Kusić: Actions speak loud Science is fundamental for economic development. A consensus on strategic issues in economy is also fundamental
Company experience with pre-bankruptcy settlements The most difficult and important thing was to sit at the same table
Launching an ICT start-up Young ICT professionals with a business idea have opportunities for launching a start-up and becoming entrepreneurs
PAGES 2-3
PAGES 4-5
PAGES 14-15 2008 2009 2010 2011 2012
Croatian Business & Finance Monthly Established in 1953 Monday / 5th May/ 2014 Year VII / No 0236 www.privredni.hr
S U P P O R T E D
B Y
T H E
pvinternational pv international C R O A T I A N
C H A M B E R
O F
E C O N O M Y
ECONOMIC DIPLOMACY
MORE CO-OPERATION SOUGHT Unofficial survey reveals that the largest 15 companies increased exports by €0.2 billion with diplomatic assistance Igor Vukić ight of 50 Croatia ambassadors received a letter from the Minister of Foreign and European Affairs, Vesna Pusić, in which she warns them of their unfulfilled duties. If they continue with their passive attitude regarding the needs of Croatian exporters, stricter measures will follow. From now on, ambassadors, economic attachés and other economic diplomats will be assessed every three months, to determine whether they are fulfilling their duties, as stated during a presentation of the results of a project that started six months ago and was conducted under economic diplomacy. According to Minister Pusić, the project of economic diplomacy started with two main components: the identification of products that could represent Croatian companies on foreign markets, and the promotion of an investment climate to attract foreign investors, especially those willing to invest in production intended for exports.
CCE helps economic diplomacy
E
Satisfied with results Minister Pusić and her Deputy, Joško Klisović, in charge of the operational aspect of the project, are extremely satisfied with results to date. After having announced that this programme of international co-operation would
The Foreign Ministry forwards investing opportunities and offers in foreign countries through its partner institutions: the Croatian Chamber of Economy, the Croatian Employers’ Association and Croatian Exporters. Participation at shows and promotions, and the organisation of business delegations are all very important in accomplishing exports, in which the CCE has long experience. intensify, 872 companies turned to the Ministry asking for help in achieving export results. The representatives of economic diplomacy (those deserving of a pass grade) took part in 1,532 interviews. There were many different demands: from requests for finding business partners to complaints about slow local and foreign institutions or discrimination in tenders. Exporters also face problems at home. The Foreign Ministry helped some to obtain a simple document (in English, however), and they waited six months before local bodies gave it to them. The Ministry also helped some to obtain the certificates required for public tenders. Foreign economic diplomacy was mainly active in Europe. Ac-
cording to Klisović, it managed to arrange that the Cefta regime is still valid even after Croatian EU accession. The only country with whom this arrangement was not reached was Bosnia and Herzegovina. Everything is set with Serbia, but the arrangement will be finalised when the new Serbian government is formed. Companies that co-operated under economic diplomacy praised the diplomats’ hard work. Klisović says these companies do not wish to reveal the level of their export income the diplomacy helped them achieve, since this information is confidential, but an unofficial survey reveals that the top 15 companies increased their exports by €0.2 billion. This is not only to the merit of economic diplomacy. We
also contributed to these results, Klisović said. The Ministry of Foreign Affairs will become even more active in attracting investors. It will provide each investor with a commissioner who will be available 24/7. In her conversation with representatives from large companies investing in Croatia, Minister Pusić found out about their problems in implementing and interpreting legislation. However, a well-informed and approachable commissioner could make things easier. If things cannot be solved at a lower administration level, they can be brought up at a Government meeting, and the competent minister could speed up the process of finding a solution, Minister Pusić said.
2
Privredni vjesnik Year VII No 236
“ Hard work is an imperative for economic stability irrespective of initial results.”
ZVONKO KUSIĆ, PRESIDENT OF THE CROATIAN ACADEMY OF SCIENCES AND ARTS
Actions speak loud
Science affects the economy at the macro level where it provides a scientific background to strategies and policies are fundamental in production Sanja Plješa cientific and technological development need to be the driving forces of economic growth, whilst co-operation between scientists, experts and businessmen is a major prerequisite against the current dynamic environment, significantly affecting both research, education and the economy. Privredni vjesnik talked with Zvonko Kusić, President of the Croatian Academy of Sciences and Arts (HAZU) on exit strategies from the financial crisis, as well as economic development strategies.
S
What is the role of science in economic development? Science is fundamental for economic development against the backdrop of current circumstances. Science affects the economy at a macro level, where it provides
Science is fundamental for economic development against the backdrop of current circumstances a scientific background to strategies and policies for economic development. Moreover, it also has a substantial corporate impact, as research and development are fundamental for production. It has to be said that 90% of global investment is focused within 10 highly developed nations, and hence smaller developing countries can hardly compete with any radical innovations in the global market. Nevertheless, there are exceptions, such as the Finnish
company Nokia, which shows that well-organised research and development and state funding can yield impressive results. Smaller developing countries, such as Japan, South Korea, Singapore and Taiwan, with limited investment potential in fundamental research can through the implementation of effective measures to compete with developed countries. It has to noted that innovation and science are fundamental for economic development.
In what way can Academy members enhance economic development in Croatia? In 1995, the Croatian Academy of Sciences and Arts pointed out the negative trends in the balance of foreign trade, external debt and unemployment. During the period from 1999 to 2003, five scientific gatherings were organised on the long-term strategy for economic growth in Croatia. The primary objective was to define material and system con-
ditions in the Croatian economy, as well as the overarching structural issues, both concerning the real economy and upgrades. In addition, it aimed to emphasise the direction and methods to be adopted during the implementation of changes and solutions whilst striving to impartially define the potential for the launch of a new development cycle, based on existing resources and aiming for stable and accelerated economic growth. The Croatian
www.privredni.hr Business & Finance Weekly
3
“ A consensus on strategic issues in the economy is fundamental. ”
S
er than words
s for economic development. Moreover, it also has a substantial corporate impact, as research and development Academy of Sciences and Arts has been aiming to establish a consensus on national issues of strategic importance, primarily concerning economic growth. We believe we are currently facing a turning point and a major reversal in unsustainable practices. Hard work is an imperative for economic stabilisation irrespective of initial results. Nevertheless, actions speak louder than words. A systematic, serious and responsible approach, as well as persistent, committed and patient work yielding real values and top quality results are fundamental. Is a new re-industrialisation currently required for Croatia? Croatia will solve its unemployment issues primarily through the development of classical production such as wood processing industry and artisanal crafts, which have been traditionally present here. Nevertheless, substantial investment in staff is yet to be implemented. Secondly, development of new types of production that will be required in several years is imperative. In addition to the issue of lack of
human assets required to launch a specific type of production and a time frame of between 5 to 10 years, there are issues concerning lending, amortisation, marketing and those caused by monopolies, to name but a few. Consequently, production based on new technologies and dynamic entrepreneurship is vital for export penetration by small countries on the global market. The solution may lie in nanotechnology, which is likely to bring another technological revolution following the IT revolution, or in biotechnology or something similar depending on the circumstances concerning the potential for the development of specific technologies, as well as available human and material resources. How plausible is the achievement of a consensus on strategic issues in the economy? A consensus on strategic issues in the economy is fundamental. Foreign investment is crucial, yet the obstacles for foreign investors are still present, primarily concerning superfluous red tape and unnecessary regulations. In addition, we need to overcome
resistance to specific projects that have aroused investor interest, hiding behind arguments such as requirements for nature and environmental protection and preservation. Ecology must not present an obstacle to foreign investment and we need to achieve a balance
The Croatian Academy of Sciences and Arts has been aiming to establish a consensus on national issues of strategic importance, primarily concerning economic growth in order to attract foreign investors. Nevertheless, as a nation, we are often prone to extreme attitudes rather than compromising and midpoint solutions - which are often interpreted as weaknesses. The achievement of a consensus is crucial for the creation and the implementation of a long-term development strategy, as well as for the implementation of the required reforms.
