PV International 0232 by NEstar

Public-private partnership €0.6 billion worth projects in 2014. Two tenders for selecting private partners are in progress

Pre-Bankruptcy Settlements: a requirement with amendments Every seventh company faces assets freeze following PreBankruptcy Settlement

Foreign trade Total exports during the first nine months were 5.3% down over the same period last year

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Croatian Business & Finance Monthly Established in 1953 Monday / 7th January/ 2014 Year VII / No 0232 www.privredni.hr

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ASSEMBLY OF THE CROATIAN CHAMBER OF ECONOMY

Lower membership fees, contributions cancelled Financial plan for 2014 includes a 15% reduction membership fees and no contributions. Elections for a new president are scheduled for mid-February 2014 Igor Vukić Drago Živković he Assembly of the Croatian Chamber of Economy adopted a work plan and financial operations documentation for 2014. The announced amendments of the Statute and Rules of Procedure have been postponed until mid-January. During this time, the CCE temporary leadership will be in the hands of Sabina Škrtić and her team who will collect all the proposals for improvements. After 13th January, the Management and Supervisory Board will bring the final proposal on which the Assembly will decide 15th January 2014. The amendments to the Statute and Rules of Procedure aim at strengthening the role of the Management Board, introducing a new function of Executive Director that would limit the present authority of the Chamber President. Furthermore, stricter rules would be introduced regarding the election of President, who should be a volunteer, and the Executive Director, employed by the Chamber, would deal with management.

Strengthen the Assembly The Work Plan 2014 was developed in compliance with com-

ments received from members of the Management and Supervisory Boards, Presidents of the Associations and Societies as well as members of the Assembly. Among these comments, Sabina Škrtić highlighted those regarding poor management of the Chamber, lack of real control, the need to strengthen the rôle of the Assembly and the economic need for the CCE, but all with goals set more clearly. Therefore, the Work Plan is based on four main pillars. According to the first pillar, the CCE should make a direct contribution to the Croatian economy. According to the second pillar, the financing method should be changed in the near term. The third pillar aims at internal CCE changes, and the fourth is focused on stronger operational co-operation with economic diplomacy. The complete reorganisation

will be the task of the new permanent leadership, who should be elected by mid-February according to the present plans. Planned income for 2014 is €23.3 million (€19.1 million through membership fees and €4.2 million from internal resources). The membership fee paid by company members has been reduced by 15% (a total of €3.4 million), and the contribution has been completely cancelled, which is a further €3.9 million reduction. Therefore, these changes in the CCE unload the economy of €7.3 million, Sabina Škrtić pointed out. The 2014 Plan also includes an internal income increase (€1.01 million), and according to the acting Pres-

ident, the resources for this lay in the existing public authorities of the Chamber, and additional services, for example, the preparation of EU funding projects. In the near term, which Sabina Škrtić estimates to be three years, CCE should cancel all membership fees and fully finance itself from these resources.

Defined platform for strategic changes Sabina Škrtić, the acting CCE President opines, “It is crucial we manage in short time to create the conditions for decreasing the overall load on the economy by €7.3 million a year on the basis of contributions to the Croatian Chamber of Economy. This may not be a lot, but it is important in these times. We have defined the platform and draw a path towards structural, operational, financial and strategic changes the Chamber should accomplish in one of the forthcoming three years.

Organising a strategic framework by 2018 is another important message, as well as defining the preconditions for the development of services, activities and competencies that would secure an income increase from CCE activities. We would like the Chamber to be led by a president who will not build his or her career in the Chamber, but who will be an established individual ready to invest his or her name and expertise in promoting the interest of the entire Croatian economy.

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Privredni P rivredni vjesnik Year No 232 Yeear VII N Y o 23 2 2

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PUBLIC-PRIVATE PARTNERSHIP

€0.6 billion worth Dalekovod to operate in Kosovo Dalekovod has concluded a contract with the Pristina-based company from Kosovo KOSTTOperator sistemi, Transmissioni Dhe Tregu, the operator of the transmission system for the Republic of Kosovo, covering the construction of a section of the 400kW power transmission line Pristina-Tirana. The contract value is €30.7 million and the project has been financed through the German Development Bank KfW Frankfurt. Looming lay offs According to members of the Croatian Employers’ Association, the situation in the Croatian economy for 2013 has been assessed with an average score of 1.39, whilst in 2012 the score was 2.06. 2014 will be a difficult year: 48.3% of employers are anticipating dire general economic conditions, considerably worse than 2013, and 60% of employers are planning redundancies. The research was conducted by Promocija Plus agency for the Croatian Employers’ Association during November and covered 320 members of the Croatian Employers’ Association. Final vessel sold The final vessel of the former fleet of Lošinjska plovidba – Brodarstvo has been sold, in cooperation with Croatian banks, concerning the settlement of debts. Its 30 staff, with 22 seamen, received severance pay and all rights and privileges pertaining to them, and hence there are no liabilities towards employees. Lošinjska plovidba- Brodarstvo operated for almost 60 years and its fleet during the last decade comprised of 6 or 7 vessels, whilst during its most successful period the fleet comprised of some 30 vessels.

Tenders for selecting private partners for the construction of Trg pravde (Justice Square) construction of the neuropsychiatric hospital Ivan Barbot in Popovača for €16.4 million. Igor Vukić ublic-private partnership projects worth €0.6 billion should be finalised during 2014, Government Vice-President, Branko Grčić, announced. According to the Government investment programme for 2014, tenders for selecting a private partner for the construction of the Justice Square in Zagreb (valued at €0.2 billion excluding VAT) are in progress, including the

The construction of new facilities at KBC Rijeka will cost over €0.3 billion construction of neuropsychiatric hospital Ivan Barbot in Popovača (€16.4 million). The signing of agreements with private partners that would build and manage the properties is scheduled for the second (Popovača) and fourth quarters (Justice Square) of 2014. During the first half of 2014 public tenders will be opened for selecting a private partner for the Croatian History Museum project (value of €16.6 million) as well as tenders for Varaždin General Hospital (€39.5 million) and Varaždin County schools (six schools, total €17.9 million). During this same period the public tender for four schools in Istra and Poreč (€19.1 million) as well as three schools in Koprivnica (€13.2 million) will also be implemented. The implementation period of the tender for constructing new facilities of the ClinicalHospital Centre KBC Rijeka has not been defined, according to data provided by the Government. This is potentially the biggest project of 2014, worth over €0.3 billion.

Last year important steps were made regarding the construction of schools in Koprivnica. The finalisation of the project was confirmed by the Minister of Education Željko Jovanović and Mayor Vesna Želježnjak when they signed the agreement in October. The agreement was also signed by Josip Borak, President of the Centre for Monitoring Business Activities in the Energy Sector (CEI). In fact, together with the Agency for Public Private Partnership, CEI will have an important role in the selection process and realisation of the public-private projects. Compliments on project speed The Koprivnica project encompasses additional construction of the arts school, reconstruction

and renovation of the synagogue for educational purposes. There is also the reconstruction of the existing elementary school and construction of a new school for 560 students with a sports hall and outdoor courts. The final value of construction and maintenance during the 27 years will be determined when the private partner is finally selected. According to the programme, the lease will be paid by the Ministry of Science and City of Koprivnica (55%:45%). Minister Jovanović complimented the responsible authorities in Koprivnica for speedy and quality preparation of the project. The Koprivnica model should be applied throughout Croatia. Mayor Želježnjak said Koprivnica has already proved itself regarding the implementation of PPP programme related projects, with the

Justice Square covers 50,000 m² The contract of the Justice Square PPP project would be concluded over 30 years. The private partner would construct the facilities covering 50,000 m² for four courts and the Judicial Academy. The existing urban concept solutions envisage the construction of four main buildings directly connected to a large underground garage offering the private partner additional possibility to commercialise the space. According to information provided by CEI, international investors are extremely interested in the Justice Square project, which is why the deadline for the tender of one of the biggest projects in Croatia was extended.

