Subsidies to producers EU prepared compensation to exporters to Russia; new measures to be introduced before the harvest of tangerines
Trade figures During the first six months, Croatian exports increased 13.3% in relation to the same period in 2013
Paulownia and biomass Croatia has four biomass power plants and the use of biomass motivated people to plant paulownia
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Croatian Business & Finance Monthly Established in 1953 Monday / 1st September / 2014 Year VII / No 0239 www.privredni.hr
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pvinternational pv international C R O A T I A N
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PROPERTY TAX TO INCREASE LOCAL GOVERNMENT REVENUE BY €0.20 BILLION
NEW TAXES PLANNED IN 2015 Introduction of 12% interest rate on savings and property tax, as well as the possibility of raising concession fees are amongst planned measures Igor Vukić ollowing amendments in the income tax system, only re-invested income will be exempt from tax, whilst any income retained as subscribed capital will be eligible for taxation. Amendments to the law announced in the measures planned by the government are intended to reduce the budget deficit below the European 3% requirement. The introduction of a 12% interest rate on savings and property tax, as well as the possibility of raising concession fees are amongst the planned measures. According to data provided by the Minister of Finance Boris Lalovac, amended income tax rates would result in €66 million into the state treasury. The estimate has been made based on the total income retained by companies that were exempt from taxation in 2014. The Tax Amendment Act on re-invested income will be passed by the end of 2014 and will come into force from 1st January 2015.
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Building society interest rates exempted Interest rates on savings would be eligible for taxation at the 12%, with the exemption of a
specific amount allowed for issues of social vulnerability. Moreover, building society interest rates will also be exempt, in compliance with the law that will come into force from 1st January 2015. Furthermore, a property tax has been announced yet again for 2015. According to government sources, the property tax is intended to extend the taxation base and introduce a tax based on the principle of fairness, where the value of taxation depends on the value of the property. Simultaneously, there are plans concerning the abolition
of utility fees and tax on holiday homes in 2015. The property tax would increase local government revenue by €0.20 billion. It would be considered as compensation for the provision of services by local government and would represent a base for the financing and reform of the health care system. Hence, government budget expenditures for the financing of local hospitals will be transferred to local budgets. Property tax As has been pointed out in government documentation, the European Union requested an additional presentation of the concrete strategy of property tax implementation. Additional funding
for the financing of the project is imperative in order to implement this measure, as well as the strengthening of co-operation amongst the relevant institutions (ministries, tax administration and local government). The projections on property tax thus far presented only the information provided by tax administration offices. Nevertheless, a comprehensive analysis of methods of assessment of property value on various locations will be fundamental. The government planned to raise concession fees through an increase in concession compensations and coefficients in 2014. Budget revenue will see an increase of €26.5 million through amendments to laws and ordinances, as well as a considerably
Utility fees and tax on holiday homes to be abolished in 2015 more effective payment collection. None of these amendments has been enforced to date and an extension of concessions in the energy sector is also intended to increase revenue. Invitations for bids for new concessions for research and the exploitation of hydrocarbon both offshore and on land.
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( 3,000 tonnes of tangerines exported last year from Croatia to Russia
SUBSIDIES TO FRUIT AND VEGETABLE PRODUCERS HIT T BY RUSSIAN IMPORT BAN
EU prepared for €125 mill compensation to exporters
New measures will be brought into place before the harvest of tangerines, which is important news for Croatian produce Croatian producers of apples, milk, dairy products, fish and meat was also brought up during the Brussels sessions. Meas Igor Vukić he European Commission will provide aid to fruit and vegetable suppliers hit by the export ban to the Russian market. According to information provided by the Croatian Ministry of Agriculture, Croatian exporters to this market may also count on this fund. A total of €125 million will be allocated for the first series of measures. For now, the measures are focused on tomatoes, carrots, cabbage, peppers, cauliflower, cu-
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Suppliers of any returned fruit and vegetables will be compensated for each kilogram of product cumbers, mushrooms, apples, pears, berry fruits (raspberries, blackberries), grapes and kiwi. According to the EC assessment, these products are at special risk since they are at the stage of early or peak harvest. Furthermore, an alternative market, outside the EU, does not exist for these fruits and vegetables. For citrus fruit, which mature later and include tangerines, the measures will be introduced prior to the harvest. According to the Deputy Minister of Agriculture, Zvjezdana Blažić, in addition to tangerines, the request for protecting Croatian producers of apples, milk, dairy products, fish and meat was also brought up during the Brussels sessions. Measures for compensation in these activities are also expected.
Donation of fruit The agreed measures for fruit production include taking products off the market and donating them to charities and institutions, schools, hospitals, retirement homes and penitentiaries. The suppliers of returned fruit and vegetables will be compensated for each kilogram of product, with a possibility of additional aid for sorting and packing costs as well as transport to the receiver of aid. Then there is also the green harvest measure, the harvest of nonmatured products before technological maturity steps in. The non-harvest concept was also included, where in fact products covered within the framework of a normal production cycle, are not sold. The producers who opt for green harvest and non-harvest will be entitled to financial compensation per hectare of fruit and vegetables. Every producer of fruit and vegetables in the EU is eligible to receive subsidies, as well as members of producer organisations and independent producers. They can apply voluntarily, and the producer or the producer organisation decides about using the measures, depending on whether the financial compensation is acceptable. The Croatian Chamber of Economy warned Croatian entrepreneurs about illegal attempts to avoid sanctions. The issued statement contains a warning about attempts to avoid the sanction regime by exporting via Serbia. The CCE regards these statements may confuse Croatian producers, and finally,
Export of high-processed products at greatest risk The CCE evaluates the sanction package that the Russian Federation has responded with to the EU and USA sanction regime, will put at risk around 1.5% of total Croatian exports of agricultural and food products ($20-25 million). This information is based on data covering foreign trade between Croatia and Russia during the immediate past. However, this sanction package could cause more serious problems for individual exporters, especially for companies whose exports to the Russian Federation are an important part of their production. Since the structure of exports to Russia mainly includes high-processed products (Custom Duty Chapter 21 – Various processed products), these products could experience the most severe negative consequences concerning exports. Russia is the second most important export market for EU agricultural and food products, with a 10% share. EU food exports to the Russian market grow yearly. During the past ten years it has increased from €4 billion to almost €12 billion. The EU mainly exports products with added value, like fruit and vegetables (15% share), cheese (8%), spirits and vermouth (11%), pork (8%). Food imports from Russia to the EU are considerably lower, totalling around €1.7 billion, including mainly raw material or products at a lower processing phase (oil, oleaginous plants, and leather).