Is the survival of small economies plausible without the strengthening of large companies and consortiums? Small highly developed countries such as Switzerland, Holland and Finland have at least one large multinational company, whilst those who do not have one are at times faced with problems such as those in Greece and Portugal. Goran Družić, Academy Member, Head of Economic Research Department at the Croatian Academy of Sciences and Arts pointed out that a large multinational company such as a “Croatian Nokia” is highly necessary, as it would solve several of the current problems in the Croatian economy, as well as the issues concerning further economic growth. Nevertheless, this is not easy to achieve and the results are uncertain. Shipbuilding currently has the highest potential, with its unique global product –ships. Still, we are aware of issues faced by shipbuilding and its survival. Small and medium sized companies currently rely on large, not necessarily Croatian, companies for survival.
The Croatian Academy of Sciences and Arts (HAZU) as the conscience of the nation HAZU has become extremely open to the public during your term of office as the President. What else is required to improve its public recognition? The Croatian public is aware of the fact that HAZU is more open and not an elitist institution irrespective of its being ‘elite’. Nevertheless, HAZU needs to be a point of reference in Croatian society expressing attitudes based on scientific, professional and ethical principles rather than on political grounds. HAZU needs to be an active participant in Croatian society and recognise the
requirements of the environment within which it operates. The Academy is not an authority solely in science and arts, as it is also an ethical authority concerning all the important and fundamental issues in society and state. As one of the fundamental national institutions for 153 years, the Academy acts as the ‘conscience of the nation’ and its role is preservation of identity, promotion of the unity of the nation and the highest social values beyond the daily ideologies, partiality and classification on any grounds, enabling it to operate independently. It does not adhere to
extremist views and most of its members’ attitudes are beyond ideologies. HAZU needs to be the safe haven for the nation against the backdrop of turbulent times and hasty changes. Moreover, it needs to contribute to the consensus on national objectives of strategic importance whilst honouring the fundamental values of society. Its role comprises of bringing together, mobilising, leading and presenting the scientific, professional and artistic elite in all fields, as well as conducting analyses and assessments on issues of national importance.
4
Privredni vjesnik Year VII No 236
GREAT SUCCESS FOR JGL FROM RIJEKA
JGL: income leaps to €114.6million The results achieved in 2013 turned JGL into the second largest pharmaceutical company in Croatia
The JGL Group total consolidated profit 1991-2013 leapt from €0.2 million to €114.6 million. After a very successful 2012, characterised by strong growth in foreign markets, the business results continued their upward trend during 2013, especially exports which increased 16%. In 2013, JGL overall income grew at a rate of 11%, reaching €89.5 million, of which €66.7 million was achieved on
foreign markets. Exports reached 77% within the structure of total income, with the best results being achieved primarily in Russia (24% growth). Last year finished with a record nett profit of €9.4 million. Regarding the Croatian market, sales results reached 99% compared to the year before, pointing to further stagnation. The number of employed staff totalled 660 at the end of 2013, and 58 new workers were hired. JGL North America started the distribution and sales on the American market, and the first products of the Aqua Maris line were exported to Italy. Investments also continued, with Pharma Valley as the most significant construction project near Rijeka, worth €45 million. (D.Ž.)
KONČAR GROUP CONSOLIDATED RESULTS
Income up, exports almost 50% up In 2013 Končar Group achieved €0.33 billion in consolidated profits from product and services sales, 2.8% more over 2012 Operating income came in at €0.36 billion, on a level with 2012. Operating expenditure was €0.34 billion a 1.1% decrease. Operating profit was €15.2 million, 21.9% more than 2012, and profit after tax was €21.4 million. Last year, Končar recorded €0.16 billion in sales on the Croatian market, 1.8% up on a year-onyear level. On foreign markets, sales totalled €0.16 billion. The most significant export results were achieved in Germany (€16.7 million), Bosnia and Herzegovina (€14.2 million), Sweden (€11.7 million), Czech Republic (€10.5 million), Austria (€8.7 million) and Slovenia (€5.6 million). In addition, Končar Group signed new contracts valued at €0.35 billion, a 9.9% rise in relation to the same period of
2012. Of this amount, 43% was contracted to the local market and 57% to foreign markets. Total contracts signed as at the end of December 2013, totalled €0.31 billion, 8% up in relation to the beginning of 2013. On 31st December 2013, total consolidated assets and asset sources stood at €0.45 billion, and current assets are three-times higher than short-term liabilities, pointing to Končar’s solid liquidity. (D.Ž.)
( €5.5 billion
frozen at the time settlements were introduced
COMPANY EXPERIENCE WITH PRE-BANKRUPTCY SETTLEM
THE MOST DIFF THING WAS TO
After 15 months of complex work and derogation of constitu assessment was also given by the European Commission an Igor Vukić t was 10 p.m. and the lights in Dalekovod’s Office of the Board were still on. Company representatives and creditors negotiated details of the pre-bankruptcy settlement. The exhausting talks paid off in the end: rather than filing for bankruptcy and probably perishing, Dalekovod is
I
While an average bankruptcy costs €6,600 to €13,000, pre-bankruptcy settlement costs €600 once again a healthy company. After hanging on the verge of a business abyss, the company has returned to its main activity and signed new contracts worth €170 million. Other participants of the recently held conference on pre-bankruptcy settlements, organised by the weekly magazine Lider, shared a similar experience. No one suffered any additional loss in prebankruptcy settlements, Dalekovod’s Board President, Goran Brajdić, highlighted. However, the law did force creditors and debtors to sit at the same table, and when that happens, everything becomes easier. “One can reach an agreement with one bank, but when you have seven creditor banks, then this is impossible without a model offered by pre-bankruptcy settlements”, noted Jure Radić who managed to stabilise IGH with a settlement. Their words probably sounded like music to the ears
of the Finance Minister. After 15 months of complex work and derogation of constitutional complaints, economic representatives evaluated the pre-bankruptcy settlements as positive. A positive assessment was also given by the European Commission and IMF; all relevant experts support this model, Linić pointed out. He also added that 40,000 jobs had been preserved in the process. Write-offs could decrease He reminded that settlements were introduced during a period of intense illiquidity, when frozen accounts reached the sum of €5.5 billion. Bankruptcy pro-
www.privredni.hr Business & Finance Weekly
5
( 57% claims
to be collected in finalised pre-bankruptcy settlements
ENTS
FICULT AND IMPORTANT O SIT AT THE SAME TABLE
utional complaints, economic representatives evaluated pre-bankruptcy settlements as positive. A positive d IMF vation, for example Hotel Medena near Trogir and five other similar tourist complexes, found strategic investors, Deputy Minister of Tourism, Ratomir Ivičić, stressed. Furthermore, this sector finalised 128 settlements. After settlement, IGH started the process of additional capitalisation with a strategic partner. IGH will become a member of an international construction consortium that currently misses an engineering-project segment – IGH’s specialisation. This will help IGH return the full debt required by the settlement.