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projects in 2014

in Zagreb, valued at €0.2 billion excluding VAT, are in progress, as well as for the

construction of a grammar school in 2006. Other projects in the education sector prepared according to the PPP model have been announced earlier. The potential worth of the investment in elementary schools and high schools is estimated at €0.8 billion. The catalogue of potential projects includes 338 construction projects, additional construction, reconstruction and equipping of schools. Counties, the City of Zagreb and 33 larger cities applied for the projects. This is how the Ministry wants to introduce single shifts in elementary and high schools. The projects are also an opportunity for employment in the crisis-hit construction sector. However, in order to implement this investment, a series of decisions have to be made regarding the financing of the future lease of constructed property. Decisions of the representative bodies of local authorities who own the schools will have to be collected, and often complex relations between cities, municipalities and counties will have to be solved. Different opinions regarding PPP projects are present within the Government itself. The Ministry of Justice has recently refused to give consent for agreeing the

Justice Square project. The main issue was whether there would enough money to pay the lease of the new court buildings. The supporters of PPP explained that the Ministry of Justice would actually save money since they will no longer pay maintenance on the present old court buildings. A compromise was reached in the end: the Justice Square project

encouraged to renovate the public lighting system by using PPP models. The projects are not overly valuable, but would costeffective for the local budget. Private partners would bear the risk of fitting, that is, replacement of lights and maintaining the agreed standards of energy saving. The Agency is therefore trying to standardise the com-

Mild inflationary growth According to data provided by the Central Bureau for Statistics, slight inflationary growth was seen in November. The annual rate, measured by the consumer price index, was 0.4% in November (0.2% per annum in October). In relation to October, consumer prices were 0.1% lower. The higher consumer price index on an annual level was primarily influenced by higher prices of food products (+0.7%), which comprise 26.9% of the structure. Ten years of Terme Tuhelj Terme Tuhelj in Hrvatsko zagorje marked their tenth trading year. During the past decade, the company has managed to quadruple its business results, becoming one of the biggest continental tourism centres. Terme Tuhelj managed to turn a bankrupt company into a fully operating tourist resort with thermal and wellness functions with an individualised approach to each visitor and offering quality rest and entertainment. Over €30 million was invested in its development.

How to find the right partner Things did not run smoothly for some tenders even after the initial high level of interest. Tenders for the construction of new facilities in the neuropsychiatric hospital in Popovača started in early 2013. Four bids were submitted by the first round in July. Three companies (Zagorje Tehnobeton, Tehnika and Kamgrad) were invited to the second round, which lasted until mid-October. However, not a single company offered a final bid in the end. The tender was cancelled and a new one invited for - which is still ongoing. will be finalised, and the lease of the court buildings will be paid by the State Property Management Office when the project is completed. PPP awaits public lighting PPP Agency held a series of seminars with the aim of motivating the representatives of local authorities to create projects that would satisfy some public interests. Furthermore, they were

pletion documentation (contract on energy saving service, tender documentation, energy inspection, financial model and similar) to speed up the preparations of these projects. Local producers of the relative equipment could find interest in these projects. The Agency also prepared guidelines for local administrations that explain the advantages of the PPP model to provide various public services.

ZABA grants entrepreneurial subsidies Representatives of Zagrebačka banka and its partners have granted over €118,500 in subsidies to the winners of three tenders: ‘My Motive 2.0’ for creative crafts, ‘My Green Zone’ for green entrepreneurship and ‘My Opportunity’ for innovative entrepreneurial concepts. All three tenders are covered by the ‘My Zaba Start 2013’ project, a new approach to donating intended for entrepreneurial subsidising. Within this project only one remains open – ‘My Community’ for social companies, which will be finalised in March 2014. The project budget totals €0.16 million.

Privredni vjesnik Year VII No 232

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amount insolvencies are down since end of 2012

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PRE-BANKRUPTCY SETTLEMENTS: A REQUIREMENT WITH AMENDMENTS

Every seventh company faces following Pre-Bankruptcy Settle

Without bank assistance, companies face a new cycle of the non-settlement of liabilities and thereby initiate a chain where there are companies whose 80% of new partners are undergoing Pre-Bankruptcy Settlement Drago Živković re-Bankruptcy Settlements are a requirement in the Croatian economy. Nevertheless, the law that enforced them over a year ago, resulted in a vast array of inconsistencies and issues, as pointed out during the recently held roundtable discussion of Banka Magazine entitled From Great Expectations to Great Disappointments. The total value of reported receivables in Pre-Bankruptcy Settlements exceeded €6.6 billion, the number of case files far exceeds 5,000, yet there are almost 10 times fewer settlements reached. According to data presented by Suzana Košćak, Professional Assistant at Banka Magazine, 10 new proposals for opening Pre-Bankruptcy Settlements are submitted daily, irrespective of the fact that 3,000 proposals have been rejected thus far. Nevertheless, 14 months following the implementation of the law, the liquidity of the system has not increased, as she pointed out, whilst written-off state receivables in Pre-Bankruptcy Settlements may yet result in legal action. In accordance with EU legislation, the selective writing-off of receivables may be considered as state support and consequently entrepreneurs who regularly settled their liabilities are likely to initiate legal action due to preferential treatment for some entrepreneurs. In addition, the long-term benefits of PreBankruptcy Settlement are currently uncertain, as banks will deem such companies as high risk, which will assuredly negatively affect their financing.

Lack of insight into legislation According to the data presented by Dragutin Kovačić from Fina, 78 of 518 companies, or every seventh company that reached settlement by 3rd December are already faced with a further assets freeze implying new debts towards creditors. Nevertheless, Kovačić emphasises the fact that total insolvency fell by €1.1 billion by the end of 2012, to €4.49 billion. A large number of rejected proposals for the opening of Pre-Bankruptcy Settlement show the striving of entrepreneurs to incur as little expense as possible during bankruptcy, which has been made possible by Pre-Bankruptcy Settlement, and hence entrepreneurs initiate the proceedings fully aware of the high likelihood of being rejected, according to Kovačić. According to Fina, Pre-Bankruptcy Settlements resulted in saving 21,483 jobs, yet the long-term effects are still uncertain due to problems companies have to tackle yet

Written-off state receivables may result in legal action

Ministry of Finance has not initiated any legal proceedings thus far against entrepreneurs who ignore the obligation of initiating Pre-Bankruptcy Settlement and hence have not sanctioned it thus far.

again following any settlement. Kovačić pointed out that Fina faces severe problems in the implementation of the law due to poor insight into legislation amongst entrepreneurs, with many entrepreneurs still not aware that legal documents in connection with the proceedings are not sent by post as they are published on web pages. Moreover, irrespective of its being regulated by law, the

A chain reaction Banks had to significantly increase their bad debt provisions due to Pre-Bankruptcy Settlements and the regulations of the Croatian National Bank and have, in addition, been deprived of regular revenue from companies undergoing Pre-Bankruptcy proceedings, as highlighted by Brane Golubić, Board Member of Hypo Bank. If client receiva-

bles are included in provisions, the client is obligated to regularly settle their liabilities for a minimum period of six months in order to be considered eligible for further financing. These six months are a severe challenge and without bank support, companies easily face a new cycle of non-settlement of liabilities and hence initiate a chain reaction of new Pre-Bankruptcy Settlements. This primarily occurs in the construction sector, where there are companies whose 80% of new partners are undergoing a Pre-Bankruptcy Settlement, which makes it virtually impossible for companies to follow a different path.

