Anka Mrak Taritaš There will be just one permit – a building permit, says Minister of Construction and Physical Planning
Agriculture €330 million of non-repayable funding from the EU is a great opportunity for Croatian producers
Electricity supply Companies GEN-I and RWE Energija increase penetration into the Croatian market
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Croatian Business & Finance Monthly Established in 1953 Monday / 1st July / 2013 Year VI / No 0227 www.privredni.hr
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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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ROUND TABLE DISCUSSION ORGANISED BY LEITNER& LEITNER
Linić: Croatia is a reasonably wealthy nation The state will introduce regulation concerning the settlement of liabilities within 30 days and will expect the same from all private businesses beginning in July Unlike Linić, who stated that the increase in VAT rate cannot be considered as increasing the tax burden (as VAT is neutral for entrepreneurs), Miloloža claims that the length of the production cycle substantially exceeds the VAT payment deadline resulting in entrepreneurial debt and hence any VAT rate increase certainly is a tax burden. Irrespective of the fact that employers and the government agree on the need to amend the Labour Law, Linić warned that the current Labour Law is not overly rigid, as a total of 140,000 staff in private sector were laid off since the start of the crisis. “A lower VAT rate cannot
Drago Živković he Croatian business community is not in favour of a property tax since there is an immense amount of property involved. Therefore, it is protecting its own private interests, which it gives priority over business interests, stated Slavko Linić, Finance Minister, during the round table discussion organised by Leitner&Leitner, a tax consulting and auditing company. “Croatia is a reasonably wealthy nation, as individuals generally own several apartments and plots of land”, concluded Linić, whilst explaining the reasons behind his support for the introduction of a property tax. He announced parafiscal tax reform in the near term and the introduction of an excise duty on electricity and gas as from 1st July 2013. In 2012, the state relinquished a total of €0.46 billion to assist entrepreneurs by reducing contributions for health care, and through income tax exemptions; consequently Linić harshly refutes any claim concerning an increase in the tax burden. 7,360 legal entities are currently implementing reprogramming of tax debt, whilst 4,400 claims have been submitted for pre-bankrupt-
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cy settlement that includes €5.67 billion in unsettled liabilities. The state will introduce regulation concerning the settlement of liabilities within 30 days and will expect the same from all private businesses with effect from July. Linić announced strict payment deadline controls, a high degree of sanctions and even filing for bankruptcy for those failing to settle liabilities. “It is time to implement rigid regulations and we will close businesses in cases where only one invoice is not in compliance with legislation. We will show
no mercy towards businesses surviving on tax debt” highlighted the Finance Minister. Ivan Miloloža, former President of the Croatian Employers Association (HUP) stated that he does not believe it is appropriate to close a business following a first-time non-compliance with the law, as he deems that a business needs to be sent a payment reminder prior to being sanctioned. He also refuted the statement concerning the business community being against the property tax, by stating that there are currently countless parafiscal taxes in Croatia.
We will close businesses in cases where only one invoice does not comply with legislation, says minister Linić be expected over the next 8 to 10 years”, stressed Linić, explaining that €2.5 billion of the €4.8 billion required to pay retirement pensions comes from the state budget and one half of the budget is a result of VAT collection.
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Privredni vjesnik Year VI No 227
ANKA MRAK TARITAŠ, MINISTER OF CONSTRUCTION AND PHYSICAL PLANNING
Building permits issued extremely slowly In compliance with the Law on Construction, there will be just one permit – a building permit. All necessary documentation, which is not extensive, will have to be submitted in order to obtain it. Nevertheless, the investor will have to report the start of construction work 8 days prior to the issuance of the building permit and settle all liabilities Jozo Vrdoljak rivredni vjesnik talked with Anka Mrak Taritaš, Minister for Construction and Physical Planning on the latest developments in legislation concerning construction and investment, as well as on current projects of the Ministry of Construction and Physical Planning
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The Ministry of Construction and Physical Planning is currently working on three new laws. What will be the consequences of their enactment? You are referring to three new laws concerning physical planning, construction and inspection procedures, and currently there is a thorough public discussion about these issues, which needs to be finished before the start of the enactment process. We are presenting the fundamentals of the three laws. We have a vision and a draft, yet we value highly public
Building permits for construction projects need to be issued rapidly discussion. The fact that a location permit will be required in very rare occasions, such as exploitation in cases of expropriation and for phase construction. Spatial planning needs to be operational. Moreover, building permits for construction projects need to be issued quickly. Building permits are currently issued with extremely inefficiency, and there is no certainty investors will eventually obtain them. In addition, we are dealing with the accountability of urban planners, project engineers, and competent offices. We are introducing the possibility for the
Ministry to initiate disciplinary proceedings against the Heads of offices or clerks if their performance has been inefficient. Will the number of the required permits be significantly slashed? In compliance with the Law on Construction, there will be one permit – a building permit. All the required documentation, which is not extensive, will have to be submitted in order to obtain it. Nevertheless, the investor will have to report the start of construction work 8 days prior to the issuance of the building permit and settle all liabilities, which will surely upgrade the credibility of the investor. The authority for construction inspection will be transferred to the local level and hence the authority of the public utility services will significantly increase, primarily in cases of minor construction work and construction of small buildings, sheds and summerhouses, to name two, which have required construction inspection thus far. Similar issues will be dealt with by public utility services, and construction inspectors will deal with issues that are more complex. Public utility services are currently in charge only in public areas. These amendments will enhance the effectiveness in tackling similar issues. We are currently introducing several innovations and a system of monitoring of the current situation. Legislative amendments will help tackle spatial issues. What is the principal goal of POS+ project? According to certain estimates, there are around 20,000 unsold apartments and we are attempting to deal with this issue through
POS+ project. The price per square metre is €1,400 and we are supported by banks and savings institutions with whom we co-operate. The state will participate in the project by providing a €200 per square metre level of assistance to buyers in addition to granting loans at 4% to the general public. Consequently, apartment prices have been dropping, primarily in the continental part of Croatia. Most construction companies are facing pre-bankruptcy proceedings. How concerned are you as Minister of Construction about this issue? We create projects, such as POS+, to aid the operations of construction companies. We assist the general public in the purchase of apartments. In addition, we provide support to construction companies who will subsequently benefit and the state, w h i c h will boost budget revenue.
How do you explain the fact that the energy efficiency in building project has not delivered significant results? There have been a wide range of legal and unresolved issues, and the project requires a vast number of formal alterations and legislative amendments. Moreover, an interdisciplinary approach is imperative. Energy efficiency is a joint project with the Ministry of Economy, the Ministry of Environmental and Nature Protection and the Ministry of Construction. We are working constantly on it, examining its critical points and co-operating with all participants. When we are ready, we will provide comprehensive information for the general public to enable them to use it to its full potential.