ceedings lasted 10 to 15 years and creditors managed to collect barely 30% of their claims; the state collected less than 10%. Based on the finalised prebankruptcy settlements, 57% of claims will be collected and around 42% written off. The state wrote-off €0.2 billion of debt, the banks wrote off €0.3 billion and other creditors, mainly suppliers and business partners, wrote off a further €0.8 billion. Had such settlements started in 2008, then the level of write-offs would have been lower, Deputy Minister of Finance, Boris Lalovac, noted. He also pointed out that when the report on blocked
companies arrived at the Ministry, it said there were 70,000 of them. “We thought it a statistical error, but it was not. The economic and judiciary systems, which should have regulated it, were in decline”, Lalovac said. A total of 30,000 companies were deleted in pre-bankruptcy settlements. These companies were mainly from construction and trade without a single employee. While average bankruptcy costs €6,600 to €13,000, pre-bankruptcy settlement costs €600, Lalovac added. Settlements have also helped the state find new investors in old state hotels. Facilities in need of additional investment and reno-
Foreigners want to help, local companies not interested Varteks reached a settlement according to which it will have to pay back €78.4 million, the company co-owner Zoran Košćec said. The settlement provided him with fresh money from the CBRD and helped him start a new investment cycle. Košćec has been working on a company restructuring since 2005, when he joined the company. The business did stabilise, but was then hit by the global crisis.
Manager of Đuro Đaković Alatnica, Nikola Veočić, opines that pre-bankruptcy settlements are one of the best economic moves of the Government. Veočić had such negative experience with payments in Croatia that he will now only export. Partners in Austria, Switzerland and Germany pay within 15 days, although he admits they pay €20 per hour, and Veočić’s expenses reach €25. This is why he must invest in increasing competitiveness and buy new machinery. However, local bankers will not support him, so he has arranged with foreign partners to purchase a new machine in instalments and via compensation in products. He says he does not understand why some people from Switzerland or Germany, who do not even know him, want to work with him and help, while locals do not care. On the other hand, he is not surprised since he invested in the production of anti-hail rockets in 2010; he provided additional training for his employees and prepared everything, but the former government decided to import anti-hail rockets from Serbia as it is still doing today.
Pre-bankruptcy does not sound good Entrepreneurs agree that a model which would force creditors and debtors to reach an agreement has to exist, but it should not be called a pre-bankruptcy settlement. When IGH entered the pre-bankruptcy process (often associated with bankruptcy and shut-down), it lost several contracts, mainly in Croatia (especially HŽ). Jure Radić says that the aspect relating to filing claims should be amended. IGH will soon file claims against companies that filed for false claims and thus slowed the settlement process.When banks hear the word ‘pre-bankruptcy’, they immediately send the company in the sector for risk lending despite the fact the business could become more stable than before, says Marko Bartulić from Hvidra, a public utility company from Split.
6
Privredni vjesnik Year VII No 236
( 1.1% inflation rate ( 1.7% anticipated for end of 2014
inflation in 2015
CROATIAN NATIONAL BANK OUTLOOK
Noticeable deceleration of inflation In March, the consumer price index decreased 0.4% in relation to February. The trend started January when consumer prices decreased 0.1% compared with the previous month with the annual inflation rate decelerating from 0.3%, recorded in December 2013, to 0.1% Igor Vukić his year inflation could slow considerably according to an assessment provided by the Croatian National Bank Council in April. Under conditions of a stable kuna/euro exchange rate, a lack of local inflation pressure on the cost and demand side, as well as lower prices for imported food products and crude oil, the average annual growth in consumer prices could decrease from 2.2% last year and may touch 1.1% by the end of the year, according to the HNB assessment.
T
Inflation remains below average A degree of acceleration is anticipated next year, but with an average 1.7% the annual rate of inflation could remain below its long-term average, the HNB Council concluded. At its last meeting, the Council also adopted its Monetary Policy Forecast to 2016. According to the HNB inflation data, the consumer price index decreased 0.4% in March compared with February. The trend began in January when consumer prices fell 0.1% in relation to the previous month, and the annual inflation rate slowed from 0.3% in December 2013 to 0.1%. Compared with July 2013, inflation decreased by 2.2%, mainly due to one-off factors, HNB evaluates. Food products reduced their contribution to inflation as a result cheaper food raw materials on the global market, and
increased competition through the cancelled protection custom duties after Croatian EU accession. For example, during the past seven months, the price of cereals fell by 28% on the global market and the price of oil and oleaginous plants dropped 10% as a consequence of a good quality harvest. Governor Boris Vujčić explained several times that there will be no devaluation, as this would not bring any positive factors to the economic. The HNB Newsletter published in March gives a detailed account of the conditions affecting inflation movements, highlighting the present lack of local inflation pressures on the cost and demand side. All this contributed to negative movements on the labour market, characterised by the grow-
ing unemployment rate and lack of pressure that would increase salaries. Higher VAT, higher prices All major components (except energy) contributed to the reduction of inflation in January 2014, but the highlights were services and non-processed food products. The slowing annual rate of service price changes (from 0.4% in December to 0.0% in January) is a result of the positive effect of the base period. The annual rate of service price changes, whose prices are created on the market in January, was also low (0.1%), mainly due to a deceleration in the growth of labour costs. The prices of non-processed food products on an annual level continued to decrease (to 2.1% in January) as a consequence of the ef-
fect of the base period, that is, less intensive seasonal price growth of vegetables compared with the year before, which is probably due to current better weather conditions. On the other hand, the administrative decision to raise the VAT rate from 10% to 13% influenced the growth of prices, especially certain processed food products (oil and sugar) and water supply, whilst price growth in hospitality services was miniscule. Positive movements in import inflation resulted in decreased inflation for consumer prices and contributed to more intense economic competition, HNB opines. Furthermore, this also contributed to reduced prices of raw materials on the global market, and a low inflation rate in those countries defined as the most important foreign trade partners.
www.privredni.hr Business & Finance Weekly
7 ::: news
( €26.8 billion
ERGO on the insurance market The German company, ERGO, is a new player in the Croatian insurance market. In addition to mandatory car insurance, ERGO also offers all-risk insurance, property insurance and accident insurance. Until 2012, ERGO had operated in Croatia under the name Victoria osiguranje (Victoria insurance). The new name has brought changes to the company portfolio and marketing strategy. The largest sales channels were once Zagrebačka banka and Sberbank, but now they are developing their own branch network, as they have invested considerably in a quality IT system and announcing new types of insurance.
