Domagoj Sajter Bankruptcy is a payment mechanism for unfulfilled obligations, similar to the penalty card
Production of barley and malt 50% of brewing barley is produced in Croatia but imports are a necessity as brewers mainly use spring barley
€1.64 billion uncollected tax in 2010 Total Croatian tax, the share of all the taxes and contributions in GDP, from 2000 to 2009 was slightly below EU27 average
INTERVIEW
BREWING INDUSTRY
TAXATION
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Croatian Business & Finance Weekly Established in 1953 Monday / 6th June / 2011 Year IV / No 0156 www.privredni.hr
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GOOD NEWS FOR CROATIAN PRODUCERS AND LOGISTICS
Working capital credit financing programme
Easier access to export markets for textile producers, leather and metal producers
A fourth auction was recently held by the Croatian Bank for Reconstruction and Development (HBOR) for the credit quota allocation for implementation of the working capital credit financing programme. The Croatian Bank for Reconstruction and Development offered €52.88 million and 10 bids were made by commercial banks totalling €100 million. Since the level of interest shown was double the amount offered, 6 offers were accepted covering the €52.88 million. €0.42 billion revenue for Adris Group Adris Group total revenues for 2010 were €0.42 billion, down 1.4% over 2009. Exports came in at €0.17 billion, up 18% over 2009. 45% of sales revenue came from sales of products and services to foreign markets. Consumption increase in April. Sales volume for Croatian retail saw growth of 3.7% year-onyear, exceeding expectations, mainly as a consequence of late Easter holidays, according to the Croatian Bureau of Statistics, with nominal retail sales volume was 6.7% up.
The government recently adopted the law under which, after the conclusion of negotiations, Croatia will join the diagonal cumulation system Igor Vukić hen a Croatian textile producer buys cloth from Turkey, sews a shirt and wishes to sell it in one of the European Union countries, they cannot declare it as a Croatian product due to the origin of the cloth. Also they cannot use customs exemptions implied in the agreement between Croatia and the European Union. Nevertheless, this will change in the near future. Last week the government adopted a law under which, after the conclusion of negotiations, Croatia will join the diagonal cumulation system. The system comprises the European Union, Albania, Bosnia and Herzegovina, Montenegro, Macedonia, Serbia and Turkey
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When the law has been adopted by Parliament in emergency procedure, Croatian fish producers, for example, will be able to sell fish currently processed in plants in Albania as a Croatian product or as a European Union product. More favourable customs duties According to Martina Dalić, the Minister of Finance, such products will have more favourable customs duties and other administrative costs and will become much more competitive. The diagonal cumulation regulation will bring many benefits to textile producers, fish and fish product producers, as well as to companies in the leather and metal sector and other segments of the processing industry.
Prime Minister satisfied with export growth Croatian exports in April saw a surge of 36.3% over April in 2010, pointed out Prime Minister, Jadranka Kosor, at the government session last week. It was in fact up 46.2% with respect to March, she added, analysing the implementation of the Economic Recovery Programme. According to the Prime Minister, Croatia witnessed several signs of a “spring awakening” with industrial production growing 2.7% year-on-year, with retail up 6.7% and foreign tourist arrivals soaring by 28%.
Croatian companies involved in distribution and logistics will also indirectly be granted more
favourable operating conditions. According to Đuro Popijač, Minister of Economy, in Croatia there are some 200 major distributors of various types of goods, employing several thousand workers. The fact that Croatia has not been a member of diagonal cumulation of origin system has been a major hurdle to their business activities. Some have already announced their relocation to neighbouring countries within the system in order to cut business costs. Eventually, their operating conditions will be similar as those of European Union countries.