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er €6.6 billion rted receivables in Pre-Bankruptcy Settlements

s assets freeze ement reaction. This primarily occurs in the construction industry

Nevertheless, companies may strive to avoid a chain reaction by insuring their receivables with insurance companies, following the example of AWT International whose director, Miho Glavić, stated they succeeded in collecting 80% of receivables from Pre-Bankruptcy Settlements. He believes settlements are indispensable, yet the existing legislation requires amendments. Somewhat chaotic Glavić retorted to the statement by Fina on the lack of insight into legislation amongst entrepreneurs highlighting that it is difficult to deepen the insight into

the legislation, as it has recently seen multiple substantial amendments. The principal issues are the regulation in accordance to which debtors are obligated to declare their receivables, and the issues concerning plans for restructuring, since they are created by debtors and hence often comprise of unrealistic expected sales growth forecasts, making it virtually impossible for creditors to even consider them. “In case one’s assets have been frozen for a year, they have already lost their market position as everyone is easily replaced in the market. It is unrealistic to expect that those who have managed to reach a Pre-Bankruptcy Settlement will be able to proceed, operating from their previous position and it is even less likely that they will be able to co-operate with the same partners with the same degree of confidence”, stressed Glavić. Judges have attempted to highlight the problems that were likely to arise from the existing Pre-Bankruptcy Settlements prior to the enforcement of the existing law, pointed out Nevenka Marković, a judge at the Zagrebbased Commercial Court. She believes the law passed in 1929 during the Yugoslavia era was similar, yet more effective than the existing law. Currently, the real amount of receivables is unknown, as debtors may state them without any controls or sanctions, whilst the receivables that were not announced by debtors must be announced by creditors. Consequently, judge Marković concluded that the existing Act on Pre-Bankruptcy Settlement is somewhat chaotic.

PRIVATISATION OF THE LARGEST CROATIAN INSURANCE COMPANY

Adris acquiring Croatia insurance Rovinj-based Adris will expand its business empire with Croatia insurance shares. Adris with its bid price of €970.45 per share for a 39.6% stake exceeded the bid by the Polish insurance company PZU, which offered €800 per share. “According to all the aspects of the tender, the bid by Adris was the most favourable”, pointed out Finance Minister, Slavko Linić, explaining the decision during a government session. The total price of Croatia insurance for Adris will be €119 million with an additional €110 million of capitalisation, which will enable a more vigorous penetration to insurance markets in South-East Europe, as opposed to PZU, which proposed €51 million for capitalisation. The Adris bid increased 23% during the second round; the final bid gives a market value of Croatia insurance of around €307 million. “The market value of Croatia insurance was estimated to be

between €180 million and €200 million and we can express our utmost satisfaction with the final bid”, emphasised Linić. The state will retain its ownership share of over 28.6% of Croatia insurance in order to monitor and participate in strategic decisions. According to the conditions of the tender, the company name and the company seat are to remain unchanged and the shares are to retain the Zagreb Stock Exchange listing for a minimum of two years. Adris proposed the minimum period of Stock Exchange listing of 10 years.

ERSTE BANK BID TOO LOW

No buyer for HPB The government has not accepted the bid by Erste Bank for the acquisition of Croatian Postal Bank (HPB). The binding offer from Erste Bank was too low, even lower than during the first, non-binding round. The second potential buyer, OTP Bank, has not submitted a binding offer. Erste offered €119 per share, €30 lower than the bid submitted during the first round. “Potential buyers have probably reached the conclusion that HPB Bank has too many legal claims and potentially risky loans, and such issues need to be tackled prior to any acquisition”, pointed out Minister of Finance, Slavko Linić. According to him, HPB may continue its development programme without a new owner. Following the scandal dubbed ‘Cash machine’, the new Management Board has succeeded in stabilising bank op-

erations and the number of clients has been rising. This was also due to the government decision to pay a large number of remunerations to the public through HPB Bank, stressed Linić. The bid price offered by Erste Bank was below 54% of HPB Bank subscribed capital, whilst the price of €150 per share during the first round was below the HPB share price on the Zagreb Stock Exchange. The average share price on the Zagreb Stock Exchange over the past several months has been around €158; consequently, Linić highlighted the fact that the sale of HPB Bank is currently far from inevitable. Market shares in the domestic banking market have remained stable thus far. Had Erste Bank acquired HPB, its market share would have exceeded PBZ and would have become the second largest bank in Croatia. (I.V.)

Privredni vjesnik Year VII No 232

KONČAR GROUP

€0.34 billion income In 2013 Končar Group achieved consolidated income of €0.34 billion according to a preliminary estimate, 6% more over 2012. Profit after tax is an estimated €0.2 billion. Sale income is divided equally on local and foreign markets, where Končar gains more than half of its exports (€92 million) to EU markets. The estimated value of new contracts concluded in 2013 was €0.36 billion, and for contracted projects at the end of the year, some €0.32 billion, which is 8% more compared with the end of 2012. A total of €15.3 million was invested during 2013 and the plan is to invest a further €18.4 million in 2014, with over 90% will be financed internally. The most significant contracts Končar finalised during 2013 included the first reconstruction phase of HR Zakučac, the finalisation of work on HE Ozalj 1, the

( €5.4 billion

foreign trade deficit during the first 9 months

FOREIGN TRADE DURING THE FIRST 9 MONTHS OF 2013

replacement of electric traction on the Moravice-Rijeka-Šapjane track, and the construction of a small hydro-power plant. Končar delivered three renovated generators for hydro-power plants to Finland, and the equipment for another hydro-power plant to India. They sold 549 distributive transformers in Kuwait and the equipment for 11 small hydro-power plants in Norway. An Antonov airliner delivered a 200 tonne heavy transformer to the Philippines. (D.Ž.)