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General Assembly of the Croatian Chamber of Economy (CCE)
Regional representative offices closing down but opening in the US Closing representative offices does not imply neglecting the wider region. County Chambers will assume a more central role in cross-border co-operation, whilst the central Chamber of Economy will focus on strengthening co-operation with Chambers across the European Union the backdrop of EU accession, which included over 600 seminars in 2012, as well as training for 60 internal staff on project preparation for the absorption of EU funding. It still currently performs 21 public functions in compliance with existing legislation and thus issued in excess of 160,000 documents in 2012.
Drago Živković decision has been reached at the recently held General Assembly of the Croatian Chamber of Economy (CCE) to close its representative offices in Belgrade, Sarajevo, Prishtina and Kotor; it has also confirmed the former decision concerning the closing of representative offices in Banja Luka and Kabul. Simultaneously, a decision was reached to open a representative office in Washington, for which the CCE needs approval from the Croatian government.
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HGK sees no reason for optimism, unlike the World Bank According to Nadan Vidošević, President of CCE, closing representative offices does not imply neglecting the wider region. County Chambers will assume a more central role in cross-border co-operation, whilst the central Chamber of Economy in Zagreb will focus on strengthening cooperation with Chambers across the European Union. The idea behind the decision to open a representative office in Washington is to boost economic relations with the US, as well as capital inflow and knowledge transfer. Bad debts According to the annual financial statement of the CCE, presented by Vinko Dumičić, President of the Supervisory Board, in 2012 the Chamber generated total revenue of €31.39 million, whilst total expenditure came in at €31.17
million. The surplus of €0.21 million, according to Vidošević, is merely yet another balance sheet item and consequently non-existent in real terms. CCE wrote off bad debts of €0.4 million and €0.6 million for amortisation. In 2012, the CCE focused solely on two fundamental issues, in accordance with the report submitted by Jasna Borić, Advisor to the President.
Firstly, HGK focused on establishing closer co-operation between Croatian companies and their global partners, mainly through fairs and presentations and also with an investment catalogue comprising a total of 113 projects valued at around €6 billion. Secondly, it provided assistance to the Croatian economy in its adaptation process against
Over 27,000 trainees 2,000 working meetings and 620 various training activities participated in by 27,320 attendees were organised by the Croatian Chamber of Economy and County Chambers. Moreover, it has been actively involved in the implementation of EU projects and managed to complete 89 projects by the end of 2012, with 36 more ongoing and 57 being considered. Throughout 2012 CCE co-ordinating 122 projects, of which 38 were newly launched. The Croatian Chamber of Economy and the County Chambers hosted 68 economic delegations, with 76 visits of Croatian businessmen abroad, with nearly 2,000 participants. In addition, it prepared and organised participation in 94 fairs both in the country and abroad, and County Chambers organised participation in 132 fairs involving over 3,300 exhibitors. In 2012, CCE replied to over 21,500 written enquiries submitted by the business community; it also released 280 various publications, and its website saw over 1.1 million visits and the Register of Business Entities over 7.7 million enquiries.
Congratulations to Todorić “Croatia has seen its fifth consecutive year of recession. Nevertheless, we may consider ourselves extremely fortunate if we succeed in seeing an end to the recession prior to the end of this decade”, pointed out Vidošević, during his presentation on the trend analysis in the Croatian economy. The CCE sees no reason for optimism, unlike the World Bank, which anticipates Croatia seeing a recovery by the end of 2013 and economic growth in 2014. “Domestic demand is dropping, as well as domestic investment and we need to consider foreign investment with caution. Our banking activity has reached its lowest level since 1999, the domestic capital market is barely operating and consequently we cannot anticipate economic growth in the near term”, explained Vidošević. Individual instances, such as the Agrokor take-over of Mercator, are certainly to be welcomed and Vidošević extended congratulations to Ivica Todorić, expressing hope that consolidation in trade will significantly assist in further penetration of the domestic food processing industry to the markets of Central Europe.
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Privredni vjesnik Year VI No 227
A delegation from the Chinese Province of Fengtai visit Virovitica and Podravina
( US$8.2 million value of onion imports
AGRICULTURE AND THE FOOD INDUSTRY IN THE EU
€330 million from the EU is Chinese appreciative of clean air and low Croatian prod prices
The Croatian food and agriculture industry is awaiting a hig great potential is now used for low labour-intensive plantati
The advantages are clean air, green areas and cheap land for production in entrepreneurial zones
Krešimir Sočković
Goran Gazdek delegation from the Chinese Province of Fengtai, spent two days in Virovitica and Podravina. They talked to representatives of the local administration and the VIDRA Development Agency regarding joint co-operation and potential investment projects. The Virovitica County Prefect, Tomislav Tolušić, and the Governor of Fengtai, Ji Yan, signed a Statement on the Intent to Co-operate. The signing of the agreement creates the basis for developing economic co-operation and attracting investors. “We have many entrepreneurial zones which are underexploited, and the interest of China and Chinese investors is definitely present,” opined Tomislav Tolušić.
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County Prefect Tomislav Tolušić and Governor Ji Yan signed a Statement of Intent to Co-operate The delegation and their hosts visited local companies (Pan Parket, Keramika Modus and PP Orahovica) as well as the tourism pearl of the County, Orahovica Lake. They also visited the larg-
est Croatian timber industry company, TVIN. It began with Viroexpo “After hearing the presentation, we became interested in investing in Croatia, especially in Virovitica. It has many advantages: clean air, lots of green areas and cheap land for production in entrepreneurial zones. Both sides could profit from investing in projects,” stated the delegation. The visit of the delegation and the signing of the Statement of Intent to Co-operate is one of many activities relating to building economic co-operation between China and the County that started in 2004 when Chinese entrepreneurs participated for the first time at the Viroexpo International Show of Economy, Crafts and Agriculture. As a result, a delegation from the Chinese Council for the Promotion of International Trade visited Virovitica regularly, initiated by the CCE County Chamber of Virovitica where the delegations met regularly to discuss expansion and balancing the scope of mutual foreign trade exchange. Last year, trade between Virovitica and Podravina and China climbed to $2.6 million foreign: $1,343.601 of exports to China, and $1,328.811 in imports.
ast year, Croatia imported US2.35 billion of food, mainly pork. At the same time, it exported food worth $1.59 billion. It is understandable that the country imported and ate slightly over 46,000 tonnes of bananas ($38.9 million), but the real question is why we did not produce onions locally, since it imported $8.2 million of them in 2012. The same question concerns carrots, which grow well in the soil, but are obviously too expensive to cultivate, hence why Croatia imported $4 million worth in 2012.