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Privredni vjesnik Year IV No 0155
GORAN RAŽNJEVIĆ, ILIRIJA, BIOGRAD BOARD PRESIDENT
€4.38 billion ( No alternative debt of 63,000 companies
to legal safety
New legislation does not differentiate between legal and illegal maritime littoral users he emergency procedure of passing a new legislative proposal on maritime littoral and sea harbours could have an enormous impact on companies which have so far been operating and investing in this zone. The concessionary model approval for business use of this zone in compliance with the Law on concessions and new legislative proposals is carried out by public invitation through the collection of bids. Such a proposal would be acceptable in cases of greenfield investment, yet is not acceptable in the current situation, particularly when hotels, camps or other existing tourist facilities are inextricably related to the maritime zone. Public invitation for the collection of bids as a model of concession approval is absolutely inappropriate in the current situation, since it would result in a form of auction of many companies’ legally acquired non- amortised assets and, in the case that companies were not granted the concession, it would be a type of nationalisation of their property. Since companies would not be indemnified from this investment, there would be huge losses due to the loss of property. The problem is in the fact that a new legislative proposal does not differentiate between legal and illegal maritime littoral users. We believe that capital and investment of companies which have incorporated the value of
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IMPRESSUM: Privredni vjesnik Kačićeva 9 10000 Zagreb +385 1 5600020 uprava@privredni.hr www.privredni-vjesnik.hr/ subscription
DOMAGOJ SAJTER
Bankruptcy is precondition f
Bankruptcy is a payment mechanism for unfulfilled obligatio Svetozar Sarkanjac lthough only 32, Domagoj Sajter, assistant professor at the Faculty of Economy, is regarded as one of the most competent people in bankruptcy issues. This was precisely the subject-matter of our conversation.
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their investment into structures and infrastructure on maritime zones as their original capital in compliance with laws and regulations must not be brought into question. In the case of Ilirija, transformation of ownership patterns has been done in compliance with the law and additional huge investment has been made. In addition, the concession has expired in the intervening time, which is why the whole situation is acquiring dramatic dimensions for Ilirija. Nevertheless, it is possible to avoid all the negative consequences of a new legislative proposal if companies were granted the right of priority concession enabling the legal users of facilities on maritime littoral to file a request for priority concession. (Editors Note: The term “maritime littoral” is often referred to as “Maritime Good”. Both phrases are acceptable in the context of this article).
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
According to some data, last year 1,300 Croatian companies went into bankruptcy, almost 24% more compared with 2009. The law prescribes that economic operators whose accounts are blocked for over 60 days have to file for bankruptcy. If bankruptcy is not declared on time, they face two years in prison. However, there are over 63,000 economic operators in Croatia with a debt of over €4.38 billion. They have been blocked for over a year, but they have not gone into bankruptcy. Of these 63,000, 45,000 are so called “zombie” companies, without a single employee. This means that if 45,000 bankruptcies were declared tomorrow, not a single Croatian would lose their job Therefore, the fact that bankruptcy proceedings are avoided to keep jobs does not ring true. Unfortunately, these tragic numbers do not stop here. According to statistics, the highest share of long-term blocked economic operators (41%) refers to those who have been blocked for over five years. Therefore, the blockage is 30 times longer than the prescribed limit, yet no bankruptcy orders were filed against them. I also have to correct the data
in question regarding the 1,300 bankruptcies filed last year. The number is actually significantly smaller. Compared with these tens of thousands of blockages, only 422 bankruptcies were actually declared in Croatia in 2010. Why are bankruptcies not declared? There are many reasons, but I will mention a few. Firstly, the scope of work is impressive. There are only 113 trade judges and court counsellors in Croatia, and with over 63,000 economic operators blocked for over a year, each of them would receive 560 cases. Furthermore, creditors are not motivated enough to start bankruptcy proceedings. Creditors are aware that settlement is impossible even in the case of bankruptcy, since in many cases the owners drained the most of valuable assets from the debtors, leaving only debts to the company. Secondly, the costs of the proceedings are considerable. In addition to the court fee, a special fee of €1,375 also has to be paid. Then there is the advance payment of costs of the previous procedure and enormous costs of lawyers, as well as advance payments for special hearings. What does the creditor, who paid for all this, receive in return? Absolutely nothing. He is in the same position as all other creditors. Therefore, creditor A, who passively observes how creditor B pays for the costs, has the same rights in the bankruptcy proceedings as creditor B. It is evident that few people are naïve enough to bear the costs for others.