CARS ARE SELLING

Two Ferraris sold From January until the end of November 2013, 26,080 new personal vehicles were registered, almost 13.2% fewer (3,949 vehicles) compared with the same period the year before. During this period Volkswagen was the top selling brand, according to data provided by agency Promocija plus. By the end of November 4,422 new VW personal vehicles were registered in Croatia, giving a 17% share of the market. Opel followed with 2,593 vehicles sold and a 9.9% market share, Peugeot third with 1,902 sold vehicles and a 7.3% share. The South Korean Hyundai sold 1,768 cars, followed by Renault (1631), Škoda (1,626), Citroën (1,596), Kia (1,550), Ford (1,101) and Chevrolet (964). It is

interesting that 939 new Audis, 713 BMWs, 446 Mercedes, 39 Porsches, 18 Lexus, 5 Jaguar and 2 Ferraris were registered during the eleven months. Concerning vehicle models, Croatians mainly registered Volkswagen Golf (1,621). There were 1,213 newly registered VW Polo, 957 Opel Astra, 830 Opel Corsa and 775 Hyundai i30. The highest number of new vehicles was registered in Zagreb and its vicinity (8,509), followed by Primorje and Gorski kotar (2,443), Split and Dalmatia (2,231), Požega and Slavonia (1,951) and Osijek and Baranja (1,456). On the other hand, the lowest results came from Lika and Senj(132), Krapina and Hrvatsko zagorje (354) and Koprivnica and Križevci (380). (B.O.)

Processing in

According to data released by the Croatian Bureau of Statis stood at €6.6 billion and imports €12 billion Igor Vukić roatian foreign trade slightly moderated the fall during the first nine months of last year. According to the Croatian Bureau of Statistics, total exports during this period were 5.3% down over the same period last year. The value of exports was €6.6 billion and imports €12 billion, a decrease of 0.6%. The foreign trade deficit stood at €5.4 billion with an import/export ratio of 54.9%. Exports to EU member states has been satisfactory, but down 1.7% at €4 billion, achieved notwithstanding ongoing and relatively negative trends in the Eurozone. Exports to Italy are still negative, falling by 13.2%; exports to Austria slumped 12.3%. On the other hand, exports to Germany increased by 0.4%, and exports to Slovenia soared by 13.7%.

Failure lessened on CEFTA and Russian markets Croatian exports to Greece, irrespective of the fact that they are not on a par with those to traditional Croatian trading partners (Germany, Slovenia, Austria and Italy) have increased substantially from €65.4 million in 2012 to €78 million in 2013 (up 29.7%). After a nine month downturn, a muted lessening on both CEFTA and Russian markets has been seen. Exports to CEFTA markets dropped €79 million (6%), to €1.4 billion. Exports to Serbia decreased 8.2%, to Bosnia and Herzegovina, 2.6%, and to Montenegro 35.8% (to €76 million). Exports to other countries (Russia, Ukraine and Turkey) dropped 19.5%. Exports to Russia fell to €0.16 billion, which cannot be compensated for by a rise of exports to Turkey (up

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value of food products imported

dustry exports fell 6.1% tics, total exports during the first nine months were 5.3% down over the same period last year. The value of exports 10.3% to €4.4 million). Exports to US dropped by 30.1% and came in at €0.26 billion. During the first nine months, processing industry exports decreased 6.1% and the total value of exports was €5.86 billion, some €0.25 billion down compared with the same period in 2012. Exports of refined petroleum products, which were positive during the first six months, dropped substantially over the first nine months and ended with a negative result; exports were €0.8 billion, a significant drop on the €0.9 billion during the same period in 2012. The value of exports of pharmaceutical products stood at €0.3 billion, showing growth of 7%, metal products soared by 19% to €0.4 billion, whilst rubber and plastic products showed growth of 11%, with a value of €0.14 billion.

Exports of food products were negative, decreasing by 2.9% to €0.46 billion. During the first nine months the value of exports of clothing products reached €0.25 billion, and chemicals and chemical products were acceptable (€0.4 billion). Exports of wood products rose by 4% €0.28 billion, although exports of electrical equipment products were down 5.5% (with a value of €0.48 billion). Export jobs worth €0.3 billion Exports of finished metal products saw a recovery with growth of 19% and value of €0.43 billion; exports of leather and leather products were worth €0.18 billion an increase of 1.5%. Other means of transport, including vessels, showed the worst results. In 2011, the value of export jobs of other means

of transport was €’0.47 billion. During the first nine months of 2013 the value dropped to €0.3 billion, a dramatic slump of 45%.

The import of food products saw a substantial increase following Croatia joining the single market On the other hand, following Croatian EU accession, imports of food products showed a substantial increase of 7% to €1.1 billion. Imports of leather products, paper, computers and other machinery also increased. Other import categories decreased mainly between 5% and 15%, with the exception of imports of oil derivatives which plummeted

by 35.5%. The total value of imports in the processing industry dropped by 9.9%. According to Croatian National Bank analysts, imports in July and August were considerably lower compared with the exceptionally high values shown during the second quarter. Following vigorous growth in the volume of trade in goods during the second quarter, primarily in June, as a result of Croatian EU accession, July saw a decrease in trade in goods. This was primarily prominent in imports, which in July showed a drop of 17.6% in relation to the previous quarter. The dynamics of exports was eased considerably and following slight growth during the second quarter, exports in July dropped by 1.2% compared with the average in the previous quarter, as pointed out by the Croatian National Bank.

Privredni vjesnik Year VII No 232

( around 13,700 tonnes average annual production of turkey

POULTRY PRODUCTION

POULTRY TRENDS Croatian chicken producers are well-positioned on the Croatian market and are likely to strengthen their market position due to support provided through EU funding to keep abreast of competition Krešimir Sočković lmost all the sectors of the meat industry have seen a decline over the past several years. Pork, veal and beef production has decreased and their consumption has also dropped, yet Croatia has simultaneously seen an increase in their imports. Moreover, the production of turkey and chicken has also dropped. However, overall negative trends are substantially lower. Croatian chicken producers are well-positioned on the Croatian market, as around 85% of total sales of chicken and turkey are produced locally. Fluctuations in global demand have been primarily affected by rising costs of production. Beef consumption has dropped 1.6% and that of pork by 0.6% over the past two years as a result of higher prices. Simultaneously, chicken and turkey consumption has seen a 5% increase globally and their share in total consumption has risen to 35%. According to estimates by the Association of Poultry Processors and Poultry Trade in the EU (AVEC), expected growth stands at one fifth, or the average annual growth at slightly below 3%. According to statistics, Croatian average annual production of chicken stands at around 62,000 tonnes. 2011 and 2012 saw the import of chicken at around 13,000 tonnes, with exports of around 4,000 tonnes. Annual consumption of chicken in Croatia was around 70,000 tonnes, or 15 kilos per capita. Annual turkey production was around 13,700 tonnes, with exports of around 873 tonnes and imports of 1,615 tonnes. Annual turkey consumption in Croatia

was around 3 kilos per capita. According to estimates by the Croatian Bureau of Statistics, total consumption and processing of poultry in 2012 slightly exceeded 88,000 tonnes or around 19.50 kilos per capita. 2012 saw the largest export of poultry worth $50 million, whilst imports stood at around $37 million. According to the economic calculation method applied, in 2012 the poultry sector accounted for 17% of overall livestock production. Imported eggs 1.5% According to data released by the Croatian Bureau of Statistics, the last two years have seen an annual drop of 8% in the number of laying hens. Of around 4.2 million laying hens, 2012 saw around a half of them on 149 farms registered for production of table eggs and the remainder on independent farms. A total of 585 million chicken eggs were

produced during 2012, considerably less than in 2011 when total production was 691 million. 219 million chicken eggs were produced during the first three quarters of 2013.

requirements are met locally. Annual egg consumption per capita currently stands at around 160 which is substantially below the European average of 225 and it is thus realistic to expect an increase in the numbers.

