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Interview: Anton Kovačev Not everything is bad, says Board President of the Croatian Bank for Reconstruction and Development

New pension reform Mandatory retirement at 67, those employed part-time will be entitled to severance pay from a special fund

Entrepreneurial impulse Minister believes that new projects will generate an increase of €39.8 million in 2014

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Croatian Business & Finance Monthly Established in 1953 Monday / 2nd September / 2013 Year VI / No 0228 www.privredni.hr

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FOREIGN INVESTMENT IN CROATIA

Banks still attracting a large proportion of foreign investment In the first quarter of this year, investment totalled €76.3 million, of which €116.2 million was retained profits, and €267.7 million to other types of investment Igor Vukić oreign direct investment in Croatia totalled €460 million in the first quarter of this year, according to preliminary data published by the Croatian National Bank (HNB). This shows significant investment growth in relation to the prior period. During the whole of 2012, direct investment totalled €973.3 million. Foreign investment was particularly scarce in the last quarter of 2012, during which time HNB registered no new investment but a transformation of debt (€100 million) into equity capital. In the first quarter of 2013, investment totalled €76.3 million, of which €116.2 million related to retained profit, and €267.7 million to other types of investment. Concerning activities, the majority of investment related to the banking sector (€99.9 million).

Investment growth in construction The telecommunication sector attracted €50.1 million, real-estate sector accounted for €40.6 million, and a similar amount into power, gas, steam and hot water supply. The construction sector accounted for €36.2 million investment in the first quarter of 2013. For comparison, during the whole of 2012, this sector absorbed only €47.8 million in foreign investment. Data thus far for 2013 confirms the evaluation of HNB’s analysts as the first positive steps forward for construction. However, it would be too early to say whether the negative trend is reversing, analysts warn. Some €17.1 million relates to real-estate investment, and the same amount was also invested into the production of power machines and devices. The insurance sector (mandatory insurance excluded) attracted €12.9 million. €12.7 million was invested in leather processing, the manu-

facture of leather products and footwear, and over €10 million into transport and accompanying activities (€10.7 million). Direct trade investment, ranked second since 1993 (with €2.2 billion invested over 20 years), accounted for only €9.5 million in the first quarter. Active investors Austria remains the largest investor. In the first quarter of this year, it invested €149.5 million; over the past 20 years, Austria has invested a total of €7.2 billion. Dutch investors were also active at the beginning of the year accounting for €67.4 million. In terms of total investment, the Dutch take second place with

€4.1 billion. During the first quarter, Germany invested €57.7 million (total €3.1 billion), Spain (€36 million) next in line. In terms of total investment, Spain has invested €97.5 million to date. Companies with head offices in Luxembourg invested €34.2 million in the first quarter, Italy €21.3 million and Sweden €18.3 million, the Virgin Islands €16.6 million, and Switzerland €15.8 million. According to data provided by HNB, during the past 20 years a total of €27.3 billion of foreign direct investment arrived to Croatia. 2008 was a record year with €4.2 billion with 2010 recording the weakest inflow (€326.3 million).

2 ::: news Unemployment falls Registered unemployment in Croatia decreased in July from 18.6% to 18.5%, the lowest rate since September 2012, according to data provided by the Central Bureau for Statistics. Even though the fall has been slower compared with the previous couple of months, unemployment has been falling continuously for the past five months, mainly as a result of seasonal employment in tourism and agriculture. On an annualised level, the unemployment rate increased by 1%. According to data provided by the Croatian Employment Agency, 316,246 people were registered as unemployed, 1,846 less compared with the previous month. Contract for Viadukt on the highway near Ploče Together with the Slovenian company Javna razsvetljava from Ljubljana, Viadukt has signed a contract to execute additional work on the highway ZagrebSplit-Dubrovnik, (the RavčaPloče section) and the connecting road. Hrvatske autoceste is the investor, and the work is worth €7 million. The deadline for completion is 60 days from the start day. Export of vaccine to India

The Institute of Immunology and the Indian company HLL Biotech Limited signed a contract on the delivery of vaccine and the transfer of technology for producing the measles vaccine. HLL Biotech is a branch of the company HLL Lifecare Limited, founded by the Indian Government, and sells its products in more than 115 countries. HLL Biotech will produce 80 million doses of vaccine against measles for the Indian market. During the next five years, the Institute for Immunology anticipates income of $5 million, and between $5 million and $10 million thereafter.

Privredni vjesnik Year VI No 228

( 122 loans approved in 2012

ANTON KOVAČEV, BOARD PRESIDENT OF THE CROATIAN BANK FOR RECONSTR

Not everything is ba notwithstanding

There are successful projects and successful entrepreneurs in Croatia who not only man expanded and modernised to increase the number of employees and exports Jozo Vrdoljak ith Anton Kovač, Board President of the Croatian Bank for Reconstruction and Development, Privredni vjesnik spoke about the activities of the development bank, corporate lending and their contribution to economic development

How was HBOR’s business year 2012 and the first half of 2013? How many loans were made compared with the previous period? Last year was a record for the number and amount of the approved loans. We approved 122 loans (€1.35 billion), 56% more over 2011. Our lending activities have seen growth in 2013 compared with the record of 2012. During the first six months of this year, we have approved €0.52 billion up 11.5% more compared with the same period in 2012. In addition to the increase in lending, the growing trend of investment loans has continued compared with loans for financing craft organisations. Are entrepreneurs interested in lending, and what are their common requirements? The is considerable interest in our loans, which is confirmed by the numbers I have already mentioned. This year there is more interest in investment loans, that is, different types of investment (tourism, agriculture, different production activities, environmental protection, energy efficiency and renewable energy resources). Our loan programmes

We are trying to ensure better financing criteria Are you preparing new programmes, and are you expecting more contracts similar to that with EIB? We are in contact with Croatian entrepreneurs on a daily basis, and based on their suggestions and needs, we introduce new programmes and adapt existing ones. We are trying to meet their needs and provide them with as appropriate financing criteria as possible. This year we introduced certain changes to our programmes. In our programmes Beginners, Women Entrepreneurs, Small and Medium-sized Entrepreneurship, we introduced lending against intangible assets – financing investment of the development of products, patents, licenses, concessions, copyright and franchises. We additionally increased loans for start-ups intended for investing in craft businesses from 15% to 30%. For loans up to €93,000 we allowed financing 100% of the investment, VAT excluded. We will certainly not stop here. We will continue adapting our programmes that will be contributed to by new planned loans from EIB and other international financing institutions.