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( 638 tonnes of apples
WWW.INVESTINCROATIA.HR
sales per year
ion for s to Russia
rs. In addition to tangerines, the request for protecting sures for compensation for these activities are also expected
cause greater damage that the sanctions themselves, not only for individual companies but also for the entire Croatian economy. Sanctions are serious It must not be overlooked that international trade is based on the origin of the product, among other things, and in order to obtain any type of privileged treatment in trading which is defined by free trade agreements, it is crucial to acquire local origin status of the goods. Therefore, the mentioned products may be exported from Serbia to the Russian Federation only if Croatian companies have a company founded in Serbia or they founded one in Serbia. Furthermore, the production of the mentioned agricultural and food products or raw mate-
rials has to be performed mainly on Serbian territory. The Free Trade Agreement between Serbia and Russia, which enables the privileged export of Serbian products to Russia, is almost identical to all other free trade agreements concerning the rules for product origin. Therefore, to achieve preferential export conditions to Russia, the product has to be exclusively of Serbian origin. Packaging, wrapping, package rearrangement or changing does not guarantee the status of a product within its origin. Since the country of origin has to be indicated on the customs declaration, the Russian customs service has already announced rigorous inspections with the goal of preventing anyone attempting to falsify customs documents. It is also expected that Serbia will introduce stricter inspections, especially considering the recent situation when Russia limited the export of pork when an exporter in Serbia tried to export meat previously imported from Spain and Croatia, according to the statement given by the CCE. Independently to EU buyers In 2013, around 3,000 tonnes (around US$2 million) of tangerines were exported from Croatia to Russia. In the first quarter of this year, a total of 638 tonnes of apples was exported (US$575,000). Tangerine producers announced they would try to find new buyers in the EU market independently. However, any product surplus that will occur on this market will probably cause a sharp decline in price.
How and where to invest The CCE Investment Centre developed website www. investincroatia.hr, has the goal of providing more succinct communication to potential investors, promoting Croatia as a desirable investment country and consolidating all information required when making decisions about investing in Croatia. The site contains all the necessary information on investment options, projects, locations, economic indicators, subsidies, business costs, tax system, business methods and legislation behind
investing and other business activities. The internet site is another activity within the framework of other CCE activities for promoting the Croatian economy and simplifying access to information for potential investors and foreign partners, CCE President Luka Barilović promotes. He also added that since the Investment Centre presented its Investment Project Database, they have received around 70 queries and held over 30 presentations in Croatia and globally, which clearly shows investor interest in Croatia. (B.O.)
A LINK BETWEEN ENTREPRENEURS AND THE SCIENTIFIC COMMUNITY
The Pannonian Competence Centre for Wood The project “Pannonian Competence Centre for Wood” has recently been presented in Virovitica as one of the first projects to be implemented through European Union Structural Funding. The Centre will provide services to small and medium-sized entrepreneurs involved in the wood-processing sector both in Croatia and throughout the region, covering all development aspects of end products from wood, or products with higher value-added with an emphasis on innovation. The total project value is €5.9 million and 99% of the value will be financed through EU Structural Funding, whilst ViroviticaPodravina County will provide the financing for the remaining 1%. In addition, ViroviticaPodravina County is simultaneously the project holder and its project partners are VIDRA – Regional Development Agency for the Virovitica-Podravina County, Ruđer Bošković Institute and the Zagreb-based Faculty of Forestry.
The Pannonian Competence Centre for Wood will be constructed in the Virovitica-based Entrepreneurial Zone II, employing 6 university degree holders. The planned duration of the project implementation is 24 months. In addition to research and development of wood-based products and ancillary industries, the Centre will provide technology transfer services, the creation of prototypes of innovative wood-based products, product design services, packaging design, as well as business consultancy services and brand creation. Moreover, the Centre will be a link between entrepreneurs and the scientific community. (K.S.)
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Privredni vjesnik Year VII No 239
( €4.94 billion
( €8.4 billion
exports over the first 6 months
imports for the same period
TRADE FIGURES FOR THE FIRST SIX MONTHS
Positive exports in June show slight acceleration During the first six months, Croatian exports increased 13.3% in relation to the same period in 2013 Igor Vukić uring the first six months, Croatian exports increased 13.3% over the same period of 2013, according to preliminary results provided by the Central Bureau for Statistics (DZS). Total exports reached €4.94 billion.
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New methodology Exports to other EU countries increased €0.5 billion to a total of €3.19 billion (18% growth). Exports to non-EU countries grew at a rate of 5.5%, reaching €1.76 billion. The growth trend for the first half of the year continues to increase, according to first results provided by DZS. The trend showed a slight acceleration, as it stood at 12.9% during the first five months. During the first six months, imports increased 3.7%, reaching €8.4 billion. Import / export coverage was 58.8%; imports were €3.4 billion higher than exports, and over the first six months of 2013 this difference was €3.7 billion. Analysts partly attribute export
growth to a new statistical methodology that was introduced when Croatia joined the EU. Data on trade are now obtained from two sources. One is the Intrastat system for collecting trade statistics between EU member countries, and the other source refers to standardised customs declarations for trade statistics with nonEU countries. For the first time, these forms include shipments of low value, which contributed to any export increase. Sharp increase in clothing exports For some sectors, statistics are available only for the first five
months. During this period exports in the agricultural and forestry sector increased 36% (to €0.18 billion). The Processing industry exported 9% more, rising to 26.8%. Significant growth within this sector was achieved by the export of wood and wood products (39%), reaching €0.21billion. The production of clothing also saw high growth (65%), and a total of €0.24 billion worth of clothes was exported. Exports of chemicals and chemical products also increased (21% to a total of €0.24 billion). Export growth was also seen in the production of metal (14.1%),
Exports to CEFTA continues to grow During the first five months of this year, a total of €0.78 billion was exported to CEFTA countries (13.8% growth). The surplus with CEFTA increased slightly since imports from this group decreased 7%, to €0.37 billion. Exports to Bosnia and Herzegovina reached €0.46 billion (7.6% growth), and to Serbia up 40.3%, to €0.2 billion. Positive results were also seen from the largest Croatian markets. Exports to Italy are growing again, and over the first six months, they rose 22.8%, reaching €0.6 billion. Exports to Germany reached €0.46 billion (12.6% growth), to Slovenia, up 33% to €0.5 billion and Hungary increasing from €82.3 million to €124.9 million.
leather (19.5%), paper (35%), computers, electronic and optical products (43.6%), motor vehicles, trailers and semi-trailers (23.7%). The export of furniture reached €0.13 billion during the first five months compared with being 33% lower during the same period of 2013.
Growth trend for the first half of the year shows an increase, according to first results provided by DZS Such a level of growth compensated for a lower export of ships (70% decrease). Last year, this sector registered €0.19 billion value of exports, compared with just €56 million this year. Exports of pharmaceutical products also decreased during the first five months of this year (from €0.18 billion to €0.15 billion). In September, DZS will publish a more detailed analysis of exports for the first six months of this year.
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( 20th anniversary Energy Institute Hrvoje Požar
( 50% of activities for foreign clients
INTERVIEW: GORAN GRANIĆ, DIRECTOR OF THE ENERGY INSTITUTE HRVOJE POŽAR
A PRICE FOR SECURITY Delays in the development of the new energy strategy are having an adverse impact on Croatia becoming an active player as well as the need to buy-in external expertise and technology Boris Odorčić he Energy Institute Hrvoje Požar has recently marked its 20th anniversary. Goran Granić, Director of EIHP, noted utmost satisfaction with several achievements over that period, although there is definitely room for improvement. He pointed out that the Institute was founded in order to provide professional and scientific expertise to state and local authorities, as well as to the energy sector. Consequently, he believes that EIHP might have had a more significant impact on the creation and development of some specific ideas of energy policy, as the success of any policy is narrowly correlated with the quality of implementation documentation.