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The Croatian food industry attains almost a quarter of revenue of total local industry The situation with fruit is also not the best, since only tangerine exports show a surplus. It is thus fully understandable that many people inside the agricultural and food-processing sector to ask whether EU accession will pull us out from recession or prolong the agony of stagnation, with the threat of shutting down 25% of food companies. Fear of excessive food imports and the effect on Croatian agriculture is palpable. Many wonder whether Croatian food companies will
transfer their production to Bosnia and Herzegovina as well as Serbia. This subject in particular was discussed during a business conference on agriculture and the food industry, organised by Business.hr. Experts in these areas and representatives of authorities discussed the future of the respective branches after EU accession. Funds for development The Croatian food industry creates almost a quarter of the
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( US$4 million
value of imported carrots last year
( US$2.35 billion
value of food Croatia imported last year (mainly pork)
of non-repayable funding s a great opportunity for ucers
h level of financial incentives from the EU, but also strong competition. A large proportion of agricultural land with ons
revenue from the total of local industry. However, data according to which income per employee stands around €55,000 are only slightly better than the EU average. Croatia invest half less than that of the EU in this sector, which consists of 90% small-sized companies with less than 50 employees, but employs a total of 40,000. Although there is great potential in healthy food, Halal and Kosher products, for which many Croatian producers have been granted certificates, it
seems this area is underexploited. EU accession should be regarded as a very good opportunity for Croatian agriculture and the food industry, says the Advisor to the Agricultural Minister, Zvjezdana Blažić. There is around €700 million reserved for the country within EU funds - funds that were unavailable until now. They should be invested into training, irrigation, underpopulated and rural areas, as well as the development of national products that have not been invested in suf-
ficiently, highlights Blažić. She added that the Croatian food industry is a strong and persevering economic branch that registered growth in the midst of crisis, and large local companies are ready to enter the EU as they have been working on it for years. Smaller companies that did not manage to prepare themselves will receive help from the government, Zvjezdana Blažić points out. The Head of the Division of the State Office for Trade Policy, Nina Berić, explained the norms and regulations awaiting Croatia after entering the common duty free market of 500 million people. The Director of Kondin, and the Association of Confectionery Producers, Stipan Bilić, thinks that Croatian production is not fully prepared for accession. Other countries that joined the EU earlier analysed their production branches in the EU before accession. They assisted the strong branches, and eliminated weak ones. This is Croatia’s biggest failure, Bilić thinks. Optimism needed The whole story around food products and EU accession is too negative, says Lovro Benčević, expert associate of the Regional Development Agency of the County of Zagreb. The positive sides of this story need to be highlighted. Croatia awaits €330 million of non-repayable funds.
This is precisely what will open doors for Croatia and its producers, Benčević says.
Fear of excessive food imports and its effect on Croatian agriculture is palpable Josip Vrbanek, Analyst at Georg, also thinks more optimism is needed. “We must remember that we now have only €27 million for this sector, but this figure will be 12 times higher when we join the EU”, Vrbanek says. Croatian producers warn about the decline in our agriculture, but no one seems to look for its cause. Zvonko Popović, Director and owner of Kanaan, the largest regional producer of crisps, warns that the most fertile land, owned by the government, is in the hands of people who do not wish to work. Many only grow subsidised produce on this land. We, who want to work and have the capacity to process food products using more intensive production, cannot compete for state land with the present contractors who take their machinery to the land only a couple of times a year and grow low, labour intensive crops such as wheat and corn. Unfortunately, the new act that will regulate this issue will not improve our situation, Popović says.
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Privredni vjesnik Year VI No 227
( 46%
( 1100 people
of Đuro Đaković state owned
employed by Đuro Đaković
INTERVIEW: VLADIMIR KOVAČEVIĆ, BOARD PRESIDENT OF ĐURO ĐAKOVIĆ HOLDIN
We have a high opinion but development lies in e
With its five main activities, Đuro Đaković is oriented towards defence, but also transport, industry and energy, renew construction and infrastructure. Their intention is to bring long-term changes to their structure, and turn from a 90% producer to a 90% exporter, says Board President of Đuro Đaković Holding Svetozar Sarkanjac his month the Board President of Đuro Đaković Holding, has signed two lucrative business deals. One contract is with the French company Atir Rail S.A. for the manufacture and delivery of specialised bulk transport wagons, worth €6.1 million. Delivery will start in December 2013, and will continue throughout 2014. The second contract was signed with the Defence Ministry and it is worth €14.8 million.
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What does the contract with the Defence Ministry represent? This contract confirms our long and successful co-operation with the Defence Ministry. We are delighted the Armed Forces will continue to invest in new equipment and modernisation, relying mainly on local producers. Good co-operation with local defence and positive references acquired in the local market are preconditions for global success for producers of defence technology. With the earlier contract with Patria from Finland and Kongsberg from Norway regarding the integration of armoured units with armoured fighting vehicles in Slavonski Brod, Đuro Đaković is now part of an elite company of the state-of-the-art defence technology producers. However, the defence segment is not the only area on which
Đuro Đaković bases its future activities. Of course. With its five main activities, Đuro Đaković is oriented towards defence, but also transport, industry and energy, renewable energy sources, construction and infrastructure. In each segment, the company has made huge progress to turn from a company mainly oriented towards the Croatian market into one with a stronger position on the foreign market. Our goal is to bring long-term changes to the structure, and turn from a 90% local market producer to a 90% exporter. But this will not be easy and will not happen overnight. This process will last a year or two. However, we will do all it takes to reduce the time required. One of the key preconditions for this business change is to invest more in increasing efficiency, new equipment and opening new markets. Although general public opinion is that you mainly rely on local defence markets, you are actually highly active on foreign markets.
We do not talk much about it, but this area is actually the one best placed, concerning orientation towards export markets. Our focus is to become the most successful supplier to the Middle East and Africa, where we have already made huge investment. We made the best progress in Kuwait. There is an element of ‘comeback’ to this market, as we exported large numbers of tanks in 1991 (149) that represented state-of-the-art technology at that time. It is also important to mention that Đuro Đaković did not enter the market only as a producer or seller. We offered support and maintenance to the Kuwaiti army until their victory, becoming part of the victory team. With this background and the quality of our products, we acquired a very positive reference, on the basis of which I have realistic expectations that the new programme of armoured fighting vehicles will bring us new business success in this market. Furthermore, we have been selected as one of four producers for final testing.
Ideal ratio guaranteeing progress What is the ownership structure of Đuro Đaković Holding? In rough terms, 46% is in the hands of the state, and 54% privately owned. This combination is an ideal ratio that guarantees progress. In fact, the influence of the state is crucial for the development of the defence production aspect, whilst the private capital of Đuro Đaković positively influences company orientation towards the market.