INTERVIEW
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( 45,000 zombie companies without a single employee
a necessary and inevitable for a fair market game
ons, similar to the penalty card Why is it important to initiate bankruptcies? Bankruptcy is a necessary and inevitable precondition of a fair market game. When a football referee shows the red card to the player for using his hand, this may mean the player intentionally broke the rules of the game or he made a stupid move because of his inexperience. In any case, when the player is sent off, the game can return to normal and the message is sent that unfair conduct will not be tolerated. If the statistics would show that referees give out few red cards, this may mean the game has become “innocent”, without the need for severe penalties or the judges have started to tolerate this breaking of rules. The consequence of the latter would
lead to use of hands in football. This is precisely what is happening in Croatia. The market game has become the complete opposite of the core meaning of the market. If the market serves for an exchange, and the opposite party does not pay for the goods or services, failing to fulfil its obligations, it does not play according to the rules. Bankruptcy is a payment mechanism for unfulfilled obligations, similar to the penalty card. It has a double role. It signals to all participants that non-payment will not be tolerated, and provides satisfaction to the injured party. If a goal is scored using hands, then it must be annulled. If an individual builds a business empire on the backs of suppliers and workers who do not receive salaries or
contributions, these suppliers and workers (as other creditors) must have a compensation mechanism. If this mechanism is dysfunctional, the market game becomes twisted and distorted since goals are scored using hands and no one reacts. What are the sanctions against those who violate legal provisions? Poor or non-existent. According to data from the County State Attorney Office in Osijek, only one report of bankruptcy criminal act was filed in Eastern Croatia in the whole of 2010. That same year, 17 convictions were issued
It is possible to transfer laws, but the mentality – with difficulty The current Croatian Bankruptcy Act has actually been taken over from German legislation. Why does it work in Germany and not in Croatia? It is often said it is unnecessary to reinvent the wheel, and it is enough to translate a foreign law and the problems will solve themselves. Let us imagine an old clock hanging on the wall of a Swiss watchmaker. This fine and precise mechanism used for centuries has to be regularly serviced and repaired; parts need to be changed if the mechanism is to function properly. Let us assume someone gave this clock to the Bedouins in the desert. They have heard of a clock, they know what it looks like and what it does, but they have never had such a mechanism. Since there are no walls in their tents, the clock soon stops working due to neglect and poor conditions. The Bedouins lack the knowledge, expertise and experience to fix it. What happened? They stared at the clock which does not work, admiring its fine and complex mechanism, wondering why it worked for centuries in Switzerland, yet it does not tick here. Similar to
this story, we also transcribed a very complex and fine German bankruptcy mechanism which had never seemed to work here, and we wonder why the same tool works in Germany. Transfer of this important law is also a transfer of the culture and mentality that produced the original law. Croatians obviously do not have the same mentality or the culture as the Germans have, and I am not trying to compare the two nations, but simply stating we are different.
for the criminal act of avoiding declaring bankruptcy, of which only five received a conditional sentence. The same tendency is present in other Croatian regions. Non-payment is regarded as normal behaviour. Why? The players are all “reputable” entrepreneurs, members of the “high” society or so called elite. Only a few have the courage to shout: “The Emperor is naked!” You amassed assets at the expense of creditors; you have a sea of unpaid invoices and parallel companies in debt. When entrepreneurs are up to their necks in debt, they simply open another company and behave as nothing had happened. We may only hope these problems will be approached when we enter the EU, since it is clear we are incapable of solving them ourselves.