www.privredni.hr Business & Finance Monthly

( €1.35 billion

::: news

total of approved loans

UCTION AND DEVELOPMENT

ad, the crisis aged to maintain their existing activity despite under difficult circumstances, but also Beginners and Women Entrepreneurs are very popular, and these programmes are intended for smaller, in most cases beginner, projects. This year we have already approved 100 loans valued at over €7.3 million. You signed two contracts this year - HBOR approved a loan from the EIB valued at €500 million. Which projects will be funded with these loans? These funds are intended for financing SME projects and medium-capitalised entrepreneurs with up to 3,000 employees. They are intended for investment projects in industry, infrastructure projects in the public sector, energy projects, environmental protection, health and education. You pointed out that the exit from the crisis depends on boosting investment. Will the approved loans be used for this purpose? Are there projects that could activate a new investment cycle in Croatia? Certainly. The funds will be mainly used for investment projects, of which at least 70% will be used for investing in SME projects and medium-capitalised companies. Our past co-operation with EIB resulted in 1,800 projects and over 7,100 new jobs, as well as many of those that were preserved. There are successful projects and successful entrepreneurs in Croatia who not only managed to maintain their existing activity despite difficult circumstance, but also expanded and modernised, increase the number of employees and exports. It is obvi-

ous that more entrepreneurs and projects of this kind are needed in order to change the present negative trends. This is why HBOR is searching for funds and ways to aid entrepreneurs and contribute to implementing strategic decisions of the Croatian Government concerning the reactivation of a new investment cycle. Last year you temporarily reduced interest rates by 1%, and after the deadline expired, you kept this decision until the end of the year. Is this measure a possible introduction to a reduction of interest rates? The considerable increase in credit activity last year and in the first half of this year was certainly conditioned by reduced interest rates. They are the result of the large payments into HBOR share capital, favourable special financing institution loans and the fact we renounced achieving high profit. The decision on reducing interest rates is our business decision, which was supported by the Supervisory Committee, but it is difficult to estimate to what extent it will affect the interest policy of the banks, especially since HNB has announced stricter regulations. What do the banks think about this measure? Is this possibly the reason why their credit activity has slowed? As a state development bank, HBOR wants to set a good example that others will also follow. However, HBOR is not profit orientated unlike the ordinary banks. Our goal is economic de-

velopment, which owner, demands of cial banks achieve their shareholders

Croatia, our us. Commerthe goals of and owners,

Last year was a record for the number and amount of the approved loans and this is profitability. However, their final interest is also to boost the Croatian economy since a strong and developed economy will have a greater need for them and their financing. Will this measure strengthen competitiveness of the Croatian economy? Are you preparing something that would increase competitiveness of companies on the EU market? We introduced lowered interest rates with the aim of increasing competitiveness in the Croatian economy. After all, lower interest rates, lower investment costs and longer repayment deadlines affect the price and quality of Croatian products and services on both local and foreign markets. I always say one thing – large and strong exporters were those who first proved themselves on the local market. Only few succeed in foreign markets first. That is why HBOR’s direct promotion of investment through its loan programmes and securing export claims payments, indirectly promotes exports by strengthening local production and increasing competitiveness on the local market.

HBOR bonds placed The Croatian Bank for Reconstruction and Development placed €150 million in bonds with a due date of seven years, due on the 8th May 2020. The bonds were issued with a state guarantee, and a 6% coupon. The issue was bought by Deutsche Bank and JPMorgan, and will be quoted in secondary trading on the Vienna Stock Exchange. Croatia leads in investment Last year, Croatia attracted $1.25 billion in foreign direct investment, according to data from the UN Conference on Trade and Development (UNCTAD). According to the value of foreign investment in 2012, Croatia once again was ahead of Serbia, its serious competitor for the past few years. Last year foreign investors invested only $352 million in Serbia, a result that puts the country at the bottom of the list of regional countries. Besides Croatia, Albania ($957 million) and Bosnia and Herzegovina ($633 million) are the two other countries with the highest level of foreign direct investment. Sberbank rebrands its offices

Sberbank has opened another office in Zagreb. The bank has been operating in Croatia since its takeover of Volksbank. The rebranding process will continue in Čakovec, and it should finish by December with 31 offices in 23 Croatian cities. On the Croatian banking market, Sberbank ranks ninth according to total assets, with a balance sheet of €1.09 billion.

4 ::: news

Privredni vjesnik Year VI No 228

( 2020 to 2030

will be the transitional period to implement pension reform

NEW PENSION REFORM

Bank branches declining in number, ATM’s increasing Last year banks in Croatia continued to reduce the number of branch offices and staff, whilst increasing the number of ATM’s, according to data provided by the Croatian National Bank. The number of branch offices has been falling for three consecutive years and at the end of 2012 there were a total of 1,254 branch offices, 12 down over the end of 2011. 43 branch offices have been closed over the last three years. The number of bank employees has been reduced by 226 and at the end of 2012 banks employed a total of 21,639. The number of ATM’s continues to grow: end 2012 saw 4,083 an increase of 2.7% compared with the end of 2011. Leasing profits halved Irrespective of the fact that the first six months of 2013 saw a rise of almost 5% in newly signed leasing contracts compared with 2012, with a 1% increase in value, total profits made by leasing companies has more than halved. During the first six months in 2012 leasing sector profits were €30.28 million, compared with €14.59 million for the same period in 2013, according to data provided by HANFA. Assets of the leasing sector slumped by around €0.42 billion or 13.5%. Atlas losses continue During the first six months of 2013, the Atlas tourist agency saw produced revenue of €18.53 million, €0.1 million down over the same period last year. Expenditure reduced by around a similar amount to stand at €23 million; total losses came in at 4.47 million, down by €66,300 over last year. Staff expenditure remained almost unchanged, although tangible costs dropped by €1.02 million.

Mandatory retire 67 or even earlie

Employees will be entitled to strike if there is a one day salary delay and those employed p Igor Vukić here an employee refuses a salary reduction, the employer will be entitled to dismiss him. The mandatory retirement age for those born after 1964 will be 67. However, they will be able to retire sooner where they have achieved 40 years of employment. Employees will be entitled to strike if there is a one-day salary delay and those employed part-time will be entitled to severance pay from a special fund.

Agreement or dismissal These are only several of the proposed amendments to the Labour Law that have unofficially leaked out. Mirando Mrsić, Minister of Labour, has confirmed several of these proposals, opening up public discussion on amendments, which will surely intensify in September. Trade Unions and employers have naturally revealed opposing attitudes to the proposals. According to Krešimir Sever, President of the Independent Trade Unions of Croatia, “the amendments do not have to be rapid, as they will not create new jobs and increase employment by themselves. Young people leaving Croatia in search for employment often end up living and working in EU member states with even more rigid employment legislation and a more authoritarian welfare state, and yet these states manage to create new jobs and employ foreign employees”. Mirando Mrsić stated that the government is aiming to create a balance between protecting