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What does EIHP currently represent? The Institute is a state-owned scientific institution, employing 75 staff, with business activities in Croatia, throughout the region, the EU, former USSR countries and the Mediterranean. Foreign clients – energy companies, foreign governments, as well as financial and international institutions - account for over 50% of our5 business activities. Furthermore, the Institute is a wellknown brand in those countries, and our principal objective is the continuous improvement in the quality of our work. How does EIHP rank compared with countries in the region and the EU? The energy sector assessment comprises of several aspects. It used to be stable and with affordable prices. Nevertheless, the energy sector is currently in transition and implementing the Eu-
ropean Acquis Communautaire at a slow pace. On the one hand, it is increasingly effective; on the other the consumption of natural gas, oil derivatives and electricity has seen a steady decrease for
The energy sector is currently in transition and implementing the European Acquis Communautaire continues at a slow pace over five years, partly as a consequence of the financial crisis, yet also due to technological development permeating through the entire cycle from production to energy consumption. How can Croatia achieve full energy self-sufficiency and become a stable and secure country in that respect? Concepts of security and selfsufficiency are often confused. Croatia is inside the European energy market and hence there will always be exports and imports of energy. Potential risks in energy procurement greatly affect security; Croatia needs to continually explore the issue of supply security and in due time make decisions on risk management and security enhancement. There is a price to security and real investment in infrastructure can significantly reduce the supply risks. How does Croatia rank in terms of renewable energy sources? Croatia has started implementing a
renewable energy policy and I am extremely satisfied with the results achieved to date. Both the EU and thus Croatia as well, need to redefine the entire concept of climate protection and reduction of CO2 emissions, as well as focus on the promotion of measures for energy efficiency, renewable sources, transportation and technological advancement. We advocate the abandonment of the current model of fund raising and incentives through the introduction of a special tax and compensation for CO2 emissions, as well as through the promotion of investment measures. Is there potential in the Croatian economy to provide the relevant technologies to develop her energy sector? The preparation of a new energy development strategy is imperative by 2050. Over the forthcoming decades, the development of the energy sector will occur by new technological and climate platforms, which can imply vast potential for the development of Croatia.
Delays in the development of a new energy strategy adversely affect Croatian prospects to become an active player and places her at a disadvantage - a user and buyer of someone else’s expertise and equipment. Finally, what is your opinion on the LNG terminal, the Ionian-Adriatic Pipeline and the construction of the second reactor at the Krško Nuclear Power Plant? What is the potential of these projects? These are important projects, although their impact has been greatly overstated. They are primarily economic and partly energy projects, concerning their impact on the Croatian energy sector. Over the next 40 years CO2 emissions will be fundamental for the development of the energy sector throughout the EU and obviously also in Croatia. Should the EU commit to reduce CO2 emissions by 80% by 2050 throughout the energy sector and by 95% in the electricity sector, the dynamics of change will also encompass the gas sector. Notwithstanding the fact that gas is more acceptable compared with other fossil fuels, it is unacceptable in terms of emissions. I believe it can be predicted that 2050 will see the disappearance of gas combustion devices and gas will be used primarily in electricity production with CO2 capture and storage and partly in transportation.
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Privredni Pr P riivvrreedn dni vj vjesnik je Year VII No Y Ye eaarr V II N II o 239
2013 - EXCESSIVE FROST, 2014 - EXCESSIVE RAINFALL
Tobacco at the whimsical mercy of the weather Excessive rainfall will have a negative impact on yields but 2,200 kg per hectare or a total of 8,600 tonnes of tobacco are expected Goran Gazdek ollowing adverse climatic conditions of 2013 due to an exceptionally early frost, in 2014 tobacco producers are faced with extremely wet weather, which will certainly have a knock-on effect on both the quality and the yield for this year’s harvest. Nevertheless, 2,200 kg per hectare are expected (or a total of 8,600 tonnes) as a result of ongoing investment into production and profitability, as pointed out during the Tobacco Fields Days, a two-day event organised by the Croatian Tobacco company, and held in Virovitica. The event brought together some 100 tobacco producers and around 30 business partners from Croatia, Bosnia and Herzegovina, Serbia, Bulgaria, Italy, Hungary, Holland, Germany, Poland and the US and Singapore. This year’s production at the Croatian tobacco site in Slavonia and Podravina was presented, as well as the results of trial production on fields near Virovitica and Kutje-
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employed in the store
Ikea in Croatia
Market share r and throughou
The investment of the Swedish furniture giant has led to a s quality standards, lower margins, and affordable prices. Dom Krešimir Sočković vo. This year contracted burley tobacco production will cover an area of 3,796 hectares. In order to upgrade production, reduce costs, increase yields and boost quality, Croatian Tobacco invested in the reconstruction of curing capacity for 2014. “Encouraged by extremely satisfactory results achieved by the irrigation project over the last three years, in 2014 we implemented irrigation systems for 105 producers covering 403 hectares, which exceeds 12% of the overall area under tobacco cultivation”, pointed out Zlatko Pleša, the newly-elected Management Board President of Croatian Tobacco.
LIVESTOCK EXHIBITION AT BJELOVAR FAIR
The best livestock from the Croatian breeding programme
The Croatian agricultural agency is organising a state livestock exhibition in cooperation with the central cattle-raising alliances during the Bjelovar-based 22nd International Autumn Fair that will be held from 5th to 7th September.
( 350 staff
The best livestock amongst cows, horses, pigs, sheep and goats from the Croatian breeding programme will be shown, along with traditional original poultry breeds and bee keeping. 552 beef cattle, horses, pigs, sheep, goats, poultry and bees will be exhibited. In addition, 221 breeders will be presented from throughout Croatian counties. The Young Cattle Breeders Cup will be held during the fair for the 8th consecutive year. Young breeders from cattle producing families will also be presented during the competition.
fter 20 years from its first announcement, the Swedish furniture giant Ikea has recently opened its first shopping centre in Croatia and in ex-Yugoslavia. It is located in the Rugvica business zone near Zagreb. The total investment in one of the largest stores of this company is worth over €92.6 million, resulting in the creation of 350 new jobs and a new business infrastructure at the eastern outskirts of Zagreb. Notwithstanding rumours of investment into production in the region and perhaps even in Croatia – a flat-panel system - there are no firm plans concerning this to date. Nevertheless, consumers in both Croatia and neighbouring countries express their utmost satisfaction with substantial price reductions in the furniture sector, one that is normally considered as a market segment with high margins, due to the penetration of this international market player providing high quality for value for money.
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Competitor reaction A significant restructuring and repositioning of the domestic market players preceded the opening of the first Ikea store in Croatia. Emmezeta, a retailer of furniture, electronics and household appliances, has opened its new shopping centre near City Center One East and has announced the opening of new shopping centres in Rijeka, Slavonski Brod and Zagreb Jankomir in the near future.