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Privredni vjesnik Year IV No o 0156
( 55,000 and 60,000 tonnes of mallt annual production of Slavonija slad
PRODUCTION OF BARLEY AND MALT
Climate restrictions defeated by plant breeders Around 50% of brewing barley is produced in Croatia. Imports are a necessity since Croatia is situated in the climate zone for winter barley, whilst brewers predominantly use spring barley Drago Živković uring a decade of work, the largest factory for brewing barley in the region Slavonija slad from Nova Gradiška, has become the top producer of barley. When built as an investment by the Belgian company Boortmalt, the barley factory was the most modern in Europe. It is at the top even today, points out its CEO, Vlado Bičanić. It was the first barley factory which produced barley for all customers on the market, since before each brewery had its own barley plant. Breweries were forced to manage somehow, considering the old barley factory in Nova Gradiška had a capacity of 18,000 tonnes, and the Croatian beer industry requires around 45,000 tonnes of barley per year. The present factory produces between 55,000 and 60,000 tonnes of barley, which means it processes up to 75,000 tonnes in total. Around one third of production is exported, mostly to B&H, where Slavonija slad supplies 90% of the market, then to Slovenia, Montenegro, Kosovo, Albania and Serbia. With the remaining two thirds, the factory covers 90% of the demand of Croatian beer production.
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Imports are necessary Even though the factory employs a very few number of workers (30 permanent and 15 seasonal), its importance to the local community is much greater when one takes into consideration around 300 subcontractors producing brewing barley. Around 50% of barley for processing is
Brewing barley is a good choice for farmers as a preceding crop for many cultures produced in Croatia and in some years even more. Imports of barley are necessary due to climatic restrictions. Croatia is actually situated in a climate zone for winter barley, whilst brewers predominantly use spring barley. Hence why spring barley is imported mainly from Hungary since the zone of spring barley starts north of Pécs. However, there has been a significant development in this area, since winter barley has seen continuous breeding and now is approaching spring varieties in terms of quality and this increases the capacity of the production of local barley. This is the main goal of the entire barley industry concerning Bičanić. The beer industry has also realised this, increasing the consumption
of barley produced from winter varieties. Test on the fields conducted by subcontractors showed that certain spring varieties of barley can be planted in autumn, managing to survive the winter, possibly due to climatic change. The most significant test of this type is conducted by the largest individual barley producers, Belje and Vupik on an area of 100 hectares. The spring barley, planted last autumn, is showing excellent results this year, according to Bičanić. Price and traceability Such spring varieties decrease the production risks, prolonging the vegetation and improving the physiology and transformation of nitrogen. Local barley is not only cheaper, but its traceability is even more important, and it is guaranteed for all barley produced in Croatia. The last two years have been difficult for the beer industry, and Slavonija slad shared the same destiny. Luckily, the market of this region did not
suffer the same blow as the markets of Eastern Europe, where, for example the Romanian market declined from 19.5 million hectolitres to under 15 million hectolitres. Compared with other branches, brewers do have reason to be satisfied, especially since the first quarter of this year shows the negative trend has reversed. The cultivation of brewing barley has a future, Bičanić is convinced. Brewing barley is a good choice for farmers as a preceding crop for many cultures and as the first crop which brings spot cash in the season. Thus Slavonija slad has stable co-operation with its subcontractors, which is the solid ground for further production development of barley and malt. According to the results achieved by the production of brewing barley during the past decade, Croatia has come a long way, leaving its regional Hungarian and Serbian competitors behind, concludes Bičanić.