workers’ rights and the possibility to help with the restructuring of business activities for employers. He believes it is logical for an employee to be dismissed if they do not agree with the employer’s proposal for a reduced salary. According to Sever, this proposal would make it easier for employers to dismiss employees they have previously had any issues with, primarily in companies without a collective agreement. Employers have been striving to ease the dismissal of employees. The recent amendment to the Labour Law enforced following long-term negotiations prescribes the dismissal for employees whose performance during the probation period was unsatisfactory; formerly, the entire dismissal procedure was required. Damir Majetić, CEO of the Croatian Employers Association (HUP) stated that both employment and dismissal models need to be simplified, which would enable employers to react more effectively and efficiently to market changes. A strike for a oneday salary delay? Employers deem the proposal for employees to be entitled to strike in the case of a one-day salary delay, to be exaggerated. Bernard Jakelić, Vice President of HUP, stated it was overly radical and that a similar solution does not exist in other states. He believes it would

be more appropriate to encourage arbitration and agreement in similar situations. The Croatian Chamber of Economy evaluated that it might be inappropriate to insist on a one-day salary delay as a legal basis for a strike. Agreement was reached concerning the arbitration issue, yet court litigation needs to be considered as an option for the settlement of labour disputes. The Croatian Chamber of Economy has welcomed the proposal of severance pay for the dismissal of part-time employees. A severance pay fund would consist of current employer contributions. According to recent announcements, employers are concerned about the additional expenses the fund might imply. Nevertheless, Bernard Jakelić stated there is no reason for concern, as there will be no additional expenses in this case. Amendments to the Labour Law also cover flexible working hours. It had been assumed at the Ministry of Labour that overtime work is often not recorded, and hence not adequately paid. According to data provided by the State

www.privredni.hr Business & Finance Weekly

( 40 years of service for full retirement

ement at er

part-time will be entitled to severance pay from a special fund inspectorate, the number of infringements committed by employers concerning overtime work as a percentage of the total number of infringements, currently stands at 2%. The increase in retirement age will be enforced during the transition period between 2020 and 2030. The final model will be selected following consultation with experts and cross-section of roundtable discussions, as announced by the Minister Mrsić. According to announcements, the mandatory retirement age for those born after

1964 will be 67. Nevertheless, the Minister explained that there would be a proposal concerning earlier retirement, albeit primarily where an employee has achieved 40 years of service prior to the mandatory retirement age. “Those employed from age 20, 21 or 22 will be entitled to full retirement upon achieving 40 years of service, which has not been an option thus far. Their retirement pension will not be reduced due to the fact they have been retired prior to the mandatory retirement age”, explained Mrsić.

REGIONAL EXPANSION

Vindija to open new plant in Serbia

Varaždin-based food processor Vindija has recently opened a new poultry processing plant in Vojvodina. The value of the investment is €2.66 million and some 50 new jobs are planned, primarily employing local people. Vindija has been operating in Serbia since May 2009 when it made its first investment by acquiring a devastated factory and thoroughly reconstructing it with a €12 million investment and employing 160 staff. Since June 2010, Vindija production was the first in Serbia to comply with EU veterinary and sanitary regula-

tions and requirements and was consequently allocated an export control classification number for poultry meat exports and products to EU markets. Vindija has to date invested over €34 million in Serbia in an integrated production chain comprising the above factory producing poultry meat, the Valjevo-based livestock feed factory, three distribution centres, as well as in broiler farms. The recently opened broiler farm has a capacity of 320,000 chickens per cycle and is amongst the most modern farms. Vindija employs a total of 330 staff in its Serbian plants. (D.Ž.)

TAX ADMINISTRATION TACKLING SHADOW ECONOMY

Fiscal monitoring identifies €1.72 billion During the first six months of this year, Croatian caterers and traders have reported €0.9 billion of goods subject to VAT, up over the same period last year. The amount of goods subject to VAT covering all activities has increased by €1.72 billion, according to the Tax Administration at the Ministry of Finance. Total taxable goods in the hospitality and food preparation and catering industries over the first six months of this year, exceeded those over the same period in 2012 by €0.2 billion, based on a comparison of VAT returns over the first six months of 2013 and last year. In addition, the comparison of VAT returns for the same period in wholesale and retail showed total taxable goods during the first six months of 2013 exceeded those over the same

period in 2012 by €0.8 billion. Total taxable goods in all activities during the first six months of 2013 rose by €1.73 billion. The Tax Administration emphasised that it had been constantly monitoring the implementation of the provisions of the Fiscalisation Act in cash transactions. Hence, by 12th August 2013 it has performed 25,394 cases of surveillance revealing 3,055 irregularities, requiring 596 temporary bans on activities. (D.Ž.)

Privredni vjesnik Year VI No 228

( 414 businesses and SME’s ( €9.5 million compete for financial support this year

allocated for 103 projects

ENTREPRENEURIAL IMPULSE

Support to boost competitiveness and encourage exports Gordan Maras, Minister of Entrepreneurship and Crafts, believes that entrepreneurial projects will generate an increase of €39.8 million in 2014, providing a healthy return on investment and justifying assistance provided by the state Krešimir Sočković fter 20 years of considerable support through several million Euro to lossmaking companies which did not manage to ensure competitiveness and create new jobs, we have finally decided to move on” stated Gordan Maras, Minister of Entrepreneurship and Crafts, during the presentation of Entrepreneurial Impulse 2013 Mjera B1 support designed to boost competitiveness. “These entrepreneurial projects will generate an increase in revenue of €39.8 million in 2014, providing a healthy return on investment and justifying the assistance provided by the state”, pointed out Maras. He announced the support in 2014 would be tenfold in relation to the support provided in 2013.

“

Imbalance across counties 414 businesses and SME’s compete for the Entrepreneurial impulse support this year and €9.5 million has been allocated for 103 projects. The average grant value this year has seen a substantial increase compared with the past several years, at €100,000. Most projects, as well as funding of almost €1.7 million (or 18%), were granted by the Ministry to the metal production sector, the electronic engineering sector and electronic equipment and devices, as well as the wood industry (with 16% of the total funding available). 25% of the projects that were granted support are in Zagreb, whilst Zagreb, Međimurje and Virovitica-Podravina Counties saw the highest number of projects granted support. Three counties – Dubrovnik

€0.2 million this year to enhance competitiveness: projects by the Zagreb-based company Agroproteinka for the treatment and management of hazardous waste, and a Tkon-based factory producing fishing nets and packaging material on the island of Pašman.

County, Požega-Slavonia County and Lika-Senj County- did not submit any projects. Only two projects were granted the maximum non-repayable funding of

1001 new jobs According to anticipations and as a result of support provided by the state, 1001 new jobs will be created in businesses and SME’s and the revenue of those who received support are expected to rise by 13.8%. Moreover, expenditure is expected to decrease by 3.5%. 83 of the 103 projects are expected to provide new production services or new production processes, and 82 are anticipating an increase in exports as a result of the support allocated.