direct investment in Croatia since 1993
Croatian National Bank
Direct investment plummets 60% Last year equity investment totalled €518 million. When other investment is added and retained profit deducted, the final result is €437 million Igor Vukić ven though capital inflow into Croatia was slightly higher in 2013, foreign direct investment was almost 60% lower than the year before. Capital inflow mainly related to higher indebtedness, while direct investment barely reached €437 million, and was €681.1 million
E
In 2013 equity investment mainly relates to debt transformed into capital of other companies lower compared with investment in 2012. According to data provided by the Croatian National Bank, this low level is still higher than that for 2011 when nett investment was only €370 million. However, this figure is still a long way from the record of 2008 when foreign investment exceeded €4 billion. Equity investment totalled €518 million last year. When other investment is added and retained
profit deducted, the final result is €437 million. When this sum is added to the total amount of direct investment in Croatia since 1993, the final level is €26.8 billion, according to HNB preliminary data. In 2013, equity investment mainly related to debt transformed into capital of other companies. Therefore, new equity investment is mainly realised in financial intermediation activities (especially leasing companies) and in real-estate and telecommunications sectors, according to HNB. Negative retained profit was seen in financial intermediation and oil derivatives production, which is a consequence of poorer business results of local companies owned by foreign companies. Overall results were mainly affected by value harmonisation of INA’s property in Syria, HNB analysts point out. Main investment area has been the banking sector During the past 21 years, the majority of investment went to the banking sector or financial intermediation (a total of €8.5 bil-
lion). However, last year this sector saw an outflow of €230.7 million. The highest inflow was seen in the real-estate sector (€185.3 million), whilst other business activities accounted for €156.8 million in investment, and equity investment in real-estate totalled €138.8 million. Investment continued in the construction sector (€30.9 million) and traffic logistics (€49 million). Higher investment growth was also seen in the research and development sector (€31.7 million). Last year, the majority of foreign investment came from the Netherlands (€152.8 million), and Germany (€123.8 million). Considerably lower investment came from Austria (€64.9 million), Luxembourg (€63.2 million) and Italy (€62.3 million). The highest outflow of foreign investment was seen in Hungary (€171.3 million), Sweden (€43 million) and Slovenia (€23 million). Austria is still at the top of the largest investors, a position it has enjoyed since 1993 (€7.1 billion), followed by the Netherlands (€3.3 billion), Germany (€3.2 billion), Hungary (€2.3 billion) and Luxembourg (€1.7 billion).
HPB invests millions in development Hrvatska poštanska banka (Croatian Postal Bank) opened its first affiliate in Požega and the County of Požega and Slavonia. The present network consists of 61 affiliates, 350 ATM’s and over 1,000 postal offices. In order to bring its entire range of financial service closer to its clients, HPB has opened 14 new affiliates during the past four years. According to the HPB report, €8.4 million will be invested in the development and expansion of their business network, continuing their investment activities from 2013, which halted because of capital investment privatisation. Time capsule for Zagrebačka banka
On the occasion of marking its 100 years in business, Zagrebačka banka opened a Time Treasury or Time Capsule for the general public, regardless of whether people are clients or not. The Time Capsule will be a place where people can store their memorabilia, various items, photos or messages they would like the Bank to keep for the next 100 years, without charge. The items can be stored from 17th April to 17th May, and the Time Capsule will be reopened in 2114.
8
Privredni vjesnik Year VII No 236
( 1,528 organic producers registered in Croatia in 2012
OLIVES AND ORGANIC FARMING
Economic potential
Economic experts specialised in the olive oil market in the European Union an the demand for olive oil being met only in 2020 Jozo Vrdoljak here are currently 5.5 million olive trees in Croatia. Some 30,000 hectares of land is covered with olive groves, with 20% of this total currently still uncultivated. In addition, olive groves account for 0.5% of total agricultural land in Croatia, whilst the share of vineyards is around 2%. The share of the most common variety of olives - Oblica (Olea europaea L) is 60%, followed by Buža (or Buza) and Leccino with a 5% share in total production. Around 45,000 households are involved in olive oil production. Croatia currently has 180 olive oil producers; between 4.5 million and 5.5 million litres of olive oil are produced from between 25,000 tonnes and 35,000 tonnes of olives. Oil imports are currently seeing an increase of around 20%. Nevertheless, the annual olive oil consumption per person in Croatia is insignificant, standing at around 2 litres, compared with Greece where it exceeds 20 litres. “The olive oil market is one of the fastest growing markets, irrespective of the financial crisis. Economic experts specialised in the olive oil market in the European Union anticipate a 30% surge in oil prices, and the demand for olive oil will be met only in 2020”, stressed Lordan Ljubenkov, President of the Cooperative Association of Dalmatia. “This is primarily due to a general decrease of around 30% in subsidies for olive oil production, as well as to a severe drought in Spain which resulted in a 50% fall in production. It was a severe blow, as the share
T
of Spain in global production is around 50%. Moreover, the increase in global olive oil consumption significantly exceeds production. The promotion of olive oil as health food resulted in a substantial increase in demand from China and India, in addition to traditional markets”, emphasised Ljubenkov. Olive cultivation in Croatia The culture of olive growing has a tradition spanning 2,000 years. During the last 15 years olive growing in Croatia has seen a renaissance, due to several factors and primarily as a result of lack of tourism during the Homeland War in Croatia and hence the local population resorted to olive growing. Furthermore, additional training was provided and subsidies granted both at state and local level through a national operative programme for olive growing.