After tanks and armoured vehicles, the first association of Đuro Đaković are freight wagons. In addition to foreign markets, such as France, you are not giving up on the Croatian Railways. So far, we have made great progress in foreign markets for freight wagon production. Slightly over 80% is produced mainly for export. However, it is important for us to stay in contact with the lo-
We have made huge progress in production: slightly over 80% is for export markets cal market, especially since we have to preserve the concept of freight wagon production. In that sense, we expect the actual privatisation process of HŽ Cargo will not slow additional contracting for Cargo, and as the leader in such production, Đuro Đaković is a company that will secure long-term contracts in Croatia and foreign markets. In addition to defence and transport, you are making great progress in the energy sector. Đuro Đaković definitely wants to be part of the energy projects anticipated in Croatia. In this area, our goal is to offer global market production on a turnkey basis, es-
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( over 80%
of production exported
NG
of the Croatian market export
wable energy sources, % local market
We will also offer new products
How will you preserve your market position? Our strength lies in our 1,100 employees. The best proof of this is that our production area produces one of the most competitive fighting vehicles, a freight wagon competitive on the European market, tanks for oil, gas and oil derivatives. These are what makes Đuro Đaković a great company. We will do all it takes for our products to become one of the most competitive globally, and to offer new products as added value based on a several decades of experience and the skills of our workers and experts.
pecially regarding the construction of plant for the processing industry. Naturally, you will not do this on your own. Exactly. When I say Đuro Đaković, I mean that behind every business division, there are at least twenty subcontractors: universities, institutes or expert centres and other subcontractors. Therefore, Đuro Đaković will remain what is anticipated from the company – a generator in the processing industry, and the whole region, as the most important part of Croatian industry. You pay great attention to renewable energy sources. Although these are completely new projects, they are not typical of the scientific and production experience of Đuro
Đaković. Our Department for Renewable Energy Sources is venturing into the areas of wind, cogeneration biomass plants and waste water purification and irrigation. During the past year, we invested considerably in these projects, and I expect we will soon be present on both local and foreign markets. Even though construction in Croatia has declined rapidly during the past couple of years, you are quite optimistic about entering this area. Of course. Crises come and go. Those who are well prepared and that specialise in certain areas,
In the processing industry area of production our goal is to offer the global market plant on a turnkey basis sustain them. Therefore, Đuro Đaković in co-operation with its partners is preparing itself for special construction projects focused on railways, bridges, oil platforms and similar. It is precisely these areas we wish to specialise in, and achieve concrete results. The focus of the new Board of Đuro Đaković is to invest in knowledge, new technologies and export markets.
8 ::: news
Privredni vjesnik Year VI No 227
( 2.3 million customers
for Hrvatska Elektroprivreda (HEP) the public electricity supplier in Croatia
ELECTRICITY SUPPLY MTC invests in Croatia The Swiss MTC Group plans to invest €30 million in their Croatian company Aluflexpack, which they took over in November 2012. The takeover of Aluflexpack is the first step by MTC Group towards taking the leading position in the European packaging industry. Their goal is to significantly increase the sales in key areas of packaging for food for people, pet food, sweets and the dairy industry. Končar investment Prime Minister, Zoran Milanović, commissioned a new €14 million high-voltage laboratory in Končar – Distribution and Special Transformers. Končar D&ST has invested over €26.5 million over eight years, allowing sales revenue to increase from €27.7 million to €90 million. The entire Končar organisation has invested €83 million since 2002, and has sold transformers worth €2 billion. €7.4 million for small entrepreneurs Within the scope of the IPA Programme, 49 entrepreneurs have received non-repayable funding. Almost 1,000 applications were submitted for the tender invited by the EU Central Finance and Contracting Agency. 53 entrepreneurs were selected with projects worth €8 million, and 49 contracts were signed (worth €7.4 million). IPA Programme now accounts for €6.3 million, and individual subsidies will range between €50,000 and €200,000. Podravka drops drinks The Main Assembly of Podravka accepted changes in the company statutes. It also allowed more rapid additional capitalisation, and it was decided that equity would be decreased by €71.7 million in order to cover losses. It was also announced the company would cease making drinks, bakery products and a certain frozen foods, which could increase operating profits by some €4 million. Podravka is searching for strategic partners for these programmes.
MORE AFFORDAB Companies GEN-I and RWE Energija have decided, following an expansion supplied with electricity at more affordable rates Boris Odorčić he Croatian electricity market was liberalised in 2008 and subsequently consumers have been able to select their electricity supplier. Irrespective of the anticipation of strong competition with Hrvatska Elektroprivreda (HEP), the Croatian public electricity supplier, following market liberation it appears that competition has yet to be intensified. Following their expansion, GEN-I and RWE Energija have decided to increase penetration into the Croatian market and new customers will be supplied with electricity at more affordable rates. GEN-I has been present in Croatia for several years as the electricity supplier to large companies, cities and institutions. Following a recent tender for electricity supply, the bid by GEN-I has been assessed as the most favourable and thus GEN-I will supply electricity to 35 min-
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istries and state administrative offices. Two further bids were submitted, yet the bid by GEN-I was assessed as the most favourable totalling €12.3 million ex-VAT, €2.1 million lower in relation to the estimated value of procurement of €14.4 million and €1.2 million lower than the HEP-Opskrba bid.
GEN-I has been setting much lower power costs for both households and small businesses Moreover, GEN-I has been supplying electricity at significantly lower rates to its end users – households and small businesses. “Cheaper electricity” is the term used for the lowest power rate, guaranteeing that rates will remain unchanged until the end of 2015. In addition, for the first month, GEN-I provides electricity free of charge, and con-
sequently savings in 2013 may reach up to 30%. Turning point Robert Golob, Board President of GEN-I, pointed out that the company is determined to achieve its ambitious objectives and is not primarily interested in generating profit in the near term. “We have been present in Croatia since 2005, and our revenue and profit have been growing since that time. We began supplying electricity to end users in 2010 when we became the power supplier for Zagreb after winning a public tender, which was the turning point both for the Croatian market and for the company. I expect, due to several signed contracts, that sales in 2013 will quadruple over 2012”, he highlighted, adding that company plans for the Croatian market are to supply energy to 20,000 customers by the end of 2013, 50,000 by the end of 2014 and resulting in 17% of market share in three years.
CONFERENCE ON GOVERNMENT ENERGY POLICY
Replacing imports with
36 energy sector projects worth €9 billion under preparation. 10 projects w roatia is likely to reduce her energy imports and transform into an energy exporter in the near term, stated Jelena Zrinski Berger, Assistant to Minister of Economy, during a conference on Government energy policy, organised by Lider, a Croatian weekly business magazine. She expressed optimism at the draft of Hydrocarbon Law, which will enable more exten-
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sive research and oil and gas exploitation. Provisions of the 3rd Energy Package are behind the liberalisation and further market development, whilst a new legal framework for renewable energy sources and energy efficiency will be in place by the end of the year. In addition to the appearance of new suppliers, the energy sector will see significant investment. According to Dragan
Marčinko, Head of Centre for Energy Sector and Investments, 36 projects worth €9 billion are under preparation, with 10 projects worth €5 billion require private investors. HEP, Janaf and Plinacro have planned investment of €436 million in 2013, a significant increase (115%) over 2012. Foreign investors have recognised the immense potential for projects in Croatia, yet
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( 35 state administrative offices to be supplied by the Slovenian company GEN-I
BLE POWER COSTS
of their products, to increase penetration into the Croatian market with new customers being GEN-I has been operating in 18 electricity markets and is a holder of a cross-border transfer, which enables global optimisation of supply routes resulting in competitive purchase prices. Consequently, GEN-I provides electricity and natural gas to customers in Austria, Croatia, Italy, Slovenia, Serbia, Macedonia, and has total sales volume of 4.5 billion kWh per year. The company also supplies reputable global companies requiring top standards of power supply such as OMV, Goodyear, Novartis, Lafarge and Mercator.
exports
worth €5 billion requiring private investors prefer long-term contracts, which are currently highly unlikely. Ljubica Cvenić at HEP, stated that HEP needs to consider energy projects and thus co-ordinate its investment accordingly. “We are striving for a joint venture model in financing and the details vary in accordance with individual projects”, she emphasised. Investors aiming for rapid turnover of capital opt for renewable en-
ergy sources. Davor Mladina at Končar warned that most domestic wind power plants have been constructed using foreign components, when domestic production could have been developed further. “There is huge potential in Croatia which needs to be exploited, yet even the concrete platforms for some wind power plants were produced abroad”, stressed Mladina. (I.V.)