Emmezeta is a part of the Conforama Group with headquarters in France. In response to Ikea’s 9,500 home furnishing products, Emmezeta has over 15,000 products comprising of furniture, decorations and household equipment, as well as electronics and household appliances, which make it the market leader on the domestic market. The total investment value of Steinhoff International Group, which owns both Conforama and Kika in Croatia, has thus far reached around €150 million. Moreover, in addition to the opening of the new stores, the company has introduced rebranding and thus by the end of 2014 all Kika centres in Croatia will be transformed into Emmezeta centres. The annual turn-
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( over €92.6 million invested in Ikea store in Rugvica
race in Croatia ut the region
ubstantial restructuring in the home furniture and equipment sector in Croatia. Croatian customers will see high mestic producers see Ikea as a major export opportunity Ikea: Striving to be the market leader Our objective during the first year of operation is to reach a turnover of €60 million and see three million customers. It remains to be seen how many of those visiting us will be clients, stated Igor Štefanec, Head of Public Relations at Ikea. “We are aiming to define this market and become the market leader. Notwithstanding our being primarily focused on Zagreb and its outskirts (within 60 minutes drive), we are aware that our clients will come from other areas, as well”, pointed out Štefanec. Furthermore, the company is emphasising the fact that it is open to co-operation with regional manufacturers. “Those aiming to compete need to be aware of the fact that we are not only looking for suppliers for the Zagreb-based Ikea or the Graz-based Ikea, as that would merely imply a narrowly-defined region. We are currently looking for suppliers who can provide quantities which would meet our requirements for the whole of Europe, or those able to meet global requirements”, highlighted Štefanec.
over of Emmezeta in Croatia stands at around €52.9 million. The opening of the Ikea store has caused reactions from other producers and retailers, and resulted in a substantial drop in prices as has been pointed out on promotional leaflets by retailers such as Harvey Norman, Lesnina and Prima. Irrespective of the suspicious stance on this investment assumed by many and the fact that the state invested considerably in the Ikea infrastructure met with severe criticism, local furniture manufacturers enthusiastically welcomed the Swedish company. According to Zdravko Jelčić, President of the Association of Wood Processing Industry at the Croatian Chamber of Economy
and Director of Spin Valis, a large Croatian furniture manufacturer which primarily fo-
According to Zdravko Jelčić, Director of Spin Valis, a 5% increase in exports through Ikea would be worth over $50 million cuses on exports, the opening of the Ikea store will certainly negatively affect some retailers, distributors, as well as small furniture manufacturers in Croatia. “Some jobs will be lost and it is feasible that Ikea’s market share will range between 15% and 20% of the furniture market and
its annual turnover will be some €92.6 million. The opening of the Ikea store is a consequence of Croatia being inside the Single European Market, as well as to the global market”, emphasised Jelčić. The Viroviticabased company, Tvin, is the only domestic furniture manufacturer co-operating with the Swedish company. The store also stocks several products from the Bujebased Feroplast company. Exit to the global market The Croatian Chamber of Economy has thus far contacted and acted as an intermediary during the negotiations between Ikea and domestic manufacturers, and Ikea sources have expressed interest in meeting several Croatian manufacturers during several rounds of negotiations, pointed out Božica Marković, Director of Agriculture, Food Industry and Forestry Department at the Croatian Chamber of Economy. “It has to be highlighted that initiation of co-operation
with Ikea implies penetrating the global market. Several meetings have been held so far and this is a most appropriate time for direct negotiations between manufacturers and Ikea concerning concrete opportunities for co-operation. I believe that Croatian solid wood furniture manufacturers have immense potential. Moreover, there is also potential for manufacturers of plastics, paper or food, as well as for those in logistics interested in this type of work”, stressed Božica Marković. Global trends, as well as those in Ikea, show substantial demand for ecowood furniture, added Jelčić. “We have not concluded any contracts thus far. It has to be pointed out that the value of exports by the Croatian wood processing industry stands at around $1 billion per annum and should we succeeded in boosting our exports through Ikea by only 5%, that co-operation would be worth $50 million”, emphasised Jelčić.
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Privredni vjesnik Year VII No 239
( over 80,000 hybrid paulownia seedlings covering 20 ha in Osijek and Baranja
PAULOWNIA AND BIOMASS
For happiness, a dowry and economy and environment
Croatia has four working biomass power plants, with a total capacity of 7.69 MW: the cogeneration biomass plant Li pellets in Novska. The use of biomass motivated people to plant paulownia, an Asian tree used in the timber industry Boris Odorčić he subject of renewable energy sources immediately brings to mind the free work potential of wind and sun. One of the reasons is certainly their enormous potential, something the economy recognised long ago. However, in addition to wind parks and solar power plants, biomass can also be a key contributor for reaching the goals set by the European energy policies that Croatia also adopted. Furthermore, it can also help create vacancies and employ local industry. According to the newsletter Energy in Croatia 2012, Croatian official energy consumption balance that the Ministry of Economy published in December 2013, energy consumption in 2012 totalled 366.54 PJ, of which 20.88 PJ related to wood and biomass energy, that is, 5.7% of total consumption. Deputy Director of the NorthWest Croatia Regional Energy Agency (REGEA), Velimir Šegon, says Croatia currently mainly uses forest-origin biomass for energy purposes (fuel wood, wood pellets and chaff), while agricultural biomass is mainly unexploited. Biomass can be used for producing electricity and thermal energy as well as solid, liquid and gas biofuels, such as wood pellets, briquettes, biodiesel, biogas and similar. This is why biomass represents a unique renewable energy source since wind, sun and geothermal energy cannot be used for direct petrol production. In Croatia, bi-
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omass is mainly used for producing thermal energy, for heating homes. It is also used by wood processing companies for industrial heating plants, and a small share of biomass is used for producing electricity in cogeneration plants or the production of biofuel, Velimir Šegon explains. Great potential In mid-August, Croatia had four active biomass power plants with total capacity of 7.69 MW. - Lika Energo Eko, Energana Varaždin, Strizivojna Hrast and the production of electricity and household biomass pellets in Novska. According to data provided by the Croatian Energy Market Operator (HROTE) the largest is the cogeneration plant for wood biomass in Strizivojna Hrast, owned by the company of the same name. The capacity of this plant is 3 MW. Concerning the project carrier with whom HROTE signed a contract on purchasing electricity, and whose plants are still out of commission, the current plan is to connect 12 plants. Their total planned capacity is 24.93
Mainly forest-origin biomass is used for energy purposes MW. The plants should be constructed over the next three years. President of the Croatian Asso-