Following Croatian EU accession the Croatian market has been open to EU producers

Investment in the future Substantial investment is imperative in order to meet the realistic estimates in this sector. Sustainable production is fundamental, along with multiple compliance and in accordance with the principle of welfare of poultry in their production. Support will be provided to producers through EU funding. Following Croatian EU accession, the market has been open to all EU producers. Local producers will need to upgrade their competitiveness, provide quality end products and improve branding. Their market share is satisfactory, yet needs to be further improved.

During the first half of 2013 the import of table eggs stood at 310 tonnes and was worth $410,000. The total production of table eggs was mainly through registered producers. The total figures denoting imports of eggs were low and hence the imports of eggs in 2013 accounted for 1.5% of eggs provided in-store. We have been producing sufficient quantities of eggs to fully meet our requirements for years and 99% of our

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( €450 million

annual production of bakery and confectionery products

PRODUCTION OF BAKERY AND CONFECTIONERY PRODUCTS

We dispose of half of what we buy Despite the fact there is a 7% non-taxable state refund on flour for baking, the refund often ranges between 25% and 30%. Annual losses of bakers stand at around €52.6 million, half the value of the total purchase of grain believes that a compromise needs to be reached with the inspectors on the minimal contents of the product declaration.

Drago Živković hilst many nutritionists currently do not rank bread as a healthy food, it is still eaten daily by most people. The average consumption of bread in the European Union currently stands at around 60 kilos per capita, whilst in Croatia it is 68.5 kilos, which implies an annual production of around 300,000 tonnes, according to data released by the Croatian Bureau of Statistics. The annual production of bread has a value of some €450 million and hence bakery and confectionery are ranked as primary economic sectors. Nevertheless, businesses engaged in these activities are not well known to the general public, mainly due to their numbers and lack of unity. However, substantial changes are anticipated in that respect, following the foundation of the Association of Croatian Producers of Bakery and Confectionery Products encompassing around twenty mainly large producers with Stjepan Varga as President, co-owner and Board President of Čakovec Mills.

Pricing pressure Businesses in this sector have been brought together through communication issues, according to Vladimir Bulić, Board President of Tim Zip, a leading manufacturer of bakery equipment. Bulić believes the number of businesses engaged in bakery and confectionery ranges between 1,400 and 1,500, ir-

respective of the lack of comprehensive information. Bakers and confectioners are currently facing an increasing number of issues following Croatian EU accession. One of the principal issues concerns the differences in prices of bread that in Croatia are 50% lower than in Austria, Germany or Slovenia. Excessively low bread prices adversely affect bakers, preventing them from generating revenue for investment, consequently weakening them and making it impossible for them to keep abreast of European competition. A chronic lack of professional workforce is yet another major issue the industry faces, as mainly pupils who do not succeed in enrolling in any other school end up enrolling in bakery or confectionery schools. Consequently, the sector is faced with the highest workforce turnover, as bakers quickly and easily change their work environment in exchange

for at least €66 higher salary. Furthermore, inspection is a further problem with which bakers are continuously faced. Occurrences of inspectors temporarily closing a bakery for 30 days due to minor infringements are extremely common. Such temporary closures negatively affect bakeries in a much more severe manner than, for instance, temporary closures of brick factories which can survive closures for a month without dire consequences. Bakeries are often closed also due to incomplete product declarations, as requirements for product declarations are highly detailed, according to Croatian bakers. “In Austria, Germany or Switzerland declarations comprise simply of information on whether the product is white or rye bread, whilst in Croatia the declaration contains seven lines containing information on accurate percentage of all the ingredients”, explained Bulić. On the other hand, Varga

An affluent country Nevertheless, the principal problem of the bakery and confectionery sectors is the nontaxable refund on products. The state provides a 7% nontaxable refund and any revenue exceeding the stated threshold are considered as revenue and are eligible for VAT and income tax at the end of the year. Bakers are responsible for unsold bread, as well as its disposal with traders being entitled to require

Average rate of profitability of bakers is only 1.2% bakery deliveries throughout the day. Consequently, the actual refund often ranges between 25% and 30%. Irrespective of the fact that some of the bread is used as animal feed, huge quantities are discarded as communal waste. Annual bakery losses on refunds normally exceed €50 million, which implies around 100 tonnes of bread daily or over 10% of the total value of production. The annual purchase of grain is around €105 million and hence we discard half of what we make. “Hence, who is entitled to say that Croatia is not an affluent country?” wondered Varga.

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( 420 berths ( around €15.8 million has Marina Kaštela

invested into Marina Kaštela

JOSIP BERKET, OWNER OF MARINA KAŠTELA, KAŠTEL GOMILICA

The east side of the Adri sailing conditions

If we were to build berths in protected island bays, we would lose our biggest advantage in nautica Jelsa, Komiža and devastated coastal areas Jozo Vrdoljak osip Berket is the owner of companies Bavadria, Marina Kaštela and Marinconsult. Bavadria offers boat rental services; Marina Kaštela is one of the best-known marinas in Croatia, and the third company specialises in marine management. We talked about ship transport and maritime problems with Josip Berket as well as new investment in Marina Kaštela and his development vision of the Croatian nautical sector.

What does it mean for Marina Kaštela to obtain a national concession? Until now, we had owned a county concession issued for a period of 12 years. According to the Maritime Domain and Seaports Act, our company obtained a state concession as the physical planning documentation on the area of the County of Split and Dalmatia changed during the validity period of the county concession. The county physical plan changed in 2006, followed by the General Urban Plan (GUP). Therefore, the port for nautical tourism increased from 200 berths to 420. After the County refused to define the proposal of the borders of the maritime domain, the Minister of Maritime Affairs, Transport and Infrastructure put an end to this situation in that the Ministry defined the borders. As a result, the conditions for obtaining a national concession for a period of

30 years were met. It is important to note that this concession is a conditional one. Marina Kaštela has strictly prescribed conditions it must fulfil and they relate to the obligation of investing. How much is the investment worth and what will you invest in? Until now, Marina Kaštela has invested some €15.8 million into the port’s present capacities, and another €11.8 million worth investment is planned in compliance with the study of economic justifiability of the completion of Marina Kaštela. The plan is to invest in the business centre with

When flights improve and the V.c. corridor is built, nautical tourism will achieve even better results a pool, sailing club, coastal defence wall in the servicing zone, that is, a new waterfront, undercover storage, 200 tonne travel lift and catering. We must finish all the work in the servicing zone in order to improve our servicing facilities. Together with Hrvatske vode we have to build a rainfall canal in the devastated area. With a new travel lift, we will be able to service ships weighing up to 200 tones, in that vessels weighing over 60 tonnes will be serviced in the existing servicing base, and those weighing below