The average olive grower cultivates 112 olive trees and uses 50 litres of olive oil “Olive growing and olive oil production are fundamental for the economic potential of Croatia. We have a substantial number of modern olive oil factories that have implemented new technologies. Furthermore, olive growing results in significant revenue, which is independent of tourism and over 45,000 households are involved in olive oil production. Over 95% of olive trees are owned by farms. The average olive grower cultivates 112 olive
trees and uses 50 litres of oil”, highlighted Gordana Dragun, Director of the Zadar-based subsidiary of the National Agricultural Advisory Service. She believes that substantial effort is fundamental in the near future to enhance the recognition of Croatian olive oil and hence she pointed out the importance of absorption of EU funding. The olive harvest was marked by lower yields in 2013 as a result of adverse weather conditions and the damage due to pests, primarily moths and the weevil, Rhynchites cribripennis. Nevertheless, Istria saw olive harvest yields almost on a par with 2012. However, it has to be stressed that in 2012 olive harvest yields plummeted between 40% and 50% over 2011, primarily due to a significant damage caused by this weevil. In 2013, lower olive harvest yields in Zadar County were primarily due to the damage caused by Rhynchites cribripennis with the exception of yields in
the hinterland where the pest was not distributed and hence yields were excellent. Rhynchites cribripennis also invaded and ruined the harvest in Primorje-Gorski Kotar County where olive yields stood at only 10% of those expected. Moreover, damage was caused by a severe drought on some of the islands in the Zadar archipelago, which resulted in premature fruit drop. In Šibenik-Knin County olive yields were satisfactory, but in Split-Dalmatia County they saw a 30% drop in relation to the previous year due to pests – primarily moths and Rhynchites cribripennis. Dubrovnik-Neretva County was faced with adverse weather conditions and pests, primarily olive fruit fly that caused poor olive yields compared with those of 2012, which were excellent. Nevertheless, severe summer droughts did not cause any significant damage in this region and the fruit was of excellent quality. Consequently, in 2012,
www.privredni.hr Business & Finance Weekly
9
( 31,900 hectares of land under organic farming
of Croatia
nticipate a 30% surge in olive oil prices with
Korčula saw the best olive fruit yields in the last 10 years. Organic production Olives are ideal for organic farming and hence several countries have been recognised as organic producers primarily due to olive growing. The organic product market in the European Union is worth €21.5 billion; the largest organic markets are Germany, worth €6.6 billion and France whose annual value is €3.8 billion. The most significant markets according to the total value of organic agricultural produc-
Lordan Ljubenkov
tion is Denmark, Austria and Switzerland with market shares of 5% or more and, with the addition to Luxemburg, these are simultaneously the countries with the highest consumption of organic products per person. Organic product consumption in the new EU member states stands at below 1%. Nevertheless, they are witnessing a substantial increase in organic agricultural land. “The Action plan for the development of organic farming in Croatia from 2011 to 2016 anticipates an increase in the share of organic products to 8%”, stated
Gordana Dragun
Darija Musulin
Darija Musulin, Head of Department for Organic and Integrated Production at the Ministry of Agriculture. “There are several measures, ranging from a boost in the availability of information and more vigorous promotion, encouragement of organic product purchases to meet the needs of schools and kindergartens, through the organisation of organic product fairs, to the foundation of a local gene bank”, she pointed out. In her opinion, Croatia has immense potential, primarily due to organic production and olive oil production. Moreover, she highlighted that the general public health nutrition issue is one of the major issues, since even some olive oil originating from EU member states is of dubious quality and is still being imported. “Stronger protection of organic producers by authorised institutions is fundamental through higher incentives, joint assistance in both production and through joint appearance in the market. Funding for organic production needs to exceed 4% in accordance with the Rural Development Programme of Croatia, for the period 2014 to 2020”, stressed Darija Musulin. There are multiple benefits of organic production; it contrib-
Radoslav Bobanović
utes to sustainable development, reduces the exploitation of resources, promotes the production of healthy food, significantly contributes to health conservation, enhances the stability of agricultural land, and primarily assists environmental protection. In addition, the product origin is clearly stated, which significantly contributes to an increase in consumer confidence and indirectly also to revenue growth, a rise in employment and a significant improvement in the quality of life in rural areas. In 2012, Croatia saw 1,528 organic producers cultivating 31,900 hectares, or 2.45% of land available. In mid-2013, according to the Organic Production Register, the number of organic producers increased to 1,864. According to data available, over the last five years the area of agricultural land under organic production has tripled. Darija Musulin pointed out the fact that an insufficiency of agricultural raw materials from organic production is one of the major issues in organic farming. She explained that the planned funding according to the Rural Development Programme 20142020 for launching organic production stands at €1,065, which significantly exceeds the €881.78 allocated to organic farmers thus far – implying a 46% increase in funding for them. “Organic production can be subsidised from regional and local government budgets under their development programmes. Consequently, Koprivnica will subsidise organic farming at €130 per hectare of area under organic farming during the period 2013 to 2015”, pointed out Musulin.
10
Privredni vj vjesnik Year VII No 236
( $109 million
value of fresh fish exports during the first 11 months in 2013
FISHERIES
Figures show upward tre farming and fish process
There has been a substantial surplus in fish farming and fish catches for a number of years, yet together with the rel there is demand for high quality products, as well as in tourism Krešimir Sočković uring the first 11 months in 2013 the value of fresh fish exports stood at $109 million, although over the same period $78 million was spent on fresh fish imports. The value of exported processed fish products stood at $27 million, whilst imports were worth $21 million. Moreover, canned fish exports were valued at $26 million, with canned fish imports being $18 million. During the same period, exports of shellfish and molluscs were worth $500,000 dollars, with imports standing at $2.8 million. During 2012, Croatia saw 62,974 caught tonnes of fish and fish farming produced 6,774 tonnes of fish, which implied a total annual output of 69,748 tonnes, according to statistics provided by the Ministry of Agriculture and the Croatian Chamber of Economy.
D
Increase in funding Over the last several years, total output has risen from 49,000 tonnes in 2008 to more than 55,500 tonnes. Pelagic fish catches accounted for over 80% of total annual catch. Nevertheless, Croatia has thus far not exploited her immense potential for fish farming and shellfish in the Adriatic Sea and in freshwater fish farms that are generally abandoned or unexploited. However, the share of fisheries in the export of food products is still significant and it is one of the few economic sectors showing a surplus in foreign trade.
Wine: quality needs to be exported The grey market for wine is vast and compliance with the laws is the major issue for those involved in this sector, pointed out Ivica Kovačević, President of the Association of Winemakers at the Croatian Chamber of Economy. “Wines in the grey market are generally of poor quality and undermine the reputation of Croatian wines, and that impacts badly on business. We need to create an image of wine at the national level through regional and state branding and consequently the Association of Winemakers at the Croatian Chamber of Economy launched a project entitled Vina Croatia – Vina Mosaica where Croatian wine regions have been divided into mountainous Croatia, Istria and Kvarner, Slavonia and Podunavlje and Dalmatia. Dubravko Ćuk, from Badel 1862 believes that the branding of Croatian wines has seen substantial progress. “Buyers are increasingly visiting Croatian stands at international fairs and we have created a positive image which needs to be further developed”, pointed out Ćuk.
France has currently 980,000 hectares of commercial vineyards, whilst in Croatia between 18,000 and 29,000 hectares are commercial vineyards, depending on the information source. Annual wine production in Croatia stands at around 1.4 million hectolitres. The quantity of wine in regulated trade stands at 530,000 hectolitres and it can be assumed that the remaining wine produced is traded on the grey market. Croatia cannot compete on the European or the global market with the quantity of wine produced, yet she is highly competitive concerning the quality of her wine. Nevertheless, the quality needs to be presented appropriately, as presentation is a constituent part of systematic and continuous branding, according to Darko Petrović from the Bibich winery whose annual production is about 150,000 bottles of 0.7 litre and it is primarily export-oriented. “Wine vision is fundamental, as well as raising awareness on the importance of organisation and clustering amongst wine producers”, opined Petrović.