ciation for Energetics, Tomislav Marjanović, and Editorin- Chief of the croenergo.eu
portal says that according to the Strategy for Energy Development, the potential of biomass is contained in wood biomass, agricultural biomass and the cultivation of wood biomass, in addition to biomass obtained from logging as part of the maintenance of water and electric management facilities; according to this Strategy, Croatia is regarded as a country with great biomass potential, Marjanović says. Green certificate trading It is important to highlight a relatively new global trend in biomass production – paulownia seedlings. Paulownia plantations are growing rapidly, whether the
reason is biomass or commercial cultivation, since paulownia is used in the timber industry, construction, shipbuilding as well as the production of furniture and musical instruments. Paulownia can be seen in city parks and is also used for protection against landslides and for forest regeneration. There are several reasons for its popularity. Firstly, paulownia, originating from Asia where it has been cultivated for thousands of years, is the fastest growing tree in the world that is used as timber. After eight years, it produces high-quality timber, more expensive than oak or beech. In some parts of China, paulownia
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years sufficient for paulownia to grow into high-quality tree
d also a greener
ka Energo Eko, Energana Varaždin, Strizivojna Hrast and the production of electricity and household biomass y, construction, ship building as well as in the production of furniture and musical instruments and absorbs ten times more CO2 than other species. For example, Energo Media Servis stated that four acres of paulownia absorbs 13 tonnes of atmospheric CO2 in one year and affects climate changes. Therefore, paulownia is also convenient for green certificate trading. In the County of Osijek and Županja, companies Solarni projekti (Osijek) and VR Enbekon (Zagreb) have recently planted over 80,000 seedlings of Paulownia hybrids (Paulownia OXI, resistant to -20˚ C) covering 20 hectares. This plantation is special since its irrigation system uses water pumps driven by electricity produced from the sun. In other words, a mini-solar power plant of 2.5 kW drives the water pump of 1.8 kW to produce around 100 square metres of water a day. is traditionally planted when a baby girl is born (for happiness and her dowry), and it is cut on her wedding day. Paulownia is also used for making furniture
From diesel to solar Board President of VR Enbekon Marino Franinović, says this is the first professional example of a solar irrigation system in Croatia. According to his thoughts, it
seems almost the entire Croatia could soon switch from diesel pumps to solar irrigation systems. Healthy food from Croatia and green energy are the future in which we are already living. One particular aspect, to which special attention is paid, comes from the Neretva Valley. A pilot project has already started there, and it will soon be in every ar-
would be exploited for the needs of these two companies. The entire project of planting 80,000 seedlings of Paulownia hybrid OXI is fully financed from personal funding and capital of the two companies. The price of one seedling ranges around €2.75. The price of the solar irrigation system, for example with a capacity of 2.5 kW, and the cost
Healthy food from Croatia and green energy is the future we are already living in, Marino Franinović says ticle on the green economy sector, explains Franinović. He also added that the companies Solarni Projekti and VR Enbekon have many plans for Paulownia. Some of these are already a reality. However, they are still classified, Franinović points out. But he did reveal that biomass, that is, Paulownia chaff from the fields in Osijek and Baranja,
of a water pump (1.8 kW), sufficient for 5 hectares, starts at €7,250, depending on the technical requirements. Solar power and its sub-construction do not lie on concrete, but on screw bases, literally screwed into the ground, which is another environmental contribution of these two companies, Franinović concludes.
producing electric and thermal energy) with a total capacity of 13.29 MW. The biggest individual RES plant based on its capacity is the wind power plant Velika Glava, Bubrig and Crni Vrh, owned by the company RP Global Danilo. Its total capacity is 43 MW. A further 338 plants are scheduled for commissioning in the near future. Their
total capacity will be 500.23 MW. According to planned capacity, top will be the 12 wind power plants with a total capacity of 435.20 MW, followed by the 299 solar power plants (25.75 MW), and then the 12 biomass power plants (24.93 MW). The largest plant will be the wind power plant Krš Pađene, owned by the company C.E.M.P., and its planned capacity is 80 MW.
995 RES plants in commission According to data published by HROTE, there were 995 renewable energy source power plants in commission in Croatia in mid-August, which were in the subsidy system. Their capacity totalled 365.38 MW. Based on capacity, the leader is the 15 wind power plants with a total capacity of 297.25 MW, followed by the 953 solar power plants (30.04 MW), five cogeneration plants (for
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Privredni vjesnik Year VII No 239
( 9.5%
tax for foreign coach operators in Slovenia
( 7%
tax for foreign coach operators in France
THE ISSUE OF INTRODUCING VAT ON INTERNATIONAL PASSENGER TRANSPORT THROUGHOUT CROA
Complicated procedures are in relation to high level of VA
Since 31st March 2014, the VAT rate for international passenger transport services by road has been 25%, implying obtaining a VAT ID and an ID number, foreign coach operators need to use a tax consultant. Moreover, they are oblig Jozo Vrdoljak on co-ordination amongst different Croatian Ministries has a significant impact on tax policy. The VAT rate increase for the hospitality and catering industry and tourism from 10% to 13% mainly affected hotel operators and entrepreneurs, as package holidays had already been arranged. The recent implementation of the 25% VAT rate on foreign coach operators (or the issue of international passenger transport by road being subject to VAT), as well as the extremely complex procedure foreign coach operators are required to comply with upon entering Croatia will directly and adversely affect the forthcoming tourist season. Since 31st March 2014, VAT for international passenger transport services by road has stood at 25%, implying fees for services of foreign coach operators of around €1.5 per kilometre, which directly raises the price of package holidays using the services of foreign coach operators in Croatia. It has to be stressed that there is no tax for foreign coach operators in Italy, whilst the tax in Slovenia is 9.5%, in France 7%, in Spain 6%, in Austria 10% and in Germany 19%. The extremely complex and expensive procedure to obtain both a VAT ID number and an ID number that foreign coach operators are required to comply with, due to which they need to resort to tax consultants in the country in which they operate. In Croatia, the procedure costs €250.
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Furthermore, in Croatia foreign coach operators are obliged to submit tax forms to the Tax Administration monthly, irrespective of how often they might operate in Croatia – even if merely once or twice annually, implying additional costs of €50. Simultaneously, transport across other countries is not subject to such charges and the procedure can be implemented online in only several minutes. Negative consequences According to Leila Krešić-Jurić, Director of Tourism Sector at the Croatian Chamber of Economy, the Croatian Chamber of Economy is in on-going contact with members who have been affected by the introduction of VAT on international passenger transport.