www.privredni.hr Business & Finance Weekly
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FROM SILICON VALLEY TO THE REGION
in Croatia Boris Odorčić oogle, with its headquarters in Silicon Valley, and famous for its homonymous internet search engine, has announced its expansion into Croatia and the Adriatic region. Its Zagreb office will start operating this month, aiming towards a broader product range, more satisfactory search results and more effective advertising solutions for clients and partners in Croatia and the region. The Zagreb office, headed by Joško Mrndže, will be responsible for Croatian, Serbian and Slovenian markets. After a limited presence in Croatia over the previous years, the Zagreb office will offer local support to advertisers enabling them to gain advantage of the digital economy. “Internet users in the region are becoming increasingly demanding and their online activity is also increasing. Google has identified this and is striving to offer the best online tools adjusted to local languages
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as well as companies operating in the Adriatic region”, stated Joško Mrndže, Adriatic region Director at Google. Search for marketing purposes Google has already adjusted some 15 products for individual users and companies to local needs for the Croatian, Slovenian and Serbian markets. They comprise Google Apps, application package, Google maps, geographical online maps, Google Translator and other products improving business operations. The company is currently anticipating support and expansion for local companies. Since the number of users searching for information online is constantly growing, Google, the most-used internet search engine globally, can illustrate the latest trends and economic dynamics in the most effective way. Google, therefore, offers Insights Search or Google
Trends, free tools for advising on search trends, which enables companies to find out the most commonly searched-for terms
Zagreb office offering local support to advertisers
and concepts and adjust their online campaigns or web sites to match their clients’ needs in the most appropriate way. Options for local companies Since online advertising has proved to be the most effective and increasingly popular, Google offers several options for local companies, such as Google AdWords - displaying advertisements in relation to user requests in the search engine. The public relations company Grayling stated that in order to increase earnings, companies can join Google Content Network - Google AdSense - and cash in on their website content, integrating relevant Google ads within their websites. In addition, Google offers consultancy services to companies on how to use AdWords in an effective way.
TRUSTED BRANDS
The brands in which trust is shown Five-time winners - nine local brands Dukat, Franck, Konzum, Ina, Croatia insurance, Generalturist, Gavrilović, Kraš and Cedevita 21 local and 13 foreign brands of 35 products and services have been awarded the Trusted brands award, traditionally organised in Croatia by the Reader’s Digest. Their survey, in co-operation with the British agency Wyman Dillon, in September and October 2010 encompassed 8,000 random magazine subscribers in Croatia and over 33,000 respondents from 16 countries throughout Europe. In various categories, from dairy products to tinned meat products and coffee, chocolate and water the winners were Dukat, Gavrilović, Franck,
Kraš, Kutjevo, Cedevita, Lino for baby food, Jana for water, Pliva for analgesics and Neofen, a pain relief medicine, from Belupo. Amongst the winning brands, several were winners for the fifth time: the nine local brands Dukat, Franck, Konzum, Ina, Croatia insurance, Generalturist, Gavrilović, Kraš and Cedevita plus 10 foreign brands: Nivea, Opel, Gorenje, Hewlett Packard, Nokia, TCom, Sony, American Express, Ariel and Lesnina. The awards were given recently and the list of Croatian winners appears on the European list of all
winners. The most trusted brands among Europeans were: Nivea (skin and beauty care cosmetics), Nokia (mobile phone), Visa (credit card), Canon (camera and
video equipment), HP/HP Compaq (PC), Ariel (soap powder), Kellogg (breakfast cereal), Nestlé (breakfast cereal) and Miéle (domestic appliances). (J.F.)
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Privredni vjesnik Year IV No 0156
SIMFONIJA, OSIJEK
STARI PUNTIJAR, ZAGREB
Promoting traditional cuisine and recipes
Crisis perceived as a challenge The first PR company Simfonija was established two years ago; the challenge of a vacant market was enormous and daunting ith the motto We bring life to your company, the public relations company Simfonija was established in Osijek in 2009 at the beginning of the economic crisis and recession. It was the first company of that type in the area of Slavonia and Baranja, and the pre-opening preparations of the PR agency lasted two years. Naturally, it was not easy to venture into independent entrepreneurship under such economic circumstances, especially in the field where PR did not rank high on the list of employers needs. The owner and founder of Simfonija Kristina Babić, has been working in PR since 1996. “With 18 years of service and experience in journalism, government and ministry offices as well as civil companies and trade, I finally decided to establish my own company in September 2009 at the beginning of a horrendous economic crisis in Croatia,” says Babić.
