in the Balkans. AlJazeera Balkans has been set up in Sarajevo, and the studio of this prestigious media corporation will be located in the BBI Centre. The Al-Jazeera Balkan Agreement will be officially signed during Sarajevo Business Forum 2011. As one of Sarajevo Business Forum goals is to position BH and regional companies on foreign markets, a business arrangement for Euroasfalt Company has been secured in Abu Dhabi. The value of the project is estimated at several million Euros. Euroasfalt engineers have been working on project implementation in Abu Dhabi for some while. Inspired by these positive outcomes, SBF has recently formed a Construction Consortium of five BH construction companies. The Consortium signed a Memorandum of Understanding for joint entrance to foreign markets with the ambition to be joined by more regional companies in the near future.