BIOS BUSINESS INCUBATOR HAS NEW CAPACITY

24 new business units The new premises worth €1.4 million have been financed through EU funding and around €1 million of non-repayable EU funding Svetozar Sarkanjac he on-going development of the Osijek-based BIOS business incubator has recently seen the opening of new business units financed through the IPA Programme Component IIIC with non-repayable funding for business infrastructure, under the regional competitiveness operational programme. The total value of the project is €1.4 million, with some €1 million of non-repayable funding and €348,000 provided by Osijek.

The main aim of the project is the creation of 50 new companies and 228 new jobs over the next 10 years. “The opening of the new units increased the BIOS capacity by 24 businesses. Thus, the business

incubator now consists of three facilities covering 4,420 m2”, stated Ivo Koški, until recently Director of BIOS. Irrespective of the fact that one project has only recently been implemented, the BIOS business incubator is launching a further new project. The construction of two additional levels has been planned, which will provide another 24 units. It will be financed through EU funding, as well as by the local community, as previously. Users of these new units have expressed their complete

satisfaction with the project and have provided an overview of their activities. The company S link presented the development of its IT system for agriculture, Deam lux provided an overview of the manufacturing of luxury candles, and MC Osijek presented its digital pencils. There are no more available business premises at the BIOS business incubator currently, which provides a supportive environment to 21 businesses employing 136 staff. New premises create new jobs.

www.privredni.hr Business & Finance Monthly onth hllyy

( HRK1.26 billion pre-tax profit of banks

BANKS UNDER PRESSURE

Profit decreases, assets slightly grow Over one third of banks (11), registered loss of a total of HRK200 million. During the first half of the year assets slightly grew, now standing at HRK400.1 billion Drago Živković he fall of economic activities for the past couple of years has started to have a stronger effect on the Croatian banking sector. After last year’s 27% profit loss, during the first six months of this year, the profit plummeted by 40.6%. All banks put together (31), earned only HRK1.26 billion during the first half of the year; 11 of them registered loss over HRK200 million. Centar banka registered one third of total loss (HRK66.42 million). It is followed by SG Splitska banka with HRK54.5 million. Vaba registered loss of HRK24.2 million, Karlovačka banka HRK21.5 million, Banka Kovanica HRK12.8 million, Sberbank HRK10.7 million, Kentbank HRK9.59 million, Croatia banka HRK8 million, Nava banka HRK3.8 million, and Primorska and Tesla štedna banka (savings bank) registered loss of HRK2.7 million each. As every year, the majority of total profit was achieved by five biggest banks, but this year Privredna banka takes the lead with HRK583.6 million. However, this is mainly owed to a one-off effect of selling PBZ Invest, and when deducted, the biggest profit was actually achieved by Zagrebačka banka (HRK476.1 million). Erste bank is third with HRK152.9 million, and it is followed by another two Austrian banks: Raiffeisenbank (HRK71 million) and Hypo Alpe-Adria Bank (HRK35.4 million).

High differentiation During the entire last year, the banks’ profit totalled HRK3.39 billion, which was 1.27 billion or 27% less compared to the end of 2011. The profit loss was mainly effected by net interest income

which decreased by HRK1 billion or 8.8%. According to HNB’s analysis, this is the result of a strong growth of interest expenses, mainly deriving from foreign financial institutions. In 2012, over one third of banks operated

with loss totalling HRK546.9 million. With an exception of one medium-sized bank, all banks in this group are smallsized. The differentiation in the banking system remains high, where a small number of profitable and well-capitalised bigsized banks play the leading role. Total assets of the banks stood at HRK399.9 billion at the end of the last year, which is a 1.73% decrease. According to HNB,

Total assets of the banks stood at HRK399.9 billion at the end of the last year

Loans in kuna the riskiest Besides the decreased profitability, the Croatian banks are also faced with a growing share of partly recoverable and completely unrecoverable loans. Compared with the past year, bad credits increased to almost HRK5 billion, and now total HRK43.3 billion of a total loans worth HRK286.4 billion. This is a 15.1% share compared with 13.9% at the end of 2012. At the end of the pre-recession 2008, bad loans totalled only HRK12 billion of a total of HRK250 billion worth assets, and their growth had speeded up during the last two quarters. The majority of bad loans refers to companies (26.9%), while private individuals are still holding up with 10.3% of a total of 123.7 billion worth loans. Loans tied to kuna are the riskiest, with a 17.35% share of bad loans of a total of HRK75.9 billion.

this is a consequence of HRK16 billion which were paid to the foreign owners, which reduced total assets by HRK7.4 billion. During the first six months of this year, the assets slightly increased, and now total HRK400.1 billion. Total assets of five building societies decreased to HRK7.24 billion (2.9%), during the first six months. Savings banks achieved pre-tax profit of HRK20.1 million, of which the majority was earned by Prva stambena štedionica (HRK12.3 million). PBZ and Raiffeisen building societies also achieved profit, while the remaining two (HPB and Wüstenrot) registered loss (HRK93,000 and HRK1.4 million).

Privredni vjesn vjesnik Year VII No 228 Ye Y ear ear ar V No 22

( €1.6 million ( 400 tonnes invested in new plant

annual cheese production

EKO SIR PUĐA

New plant to boost competitiveness in the EU In addition to the construction of the new plant, the cheese factory is focusing on the creation of new jobs and fostering co-operation, thereby increasing the value of its investment Jozo Vrdoljak vo Josipović, President of Croatia, recently opened a new plant for cheese production in the Čaporice business zone. The plant is family-owned and its owner is also involved in the production of the well-known Livanj cheese in Bosnia and Herzegovina. The investment value in the new plant is €1.6 million and the factory currently employs 10 staff. Total processing capacity is 10,000 litres of milk per day. The Ministry of Agriculture has recognised the significance of the project and has co-financed it under the non-repayable funding scheme designed to foster the development of the food processing industry under the Mjera-1 project. “The Puđa family has proved that success is still possible irrespective of the fact that we currently live in times when the creation of new jobs is a priority, showing

that every new job is extremely valuable. In addition to the creation of new jobs, the Puđa family are focusing on fostering co-operation, thus significantly increasing the value of their investment and the regional importance of their project”, emphasised President Ivo Josipović at the opening ceremony. Fostering co-operation According to Tomislav Puđa, owner and Director of the com-

pany, the new plant was constructed to enhance the business of the company in the EU and to fulfil the family ambition of achieving a high level of competitiveness and substantially increase their market share throughout the EU. “The company is in compliance with EU standards and holds all the required certification for business in the EU. Our principal problem is raw material, as we have currently contracted for the purchase of 3,000 litres of milk per day. We

are anticipating a rise in employment, as we are planning to invest in subcontractors in order to boost purchasing of milk. We are planning to produce different types of hard cheese, as well as top quality Dalmatian cheese from local pasture-raised milk”, stressed Tomislav Puđa. The family has a long tradition of cheese production and the recipe for Livanj cheese was passed down from generation to generation, originating in the 1970’s when cheese was produced in modest conditions. The turning point for the family occurred in 2003 when they opened a modern dairy plant and cheese factory near Livno. Annual production currently stands at around 400 tonnes of cheese. In addition, the company has high quality subcontractors nearby who they assist and support in various ways. The Puđa family is planning to construct their own farm in order to ensure a raw material base.