According to Capelli, due to this issue, for 2015 Croatia will incur losses of €400 million or lose 4 million overnight stays “The largest number of complaints were received from Istria and Kvarner which primarily rely on coach operators, mainly during the pre-season period, as well as the post-season period. The relevant institutions need to simplify the procedures in the immediate future. Moreover, we need to seriously consider a VAT rate reduction or exemption from VAT on international passenger transport services”, pointed out Krešić-Jurić. She also emphasised that this is-
sue is an extremely complicated one and hence needs to be considered from various standpoints. “The fact that VAT introduction on international passenger transport raised the fares of passenger transport is not the major issue. A much more serious issue is a complex and costly procedure of application of foreign coach operators into the Croatian taxation system with the excessive bureaucracy of Croatian institutions resulting in foreign coach operators opting for other destinations rather than Croatia. On the other hand, tour operators consequently need to raise the prices of package holidays, and due to the fact that foreign coach operators tend to avoid Croatia as their transit or final destination. However, the Croatian
tourism sector, primarily hotel operators, will see the most severe consequences, as during the pre-season and the post-season they need to rely primarily on coach operators”, stressed Leila Krešić-Jurić. Millions lost Gari Capelli, mayor of Mali Lošinj, and President of Tourism Committee of the Croatian Democratic Union, also vehemently stressed the importance of this issue. He stated that VAT on foreign coach operators results in a €400 increase in the tickets of the coach whose final destination is Dalmatia and whose passengers will remain in Croatia for seven days. Subsequently, Croatia will lose almost 200,000 German tourists in 2015 who normally ac-
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( 10%
tax for foreign coach operators in Austria
( 19%
tax for foreign coach operators in Germany
ATIA
a more serious issue AT at 25%
fees for foreign coach operators of around €1.5 per kilometre. Nevertheless, as a result of a complex procedure of gated to submit tax forms to the Tax Administration monthly, irrespective of how often they come to Croatia put forward proposals to be sent to the Ministries of Tourism, Transport and Finance. “According to our findings, a coach operator arriving in Croatia and carrying tourists to Istria, Kvarner or the Croatian Littoral, passing around 200 kilometres after the border crossing, would pay a tax of up to €100, which is €2.5 per passenger, for a seven day stay in Croatia or less than €0.35 daily for 500 kilometres, which covers most of Dalmatia; thus fees of around €250 per person or €0.90 per day. It has to be highlighted that upon entering the Croatian taxation system, foreign coach operators are eligible for a pretax deduction for fuel, road tolls and accompanying services”, as pointed out by the Association sources. count for over 1.5 million overnight stays. “Hence, for instance a Swedish coach whose passenger seating capacity is full, will have to increase its fees per seat by at least €85”, stated the mayor of Rovinj. Due to this decision, according to his estimates, in 2015 Croatia can expect a loss of over 500,000 overnight stays by Austrian tourists during the preseason and post-season. Hence, Capelli highlighted that in 2015 Croatia will lose 4 million overnight stays or €400 million. Capelli also stated that due to this regulation Croatia has seen a 20% to 30% plunge in coach transport to Croatia. Following an exchange of opinions and views, the members of the Croatian Association of Independent Travel Agents (CAITA)
Tourism is not just accommodation According to estimates put forward by the Association, coach operators upon filling a fuel tank
with 500 litres are eligible for a pre-tax deduction of €125 and, should the final destination of the package holiday be located in Dalmatia, they may fill their fuel tanks even more and deduct the pre-tax from road tolls. Consequently, they operate profitably and hence there is no reason for them to raise their fares. “One must bear in mind the fact that foreign coach operators, primarily Slovenian, carry tourists from other countries to Croatia and they have exploited the benefit of not paying taxes in Croatia for a number of years; consequently they were in direct competition with Croatian tourist coach operators and tourist agencies which were automatically more expensive due to Croatian VAT rates”, explained CAITA sources. CAITA sources emphasise that prompt co-ordination between the Ministries of Tourism, Transportation and Finances is fundamental in order to pass legislation that will be based on a compre-
Minister Lorencin: We are co-operating with the Tax Administration on simplifying procedures Tourism Minister, Darko Lorencin, pointed out that last winter the Ministry of Tourism co-operated with Tax Administration on the simplification of the registration procedure and tax registration. “Administrative obstacles have primarily affected small coach operators involved in short one or two-day trips. We have tackled this issue with German coach operators several times thus far and also during the recently held Colognebased RDA fair. We have been provided with an insight into the models adopted by several other countries and have already simplified the procedure with the assistance of the Tax Administration. We are planning to hold a meeting with the Minister of Finance and the Director of Tax Administration in order to discuss the further simplification of the procedure and the feasible tax rate reduction”, announced Tourism Minister Darko Lorencin.
hensive insight into the issue. Association sources reiterated that tourist agencies have not received an explanation by the Tax Administration on the implementation of the special tax procedure, which eventually resulted in considerable confusion. “Tourism is not merely accommodation, food and drinks which
Tourism Minister Darko Lorencin announced forthcoming discussions on procedure simplification and a possible tax rate reduction are eligible for the reduced tax rate of 13%. It also includes excursions, adrenaline parks, rental of bicycles, scooters, deck chairs, parasols, tourist transportation, scuba diving courses, courses of horse riding and tourist guide services, to name a few. Moreover, there are agency services and they are all eligible for 25% VAT. We believe that through the introduction of lower VAT rates on these services, competitiveness would see a substantial upgrade and hence a large number of service providers would exit the grey zone. Subsequently, this would have a positive impact on the VAT revenue from tourism”, as stated in the request signed by Davor Puh, Commissioner for transport at the Croatian Association of Independent Travel Agents.
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Privredni vjesnik Year VII No 239
PHYSICAL PLANNING AND BUILDING ACT
( from 60 to 38 days collective dismissal procedure shortened
AMENDMENTS TO THE LABOUR ACT ADOP
New law, new rules It has to be in our interest for construction companies to register in Croatia, minister Mrak Taritaš highlights Sanja Plješa hree building acts entered into force with the beginning of this year: the Physical Planning Act, the Building Act and the Building Inspection Act. The forthcoming new act on physical planning and building, which is at the draft phase, will round up the legislative set in the construction sector. The new legal solution will solve issues affecting the business of many private individuals and legal entities working in the field of physical planning and construction, according to a statement given during the presentation of the new legal solutions. This new act will harmonise the Croatian legislative system with the European Directive. The act on activities related to physical planning and building will solve the problem of regulated professions and activities in physical planning and construction as well as give freedom to offer services and rights to Croatian operators and individuals to establish companies inside the European Economic Area, as well as to include Croatia in this system.
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A country cannot be stepmother The Minister for Physical Planning and building, Anka Mrak Taritaš, pointed out a series of reasons for drafting the new legal solution. Recession changes on the market, changes in the
acquis communautaire, which regulates the issue of recognising professional qualifications, are only some. When the present act on activities of physical planning and building was created, economic affairs in Croatia were different. During that period motorways and roads were still under construction. During the years thereafter, the economic crisis hit the construction sector, Anka Mrak Taritaš said. Hence why a new act has to be drafted to set clear rules, and we cannot be restrictive, she highlighted. We cannot be a stepmother to our own people. It has to be in our interests for Croatian companies to register in Croatia where they will pay taxes. There were cases where some companies regis-
The new act will focus on issuing certificates to Croatians wanting to provide services abroad tered in Slovenia since this country has simpler legal regulations and administrative procedures, Anka Mrak Taritaš said. Among other aspects, the new act will try to solve the issue of issuing certificates to Croatians wishing to offer their services in other countries, members of the European Economic Area consisting of EU country members, Iceland, Lichtenstein and Norway.
EASIER COL OF REDUND
The act will allow the temporary transfer of workers between contract has to be signed Igor Vukić fter 18 months of negotiating with social partners, the Croatian Parliament adopted amendments to the Labour Act in mid-July. The amendments were adopted in the form suggested by the Government, since unions and employers failed to come to an agreement. Compromises, appropriate for the current labour market,
A
The new act obliges employers to order overtime work in writing were suggested, Minister of Labour Mirando Mrsić said. The act will allow the temporary transfer of workers between companies with the same owner. The transfer can last a maximum of six months, and special additions to the work contract have to be concluded, including the description of work and its deadline. Where a worker is transferred to a related company abroad, the deadline is two years. The Government perceived the former provisions of the Labour Act did not allow employers to adapt quickly enough to market needs. Moreover, unequally distributed working hours during certain periods was allowed only to a small number of employees. Only those working in shifts were able to organise themselves, whilst others were in danger of violating working regulations, for example, if they would work
more during times of increased orders. The previous regulations were particularly inappropriate for small and medium sized companies and artisans, the generators of economic growth. Additional work possible The new act allows workers to work 50 hours a week during certain periods, or 60 hours in extreme cases, but this has to be regulated through collective agreements. The period of increased work intensity cannot exceed six months. This type of arrangement was welcomed in tourism and related sectors that depend on weather conditions and seasonal load, the Government stated.