www.privredni.hr Business & Finance Weekly
11
( $78 million
spent on fresh fish imports over the same period
nds in fish ing
lated activities their share of GDP is insignificant. Both areas have high growth potential on the EU market where Croatia imports significant quantities of low-value fish products (herring for tuna fish farming) and simultaneously exports highvalue fish products. Consequently, 99% of fresh farmed-raised or freshly landed tuna is exported to the Japanese market. EU funding is fundamental for further development of the fisheries sector. In 2013, the EU allocated €8.7 million to the Croatian fisheries sector, whilst for 2014 funding has increased to reach €20 million and in 2015 it is anticipated to reach €26 million. According to estimates, the share of fisheries in the Croatian GDP currently varies between 0.2% and 0.7%. Nevertheless, those involved in this sector point out that the impact and the share of fisheries need to be considered through the share of all business activities related to the sector. Fishermen believe that the construction and maintenance of vessels, the production of tools and equipment, transportation, warehousing and logistics, port activities in connection with fisheries and several aspects of tourism closely connected to fishing, all need to be considered. Moreover, they believe it is crucial to highlight the importance of supply to the public with high quality fresh food, the share of fisheries in foreign trade balance, as well as the interest of employment on the Adriatic coast and on the islands where fisheries are one of the principal activities generating revenue throughout the year. In the scenario where all previously mentioned activities were included in the fisheries sector,
the share of fisheries in national GDP would exceed 1%. During the last decade, the number of fishing vessels has seen a substantial increase due to the support programme implemented between 2005 and 2009. Following Croatian accession to the European Union the fleet register has seen 3,500 new vessels entered from the previous category of personal fishing. Increase in fish consumption An increase in domestic consumption of fish is vital for the growth of the fisheries sector. Consumption of fish per person is 8.5 kilos, about half the average of the European Union. Furthermore, of these 8.5 kilos the
Our sea resembles term deposits, as the principal remains unchanged and one can benefit from the interest if one acts wisely share of the highest quality saltwater fish is about half a kilo, as stated by Dražen Knežević from the Croatian Food Agency. “The potential needs to be fully exploited, primarily since Croatian waters – both sea and fresh – are of the highest quality both in Europe and globally”, pointed out Knežević. Milan Božić, President of the Fisheries Department at the Croatian Chamber of Economy emphasised that fish demand in Eu-
rope is rising continuously, and it currently cannot be met through its own resources. “Annual fish consumption in the EU is 13.6 million tonnes, but EU member states currently produce only 35% of fish to meet the demand”, highlighted Božić. “Before 1990 Croatia used to produce 12,000 tonnes of carp mainly through fish farming, whereas now total production of fish, both saltwater and fresh water, stands at around 13,900 tonnes. We are planning to exploit the full potential by 2020 and increase production to reach around 50,000 tonnes of fish. Kristina Mišov Jelavić, of Pelagos Net, an expert in mariculture and tuna farming, pointed out that around 7,500 tonnes of tuna can be produced in installed capacities. “Tuna farming is costeffective and we have seen a surplus for years, with 99% of our farm-raised tuna being exported to Japan”, she noted. Quota alterations anticipated Croatian fishermen opting for tuna catching will express their delight at the news that by the end of 2014 it is anticipated that the quota for the catching of small tuna for farming will see an increase. Croatian tuna farms obtain their tuna fish primarily through this source. The current quota stands at 390 tonnes, and that substantially restricts tuna farming, as well as the sale of pelagic fish whose catch total ranges around 25,000 to 30,000 tonnes. Half of this fish is used for the fattening process, and
only 5% is sold as fresh fish on the market with the remainder is processed in factories. “Unless the quotas are altered, we will not be able to increase output. Tuna quantities are sufficient and it often causes significant damage to fishermen through damage to nets and still their catch is restricted”, stressed Kristina Mišov Jelavić. Petar Baranović, Head of the National Fishery Management Council, stressed that the current situation is the result of several causes. “The 1990’s saw an incorrect kuna exchange rate which subsequently adversely affected overall production in Croatia. We encountered problems with processing, as we were left with only four fish processing factories of which only two have been operating viably. Consequently, the issue of survival needs to be addressed, as it accounts for between 60% and 70% of fishing. The reversal of negative trends is imperative. Our sea resembles term deposits, as the principal remains unchanged and one can benefit from the interest if one acts wisely”, stated Baranović. Fish consumption can also rise through sales in tourism. “We need to use our best efforts to enhance the survival of this activity that has been fundamental for thousands of years. Fishermen and wine producers need to exploit the vast tourism potential. We have been focusing merely on meeting the basics. Dried figs, olive oil, wine and brandy are imported into Croatia and in my opinion this is tragic”, concluded Baranović.
12
Privredni vjesnik Year VII No 236
TRENDS IN INDUSTRIAL PRODUCTION
Too early for euphoria Two months of consecutive growth (2.2% in January and 1.6% in February) is encouraging since the last time this level of growth was seen was 30 months ago, but it is too early for optimism Igor Vukić ndustrial production in Croatia has grown for the second consecutive month. It was 1.6% higher in February in relation to the same month of 2013 and in January the growth rate was 2.2% on a year-on-year level. According to data provided by the Central Bureau for Statistics, in February the production of durable products for mass consumption increased by 5.6% over 2013. Non-durables for mass consumption increased 2.6% and there were no significant changes in the energy sector, but the production of intermediary products and capital products reduced by 1.3% and 0.4%. Industrial production growth for two consecutive months was last recorded 30 months ago (June and July 2011). During this period, Croatian statistics also recorded two consecutive quarters of GDP growth. Data on industrial production growth from the beginning of the year lead to discussions on whether this was the start of a
I
new trend or simply statistical variations without any longterm effects. For example, Raiffeisen Bank analysts say Croatia must wait a little longer to give solid assessments on production growth. For the rest of the year, weak local demand, the restructuring of the larger companies and weaker foreign demand will
remain the limiting factors for any recovery of industrial production, according to RBA analysts. Outlook not before summer The positive effects of the period are on the other side: industrial production over the past couple of years has been more than a little weak, which is why a mild re-
covery or return to normal recession levels seems more intensive. Therefore, analyst Zdeslav Šantić from Splitska banka says we should wait until July to make an accurate assessment of whether industrial production is at its peak, and then we will see whether a true recovery has begun. In any case, the level of industrial production during the first quarter has the least effect on annual results, Šantić notes. According to Šantić, economic activity will be influenced by the pace of implementing numerous pre-bankruptcy settlements. Moreover, for the past year, Croatian industrial companies have been exposed to stronger EU competition. Hrvoje Stojić from Hypo Bank highlights that many companies are settling their debts, and weighing the expenditure of financing new investment. Croatian industrial production saw a decrease higher than the average of SEE countries. Local demand is weak, and only a recovery on the markets to which Croatia exports the most could give a positive impulse.
START OF WATER MANAGEMENT PROJECTS
Osijek and Poreč - first structural fund projects Contracts on co-funding and allocating non-repayable funds for water management projects in Osijek and Poreč were signed in the Ministry of Agriculture These two projects are worth almost €140 million in total. Government Vice-President Branko Grčić, highlighted that this amount is one third of total structural funds intended for the development of Croatia’s water management system. Osijek and Poreč will be the first two projects, opening the doors to many other EU funded projects, added Grčić. Agricultural Minister, Tihomir Jakovina, noted that
these projects would contribute to achieving the strategic goals of water management set as a result of EU membership. The project in Osijek is worth €72.5 million, and the surrounding area in addition to the city of Osijek, with the EU funding 73% of the project (€53 million). The purpose is to improve the water supply and drainage system as well as purify waste water in the area having around 135,000 people.