WIND POWER PLANT AT VOŠTANE STARTS OPERATING

€64.5 million of investment Ivo Josipović, President of Croatia, attended the opening ceremony of a wind farm of 14 wind power generators having a capacity of 42 Megawatt, as well as of a power transformer substation with a 110-kV power-transmission line connection near Trilj, which has thus far been the largest single renewable energy investment in Croatia. The Zagreb-based company Oštra Stina has invested €64.5 million, with 25% being financed

internally and 75% through bank lending. “This is an auspicious moment for Croatia, indicating the effectiveness of co-operation between investors and local government. This level of co-operation needs to be strengthened throughout Croatia. Moreover, the project is of major importance to Croatia, as she has been striving to comply with her international obligations of reaching the mandatory target of 20% of renewable energy in overall energy consumption by 2020,

which indicates her environmental awareness, since the implementation of similar projects provides a significant contribution to the ecological health of Croatia” highlighted Ivo Josipović. Iljko Ćurić, Director of Oštra Stina, pointed out that the project had been extremely demanding, emphasising the fact that the overall development of the location, planning, financial and legal documentation have all been exclusively a result of the committed work of local experts. “It is our greatest

satisfaction to be able to point out that these wind power plants are contributing significantly to the efforts of both Croatia and the EU in increasing the renewable energy share in total energy consumption”, stated Ćurić, adding that Trilj will see €0.16 million of annual revenue from the mandatory compensation to local community. According to estimates, the wind farm will generate 112 gigawatt-hours (GWh) of electricity. (J.V.)

www.privredni.hr Business & Finance Weekly

( €2.44 billion

in subsidies paid between 2005 and 2011

( around 13,000 staff employed in HŽ

NEW AGE FOR RAILWAYS

Development of railways financed by compensation for roads Unprofitable local passenger routes will no longer be financed from the state budget; municipalities and cities will have to find funding to preserve them Drago Živković rvatske željeznice as it has been known for the past two or three years will soon cease to exist. How rail transport will look in the future, no one knows. When the former HŽ Holding finished working, three rail companies remained in state ownership: HŽ Infrastruktura, HŽ Putnički prijevoz and HŽ Cargo. One thing is certain that HŽ Cargo will be privatised. HŽ Infrastruktura will remain a public company that must ensure safe rail transport for all passengers, including those from other countries who will appear on the local market after liberalisation.

Coach transport also proposed Around €2 billion will have to be invested in the reconstruction and construction of railways through the main corridors Mađarska-Ploče, Rijeka-Zagreb and Zagreb-Beograd. Everything which is not included in the main activity of HŽ Infrastruktura will be sold, said Hajdaš Dončić who agrees with the recommendations of the World Bank and stated in the report on policies for the Croatian rail sector. However, in order to bring in €2 billion from EU funds for rail projects, the state must secure its investment share, which should be compensation for roads, which is currently €0.07 for every litre of oil derivatives. From this amount, the state would put aside approximately half that figure for investment into the railways, which would yield around €92.8 million according to the Minister’s calculations. HŽ Putnički prijevoz will be faced with great changes, where the

state expects help from local administrations. Unprofitable local passenger routes will no longer be financed from the state budget, and municipalities and cities will have to find funding if they want to preserve them. In cases where rail transport will not be profitable at all, HŽ Putnički prijevoz will organise coach transport, similar to the scheme one German public railway company is doing, Hajdaš Dončić claims. A year ago, HŽ employed some 17,000 staff. The present number is 13,000. When privatisation and restructuring ends, there will be around 10,000 employees, but Hajdaš Dončić warns that the workers who remain in the dissociated privatised companies, now belonging to HŽ, will be added to this number. A situation in which 2,000 or 3,000 people at once will lose their jobs will not happen, the Minister promises, and as he highlights, this is precisely where the

Government’s plan differs from the recommendations from the World Bank. In effect, the World Bank plan criticises the Government for being overly ambitious with investment planning, but not ambitious enough with budget cuts. However, Hajdaš Dončić responds that the Government regards rail passenger transport as a social issue, not merely an economic one. According to the World Bank report, the Croatian Government paid Hrvatske željeznice a total of €2.44 billion in subsidies between 2005 and 2011. Wasted money Even though this helped increase cargo transport by roughly 25% during the first four years, since the beginning of the recession HŽ has returned to the same position as in 2005, meaning that money invested in Hrvatske željeznice was wasted. During the same pe-

riod, rail transport has more than doubled across the entire EU. In some countries like Latvia and Lithuania it even increased by over five times. According to the criteria of productivity per employee, Croatia is followed only by Slovakia at an EU level. According to the World Bank, HŽ will need over €130 million for maintaining the present system, of which €55 million will go infrastructure, €30 million to cargo transport and €45 million to passenger transport. Croatia will be given a unique opportunity to strengthen its position as the door to Central and South Europe, through the development of the traffic-logistic system that would connect ports, rail and other types of traffic infrastructure. If HŽ manages to adapt, they could become a generator of Croatian economic growth, World Bank Country Manager for Croatia, Hongjoo Hahm, is convinced.

Privredni vjesnik Year VI No 228

(

number of active bu

BUSINESS NUMBERS

Lack o

81.7% of businesses co-operatives. For 15 Boris Odorčić s at the end of June 2013 Croatia had 274,714 registered businesses, but only 147,594 or 53.7% of them active. Comparing these data with the same period last year, it may be said that Croatia has seen a decrease in the overall number of businesses but has simultaneously seen an increase in the number of active companies. According to data provided by the Croatian Bureau of Statistics, at the end of June 2012 Croatia had 288,972 registered legal persons, covering 134,110 or 46.4% of active companies. Considering data from the end of 2008, or at the time prior to the economic crisis, it may be noted that Croatia had 263,759 legal persons and thus the total number of legal persons was slightly down compared with the current situation. The number of active legal persons stood at 132,258 or 50.1%. It may be concluded that during the economic crisis the number of businesses, institutions, legal bodies, associations and organisations has risen, whilst simultaneously the number of enterprises, micro-companies and freelance businesses has fallen. June saw 140,987 registered businesses, with 122,814 or 87.1%, active. The end of 2008 saw 128,337 registered companies, with 103,382 or 80.6%, active. According to structure, the majority were limited liability companies, accounting for 93.9% of registered companies and 93.4% of active companies. A simple limited liability company, or a “10 kuna company” is the second most frequent structural model,