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( 60 working hours per week allowed only in extreme cases
PTED
LLECTIVE DISMISSAL DANT WORKERS
n companies with the same owner. The transfer can last a maximum of six months, and a special addition to the work
The possibility of additional work in one-off short-time jobs has also been introduced (8 hours a week and 180 hours a year) for workers who already have full time jobs. Minister Mrsić explains this is a one way to decrease illegal work. The new act obliges employers to order overtime work in writing. During the presentation of the new act and negotiations in the Economic Social Council, Government representatives explained that excessive employment protection has a negative impact on movement in the labour market. Until 2003, prior to labour laws becoming more flexible, the employment protection index stood at high 3.5 points.
The surveyed unemployment rate at the time stood at 14.8%, while registered unemployment was 22.3%. When the laws shortened the dismissal period and decreased the level of mandatory
severance pay, the protection index came down to 2.7. With a decreased index, economic growth and stability in the market reduced the surveyed unemployment rate to 9.6% in 2007.
Late salaries, immediate strikes The new Labour Act prescribes strikes may be organised immediately after the deadline for salary payment ends. Until now, it was necessary to wait 30 days after the day of salary payment. This in effect meant that minimally 45 days had to pass after the end of the month in which the salary was earned, which the Government regarded as being too long. On the other hand, it is prescribed that only representative unions are entitled to organise strikes of any kind of interest claim related to a collective agreement. It would not sustainable that strikes could be organised by unions not authorised to negotiate on concluding a collective agreement or those that are authorised, but that refused to participate in negotiations, which takes away their right to strike.
Differences in collective dismissals The amendments did propose shorter dismissal deadlines, but measures against stalling the existing deadlines were introduced. Therefore, employers will no longer have to train their workers for other jobs (in cases of regular dismissal due to business or personally conditioned dismissal). The dismissal deadline for a worker on sick leave will not run, but employment will terminate after six months from delivering a decision on dismissal. The new aspect is that the deadline will run during vacations, paid leave and temporary working incapacity of a worker whom the employer relieved of his work obligation. Regarding these solutions, the Government refers to court rulings made in Croatia over the past years. In cases of collective dismissals of redundant workers, employers will no longer draft management programmes for redundant workers. The period in which an employer may collectively dismiss work agreements is now shorter. Therefore, the deadline of 30 days no longer runs from the day the management programme for redundant workers is delivered, but from the day the competent employment office received notice of the intention to cease the need for manpower. The dismissal procedure will be shortened from 60 to 38 days. If a union representative employment is dismissed, mandatory arbitrage will follow, rather than an automatic court procedure.
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Privredni vjesnik Year VII No 239
( 80 producers in Krapina-Zagorje County
( 4kg to 5 kg
average weight of an oven-ready turkey
PURAN ZAGORSKIH BREGA AGRICULTURAL CO-OPERATIVE COVERS FARMING AND SALES
Turkey in the yard and on the plate In 1935, Zagorje had 29,000 breeding turkeys, but by 1997, there were less than 400. However, a programme to protect and expand turkey farming was started allowing a €20 supplement per unit produced. The results were satisfactory – in 2013 there were 2,300 breeding turkeys produce several hundred turkeys annually”, pointed out Krsnik, stressing that, according to realistic estimates Zagorje, has the potential to produce some 30,000 turkeys each year.
Goran Gazdek agorje turkey is a recognised breed that has retained its genetic features and resembles its wild ancestors. This has been accomplished by its extensive farming in small free-range flocks and feeding on whole wheat, a year-round farming process, and a negative selection process in breeding. In 2003, Krapina-Zagorje County established the Puran zagorskih brega brand in order to revitalise the Zagorje turkey farming and the Protected the Geographical Indication (PGI) of the end-product Meso zagorskog purana (Zagorje turkey meat). It is the first fresh meat product in Croatia to have
Z
The brand Puran zagorskih brega has been protected since 2003 been awarded Protected Geographical Indication label. The County placed the organisation and commercialisation of production to the Puran zagorskih brega agricultural cooperative, whose Director, Kristijan Krsnik, pointed out that the principal objective of the co-operative is to provide help to subcontractors of farming and sales in order to upgrade their competitiveness. “Zagorje turkey is not suitable for year-round intensive farming due to its predispositions and
hence production is highly expensive”, explained Krsnik. Turkey was brought from America to Europe by Spanish sailors in 1520 and it arrived in Zagorje from Italy in 1561 when farming began in villages. At the end of the 19th century, turkey exports grew due of the exceptional quality of turkey meat. Consequently the 1930’s saw a huge production boom – turkey meat was considered a festive delicacy in Great Britain, Austria, Germany, Italy and Switzerland. The Čakovecbased company F. Vajda exported between 53,750 and 72,000 turkeys during the period 1930 to 1935. The Ptuj-based J. Reinhard and Zagreb-based Ovex were also large exporters. Incentives an imperative During that period, Zagorje turkeys were collected in villages from where they were transported to London in four or five days. Turkey meat was transported in
refrigerated railway wagons. In 1935 Zagorje had 29,000 breeding turkeys, but by 1997 there were less than 400. A programme to protect and expand turkey farming began, with a €20 incentive per bird. The results were satisfactory and by 2013 the number had grown to 2,300 breeding turkeys. There are currently 80 producers in KrapinaZagorje County of whom 60% opted for turkey farming in one centralised flock. This indicates they have five or six hens and only one cock. This concept of farming conserves production. From the start of operations our co-operative has seen some 40 producers; some have been more successful, some less. Currently we co-operate with 15 producers who are seriously committed to production and manage to breed 1,500 turkeys annually. Most have three focal flocks, whilst large producers have up to a dozen and this enables them to
Japanese royal couple visit One of the largest producers of local Zagorje turkey is the Prigorje-based Boris Vrhovski’s farm located near Đurmanec. In 2009, the farm had 950 birds, but currently the level has been reduced to 350, as the farm owner has decided to become more involved in the development of tourism on his farm. “Closed or confined areas have a negative impact on turkey farming so a large fenced plot of land is necessary. One hectare of land is sufficient to farm 400 turkeys. They are fed with mash until their eighth week and then on a combination of pasture and mash and corn”, explained Vrhovski. On hearing about the farm, the Japanese Prince Akishino, a top poultry expert, and the Princess Kiko expressed a wish to visit; their wish was fulfilled last summer. Their visit was yet further proof that the intention to preserve the turkey species and its commercialisation were fundamental. Furthermore, it showed that there is huge market potential for the products globally. Puran zagorskih brega (PZ) is already preparing for new challenges – it is currently translating product information into Chinese and searching for potential Chinese partners.