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Vacant market The PR market in Osijek was vacant at the time. The challenge was tempting, even though a long-lasting economic crisis started to loom on the horizon. Despite this dilemma, other emotions and knowledge overcame the problem. “For a long time I thought about why Slavonia and Baranja, with their
largest cities, including Osijek, have a relatively poor image in Croatia. Is it because were are really poor, or do we not know how to tell our story well? Since I have been living in Osijek my whole life and I know we are not at all poor, I believe we must make an effort and improve communication at all levels. I was convinced, and still am, that something concrete must be done, says Kristina Babić. Naturally, many saw this entrepreneurial move as being doomed, but the fact is Simfonija still operates despite many unfavourable
The market has slowly started to open and business is growing elements. We currently have only one employee, but the market has slowly started to open and business is growing, so we hope to increase the number of employees. What is important is that more company directors in Osijek and the region have started to understand the need for good communication, both internal and external, and are including us in the design and implementation of the strategy of their companies,” says Babić. (S.S.)
The Puntijar family opened its first tavern in 1838 and since then its tradition has been uninterrupted he family tradition of the old Zagreb Puntijar family reaches back to 1838 when Ivan Puntijar opened its first tavern and excursion site. After him, Ivan Puntijar II and Ivan Puntijar III also opened their restaurants. The current restaurant, Stari Puntijar, located below Medved-
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The restaurant also includes a museum with the largest collection of cook books in Europe nica was opened in 1920 by Đuro Puntijar, grandfather of Zlatko, the present owner. “My grandfather was a great entrepreneur who also owned a butcher’s shop and worked as a transporter. I am proud to say our restaurant has the oldest family tradition in Zagreb. I inherited the present restaurant in 1987 and since then I have been promoting traditional cuisine and recipes,” pointed out Zlatko Puntijar. There is probably not a single Zagrebian who has not visited the restaurant and enjoyed various traditional dishes, many of which are made according to recipes from old cook books. Even though the basis of Stari Puntijar is homemade cooking, the dishes have to be adjusted to the tastes of the current generation. Flavours of ingredients changed, but the basis of a particular dish has to be the same as it once was. In addition to side
dishes, they offer soups, 54 main courses and desserts which visitors can find on the menu we like to call jestvenik, says Puntijar. Museum with a collection of old cook books Amongst the many delicacies of Stari Puntijar, štrukli with almonds is especially distinguished. They are made according to the recipe of the first Croatian cook book printed in the Croatian language in 1813. In addition to homemade food, visitors can also enjoy the special ambience decorated with antique furniture. Smaller groups can also stay in the facilities Sveti Juraj, Sveti Mihael and Sveti Martin, and there is also parking space for 30 cars. In addition to the offer of good food, there is also a museum with the largest European private collection of over 2,000 cook books. The owner personally prints the cook books with traditional recipes. They also include pages for acknowledgments, which makes them unique in the world, says the owner. The restaurant also includes the hotel Kuća Stari Puntijar, scheduled for opening this summer. The four-star hotel will have 33 rooms and two suites, with business people as the target group. Each room will be decorated in a unique style, with antique furniture, and each one will be named in honour of my ancestors, says Puntijar. (S.P.)
www.privredni.hr Business & Finance Weekly
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CROATIAN FOREIGN CURRENCY MARKET Currency
AUD CAD JPY CHF GBP USD EUR Source: HNB
EUR
Kuna exchange mid-rate
7.47
5,486726 5,265846 6,382940 6,119429 8,386853 5,145557 7,455912
USD
5.22
31.5.
1.6.
2.6.
3.6.
5.20
6.12
7.45
5.18
6.10
7.44
5.16
6.08
7.43
5.14
6.06
5.12 30.5.
31.5.
1.6.