60 tonnes will be serviced in the area of Adriachem we took over together with the company Ribola. What are your plans for this area? We took over Adriachem at the 10th auction held at the Commercial Court in Split, with a joint payment of €4 million; therefore both companies’ have an equal share. The plan is to build a new service zone in this area, including undercover storage and a dry marina. One part will be used for

related companies specialising in sail manufacture, motor repairs and similar services. Our obligation is to build a route that would simplify the work of the service zone. Does this mean servicing will be relocated to the Croatian side of the Adriatic? This process first started in the north Adriatic, covering an area of the NCP service base in Šibenik. The construction of our servicing centre will enable servicing of bigger boats even fur-

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( €11.8 million future investment

atic offers the best

al tourism. For this reason we can only work in island towns like Vela Luka, Korčula, Starigrad, Hvar,

ther south. The fact is the east side of the Adriatic contained ships serviced in Italy where the servicing equipment was located, but not the profession. We also have to mention that a large number of our experts work in Italian servicing centres. Slowly the work will relocate here. Why is Croatia such a successful destination for charter clients? Very simple: Croatia offers the best sailing conditions. We always have sufficient wind, our

islands are ideally positioned, providing enough shelter, and families with children can sail in Croatia. The other side of the Adriatic does not have favourable conditions for this type of sailing. Also, the position of the Greek islands is not remotely as good as ours and lacks favourable winds. Ten years ago I was invited to the Ministry to give my opinion since the world charter companies threatened to move out of the Adriatic if they had to sail under our flag, that is, register in Croatia. With my knowledge of our sea benefits, I advised the State Secretary at the time to feel free to do so in order to eliminate illegal charter, convinced they would not carry out their threats. And this is exactly what happened. When flight routes improve and the V.c. corridor is built, nautical tourism will achieve even better results. It is one of the most propulsive areas of the economy and it achieves good results. A state owned company also achieves good results.

What does the existing Nautical Tourism Development Strategy lack? One part of the strategy is good, the other is unrealistic. We cannot say we need 15,000 berths. We have to specify the number of required berths. How many do we have to build in the south Adriatic, and how many in the north, and the same applies to the coast and islands. The Strategy must contain data on the number and size of boats it is able to accept. It would be ridiculous to compare ourselves with France, where the number of berths is defined by kilometre of coast. We are completely different. If we were to build berths in the protected island bays, we would lose our biggest advantage in nautical tourism. For this reason, we can only work in island towns like Vela Luka, Korčula, Starigrad, Hvar, Jelsa, Komiža and devastated coastal areas. Big marinas should exist in these bays. What was done a long time ago on Žut, Piškera and Palmižana should stay that way,

but it would be ludicrous and devastating to plan berths in the magnificent island bays. Boats visit these bays. What has to be done to ensure order? They should be turned into anchorages under concession and their eco-sustainability should be supervised, which would be possible by introducing “blackwater” tanks. The anchorages guarantee order in these bays. Furthermore, all ports offering services to nautical tourism should have a black-water drainage system. How can order be ensured in the physical planning of ports? I am completely against complete decentralisation in this segment for the benefit of easier monitoring of nautical tourism. Each local unit cannot plan the construction of marinas separately, since that would result in chaos. Furthermore, small boats, small sports ports and sailing clubs should also be considered.

Ship owners are ordering new ships What is the present situation on the market of ship transport? There are signs of recovery, but it would be to daring to say the crisis is ending. At the moment, the import of the iron ore increased from Brazil to China which dictates the conditions of the shipping market and coal for Japan due to shutting down of the power plants and the opening of thermal power plants. The transport of palm oil also increased. In fact, the rainforests of South America and Indonesia are deforested, and the same thing is happening to palms. As a result, more ships are being built for transporting palm oil. It is also evident that ship owners are slowly starting to order new ships. Marinconsult approached the International Maritime Association that large maritime companies joined, so that crew members could have explicit conditions relating to their rights. We signed a collective agreement with the Seafarer’s Union of Croatia. We are currently managing 15 ships and around 400 crew. I must say that maritime affairs were transformed in 2013, since collective agreements with crews are treated as a segment in the classification of ships.

Privredni vjesnik Year VII No 232

CENTENNIAL ANNIVERSARY OF TVIN

New investment combating recession Irrespective of the crisis, the company TVIN is striving towards reducing production costs and investing in new technology in order to successfully keep abreast with competitors Goran Gazdek he Virovitica-based company TVIN, the largest and the most successful company in the Croatian woodprocessing industry, has recently marked its 100th anniversary by laying the foundation stone for the construction of a new plant. The investment in the new sawmill covering an area of 3,000 m2 will be worth €4 million. The new plant will be used for the production of furniture by connecting them longitudinally and transversely. The Krapina-based Jedinstvo has been appointed to construct the plant and primarily locally produced machinery will be used in its equipping. The new plant, which is located near the existing factory premises, is expected to start operating in mid-2014, has been opened by Ivan Slamić, long-term director of TVIN and the current President of the Supervisory Board. “We have

completed our first 100 years of operation successfully, positively impacting on both workers and the community. During our next 100 years, we will need to be extremely careful and cautious and primarily focus on investment that will substantially increase our market share through higher profitability and employment. In addition, new programmes are fundamental, as well as improved completion that will augment stability and security of operation through reduced production costs.

Hard work and responsibility, as well as adapting to the situation on the global market and the fact that TVIN is considered as a second home by its employees are the principal guarantees of our future”, pointed out Slamić. Over 90% of production exported Ivan Špoljarić, Managing Director of TVIN, stressed that, irrespective of the crisis which adversely affected production capacities, TVIN has been continuously fo-

cusing on cutting production costs and investment into new technology in order to successfully keep abreast with competitors from China, Romania, Poland and Lithuania, to name a few. He has expressed his utmost satisfaction with the fact that the owners of TVIN are small shareholders and are the fourth generation living and working in TVIN. In its nine factories, TVIN employs 900 staff and generates income of €18.4 million, operates profitably and has no debts. Due to its thirty-yearlong co-operation with the Swedish company IKEA, TVIN exports over 90% of its production. It was started in 1913 following the start of operations of a sawmill which was constructed simultaneously with the railway by the coffinmaking company jointly owned by Hungarian and French owners. In 1952, production was extended to include office furniture, which has remained the mainstay of the company to date.

NEW INDUSTRIAL PLANT

AD Plastik going global 100 new jobs created following an investment of €20 million Drago Živković D Plastik, a leading Croatian car parts manufacturer has recently opened its new plant in Zagreb, an investment of €20 million, resulting in the creation of 100 new jobs. The new plant is located on the western outskirts of the city, and has a robot-operated paint shop for the plastic parts for Renault Twingo and Daimler Smart. The opening of the new plant will result in an export increase of 20% for AD Plastik, according to Josip Boban, President of the Supervisory Board, who has an-

nounced new investment through the automotive industry cluster of which AD Plastik is a member. The cluster has already prepared a project for the absorption of €20 million from EU funding for regional development. The implementation of the project will result in the creation of 700 new jobs for AD Plastik and other producers who are cluster members. The new AD Plastik plant has been shown to Branko Grčić, government Vice-President and Ivan Vrdoljak, Minister of Economy, who have expressed their utmost satisfaction, emphasising the fact that striving for competi-

tiveness may yield success even in Croatia. An invitation to invest The enactment of the Investment Encouragement Act by the government has greatly enhanced investment and has proven extremely successful, added Boban. Vrdoljak stated that success was due to excellent co-operation with the AD Plastik Management Board. “The most successful companies will be provided with support in order to become even more successful. This is a message and an invitation to other investors, from the government,

striving to promote investment in Croatia”, highlighted Vrdoljak. AD Plastik is a Croatian company with global presence. In Croatia, its plants are located in Solin and Zagreb, employing a total of 870 staff. In addition, the company has a factory in Romania and one in Slovenia, as well as three factories in Russia, employing a total of 2,700 staff. The value of annual exports of the Croatian AD Plastik factories stands at €70 million, and the value of annual exports of the entire group is €250 million.