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( 122,814

sinesses at the end of June

number of active companies

AND STRUCTURE

f economic freedom

are privately owned, and just 0.7% state-owned with 1.4% being .3% of businesses ownership cannot be identified accounting for 4.3% of registered and 4.9% active companies. Micro-companies lack strength Damir Novotny, economic analyst and managing partner in T&MC Group, stated that the number of newly created businesses is considered to be a fundamental indicator throughout the European Union, since businesses that are not capable of market survival and are not competitive have to face bankruptcy and consequently new ones are founded. “In 2013 the number of newly founded businesses in most EU states exceeds the number that faced bankruptcy for the first time following the economic crisis, which is a clear indicator of economic recovery. Nevertheless, in Croatia, unfortunately, businesses are currently still mainly disappearing from the market”, emphasises Novotny. In addition, economic freedom in Croatia is also unfortunately almost non-existent. “The Baltic States are much more advanced than Croatia concerning the issue of opening new businesses or the winding up of loss-making ones, and this significantly affects economic activity. In Croatia, economic activity is scarce and hence economic growth and employment are almost insignificant. This founding and winding up of businesses is also closely linked with economic growth and it is one of the fundamental issues in Croatia”, he explained, adding that a meagre rise in the number of business entities registered from the end of 2008 to date, is a result of amendments to the legal framework, or fa-

cilitated foundation of businesses with minimal subscribed capital. “Nevertheless, such micro-companies lack strength. In addition, Croatia has an insufficient number of other institutions such as investment funds which could provide assistance in market survival”, pointed out Novotny. Immense differences The number of enterprises and co-operatives has fallen. At the end of June, Croatia had 66,630 registered enterprises and co-operatives, with only 2,162 or just 3.2% active. 2008 saw 81,194 registered enterprises and cooperatives, with 7,465 or 9.2%, active. Consequently, enterprises and co-operatives show the most identifiable differences between registered and active entities, primarily due to business entities which have not submitted a request for compliance with

52.7% of businesses have no employees the Interestingly, June 2013 saw 90,860 active micro-companies (primarily in trade) and freelance businesses, a significant decrease over the 93,277 at the end of June 2012, and even moreso compared with end 2008 with 100,262 active micro-companies and freelance businesses. “Micro-companies in Croatia are in many ways unique, as they imply micro-entrepreneurship. This legislative model has been retained primarily due to tradition, yet it is not the most appropriate solution, as micro-companies were once unlimited liability companies. On

the other hand, traditional artisan crafts which currently mainly exist in north-western Croatia have been disappearing from the market”, he highlighted. Electricity providers on the rise According to business entity structure, wholesale and retail traders, motor vehicle and motorcycle mechanics are most widespread (79,763), accounting for 29% of total registered legal persons; other services followed (43,159 or 15.7%), with professional, scientific and technical activities (24,141 or 8.8%), as well as construction (22,747 or 8.3%). The figures for wholesale and retail, motor vehicle and motorcycle mechanics were similar last to last year (90,826 registered business entities accounting for 31.4%), followed by other services (41,070 or 14.2%), construction (24,970 or 8.6%) and professional, scientific and technical activities (24,614 or 8.5%). “Trade developed in Croatia as a result of the economic model adopted after 1995. It flourished due to strong domestic demand that was financed as a result of the development of the financial sector. The financial sector boomed following the severe banking crisis in 1999, when a large number of Croatian banks went bankrupt and the remainder privatised. Through the banking sector, Croatia ‘imported’ around €26.5 billion of savings from Austria and Italy and financed consumption growth. Consequently, a very strong growth in consumption resulted in the trade sector boom”, he explained. The first six months in 2013 saw

1,037 business entities in electricity, gas, steam and air conditioning supply, a substantial increase in relation to the 698 entities last year. Furthermore, both health care and social care sector saw a significant increase in businesses in the monitoring period (currently 4,249 compared with 4,086 last year), as well as arts, entertainment and recreation (20,684 in 2013 over 19,978 in 2012). Self-employment soaring According to the ownership structure of active legal persons, private ownership is the most widespread at 81.7%. Just 0.7% of businesses are state-owned, 0.9% under mixed ownership, 1.4% in co-operative ownership, but for 15.3% legal persons ownership is unidentifiable. The ownership structure according to business activity indicates privately owned businesses to be the most widespread in services. Considering the structure of active legal persons according to the number of employees, a high 52.7% or 77,823 are businesses without employees or self-employed, primarily in wholesale and retail trade. “This is a result of the first wave of creating businesses between 1990 and 1995 when a large number of microbusinesses with one or no employees were created due to the necessity for self-employment. Many people founded such businesses to make a living or to provide earnings in case of a job loss in large state-owned or private companies and hence avoid long-term unemployment. Such companies should have been removed from the market long ago”, opined Novotny.

Privredni vjesnik Year VI No 228

( over €13 billion

available to Croatia between 2013 and d 2020

( €600 million

the value of prepared projects

UTILISATION OF EU FUNDS

BEGINNING OF SERIOUS

By the end of July of this year, 80.2% of funding from the pre-accession fund reimbursed. Subsidies for arranged projects total €506.4 million, with over €3 Krešimir Sočković s Croatia prepared to use European funds and does it have projects on which it could utilise the money at its disposal? The answers to these questions differ, depending on whom you ask. Between 2013 and 2020, Croatia will have at its disposal over €13 billion from the EU Regional Development Fund, the Cohesion Fund and funds of the Common Agricultural Policy. This amount of money is substantial considering the size of the Croatian economy, particularly since it is non-repayable. However, experts working on European projects as well as many consultants, point out that it is questionable whether local administrations and local companies will have sufficient of their own money to participate in projects, and will they have quality project leaders.

How to direct the money The Croatian government announced it wants to direct funding to traffic infrastructure, rail reconstruction, waste management and energy projects. Economic experts warn this will not have any significant effect on economic growth and employment, both much needed in a Croatia that has been in recession for many years. Agriculture is a good example. It was allocated considerable funding from the pre-accession programme; however, the sector did not manage to increase in competitiveness. The money was there even earlier, but there were not

enough projects that could utilise the funding. Agriculture itself, and entrepreneurs expect more freedom will be given to the more dynamic economic sectors, small and medium sized entrepreneurs that base their activities on innovation, human resources, new products and information

Croatia achieved considerable progress for the past several months technology, which could easily become competitive on both European and world markets. Employers have been warning for years that the economic policy and European models (taxes and administration) did not boost their growth or development. Croatia was not inspired in using pre-accession programmes. When using IPA programmes, candidate states and potential candidate states receive help in harmonising and implementing the EU acquis communautaire, and they are prepared to be able to use the Cohesion Fund and structural funds. In this respect, Croatia achieved considerable progress for the past several months. By the end of 2011, from the allocated €631.5 million for the period 2007-2011, only 37.4% of the funds had been utilised, and only 19% reimbursed for aid in transition, strengthening of institutions, cross-border co-operation, regional development, develop-

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( more than 300 million kn for regional development projects