HT launching power supply services RWE Energija was created after the takeover of Energija 2 Sustavi by RWE Croatia, an RWE Group subsidiary, which had
RWE Group is one of the largest European electricity producers with around 16 million customers achieved success following its creation in 2012 as the electricity supplier in Croatia. “RWE Energija has decided to opt for the best rate to its customers. They can select between various levels of discount rates”, explained Zoran Miliša, Board President of RWE Energija. Miroslav Kulla, Board Member, stated that some customers could achieve up to 50% savings in 2013. Nevertheless, the company does
not intend to falsely promise energy savings. “Based on our pilot project for households, it is realistic to expect long-term savings for an average household ranging from 5% to 15%”, he emphasised. In addition to cheaper rates, the company primarily highlights the safety of electricity supply and points out that the RWE Group is one of the largest European electricity producers with around 16 million customers. The leading provider of telecommunications services in Croatia, Croatian Telecom, has recently amended its Statute and thereby expanded its activities into the production, supply, sale, transfer and distribution of electricity. Irrespective of on-going inquiries, the principal domestic electricity supplier, Hrvatska Elektroprivreda (HEP), with over 2.3 million local customers, has not thus far stated whether it intends to lower electricity prices nor what its plans are concerning customer retention.
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Privredni vjesnik Year VI No 227
( 53.7% of GDP ( €27.5 billion or 62.7% of G the level of public debt
::: news Ericsson pays dividend Ericsson Nikola Tesla will pay a dividend for the business year 2012 that will total €22.5 per share. This will be paid to shareholders whose shares were registered seven days before the Main Assembly. Considering the dividend is paid from the retained profit from 2003 and an element of retained profit from 2004, for private individuals ENT will retain tax and surtax on their accounts until the Constitutional Court reaches a final decision, after which the company will act in compliance with that decision. First certificates for local share As from Friday, 21st June, local investors on the Zagreb Stock Exchange could for the first time invest in structured securities based on one local stock – HT. Erste Group from Vienna will issue a total of four certificates (two turbo long and two turbo short) that will monitor the activities of the most liquid Croatian share, until the end of December 2013. Unit prices of the certificates will be under €1.30 per certificate. The barriers for turbo long certificates will be between €19.80 and €22.50, and €29.40 and €31 for turbo short certificates. Should the price reaches these barriers, trading in certificates will cease.
Profit growth for BKS Bank On 31st March 2013, the balance sheet of BKS Bank stood at €154.8 million, a 12% increase in relation to 31st March 2012. At the end of the first quarter of 2013, the bank registered a profit of €168,000, which is 258.5% growth. During the first quarter of 2013, the BKS credit portfolio increased 6.5% (to €110.9 million) in relation to the end of the first quarter of 2012.
nett foreign debt at end 2012
REPORT FROM THE CROATIAN NATIONAL BANK
HNB: trend can be re reform and investme
Positive contribution to growth in 2012 was only through exports of goods and services spending and investment in fixed capital Igor Vukić n order to reverse the negative trends in the real economy, structural reforms will be necessary to increase competitiveness locally as well as to increase foreign direct investment and exports. Monetary policy will support such trends, by maintaining stability and adequate liquidity in the financial system, according to the annual report of the Croatian National Bank for 2012. The report gives a detailed overview of the condition of the local economy and pinpoints its strong and weak points The Croatian economy is having a hard time recovering from the effects of the global crisis, according to HNB experts. They point out that since 2008 and the start of the crisis, real GDP has fallen 10%, and local spending and investment is down around 15%. Capital inflows, including foreign direct investment, are also falling. Thus, nett capital inflows totalled only €400 million, a quarter of the amount for the year before. The restraint of foreign investors is reflected in a weaker inward investment inflow, where investment in new projects totalled only €300 million. These were mainly real-estate investment as well as investment in recreation, culture, sports activities and trade.
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Debtor position Only the export of goods and services gave a positive contribution to growth in 2012. All other
Reduced interest rates in Euromarkets and falls in global risk premiums marked 2012 components had a negative effect, which specifically relates to lower personal spending and investment in fixed capital. The nett debtor position continued to improve, mainly due to the fact that banks repaid a high proportion of their debts; public companies and non-banking financial institutions returned a smaller percentage, whilst for the state and private companies their nett debtor position deteriorated. Nett foreign debt (state gross foreign debt reduced by foreign claims) decreased by €800 mil-
lion, and totalled €27.5 billion (62.7% of GDP) at the end of 2012. The reduction in interest rates on Euromarkets and a fall in global risk premiums marked 2012. The perception of Croatia as a risky country improved as a result of these circumstances, which, together with better financing terms from the parent banks of the largest local banks, enabled the local sector easier access to foreign capital in the second half of the year. The central bank supported high primary liquidity levels in the monetary system, which con-
In 2012, banks repaid a large proportion of foreign debt
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GDP
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( 10% lower
real GDP since the start of the crisis in 2008
( around 15%
fall in local spending and investment ::: news
eversed only through ent . All other areas had a negative effect on growth, plus concern about reduced personal the recovery of local lending in conjunction with the Croatian Bank for Reconstruction and Development (HBOR). In 2012, bank lending in the non-banking sector decreased by 1.9%, whilst lending to the state continued to grow (8.9%). On the other hand, local finance sources increased moderately during the summer, which was almost completely related to growth in public deposits. Banks repay debts Under conditions of reduced lending and growth in local sources, banks repaid a large proportion of foreign debts in 2012. This also points to the limitations in monetary policy and the fact that the causes for long-term retinued in an expansive direction of monetary policy. The average surplus of banking system liquidity stood at €0.4 billion on an annual level and the average overnight inter-banking interest rate was only 1.1%. After having temporarily raised the level of mandatory reserve from 14% to 15% in January, HNB decreased it to 13.5% in May, while deposits received from multilateral development banks were excluded from the basis for the calculation of mandatory reserves. This led to the release of €0.55 billion. The decision on the minimal level of foreign currency liquidity was mitigated by including Euro treasury bills of the IMF (€764 million) in foreign claims. Furthermore, the central bank tried to support
cession are not in the monetary sphere, but are related to the non-implementation of structural reforms. The major problem was the increase in the level of partly recoverable and non-recoverable loans (to 13.8%). The quality of loans approved to companies is especially low, which was mainly contributed to by an aggravated level of activity in the construction and real-estate sectors. Although the need for debt is reduced, public debt grew more rapidly in 2012 when shipyard debts were assumed (around 2.8% of GDP). At the end of 2012, debt level reached 53.7% of GDP, 6.5% more than in 2011, according to the annual HNB report.