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FINANCIAL EXPECTATIONS FOR 2014

The year of forced changes Although the Croatian household debt level is at a medium level according to EU criteria, indebtedness is still relatively high compared with other regional countries Drago Živković his year will be the year of forced changes, especially since Croatia has been placed under the Excessive Deficit Procedure. After a 1% fall in GDP in 2013, 2014 will bring stagnation and a result close to zero, so bankers concluded during a round table held by Banka magazine. According to the banks, last year was marked by a stagnated portfolio and sudden profit fall, and 2014 will be a year of uncertain changes due to the application of a very complex regulation, Vice-Governor of the Croatian National Bank

Recovery first, then loans – not vice versa, Velimir Šonje warns (HNB), Damir Odak, announced. Since this is an entirely new regulation at the EU level, no one knows how it will work in practice; therefore, there will be room for possible changes. This will cause a degree of legal uncertainty for the banks, and the largest Croatian banks will come

under scrutiny since they belong to the system of big European groups. Extremely strict criteria regarding portfolio sustainability will be applied, especially in the corporate department. However, Odak believes the banks are sufficiently capitalised to be able to sustain all tests prepared by the European Central Bank. Negative dynamics Even though the Croatian banking system is still stable and operates profitably, Odak is worried by the negative dynamics in the income structure and the increase in bad loans. Bank income from interest decreased by 8%; therefore the achieved profit is mainly the result of reduced expenditure and one-off transactions. The share of loans overdue 90 days increased 25% in 2013, and by the middle of 2014, this type of loan could rise to 50% of the entire portfolio. This year will be good for the banks if they find solutions for difficult to recover loans due to the general economic conditions. The banks that will possibly register losses due to this cleaning of their portfolio, Odak does not regard problematic. However, he believes the

owners of banks achieving losses due to negative operational activities have to take this problem seriously, or the problem will be solved at their loss. The Director of the Economic Research Department at Hypo Bank, Hrvoje Stojić, noted that the state refinancing need in 2014 will exceed €7.9 billion, which is almost 20% of the GDP. Everything, which was saved due to the restructuring of shipbuilding, was lost in interest repayment growth. Therefore, Stojić does not anticipate any economic growth in 2014. 2015 will be better Personal spending accounts for 60% of Croatian GDP, and Chief Economist at Erste Bank, Alen Kovač, does not expect any recovery this year. Although Croatian household debt level is at a medium level according to EU criteria, their indebtedness is still relatively high compared with other regional countries. Many households have been clearing their debt dur-

ing this recession - much faster than companies have - and they managed to deposit a proportion of their income, which is why saving has increased 25% since 2008. The Chief Economist of Splitska banka Zdeslav Šantić is not the least optimistic in terms of employment. Unemployment will continue to grow in 2014, and a possible fall in the mid-term period could be a consequence of a brain drain, rather than new employment. Šantić sees the exit from this vicious circle in fiscal harmonisation, that is, a decreased tax take on salaries and a simultaneous productivity increase. Recovery first, loans after - not the other way around. Therefore, the HNB measures that would boost lending are not realistic, Velimir Šonje from Arhivanalitika warned. Šonje is a conditional optimist. He says if the Excessive Deficit Procedure in 2014 forces us to make changes, then 2015 could be a year of investment and significant growth.

Privredni vjesnik Year VII No 232

CROATIAN POST AND ELECTRONIC COMMUNICATIONS AGENCY

Communication increase in the EU When Croatia joined the EU, roaming traffic increased 100% over the same period last year Boris Odorčić otal outgoing traffic on mobile communications networks increased 30% in the third quarter of last year compared with the same period of the year before, or 15% up over the past quarter. A significant seasonal effect, characteristic for the mobile phone market, is visible

The number of TV feepaying users is also rising in the summer season, especially July and August, due to tourist roaming calls and local users also registering higher traffic.

On the other hand, after EU accession, Croatia started applying roaming regulations in compliance with the EU. A price decrease, due to the new regulations, reduced operator income, while roaming traffic increased over 100% over the same period of 2012, according to data provided by the Croatian Post and Electronic Communications Agency (HAKOM). Density of broadband connections It should be noted that the influence of seasonal changes also reflected on the number of connections for broadband internet access through mobile communication networks (SIM and mobile devices). The use of SIM cards increased 12% in

relation to the previous period. When comparing numbers from September 2012, when around 55% people accessed the internet through mobile phones, it is visible that this share increased to over 66% in the third quarter of 2013. There are notable changes in the density of broadband connections at a county level. For example, Primorje and Gorski kotar reached the level of Zagreb and

the surrounding region, with a share of over 26%. Furthermore, at the end of the third quarter of last year, the number of package users (communications, data and TV services) has almost two thirds of the total number of broadband connection internet access. Consequently, the number of TV fee-paying users is also growing. HAKOM anticipates similar trends will continue during the forthcoming period.

WOOD BIOMASS – STRATEGIC CHALLENGE TO THE ENERGY POLICY OF SEE

Hunger for pellets European market conditions are very good, with around 92% of Croatian pellets finding their way to the foreign market. The highest level of pellets is exported to Slovenia and Italy Boris Odorčić he recently adopted National Action Plan 2020 (NAP) for renewable energy sources (RES) shifted the focus of projects from solar and wind power plants to small hydro-power plants, biomass and cogeneration. Director of REGEA (North West Croatia Regional Energy Agency), Julije Domac, pointed out that Croatia should have completed more biomass-based

projects that it actually has. Considering the wood biomass potential (wood waste), we have to turn it into a renewable energy source that we will actually use, Domac highlighted. However, the obstacle for the majority of Croatian power plants is the complex administrative procedure. Not even minor legislative regulations or cosmetic changes benefit investors, since they have to wait

many years for a return on investment. Furthermore, investors – for whom an interest evidently exists since around 100 have registered in the Register of Projects and plants for using renewable energy sources and cogeneration, as well as privileged producers of the Ministry of Economy – could be put off by biased purchasing conditions, that is, the distribution of the wood raw material used for pellet production. Great potential The production of pellets has great potential in Croatia. In fact, the European market conditions are very favourable, with around 92% of Croatian pellets

finding their way to the foreign market, and this percentage could be even higher. The highest level of pellets is exported to Slovenia and Italy.

Around €5 billion will have to be invested in the production of pellets In Croatia, annual pellet production from local raw materials that can replace fossil fuels, ranges around 280,000 tones. A further important issue is that around €5 million needs to be invested in the production of pellets.