Cohesion funds – a step towards competitiveness

S SPENDING

ds had been arranged, and 47.8% 302 million already paid to project users ment of human potential and rural development. By the end of July of this year, 80.2% funding from the pre-accession funds had been utilised, and 47.8% reimbursed. The value of subsidies of the agreed projects stands at €506.4 million, and over €302 million has been paid to project users. According to the Ministry of Regional Development and EU Funds, over €300 million was set side at ministries level and agencies specialising in preparing regional development projects. Last year, this Ministry spent €3.98 million on co-financing the preparation of project documentation for 32 regional development projects, and another €5.96 million will be spent this year. Almost 400 project ideas were submitted to the Ministry’s public tender and some will receive aid in their preparation. The preparation of nine big projects is complete. They are each worth over €10 million, and will

The European Commission approved the Croatian investment plan for using funds from the cohesion policy of the EU. The sum of €449.4 million, which was allocated to Croatia upon joining the EU, will be used according to the National Strategic Referential Framework. Strategic projects with transparent, predetermined goals, which coincide with these priorities, should be determined as soon as possible so that these funds may be used before their deadline expires in 2016, the European Commission says. This is a crucial first step forward for Croatia on its way to greater competitiveness, EU Regional Policy Commissioner Johannes Hahn points out.

be ready for implementation by the end of this year and the beginning of next. Total value of these projects exceeds €580 million, of which over €430 million will co-financed from EU funds. Two projects, valued at €103

Two projects, valued at €103 million have already been approved by the European Commission million have already been approved by the European Commission. The first project, for €53 million, is intended for improving water infrastructure in Osijek. The second project, €49.7 million, is intended for a drainage system and treatment system for waste water in Poreč. Total value of these projects is under €140 million, and the tender will be invited during September.

In anticipation of an investment boom Money from the EU should bring Croatia an investment boom, according to the Government Vice-President and Minister of Regional Development and EU Funds, Branko Grčić. Croatia is now adequately prepared to become one of the most successful countries when it starts using EU funds, since the state prepared large projects worth €600 million, and it is also funding the drafting of the documentation for 500 smaller local projects, Grčić says. “By 2016, our largest investment will concern water supply and drainage systems, since these projects are the best prepared in advance. Large investment projects will follow relating to railway infrastructure, primarily the European corridors passing through Croatia”, Grčić highlights. Smaller projects that will be aided by the Ministry are currently in the process of evaluation and selection, and the Ministry will soon open an internet portal where all those interested in projects using EU funds will be advised about the deadlines of all programmes.

New tenders soon According to the Ministry, the project for the construction of a second track and the reconstruction of the Dugo Selo-Križevci rail line is under preparation. It is worth €198 million, of which €168 million will be funded by the EU. The tender documentation for the construction of the new Sveti Ivan/Žabno-Gradec rail line is currently being drafted. This project is worth €32 million. The reconstruction of the Rijeka-Botovo rail link, Corridor V.b and the border with Slovenia / border with Serbia on Corridor X is also under preparation. Both projects are worth several billion euros. The tender for non-repayable funds worth €55.3 million will

The tender for non-repayable funds worth €55.3 million will soon be invited soon be invited. The funds are intended for business infrastructure, increasing the competitiveness of SME’s, analysis and innovation of business processes by applying ICT technology. The tenders for non-repayable funding schemes, worth €3.5 million, intended for projects covering work access for the disabled, the strengthening of social dialogue, support to programmes for organising civil society for motivating socially excluded groups, and support to programmes for strengthening volunteering as well as economic and social cohesion.

Privredni vjesnik Year VI No 228

( ssome €0.5 billion to be invested in Croatia

INVESTMENT POTENTIAL AND POSSIBILITIES

Wave of investment by SME’s A break-down shows investors applied for financial support in Varaždin County (19), Split-Dalmatia County (15), Zagreb City (14) and Krapina-Zagorje County (13) but none submitted from Šibenik-Knin County Igor Vukić he Act on Investment Promotion and Enhancement of the Investment Environment was passed 11 months ago and 152 investors have already applied for financial support in compliance with the Act. Over €0.5 billion will be invested into Croatia and at least 4,000 new jobs created. The impact of the Act is similar to that achieved by the previous Act on Enhancement of Investment, albeit over five years, as Gordan Maras, Minister of Entrepreneurship and Crafts recently pointed out. Planned investment during the last 11 months has exceeded total investment over the past five years. 241 companies were granted financial support from 2007 to 2012 with an investment value of €0.5 million. “This implies we have successfully selected the investment enhancement model and have

therefore become one of the most competitive countries for investors, on a par with Slovenia, Hungary or Serbia”, stressed Maras. Most investors applied for financial support in Varaždin County

Consequently, Minister Maras emphasised the fact that a rise in applications for financial support was seen in SME’s, whilst new investment will also be made in other areas of the economy.

(19), Split-Dalmatia County (15), Zagreb City (14) and KrapinaZagorje County (13) although no applications were submitted for Šibenik-Knin County. The level of financial support granted is substantial for investment in developing regions. Nevertheless, the continental part of the country saw more investors apply for financial support (79) compared with the Adriatic re-

gion (33). However, the value of investment in Split-Dalmatia County is the largest, as the planned investment is almost €0.2 billion. According to Maras, there will be a considerable number of renewable energy projects (such as wind farms) with single investment of several hundred million Euros, yet without creating many new jobs, thus classifying them as SME’s.

New jobs The investment threshold has been lowered to €50,000 in accordance with the Act on Enhancement of Investment. Financial support may be granted where at least three jobs are newly created, whilst both companies and micro-companies which are tax payers are eligible to apply. Financial support can reach €9,000 per new job depending on economic activity and the geographical region. Most new jobs will be created in Primorje-Gorski Kotar (210), Split-Dalmatia (198) and Istria (196). Most investment will be made in metal processing, food and wood processing industry, as well as in tourism.

1,075 sold vehicles, followed by Citroën (946), Renault (892), Kia (876), Skoda (743), Ford (643), Chevrolet (635), Audi (573) and Toyota (427). 420 BMW vehicles, 226 Mercedes, 29 Porsche and 16 Lexus vehicles were also new-registers during the first six months in 2013. In terms of models, the most often registered car in Croatia was the Volkswagen Golf (878), followed by Opel Astra (748), VW

Polo (726), Opel Corsa (588), Hyundai i30 (476), Peugeot 208 (404) and Opel Insignia (398). Some 55.2% of cars registered in Croatia are diesel and 44.8% use petrol. Most new-registrations were in Zagreb and its outskirts (4,827), followed by Požega-Slavonia (1,537), Primorje-Gorski Kotar (1,317), Split-Dalmatia (1,313), Bjelovar-Bilogora (1,101), Osijek-Baranja (774) and Istria (726). Lika-Senj (75), KrapinaZagorje (189) and Sisak-Moslavina (200) saw considerably fewer first registration cars.