The project in Poreč is worth €67.2 million. In addition to Poreč, the project will encompass Funtana, Tar-Vabriga and Vrsar, and the EU will fund 74% of the project (€50 million). As well as the 24,000 people living in the area, the new water supply system will serve the needs of the threefold number of tourists or 100,000 people in total. The deadline for both projects is set for the end of 2016. (D.Ž.)
www.privredni.hr Business usiness & Finance Weekly
13
( Kronprinsessan Ingrid built in Denmark in 1936
BOTEL MARINA
FIRST SHIP – HOTEL ON THE MEDITERRANEAN Although North Europe has many hotels, for now it seems that Croatia is the only enthusiast on the Adriatic and the Mediterranean, since ‘botels’ like the Marina do not exist Marin Rončević
of project, Kušeta opined.
n 2005, when Marina, the oldest passenger boat in the world with a sailing license, lost its right to sail, her owner at the time, Lošinjska plovidba, decided not to venture into a new investment so that Marina could continue sailing. Moreover, they decided the ship would be sold for scrap, which the company Arhipelag recognised as an opportunity to save a symbol from destruction. This company decided to buy the ship and invest in it, which resulted in today’s unusual tourist offer on the Adriatic– a boat/hotel – ‘botel’. Although North Europe has many hotels, for now it seems Croatia is the only enthusiast on the Adriatic since ‘botels’ like Marina do not exist, General Manager of Marina Andrej Kušeta highlights. I believe other entrepreneurs will soon recognise the great opportunities offered by older ships no longer adequate for sailing, but definitely adequate for offering accommodation. We are convinced Croatian tourism could become distinctive for this type
Strict criteria and unique solutions The renovation and conversion of Marina into a ‘botel’ is the work of architect, Igor Kušeta. He and his colleagues completed the whole project – from documentation drafting to supervising the execution. “I must point out the project was extremely complex. We had to meet many extremely strict criteria, harmonise with existing regulations on categorisation, and the most difficult to meet the strict norms required by the Croatian Ship Registry
I
relating to using ships for this purpose. In fact, an entire series of innovative solutions was used in the project. These solutions could not have been copied from anyone since Botel Marina is the first ‘botel’ in Croatia, Andrej Kušeta notes. According to the regulations, Botel Marina is categorised as a hostel, even though it offers the minimum of hostel-type accommodation. Today Marina offers single bed, two, three and four bedded rooms, as well as multiple bed hostel rooms. Each room has an en suite bathroom, air conditioning (heating and cooling)
Danish Princess Ingrid – the ships godmother Marina was built in 1936 in the Danish shipyard at Frederikshavn. She was named Kronprinsessan Ingrid after the Princess who was also the ship’s godmother. During World War II, the ship did not sail and was converted into a nursery and shop. Immediately after the war, it transported prisoners from German war camps to freedom. From 1995 to 1963, the ship carried the name Christofer Polhem. During this period, she sailed in northern seas. After being sold to the shipping company Stockholms Rederi Ab Svea in 1963, it was named Marina and sailed on the Stockholm – Mariehamn route. Lošinjska plovidba bought Marina in 1969 and owned it until 2006, during which time it connected the Dalmatia, islands, Istria and Italy.
Andrej Kušeta, General Manager of Marina
and Wi-Fi. Prices range from €13 for multiple bedded rooms to €46 for a double bedded room, for example”. Increasing interest Since the accommodation partly opened in November 2013, we did not have huge expectations during the first couple of months, but I must admit we were pleasantly surprised”, Kušeta says. The number of visitors increased month by month, and what it is even more interesting is that the period of stays are longer compared with the first couple of months. Furthermore, the forecast for the forthcoming season is excellent and we are eager to welcome even more visitors, Kušeta states.
14
Privredni vjesnik Year VII No 236
a company is certainly one of the greatest adventures one can “ Managing experience and it implies a winding road full of ups and downs. ” Antonio Perić-Mažar, Locastic
LAUNCHING AN ICT START-UP
Realism after initial
In addition to finding employment in state-owned or private companies, young ICT professionals with a business idea Boris Odorčić oung people are currently showing increasingly less interest in engineering jobs. Consequently, it is estimated that by the end of 2015, the European Union will need 900,000 ICT professionals. Hence, the Croatian Independent Software Exporters Association has organised several lectures held by prominent Croatian entrepreneurs in the ICT sector under its e-Skills for Jobs initiative on how to achieve a career in ICT or recognise an opportunity for launching an ICT start-up, to encourage young people to opt for a career in the ICT sector. In addition to finding employment in state-owned or private companies, young ICT professionals with a business idea have ample opportunities for launching a start-up and becoming entrepreneurs. Notwithstanding the recession, ICT has achieved a 78% exports growth during the last 5 years. Moreover, nett salaries in the sector significantly exceed the average.
Y
Coherence and persistence Milan Puvača, owner of the Osijek-based company Ofir, stated that the feelings one experiences during the creation of a project are very similar to the initial infatuation in a new love relationship. “Following a period of passion, research and cognition, sooner or later one needs to tackle the issue of a serious approach and the achievement of a relationship or implementation of a project. Irrespective of the time frame, one has to make a decision and be fully aware of potential consequences”, he emphasised. Amongst a large number of ob-
stacles during the launch of an ICT start-up, he highlighted risk and the requirement for an extremely high level of coherence and persistence. “Specific leadership skills required for managing a start-up can be successfully acquired. However, preparedness to create and implement one’s own business vision is essential for success”, he reiterated. “Against the backdrop of global competition primarily in the ICT sector, fear of the theft of ideas is the real business risk one must be prepared to face. During the creation of an idea one must be aware that it is highly plausible
Fully formed ideas which are implemented and sold following quality preparation, passion and expertise will always find their way to a potential customer someone somewhere has already created and implemented it more successfully on another market. Nevertheless, fully formed ideas which are implemented and sold following quality preparation, passion and expertise will always find their way to a potential customer”, believes Puvača. Mateo Perak, co-founder of the Split-based company Profico, believes that if one has a quality business vision or a good business idea but is not capable of implementation, one needs to search for a partner equipped with these skills. “Most global most successful ICT companies have resulted from partnerships between business and technological talents”, he stressed.