Profitability falls and banking losses The profitability of banks was down by a quarter, while the indicators of profitability fell to their lowest levels since 1999. The return on average assets (ROAA) decreased to 0.9%, and the return on average equity (ROAE) decreased to 4.8%; margins decreased (mainly the nett interest margin), whilst the cost of reserves for losses grew. The high adequacy ratio of liable capital additionally increased to 20.55%, which points to the strong capacity of banks to withstand potential losses. Over 30% of the total number of banks operated at a loss. Growth in international reserves Total international reserves of Croatia increased by 0.4% on an annual level in 2012, and stood at €11.2 billion at the end of the year. The ration of adequacy of international reserves i m proved; at the same time, the value of foreign claims due in the forthcoming year approached the level of international reserves (now covering 88.7% of these claims), and their ratio at the end of 2012 was the most favourable since the crisis started.
McDonald’s: €2.11 million increase in profits Last year, Globalna hrana d.o.o., holder of the McDonald’s franchise in Croatia, achieved €33.2 million in profits, €2.11 million up over 2011. Last year, total investment reached €5.95 million, and by the end of the year 1,220 staff were employed. During 2012, McDonald’s restaurants were visited by one million more customers than in and a total of 4.238,171 cheeseburgers, customers most favourite product, were served.
€66.9 million profit for Adris In 2012, Adris Group achieved total income of €0.45 billion, 5.2% more than in 2011. Pre-tax profit totalled €77.2 million, and nett profit €66.9 million. €0.21 billion was the result for the local market, and €0.17 billion in foreign markets, a 5.8% increase. TDR sold 11.56 billion cigarettes, down 3.8% over 2011. Total revenue was €0.23 billion, a 4.2% decrease. Adris’ tourist activities saw 3.04 million of overnight stays, 5% more than in 2011. Tehnika retains profit Last year, the construction company Tehnika achieved total income of €112.4 million and expenditure of €112.2 million. Profit after taxes stood at €0.2 million. The Main Assembly decided to consider all profit from 2012 as retained profit. Members of the Supervisory Board received a bonus (80% of average salary), and the President of the Supervisory Board received a further 50%.
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Privredni vjesnik Year VI No 227
( €1.8 billion
income and 5.2% growth achieved by HEP
( €0.95 billion
income achieved by Croatian Telecom
BUSINESS ACTIVITY IN 2012
Profits plunge but income and numbers employed increase Nett entrepreneurial income at the end of 2012 stood at €0.64 billion, a substantial decrease in relation to €1 billion income for 2011 billion. Additionally, also included are two banks, Zagrebačka and Privredna, whilst the list of the 10 largest companies also includes OMV Croatia and HEPDistribution System Operator.
Drago Živković ccording to data released by the Financial Agency (Fina), Croatian entrepreneurs employed 829,874 staff, excluding banks, insurance companies and other financial institutions, thus exceeding numbers employed in 2011 by 7,459. According to Fina, 97,254 entrepreneurs generated income of €80.7 billion with total expenditure of €79.5 billion. 2012 saw 56,363 businesses (58%) generate profits totalling €4.5 billion;
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The largest company in Croatia is yet again INA, which generated income of €3.64 billion in 2012 40,891 companies showed losses amounting to €3.85 billion. Consequently, nett income totalled €0.65 billion, a significant drop compared with €1 billion income in 2011. However, the number of people employed increased by 0.9%, total revenue rose by 0.4%, total expenditure was 1.1 % up, and income for the period soared by 7.8% whereas losses ballooned by 20.6% in relation to 2011.
nett average salary for staff stood at €630, a nominal 0.4% increase over 2011. Nevertheless, real salaries saw a decrease of 2.9% due to the 3.4% increase in consumer prices. INA is currently still the largest company in Croatia and in 2012 it generated revenue of €3.6 billion, down 2% over 2011, with profits plunging by 34.9%. It was followed by HEP, the na-
tional energy provider, whose results exceeded Konzum; in 2012, HEP generated revenue of €1.8 billion (5.2% growth), whilst Konzum increased by 1.1% to €1.78 billion. These are followed by Prirodni plin (Natural gas), which, having generated revenue of €1 billion outperformed Croatian Telecom whose revenue in 2012 stood slightly above €0.95
Over half of revenue generated in Zagreb INA still the largest company Exports accounted for €13 billion of the €80.7 billion total corporate income, some 2.8% up over 2011. 12,430 entrepreneurs (12.8%) exported goods and services. Imports totalled €12.1 billion, giving a trade surplus of €0.9 billion. In 2012, the monthly
Zagreb-based entrepreneurs play a substantial role in the overall business results in Croatia, due to the high concentration of capital and businesses in the capital, as well as to the fact that the Financial Agency (Fina) provides results according to company headquarters and most of these are located in Zagreb, irrespective of the fact that they operate throughout Croatia. Consequently, in 2012, 32,026 Zagreb-based organisations employed 334,228 staff and generated total revenue of €42.6 billion, total expenditure of €42 billion, profit after tax of €2.1 billion, losses after tax of €1.9 billion and nett profits of €0.16 billion.
Creative accounting The list provided by the Financial Agency (Fina) clearly illustrates the ‘lure of creative accounting’: Brodosplit, clearly a loss-making company, is top of the list, having shown a profit of €0.36 billion, as result of a bad debt write-off by banks and the state, and by showing the value of expatriated maritime property as revenue. A similar situation occurred with two more Croatian shipyards, Brodotrogir and 3. Maj, and hence the highest profit was generated by Croatian Telecom (HT) with slightly over €0.26 billion of profit before tax. It was followed by INA and three banks: Zagrebačka, Privredna and Erste. Prirodni plin (Natural gas) showed the deepest loss - its €0.13 billion loss was a result of an increase of gas imports, as well as rising gas prices. The second largest loss-making company was Konstruktor inženjering, not surprising and the same applies to the following three companies: Tankerska plovidba, Croatia Airlines and Mercator–H. Heineken Adria saw the largest profit/loss ratio (98.8%), whose income was in fact a dividend from Karlovačka pivovara (Karlovačka brewery). It was followed by Brodotrogir and Brodosplit, whose profits were fictitious, as well as CIOS and Adris Group, whose high profits were also due to dividends from related companies.