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( 80% of production ( some 2,300 items exported to 14 countries
in the DTD catalogue
DTD FROM DUGI RAT, EUROPEAN LEADER IN THE PRODUCTION OF FISHING EQUIPMENT
WE TURN ANGLERS’ IDEAS INTO GREAT PRODUCTS Equipment for fishing for squid and cuttlefish is our specialty, and in this area, we are world quality. Furthermore, we are the only producers of this type of fishing equipment in Europe, says DTD owner Tonči Dežulović, who does not regard cheaper Chinese merchandise as competition. He says anglers recognise quality Jozo Vrdoljak TD from Dugi Rat is one of the leading European producers of fishing equipment. Over 80% of their production is exported to many countries, mainly Italy, Spain, France, Greece, Algeria, Turkey, Malta, Cyprus, Montenegro, Portugal and Slovenia. They also export to Russia, Australia and Saudi Arabia. The company founder and owner, Tonči Dežulović, a mechanical engineer, says his greatest competition is from Japan and China, but in spite of the fact his products cost twice as much as Chinese merchandise, he has no problems, since anglers recognise good quality. His sons followed in his steps in terms of profession and occupation. Equipment for fishing for squid and cuttlefish is our specialty, and in this area we are world quality. Furthermore, we are
D
Last year turnover totalled €1.3 million, and €0.6 million profit the only producers of this type of fishing equipment in Europe, as this equipment is mainly handmade. Our factory in Dugi Rat produces all parts and assembles finished products. All our products are the result of extensive research and testing. We are constantly working with anglers, turning their ideas into great products, Dežulović highlights.
A start with fish lures under lamplight DTD was founded in 1900. Their first product was a Pelješac type fish lure for fishing by lamplight. This type of lure did not exist on the market at the time. We immediately concluded that the future of the company de-
€1.3 million turnover and €0.6 million profit. They make a profit every year. Until two years ago, the company produced on several locations, but then completed a new production area, investing around €0.9 million of their funds in its construction and equipment. It is situated in the indus-
pended on top quality product. duct. The tines were welded at specific points, preventing any y fracturing. The barbs were welded elded so as to avoid disrupting the material structure. Furthermore, the barbs were ground to a rounded d shape. Where they would pierce a fish they did not act as small knives. They rather impaled the catch reliably and safely. We had a 12-month warranty on this equipment, which not a single producer has provided to date, and we have never had a complaint, Tonči Dežulović says. In 2013, the company showed
trial zonee of Rat. Dugi gi Dežulović Dežulo ulović only kept a small isolated ed production area in his nativee vi village on Pelješac. Subcontractors perform only Subcontract S b f l some work, mainly relating to ome w production (plastic injection) and du lead casting. Together with its suppliers, DTD has several hundred subcontractors in Croatia. Demanding lures The company currently employs 40 workers and mainly special-
izes in the production of fishing equipment. However, they also specialise in the production of different types of lures for squid and cuttlefish. Their present catalogue consists of around 2,300 items. DTD has always been present in fishing stores, primarily with their lures for squid, octopus, crab and fish together with leaders, wobblers, sleds, and lamps. The production of DTD lures is a complex and demanding process ss since it includes differentt techno technologies and accurate Each product goes handiwork. E through several thr different prodiff iffer cesses, and the cess s se procedure and proc cedu depend on timee dep the luree type. Our personal nal experience as well as ex expert squid hunters help us to design these items. feedback All feedba back on the pperformance our products, and beh behaviour of ou both th positive and nnegative, is us, Dežulović always useful to us al inspection and highlights. After ins goes through testing, each lure go processing (coatadditional process attaching eyes, ing, varnishing atta these fins, crowns). In between bet phases, they undergo daily testing, where quality is scrutinised. finished, it is When the item is fin hhand d packed k d iin transparent packaging with a diagonally inserted cardboard base and product description. Special attention is paid to durability and performance. Experienced anglers test our products, and if their performance and quality is good, they continue to buy, Dežulović points out.
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Privredni vjesnik Year VII No 239
teams are creating a footprint on the global games market and are being “ Croatian rewarded irrespective of competing with many teams having substantially greater financial resources. This cannot be considered as mere coincidence. ”
Andrejj Levenski, President, Gamepires p Gamingg Groupp
COMPUTER GAMES INDUSTRY
On a par with global colleagues Serious Sam, Dragon Legends, The Red Solstice, Gas Guzzlers, Kaptain Brawe are just a few of the many computer games coming out of Croatia industry where exports account for 100%, whilst simultaneously “importing” profits, and we need to move towards $90 billion - the estimate of the value of computer game industry for 2014”, added Andrej Levenski.
Boris Odorčić erious Sam, Dragon Legends, The Red Solstice, Gas Guzzlers, Kaptain Brawe are just a few of the new computer games coming out of Croatia. Nine companies involved in the entertainment software industry and development and program publishing as entertainment on personal computers, game consoles, mobile phones and tablets, are active members of the Computer Games Group in the Information Technology Association at the Croatian Chamber of Economy. The Group organised the participation of several Croatian companies at GamesCom 2014 in Cologne, the largest world fair for digital entertainment. It was simultaneously the first
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As we are a small company gives us considerable agility and can adapt rapidly to new business conditions, opined Kos joint exhibition of Croatian computer game developers. The Croatian stand featured Digitalna avantura, Intercorona, Iron Ward, K.I.D. and Pandora Studio all well-known known under their brand names Reboot, LGM Games, Ironward, Cateia Games and Gamepires. The Zagrebbased Croteam, developers of the serial “Serious Sam” which enjoyed considerable critical acclaim, also participated. Infobip,
the Vodnjan-based Croatian company participated independently from the Croatian national stand. It is amongst the top five companies providing backup to SMS and telecommunication systems. Success in Cologne Andrej Levenski, President of the Group and a co-founder and Technical Director at Gamepires, showed his utmost satisfaction with company participation at the Cologne-based fair. “Literally all those we communicated with showed interest in our new projects and we started negotiations immediately upon our return”, he noted. According to Levenski, Croatian computer game developers are on a par with their global colleagues in any area. “The importance and prospects for the industry need yet to be recognised in order to begin serious investing in an area that has been performed globally for some considerable time. Some countries used the comput-
er games industry as growth generators during the financial crisis. Moreover, the game industry results did not plunge even during the worst years of recession”, he stated. He believes that the Croatian education system, the potential, and diligence are certainly on a par with those globally. “Moreover, I believe we are often considerably more successful compared with organisations with far larger financial resources and state incentives, which will hopefully be available in Croatia in the near future”, he stressed. Notwithstanding all the problems, Croatian teams are succeeding in leaving their mark on the global games market and are being rewarded, irrespective of competition from many groups with greater financial resources, and this cannot be considered mere coincidence. Our teams have the potential to transform Croatia into one of the leading European countries in the computer games industry. It is an
Penetration of Asian market Željko Kos, Technical director at Intercorona, pointed out that the company was extremely satisfied with its first appearance with the Group at the Cologne-based fair. “We have achieved all our planned objectives. The fair coincided with the final phase of development of our Starpoint Gemini 2 PC game and we held several important meetings that will assist us greatly in penetrating the Asian market”, he explained. We were granted a most valuable opportunity to present our company at the fair with 350,000 visitors, emphasised Kos. “Germany is our second largest market, following the US, and participation at the fair will assist us greatly. Since the duration of our production cycle is around two years, it is of vital importance to follow upcoming trends and assume and predict the necessary directions of our product development”, he explained, adding that Croatian companies are considered as micro-companies in the industry and thus can hardly compete with large studios. “Nevertheless, this is changing incredibly rapidly and the fact that our company is small provides us with a high degree of agility and therefore we are able to adapt rapidly to new business conditions”, stressed Kos.