€1.64 billion uncollected tax in 2010
Total tax burden in Croatia, the share of all the taxes and contributions in GDP, from 2000 to 2009 was slightly below EU27 average
ncollected tax in Croatia has recently shown a significant increase and consequently there is a need for analysis in order to be able to make a comparison with taxation in the European Union. In addition, in Croatia there is a significant deficit and a high level of public debt and there is, therefore a need for fiscal consolidation. The Ministry of Finance should pay particular attention to the more effective collection of state revenue including uncollected tax, according to Mihaela Bronić, Institute for Public Finance Analyst, in her study on uncollected tax in Croatia and the EU. According to available data, the total tax burden in Croatia, the share of all taxation and contributions in GDP, from 2000 to 2009, was slightly below the EU27 average. Nevertheless, this comparison is not objective, she emphasised, as in Croatia
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taxes are presented exclusively upon collection (cash principle), whilst in most EU states they are presented upon appearance
Total uncollected contributions standing at €0.27 billion (clearing principle). It implies that data for Croatia do not illustrate uncollected taxes and the total tax burden in Croatia would therefore be higher than at present. Consumption taxes An extremely important segment of comparison between taxes in the EU and in Croatia is the structure of taxation (a share of a certain tax bracket in total tax revenue). Contributions are dominant everywhere, yet in Croatia consumption taxes (mostly through VAT), are higher than in EU27, whilst income taxes are more pronounced in EU27.
2.6.
3.6.
6.04 30.5.
31.5.
1.6.
2.6.
3.6.
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Reduce and collect all tax owed Vesna Antonić
6.14
7.46
7.42 30.5.
WEEK JUNE 4, 2011
CHF
It is important to mention that the share of tax revenue from consumption between 2000 and 2009 (VAT, excise duties and other consumption taxes) in the total tax revenue in EU27 was increasing, whilst in Croatia it was decreasing. According to Mihaela Bronić, cumulative uncollected taxes in Croatia were €1.64 billion in 2010, whilst the total of uncollected contributions stood at €0.27 billion. This was about 13% of the total collected taxes and contributions in 2010. Since, in compliance with the general tax legislation, the limitation deadline for determining tax payments and interest and their collection, is six years starting from the date initiated, it is most likely that a significant segment of currently uncollected taxes and contributions should be written off. Also in EU countries only taxes and contributions which are believed to be collectable in the future are presented.
€290 million borrowing for Croatian motorways (HAC) The Croatian government has recently approved the guarantee for a loan of €130 million to Croatian motorways (HAC) from Frankfurt KfW IPEX bank. The loan will be used for the construction of a bridge across the Drava and the construction of the segments between Beli Manastir-Osijek-Svilaj-Ploče on Corridor V.c. Croatian motorways (HAC) have also been approved the guarantee for a loan of €160 million from Credit Suisse International bank. Insurance services State institutions spent €24.66 million on insurance services last year, with €10 million being spent by HEP as the largest individual customer, according to the results of an analysis by Briefing e-service, a company specialising in monitoring, analysis and consultancy in public procurement. Croatia insurance was the most successful in operating with the state, concluding the biggest number of contracts with a value of €18.36 million. Capital investment increase The most significant shift towards optimism has been recorded amongst company directors in Croatia in the second quarter of 2011 with respect to the third quarter of 2010. The greatest shift has been recorded in the economic environment, sales growth or expected investment. Nevertheless, the expectations of Croatian company directors towards the collection of outstanding debts, employment or the regulatory environment still cannot be described as optimistic, as was highlighted in Business sentiment index in six Middle European countries by Deloitte.