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( some €0.8 billion
booked as retained earnings on balance sheets due to reinvestment
Nada Čavlović Smiljanec, Director of Tax Administration, participated in a working lunch with the Croatian Employers Association (HUP)
The government provided entrepreneurs with an opportunity for debt clearance In addition to mutual compensation of debt, indebted entrepreneurs and those who did not succeed in g Pre-Bankruptcy p y Settlement Proceedings will be entitled to reaching an agreement with debtors during ities reprogramme overdue liabilities has recently been enacted and the allocation of European VAT identification numbers, which is a prerequisite for business activities within the single market, will begin. It is anticipated that some 32,000 VAT identification numbers will be allocated and issued by local tax administration branch offices.
Igor Vukić ompanies with substantial tax debts will be offered the possibility of debt clearance by the state in cases where they have outstanding receivables from the state. In addition, debt clearance will also be offered covering receivables from and liabilities to public companies and other market participants. The new Law on Multilateral Compensation has recently been announced by Nada Čavlović Smiljanec, Director of Tax Administration, during a recently held working lunch with members of the Croatian Employers Association (HUP). In addition to mutual debt compensation, indebted entrepreneurs and those who did not succeed in reaching an agreement with debtors during Pre-Bankruptcy Settlement Proceedings, will be provided with the chance to reprogramme overdue liabilities.
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Improved communication fundamental The Director took a conciliatory stance during her meeting with employers. She pointed out that the Tax Administration is striving to foster partnership relations with them. “We aim to act preventatively and provide advice and assistance rather than sanctions, primarily in the case of a minor transgression of regulations, due to ignorance rather than intention”, she pointed out. Tax Administration branch offices are striving to significantly
€0.8 billion reinvested Income tax exemption in cases of income being reinvested and booked as subscribed capital is another example of tax relief. In 2012, some €0.8 billion was booked as retained earnings on balance sheets, stated Nada Čavlović Smiljanec. As a result the state budget will lose €0.2 billion derived from income tax, year-on-year. Furthermore, 9,600 companies were provided with assistance through the reprogramming of €0.6 billion tax debt. Tax debt instalments are paid in over 90% of cases, emphasised the Director of Tax Administration. improve their communication with entrepreneurs and adopt an homogeneous approach to clients. Consequently, a branch dealing with large businesses has recently been created, covering 600 companies generating over 60% of total market turnover, to enable the effective handling of complex tax issues that cannot be defined in advance by the law. The Tax Administration introduced regulation stating that opinion on individual issues needs to be reached collectively to provide legal safety. Nevertheless, this substantially slows the whole decision-making process. Hence, most employer
complaints relate to the delay in providing opinions and in issuing final tax solutions. “I am not satisfied with the current situation in Tax Administration branch offices. Nevertheless, we are focused on amending long-term habits, which is an arduous task. We even had to implement disciplinary procedures”, stressed Nada Čavlović Smiljanec. However, it is anticipated the situation will change after 1st July 2013, as there has been a large amount of work concerning the preparation of legislation, regulations and ordinances relating to EU membership. The VAT Act
Discouraging tax burden Ivica Mudrinić, President of the Croatian Employers Association (HUP) believes that the tax burden discourages investors in Croatia. Capital is rational and attracted by cost-effectiveness. “Croatia currently still lacks direction in meeting the fundamental requirements to develop entrepreneurship and the real economy”, he concluded. The Director of Tax Administration responded that she is primarily focused on the introduction of order in the tax system and tax payment. This will assist entrepreneurs who regularly settle their liabilities, as it creates the backdrop to fair competition. It has been revealed that 40% of turnover in hospitality and catering was not declared, and that during the first quarter turnover in trade increased by €0.3 billion. Moreover, tax inspectors will provide help to entrepreneurs during Pre-Bankruptcy Settlement Proceedings. Liabilities to the state are mainly written off or reprogrammed in the long-term, which offers companies new opportunities, highlighted Nada Čavlović Smiljanec.
14 ::: news Atlantic pays dividend from 2010 Last year, Atlantic Group achieved nett consolidated profit of €7.53 million, while Atlantic Grupa d.d. achieved a nett loss of €1.57 million. This loss will be covered by a percentage of retained profits from 2010, and from this same profit a dividend of €3.97 million will be paid (€1.20 per share), according to the decision made at the Main Assembly of Shareholders. Shareholders registered on 20th June, when the Main Assembly was held, will be entitled to the payment, with the dividend due on 4th July 2013. Diners in Slovenia again Diners Club International, UniCredit Bank Slovenia, Hypo Alpe-Adria Bank and Erste Card Club reached agreement that will allow the business activities of Diners Club to continue in Slovenia. Cardholders and traders will be able to use the services of Diners Club as soon as the Bank of Slovenia issues a license to the new owner of the franchise, Erste Card Club, which is scheduled for July. The debts of Diners Club SLO and DC Finance to all traders (default interest excluded) will be covered by Diners Club International.
Visa programme of commercial proposals Visa began a new programme of commercial proposals for 2013 with the possibility of staying in hotels at highly favourable prices, with free Wi-Fi and breakfast as well as later checkout from the hotel. The partnership, between Rent-a-car Company Hertz and Visa, offers customers special packages and free rent-a-car service. When purchasing corporate gifts intended for clients, small and medium sized companies also have the benefit of subscribing to business publications. An application for Visa commercial offers may be downloaded from all local Apple App online stores.
Privredni vjesnik Year VI No 227
(over 3% of GDP(around 60% GDP Croatian budget deficit
current public debt
ERSTE BANK ANALYSIS
Tourism, energy and transport – competitive advantages in the EU Fostering direct investment in production, as well as export potential will be a fundamental challenge Igor Vukić ccording to Erste bank analysts, Croatian EU accession is likely to be a catalyst for reviving the potential for growth. Croatian EU membership will result in reduced financial risks, increased economic and political stability, as well as positive pressure towards reforms, as stated in Erste Group’s special report: “Croatia: success story despite hard times”, published in mid-June. “Following long-term growth problems over the last several years, optimistic expectations concerning Croatian EU membership are not surprising. Croatia has several competitive advantages, such as her geographical position, underexploited tourism and a well-developed road infrastructure. Provided Croatia plays takes the right approach and accelerates reforms, she should expect to reap the benefits of EU membership in the medium term”, explained Alen Kovač, Chief Economist at Erste Bank Croatia.
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FDI structure EU accession is likely to foster an inflow of foreign direct investment that has been significant over the last decade. Nevertheless, Croatia has been lagging behind other countries in the region concerning its investment
structure, with services dominating, whilst manufacturing FDI remained scarce. Fostering direct investment in manufacturing, as well as goods with export potential will be the fundamental challenge. In addition, accelerating the privatisation process, which has been highlighted as one of the principal government targets, will ensure fresh capital, a higher level of effectiveness and knowledge transfer, according to Erste Bank analysts.