According to him, some ideas can be implemented without substantial funding. In case of a requirement for substantial funding, one can resort to co-financing by investors such as business angels. If the idea is of a broader public interest, one might opt for crowdfunding during the initial period when banks are very averse to taking a risk. Banks are resorted to once the project is well-established. Perak believes that an idea can hardly be sold unless it has been shaped into a specific product. “It is only then that it will be appreciated and valued in most cases. The value of an idea in itself is minimal. The real value is in the
team that will create a product from an idea and sell it on the market“, according to Perak. Moreover, he believes that fear of the theft of an idea in the software industry is virtually unjustified. “ICT ideas are most commonly a logical sequence of general technological requirements and are thus a challenge to patent. If that were not so, we would end up with a single operating system, only one text or a processor. On the other hand, revolutionary ideas created by revolutionaries and visionaries are far ahead of the competition and who are not concerned about theft. They look ahead and the “thieves” always lag behind”, he explained
www.privredni.hr Business & Finance Weekly
15
value of an idea in itself is minimal. The certain value is in the team m “ The that will create a product from an idea and sell it on the market. ” Mateo Perak, Profico o
infatuation
a have ample opportunities for launching a start-up and becoming entrepreneurs are generally lured abroad by American or European funds”, he explained. According to him, the most common problem during product development is its commercialisation. “Creative individuals providing ideas for various applications are seldom equipped with the skills required for market planning and positioning. Consequently, a team needs to include a person in charge of market strategies and market appearance”, he emphasised.
and pointed out the importance of patience and perseverance and aiming continuously towards the specific objective. Dražen Oreščanin, one of the founders and partners in the Zagreb-based company Poslovna inteligencija (Business Intelligence), also emphasised that an idea needs to be sold only following its implementation, as ideas can hardly be sold. On the other hand, intellectual rights, prototypes or patents can easily be sold. The value of idea in itself is not high. “There are a large number of ideas, and there is a long winding road between the idea and its commercialisation. In cases where the implementa-
tion of an idea requires minimal funding, one can opt for crowdfunding or business angels. Venture capital financing, which is
Formal education is not an imperative, although I sincerely believe it is inevitable, says Antonio Perić-Mažar, Board Member of Locastic not available in Croatia, is the optimum following the initial development phase. Hence, startups which successfully complete the first phase of incubation
Sales competencies Antonio Perić-Mažar, Board Member of the Split-based company Locastic, stressed that nowadays almost anyone can become an ICT entrepreneur. “All you need is a computer, some expertise and you can aim at becoming an entrepreneur. Formal education is not an imperative, although I sincerely believe it is inevitable, as it results in high quality work and an open mind”, he stated. Launching an ICT start-up requires patience, ingenuity and effort to make it stable and successful. “Managing a company is definitely one of the greatest adventures one can experience - it implies a winding road full of ups and downs. Continuous investment in knowledge and skills is fundamental. A successful entrepreneur needs to tackle any obstacles. Sales competencies are also extremely important. Hence, where an entrepreneur lacks sales competencies, they need to hire someone else to accomplish this crucial task”, he highlighted. Consequently, he believes an individual or a company with a business idea and funding avail-
able for its implementation needs to develop a functional prototype, sell it on the market and monitor the subsequent course of events for further planning. “This method reduces the risks and provides an insight into product potential. Moreover, defining methods of commercialisation of the product is vital during the initial phase of the project”, he explained. In addition, in his opinion fear of the theft of ideas is unrealistic, as he believes the value of an idea is not high and hence ideas can hardly be sold. “Nowadays few investors will invest into an idea and it is difficult to assess its value. I believe the times when ideas were sold ended long ago and the commercial value of ideas is insignificant”, he stressed adding that projects are normally launched with extreme enthusiasm and love. “Nevertheless, as soon as one is faced with problems, the enthusiasm wanes and love weakens. Hence the focus on project development is fundamental, as well as on solving problems in their initial phase, as they might become more complex in the future”, he explained adding that a large number of start-up projects has two or more founders. Consequently, their relationships are often damaged due to their poorly defined responsibilities and duties. “I believe clearly defined and assigned roles, responsibilities and stakes in the project itself are critical and need to precede the development phase to avoid huge and unnecessary problems. A clearly defined vision, objectives and perseverance are the keys to a successful project completion and are imperative in a top quality team”, concluded PerićMažar.
16
Privredni vjesnik Year VII No 236
( since 2011
Game of Thrones was filmed in Dubrovnik
AMERICAN SERIES GAME OF THRONES PROMOTES TOURISM IN CROATIA
King’s Landing is ours The series was filmed in Trsteno Arboretum, Minčeta Tower, Fort Bokar, St. Dominic Street, Lokrum Island, Fort Lovrijenac and Gradac Park Sanja Plješa he popular American series Game of Thrones, filmed in Dubrovnik since 2011 when HBO discovered this city, that according to its features responds to the description of King’s Landing described by George R. R. Martin in A Song of Ice and Fire, promotes Dubrovnik as a tourist destination. In 2012 and 2013, the HBO production team and the main cast praised their stay in Dubrovnik. Furthermore, during the past few years the series was filmed in September when Dubrovnik is full of tourists. However, the filming of the series did not disrupt the daily life of the locals and tourists, stated the Tourist Board. One of the reasons why Dubrovnik was selected for King’s Landing is that the producers wanted to show the city at sea surrounded by walls. Known also as Ragusa, the historic maritime republic, the old city of Dubrovnik and its walls as well as other sights are easily identifiable in the series. Aware of the location’s attraction, even the HBO crew gave in and let the tourists and locals watch the filming of some scenes, for example the scene at the Pile Gate, pointed out Jelka Tepšić, Head of Department for Communication Tactics of Dubrovnik’s Tourist Board. She also added
T
that the series was filmed on Fort Bokar last year while tourists were walking around the City Walls, which offer great views of the Fort.
Zicasso Handcrafted Travel organise theme trips to Croatia, as the series was not only filmed in Dubrovnik, but also in the North
Tourists are attracted by the filming locations As to whether the filming of this series increased the number of tourists in Dubrovnik, Jelka Tepšić said that it was impossible to determine how many tourists arrive in Dubrovnik to visit the filming locations. Statistical data monitoring does not recognise the motive behind tourist arrivals, so a survey should be conducted to determine the percentage. Furthermore, it is difficult to deter-
mine from which countries comes the highest number of tourists interested in the filming locations since the series is popular globally, for example in the U.S.A., Great Britain, Spain, France and Scandinavia, Jelka Tepšić pointed out. The series was filmed in Trsteno Arboretum, Minčeta Tower, Fort Bokar, St. Dominic Street, Lokrum Island, Fort Lovrijenac, Gradac Park and the atrium of the Belvedere Hotel near the east gate of the city. The battles in the fourth season were filmed in the Dubrovnik suburban area of Sv. Jakov. In order to attract even more tourist to Dubrovnik, some tour operators, for example
Velebit National Park, the Veli Rat Lighthouse, Trakošćan Castle, Motovun in Istria, Trogir, the Kopački rit Nature Park, the wine cellar in Kutjevo and the Bell Tower of St. Dominus in Split.
quired for applying for EU funding. The Coral Centre will be located in Šare House, which will serve as the gathering point for coral divers.
Themed tourist route through the Neretva valley The first themed tourist route in the Dubrovnik and Neretva region was presented in March covering the Pelješac area. This county and Regional Development Agency of the County of Dubrovnik and Neretva ‘DU-
NEA’ will develop a new themed tourist route project for the area around Neretva. Representatives of the local administration will also participate in the project. More themed tourist routes are also planned for Korčula, Mljet, Lastovo, Primorje and Konavle.
The Old City of Dubrovnik and its walls as well as other sights are easily recognisable in Game of Thrones
::: news Zlarin Coral Croatian Centre Project The recently created Zlarin Coral Croatian Centre Project is valued at some €1.1 million, and will apply for EU structural funds. Tourism Minister, Darko Lorencin, approved a sum of €45,750 for preparing the documentation re-