8 ::: news Fall in GDP Croatian Gross Domestic Product showed a drop of 0.9 % in the first quarter of 2011 over the same period last year, according to initial estimates published recently by the Croatian Bureau of Statistics. It is a slightly higher rate of fall than in the previous quarter, considering the fact that in the last quarter of 2010 GDP saw a reduction of 0.6 % over the same period in 2009. Annual GDP in 2010 saw a decrease of 1.2 % over 2009, whilst in 2009 it dropped by 6% over 2008. Increase in consumption Croatian retail sales volume saw an increase of 3.7% year-on-year in April, considerably exceeding expectations. The Croatian Bureau of Statistics recently published the information that total retail sales volume in April has seen a nominal increase of 6.7% and a real increase of 3.7 % over the same month in 2010. After 8 months of continuous growth, March witnessed a sharp retail decrease of 2%, only to recover again in April, resulting in an increasing consumption trend. In addition to the recent data on an uptick in industrial production, exports and imports, new data on retail increases the anticipation of a strengthening economy in the second quarter. €878 average salary in Zagreb The average nett salary of company employees in Zagreb for March 2011 stood at €878, which is 4.1% up with respect to average nett salary for February, according to data published by Statistics Department of the City Office for Strategic Planning and Development. The average nett salary in Zagreb saw a nominal increase of 1% over March 2010. Hotel Stella joining the Best Western chain Hotel Stella, near Zagreb Airport, joined Best Western, the largest global hotel chain. It has become the Best Western Hotel Stella, a modern three-star hotel, expanding the international hotel range in Zagreb.
Privredni vjesnik Year IV No 0156
VINTAGE AND VETERAN CARS AS A TOURIST ATTRACTION
The Zagreb Oldtimer Rally Zagreb Oldtimer Club will be holding its 26th rally on 11th and 12th June consisting of an exhibition on the first day and a vintage and veteran car rally on the second Sanja Plješa MW, Mercedes, model T Ford, Mini Morris, then and now. Cars over 30 years old often have a higher market value than their younger brothers. There is a trend in Europe to restore such vehicles to preserve their cultural value and tradition as well as for advertising purposes, such as filming of various video clips and commercials. This trend is increasingly present in Croatia and consequently the Zagreb Old timer fair 2011 has recently been held in Zagreb exhibiting some 300 vintage and veteran cars, produced between 1899 and 1970. “It was the first fair of this type and of these proportions. Croatia needs fairs for everyone offering and looking for vintage cars. In the European Union there is a culture of preserving antiques, particularly vintage and veteran cars, best illustrated by vintage and veteran car fairs in Padua, Vienna, Rome, Essen and many other cities”, stated Drago Desančić, Zagreb Old timer Fair 2011 Director.
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Renting to tourists Irrespective of the fact that the value and importance of vintage and veteran cars has not yet been identified in Croatia by everyone, Desančić stated that Croatian enthusiasts of such vehicles are regular visitors of foreign fairs where they gain experience and follow trends, wishing to transfer this
to similar Croatian machines. Regarding the Zagreb old timer fair, Desančić emphasised that the fair proved that Zagreb can be the focal point of a similar cultural event in the region. In addition, he stressed the fact that in Croatia there are many craftspeople with repair shops for
Restored buses used as tourist transport are available in many coastal towns and it is possible to hire restored vehicles on Rab and Mljet such vehicles, which are facing serious operating difficulties due to the crisis. EU accession would imply increased competitiveness and offering their services perhaps even to foreigners who wish to repair their vehicles, stated Desančić. A particular focus could be placed on training of young mechanics and employing them in repair shops. “Vintage and veteran cars contribute to environmental preservation, their spares and the
cars themselves are not disposed of on illegal car dumpsites, but are restored and exhibited. They are an important tourist attraction and in some Adriatic resorts restored buses carry tourists and on Rab and Mljet vintage and veteran cars are hired”, stated Desančić. Local associations and clubs There currently are two vintage and veteran associations in Croatia. Each club organises a rally once a year. Thus the Zagreb Oldtimer Club will be holding its 26th rally on 11th and 12th June, consisting of an exhibition on the first day and vintage and veteran car rally on the second. “Such a rally is of importance for sports tourism and enhancing the development of the tourism industry in general. We have some 150 visitors coming from Croatia, Austria, Germany, Italy, Serbia, Slovenia and Bosnia and Herzegovina every year”, stressed Desančić.