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WOMEN IN BUSINESS 2013

Increase the number of companies owned by women The number of women in business, both in Croatia and globally, has been increasing even as their obligations are also rising, and their knowledge and abilities are regrettably often underestimated implementation of more effective measures of active employment policy and specifically devised methods of work suitable to women in unfavourable positions. The Croatian Chamber of Economy has conducted research on the requirements for education and professional development of women entrepreneurs under the project of South East European Centre for Entrepreneurial Learning (SEECEL) entitled Women Entrepreneurs Generators of New Jobs in South Eastern Europe in order to deepen insight into the current conditions, and provide background for the development of new, or the improvement of, existing measures from the Action Plan for Development of Female Entrepreneurship. The fact that entrepreneurial learning needs to be included within the educational system was highlighted as a result of the

Sanja Plješa omen are company owners or executives in important roles within a company, yet in senior management they are still conspicuously outnumbered by men. Women are also innovators: they invented the circular saw, the bullet-proof vest and carbon paper. The number of women in business both in Croatia and globally is on the increase. Nevertheless, their obligations are also rising in tandem, whilst their knowledge and abilities are regrettably often underestimated. A large proportion of women in business operate independently and develop their own businesses through start-ups. Nevertheless, they need to network with others from related companies in order to enhance their business success, as pointed out during the 3rd Women in Business Regional Conference 2013 organised by the Croatian business weekly magazine Lider. During the conference, Lider presented its list of 300 most successful women in Croatian business. Ljerka Puljić, Senior Executive Vice President in Agrokor, ranked first, Gordana Kovačević, Board President in Ericsson Nikola Tesla, second, with Lada Tedeschi Fiorio, Vice President of the Supervisory Board in Atlantic Group, ranked third.

Overcoming obstacles A well-known Croatian psychologist Mirjana Krizmanić attempted to explain the manner in which women can easily overcome the obstacles they encounter in their daily work, as well as in their private lives. According to her, “the largest and the most persistent obstacles are in women’s heads”. She believes that men still have difficulties both in accepting female colleagues as equal in

business, and specifically in accepting them as a boss. However, women also find it hard to accept their own roles as superiors. “Irrespective of the fact that women are more thorough and reliable than men, they still perceive men as more competent. One of the obstacles in women’s heads is assuredly the result of a different approach to upbringing of male and female children, as well as of the position of attractive women in society. Unfortunately, there is still a prejudice to attractive women being dumb”, stressed Mirjana Krizmanić. According to Saša Cvetojević, founder of Zagreb Entrepreneurship Incubator (ZIP), women in business are more persevering and determined than men. “Nevertheless, some female owners of start-ups are not adequately prepared for such business activity. Faculty education is primarily theoretical, whilst practical appli-

cation of knowledge is currently neglected, as well as the development of specific skills required in launching their own business”, emphasised Cvetojević, adding that the educational system requires substantial reform.

The largest and most persistent obstacles are in women’s heads, according to psychologist Mirjana Krizmanić

Active policy for promoting employment of women Some steps in this direction have been taken thus far and during the last several years a wide range of projects have been implemented in Croatia aiming to promote female entrepreneurship and strengthen it in the labour market. One is a project implemented by the Croatian Employment Service between December 2010 and January 2012. The principal objective was the fostering of women’s employment in unfavourable areas and providing assistance for their entrance on to the labour market. The specific objective of the project was the enhancement of development and

research, as well as the requirement to encourage women into scientific and research projects through scholarships, which may eventually result in entrepreneurial activity based on innovation. Since 2002, Croatia has seen a substantial increase in the number of companies owned by women or with women holding majority ownership, where women have pointed out their desire for independence as the main reason to enter business. As a result, the number of self-employed women in Croatia exceeds the average of EU member countries and currently is over 40%.

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PROMOTION OF CROATIA IN FRANCE

The French love visiting Croatia According to survey Top Summer Destinations 2013 on Google France, Croatia holds a good position on the French market in the category Top Mind Destinations Sanja Plješa ourist co-operation between Croatia and France over the last year was reinforced through the project Croatie, la voici. While working on its preparation and development (in Croatia named Cultural season of Croatia in

Dubrovnik is the most attractive destination for the French, followed by Split and Dalmatia France), the Croatian Tourist Board (HTZ) was involved in a series of promotional activities to create synergy between culture and tourism. The French audience was especially interested in the cultural aspects that have always been a communication base between the two countries.

However, this was also a good opportunity to strengthen the image and increase attractiveness of the destinations through the promotion of Croatian culture, reports HTZ. Last year a survey Top Summer Destinations 2013 on Google France was conducted on the attractiveness of certain destinations. According to this survey, Croatia holds a good position in the category Top Mind Destinations. In terms of accommodation, where the criteria included visitor satisfaction in certain destinations, Croatia managed to climb to third place, after Corsica and Spain, and before Morocco, France, Tunis, and Greece. French want quality The French are demanding visitors who require quality for a reasonable price. They like to give meaning to their travelling and they prepare thoroughly, comparing information and of-

Increase in French arrivals According to data provided by the tourist board system, during the first ten months of 2013 Croatia was visited by 431,591 French tourists, some 7.71% up compared with the same period last year. This is a good result since the French travelled less. Furthermore, a longer season was achieved, since the number of French tourists increased in all months, especially those post-seasonal. Therefore, the number of arrivals of the French tourists increased 11% in May, 9% in June and 5.44% in October. fers. They look for diverse programmes with specific themes, for example culture and recreation. Thus, why Croatia is well positioned as a destination with a recognisable and quality image, and it became an inevitable destination for many tour operators, HTZ highlighted. Dubrovnik is the most attractive destination for the French, followed by Split and Dalmatia. Zagreb holds a special place, with a special offer the French find attractive. Croatian tourists also like to travel to France, the top ski-

ing destination globally for the second consecutive year, before America and Austria, according to data provided by the organisation Skiing Terrains of France. Ten million tourists visited the French ski resorts last year, of which seven million included skiers, said Gordana Malić, Promotion Manager of the French national organisation Atout France. However, when asked about the number of Croatian ski-tourists visiting French ski resorts, neither tourist organisation had any information.

night stays was registered during that month or 5.48% more than the year before. From this figure, foreign tourists recorded 104,915 arrivals or 5.28% more, and 311,074 overnight stays or 12.88% more compared with November 2012.

Tenders for non-repayable EU funds In conjunction with the Regional Competitiveness Operational Programme 2007-2013 three new tenders were invited for non-repayable funding via EU funds worth in excess of €56 million. A minimum of €1 million and a maximum of €10.5 million of non-repayable funding from the EU Regional Development Fund are intended for projects submitted for the Allocation scheme for business infrastructure.

::: news Valamar the leading employer in tourism In 2013, the tourism company Valamar obtained the “Employer Partner Certificate” for excellence in human resource management. The company is constantly working on improving its employee management process. Last year they launched the ‘Uplifting Service’ project with the goal of motivating employees to be constantly at the service of their customers and each other. Managers have confidence in their colleagues and encourage

them to perform their tasks independently. Furthermore, the company also invests in the development of know-how and improving the skills of their seasonal workers. Good tourist results even in the post-season During November, Zagreb and the coastal region registered 160,945 tourist arrivals, 4.19% more compared with the same month of 2012. According to official data from the tourist board system, a total of 453,433 over-