MOTOR MARKET

Sales plunging Boris Odorčić ew-car sales in Croatia continue their downward trend. According to data provided by the market research agency Promocija Plus, Croatia saw 15,384 registered new cars from the beginning of January to the end of June 2013, some 23.8% or 4,817 vehicles down in relation to the same period in 2012. Monthly sales have also dropped. New private vehicle sales in June 2013 stood at 3,190, 4.6% or 154 vehicles down over May 2013. The results are not satisfactory

comparing month-on-month comparable sales. New car sales in June 2013 stood at 3,365 a decrease of 5.2% compared with the same month last year. The best-selling brand from the beginning of January to the end of June was Volkswagen; 2,567 were registered in Croatia during this period and the share of this German manufacturer in the Croatian market was 16.7%. It was followed by Opel, selling 1,904 private cars and a market share of 12.4%. Peugeot ranked third having sold 1,158 vehicles and a market share of 7.5%. Hyundai ranked fourth with

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( 6 turns per minute ( 5 employeees optimal roasting speed

work for Maiestas

MAIESTAS, KAŠTEL LUKŠIĆ

Innovative solution for roasting lamb and pig The company develops and applies Kroline an electric battery spit and grill with all equipment for roasting various types of meat Jozo Vrdoljak aiestas was founded in 2006 by Dražen Krolo. The company specialises in producing and selling high-quality products made from stainless steel. It has developed and applies Kroline, an electric battery spit with grill and all accompanying equipment for roasting different types of meat. The electric battery spit and accompanying grill is registered and protected under the name Mirakul. It is especially suitable for roasting whole lamb, pig and kids, made of stainless steel in the shape of a flat tube. It has its own drive and is easily transportable and dismountable. The rear, with a fitted electronic motor remains still, while the rest of the spit turns 6 times per minute, the optimal speed optimal for roasting. The electronic motor is completely automatic and soundless. The movable part has small holes with wires for fastening the meat to the spit. After use, the spit can be easily dismountable and cleaned.

Everything you need The advantage of the electric battery spit is that one has more time to spend with friends and family, rather than wasting it on connecting a normal spit to a power network. The spit will do everything you require with just one press of the switch. Production is located near Trilj and the company currently employs five workers and exports its products to several countries. The Mirakul-2 grill, with the addition of the electric battery

spit, was patented for preparing all types of meat, fish and veg-

Mirakul is now able to pack its products in practical bags in two sizes etables. It is made of stainless steel 304 used in the food industry. The electric battery spit and grill has been patented, and has both technological and health as well as compliance certification. In addition to the grill and spit, the company also produces additional equipment such as stainless steel clamps for lamb. This three-piece set of clamps

substitutes the wires previously used for holding meat to the spit. There is also a two-piece set of clamps for poultry. Awards and recognition Mirakul is now able to pack its products in practical bags in two sizes. The smaller bag is used for the spit, which is easily dismountable after use and packed in the bag. The larger is used for the complete Mirakul set. The bag also has a handle for carrying. The new Mirakul Exclusive bag is made of leather and has two metal clips attached to two outside pockets. As the inventor of this unique and awarded electric battery spit, the owner is happy his invention simplifies

preparing food, allowing people to enjoy themselves. He highlights that the Mirakul spit and grill are ideal for any place as it is simple and practical. His innovation was awarded the Gold Diploma as the best innovation in Dalmatia in 2002, an annual award presented by the Dalmatian Society of Inventors. It also received a gold medal in 2001 at the Eureka in Brussels, a bronze medal in Geneva and silver medal at ARCA Zagreb. It has recently been awarded the Gold kuna plaque for innovation, given by the Croatian Chamber of Economy – Split County. The innovation also received the Worthy Hands recognition.

Privredni vjesnik Year VI No 228

( 30% of tourism ( another 4,000 rooms accounted for in Istria

in hotels in Istria by 2020

THE TOURISM FUTURE OF ISTRIA

Destination for experiences and good food Istria needs more profitable tourism based on high quality service and specific prog grammes, for example, wine and gastronomic tourism, cycle tourism, golf and sailing

Sanja Plješa lthough Istrian tourism is the most successful in Croatia, it should improve its tourist programmes if it wants to attract visitors of the so-called ‘new generation’. They are tourists interested in more than merely sun and sea. Therefore, Istria needs more profitable tourism based on high quality service and specific products, and it should develop wine and gastronomic tourism, cycle tourism, golf and sailing, all of which was mentioned at Croatia Business Open, a business conference held in Umag and organised by Zagrebačka banka and the Istrian County together with partners Banka magazine and the company Istraurist. The conclusion

was that sun and sea as well as family holidays are still the most important aspects of the Croatian tourism; therefore, a systematic plan is required in order to offer visitors more than mere accommodation. Istria is also important since one third of Croatian total tourism turnover is achieved here. Therefore, its tourist and economic development is of extreme importance. The County prefect of Istria, Valter Flego, says Croatian and Istria economic development should be based in compliance of economic and political factors, but economic recovery will require new investment and competition. Now, growth and development depend more on human capital. Croatian EU accession offers more opportu-

nities for using EU funds, and one of the goals is to turn Istria into the leading region in terms of attracting money from funds, Flego highlighted. Tourism minister, Darko Lorencin, agrees. He stated that another 4,000 hotel rooms should be built in Istria by 2020; the Brijuni Riviera Project should be finalised; the number of Greenfield projects should increase and a couple of golf course should be built. Luxurious camps and apartments During the first phase of golf course construction, Istria should have four to six of such courses. Furthermore, Istria will continue to develop its worldrenowned cultural, business and rural tourism, Lorencin pointed

WSET IN CROATIA

CREATORS OF WINE AFICIONADOS The Wine and Spirit Education Trust (WSET), in informal circles often referred to as the Oxford of wine growing, organised internationally certified WSET courses in May and June in Zagreb. The institution is active in over 55 countries, and over 43,000 people completed its courses last year. With its quality seminars, WSET has been educating wine professionals since

1969. Recently it has started to offer specialised wine courses for many other wine aficionados. This autumn WSET will organise a three-level course in Zagreb and Split. The first level is intended for those wishing for a quick and simple insight into the world of wine. The second level is ideal for enthusiasts and those wanting to learn more, while the third level offers in-depth knowl-

edge about wine and spirits. This third level is focused on factors which affect the style, quality and price of wine and spirits from all major wine regions globally. The courses are intended for people working in hospitality, wine distribution and retail, and those working in wholesale franchises, but also wine critics, bloggers, journalists and wine enthusiasts. (S.P.)

out. Only when the service and promotions reach a better level will tourists will be prepared to pay a premium for staying in

Most tourist destinations want to attract all types of tourists, but this is an illusion Istria, the Minister added. Consultant for the Spanish company THR, Eulogio Bordas, talked about Istria’s future tourism. He warned about possible pollution and loss of identity of region. His vision is to turn Istria into a lifestyle destination, and he pointed out that visitors are ready to pay extra for value added services.