Accelerating the privatisation process will also ensure the inflow of fresh capital Tourism is a certain attraction. There are currently high expectations from the energy sector and transport, yet structural reforms are a major task ahead. Erste analysts believe tourism will attract substantial interest against the backdrop of robust tourism performance since the outbreak of the crisis and its unexploited potential to date. The transport sector also appears to have high potential, due to a favourable geographical position. Moreover, well-developed road infrastructure allows for more room for manoeuvre in terms of EU funding, to focus on other infrastructure, most notably rail-
ways and ports. Agriculture and food processing remain significantly affected by economies of scale, where government efforts to increase the productive use of state-owned uncultivated land are a step in the right direction. Excessive deficit “We anticipate some short-term negative effects from exiting CEFTA markets, yet the EU with 500 million people will offer considerable potential over the medium term. In addition, EU membership will exert competitive pressure on domestic production due to intensified imports from the EU, which will hopefully result in enhanced effectiveness”, pointed out Alen Kovač. Following EU accession, Croatia faces the activation of the Excessive Deficit Procedure (EDP), as a result of her budget deficit exceeding 3% of GDP threshold. Moreover, its public debt trajectory towards crossing the 60% of GDP threshold is highly alarming. Whilst EDP activation might deliver negative signals, Erste analysts view the EDP as an opportunity. The implied call for corrective action and for Croatia to pursue medium-term fiscal consolidation may be perceived as akin to IMF requirements, also implying support for stable fiscal policy and a requirement for deeper commitment to fiscal goals, according to Erste Bank analysts.
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( €0.54 billion
gross premiums for the first 5 months of 2013
( €0.41 billion
non-life insurance premiums
TOTAL PREMIUMS SHOWING POSITIVE
Strong growth in life insurance continues Classic life insurance recorded premiums of €120 million, with 8.1% growth and total increase of 22% Drago Živković ross premiums for 27 insurance companies totalled €0.54 billion during the first five months of this year, 0.4% more over the same period of 2012, according to data provided by the Croatian Insurance Office. In terms of non-life insurance, which comprises slightly less than three quarters of the insurance market, calculated gross premiums were €0.41 billion, 1.5% less in relation to the same period of 2012. The most popular type of insurance remains insurance against liability for using motor vehicles, with calculated gross premiums of €0.16 billion. Car insurance premiums increased 1.5% in relation to the same period the last year. The percentage of this insurance is now 40.73%, and 30.47% in total calculated premiums.
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Growth in mandatory insurance Within the scope of insurance against liability for using motor vehicles, premiums for mandatory insurance against automobile liability for damages caused to third parties was 0.2%
higher compared with 2012, and stands at €0.16 billion, a share of 99.04% for this type of risk. A total of 812,002 such insurance policies were signed, 0.2% up over the same period of 2012. Average premiums stands at €202, which is 1.32% more in relation to the same period of 2012. The fall of premiums for nonlife insurance is identified by Casco insurance of rolling stock (-44.8%), guarantee insurance (-40.7%), financial loss insurance (-21.8%), legal protection costs insurance (-20.8%), insurance against accidents (-17.5%),
Insurance for weddings and births down 6% other asset insurance (-9%), Casco insurance of road vehicles (-7.5%), insurance against accidents (-7.3%), health insurance (-4.6%) and insurance of vessels (0.7%). Travel insurance down Increased premiums for non-life insurance is seen by travel insurance (26.5%), loan insurance (24.8%), insurance of goods in transport (16.9%), other insur-
ance against liability (5.4%), insurance against liability for using vessels (4.6%), Casco insurance of aircraft (3.3%), insurance against fire and natural disasters (1.8%), insurance against liability for using motor vehicles (1.5%) and insurance against liability for using aircraft (1.1%). Gross premiums for life insurance stands at €0.14 billion, and continues its rapid growth (6.5%). Life insurance has a share of 25.2% in total premiums compared with 23.75% in 2012. Classic types of life insurance hold the highest share with premiums of €120 million, 8.1% higher in relation to 2012. Within the overall life insurance group, life insurance has a share of 87.65%, (22% in total premiums). Bonus insurance follows with calculated premiums of €8.45 million, down 5% fall in relation to the same period of 2012. Annuity or life insurance, where the insured assumes the investment risk, recorded premiums of €7.7 million, a fall of 5.7%. Annuity insurance posted premiums of €0.63 million with a 64.4% increase in relation to the same period of 2012. Insurance for weddings or births showed premiums of €0.41 million, a 6% fall.
EBRD investments
This year €20 million more than last The European Bank for Reconstruction and Development will invest €230 million in Croatia this year, €20 million more than in 2012, according to a statement published by EBRD. Investments will be focused on small and medium sized companies and the development of infrastructure. According to EBRD, Croatian EU accession will strengthen the
economy in the medium term, due to access to EU structural funds. In order to increase the potential for economic growth,
EBRD analysts advise more reform of public administration and greater competitiveness of Croatian entrepreneurs. The efficient implementation of the so far proposed reforms will create big challenges for the country, especially the labour market and concerning the role of the public sector in the economy that needs to decrease. EBRD also added that the Croatian business environ-
ment leaves significant room for improvement and increasing efficiency. The bank anticipates the Croatian economy will continue to decline this year, but only by 0.3%. The bank pins down the negative outlook on the effect of the crisis in the Eurozone and local structural problems, such as the further weakening of local household spending, investment and exports. (D.Ž.)
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Privredni vjesnik Year VI No 227
SAMOBOR-BASED NORD PRODUKT LAUNCHES NEW PRODUCT
Croatian mobile homes: a small two-roomed apartment A four-person family can live reasonably comfortably in a surprisingly confined apartment that can accommodate two guests ord Produkt, a producer of equipment for interiors, which recently launched the production of car roof boxes, has launched yet another product. The company, whose headquarters are in Samobor, near Zagreb, has recently shown its mobile homes range Nord, tailored to meet the needs of single people, families or extended families. Two types of mobile home have been launched by this producer of furniture, bathtubs, wash-basins and faucets. The first type is a 24m2 mobile home, and the second larger at 32m2. The area
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has been exploited to its full potential in both. A four-person family can live comfortably in a surprisingly restricted area and
A mobile home is highly suitable for camping sites, and can also be used as a detached home can accommodate two guests. Each mobile home comes with a fully equipped kitchen with gas and electric stove, a kitchen sink, an extractor fan and a refrigerator with a freezer, to
name but a few appliances providing rapid meal preparation. The living room comprises a table, chairs, living room cabinet with a drawer for bed linen, and an extension to convert it into a further double bed. There is also an LCD TV set and air conditioning unit. In the bathroom, there is a shower unit, wash-basin, flush toilet and an illuminated mirror cabinet with a shaver socket. “Our extensive experience in the production of equipment for interiors, as well as a wide range of creative ideas and the entrepreneurial spirit of our team
have been the principal ideas behind our business since it began, and we have always opted for the launch of new products on the Croatian market. According to initial feedback from our customers, mobile homes are extremely suitable for camping sites and tourist resorts and will be seen as a practical, affordable and innovative solution in the near term. Similar products have already achieved global recognition as an excellent investment for comfortable holidays�, pointed out Stanko Birin, owner of Nord Produkt. (B.O.)