Minister on results Trends are positive but Croatia will finish 2014 with a fall in GDP, says Government Vice-President, Branko Grčić
Interview: Damir Novinić It is not true there is no investment, says Director of Investment and Competition Agency
Entrepreneurial zones in Croatia There are virtually no cities in Croatia without a business or entrepreneurial zone
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Croatian Business & Finance Monthly Established in 1953 Monday / 19th January / 2015 Year VIII / No 0243 www.privredni.hr
S U P P O R T E D
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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
KOLINDA GRABAR-KITAROVIĆ – NEW PRESIDENT OF THE REPUBLIC OF CROATIA
NEW PRESIDENT FOR NEW ECONOMIC GROWTH It is necessary to promote entrepreneurial spirit and relieve present entrepreneurs of fiscal and parafiscal duties, says elected President Kolinda Grabar-Kitarović ewly elected President of the Republic of Croatia, Kolinda GrabarKitarović, puts country growth at the top of her priority list. Her close win over the previous President, Ivo Josipović, shows that after a full six years of recession the public has started to become sensitive to economic affairs, together with the entrepreneurs she often addressed during her election campaign. The first move Kolinda GrabarKitarović announced she would make after her inauguration on 18th February, will be to hold a meeting with the Croatian Government focusing on the existing catastrophic economic state. Social conditions in the country, halting and eradicating poverty, strengthening Croatia’s international position and efficient economic diplomacy are other important elements of her programme. From 2003, Kolinda GrabarKitarović was the Minister of European Integration. In 2005, when two ministries merged, she became Minister of Foreign Affairs and European Integration, and remained in this function until 2008. She continued her career as Croatian Ambassador to
change, and incubators for young entrepreneurs who will establish new companies have to be formed, she highlighted. Whether the new president, in a parliament democracy like Croatia and with no direct authority for influencing tax and other economic policies, really manage to bring a dash of optimism and stimulate economic growth, remains yet to be seen. “I believe in this country; I am optimistic and certain we will overcome the current situation, especially due to the foreign re-
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the USA until 2011, after which she was appointed Assistant Secretary General of NATO - Public Diplomacy –a function from which she withdrew during the presidential elections. By winning the election of 11th January, she became the first female president of Croatia. She will start her five-year mandate working with the Social Democratic Party whose work she fiercely criticised during the campaign. “We discuss ideological issues too much and existential issues too little. The country is on the verge of bankruptcy and we have to save it from deeper crisis,
which can be done only if we join forces,” she said. Croatia should base its development on small and medium-sized enterprises, since they will be those to save the country, and not constitutional changes. The country governed by SDP acts repressively on entrepreneurs, rather than promoting them, since they are the only guarantee of prosperity and development. Taxes have to be paid, but lower taxes stimulate spending and growth. It is necessary to promote an entrepreneurial spirit and relieve entrepreneurs of fiscal and parafiscal duties that suffocate them. Tax policy must
We discuss ideological issues too much and existential issues too little. The country is on the verge of bankruptcy and we have to save it from crisis serves of the Croatian National Bank,” she said after her victory. She also highlighted that many things can be changed with a more responsible governmental attitude, which particularly concerns drawing on EU funds. (A.M.)
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Privredni vjesnik Year VIII No 243
( €4 billion ( €5.5 billion illiquidity in 2014
total illiquidity in 2012
MINISTERS FROM THE ECONOMY ON 2014 RESULTS
Trends are positive; Croa
Despite slightly better trends, Croatia will however finish 2014 with a fall in GDP. Government Vice-President, Branko Grčić
construction sector and the need to reduce public spending. In 2015, growth in industrial production and the export Igor Vukić ast year was a turn-around year. Economic trends are returning from negative to positive levels, and this year should finally show a positive result in GDP growth, according to the statement issued by ministers from several economic sectors, headed by Government Vice-President, Branko Grčić. Finance Minister Boris Lalovac, Minister of Economy, Ivan Vrdoljak, Tourism Minister, Darko Lorencin and Minister of Entrepreneurship and Crafts, Gordan Maras also presented the main elements marking economic trends in their working areas.
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Accelerated Growth Despite slightly better trends, Croatia will however finish 2014 with a fall in GDP. Government Vice-President, Branko Grčić, explained this is a result of the still negative condition of the construction sector and the
tion type of economy, is changing. This is not a process that will be completed in one year. It will take much longer since the crisis tunnel is long, but its end is discernible. Our economy will stand on new and stable foundations after the crisis, Grčić proposed.
need to reduce public spending. Croatia took the obligation of decreasing debt, which resulted in decreased public expenditure and which ultimately affected the final GDP result. In 2015, this should be compensated for by the continuing trend of positive movements noted last
With only few moves in the energy sector, Croatia becomes an important European energy player year; above all, Grčić points out, growth in industrial production and exports of goods. For the first time since 2008, Croatian industry saw positive results on an annual basis. 1% growth is not much, but the pace should accelerate this year. November already saw growth of 2.8%, Grčić said. Total Croatian exports from January to October increased 8.5%, while imports grew 4.6%
in relation to the same period for 2013. Exports to EU countries increased 11.4% and imports were 7.05%, which are the first significant effects of EU integration, Government Vice-President opines. Grčić evaluates the results of industrial production and exports show that the structure of the total Croatian economy, from trade, rent-seeking and import economy to industrial/produc-
Fighting illiquidity According to data provided by the Government, the situation also improved in employment. The number of unemployed is decreasing due to administrative measures and the creation of new vacancies. At the end of November, there were 44,453 fewer unemployed than in November 2013; some 60% found new jobs. The state downsized the number of employed in public services, with some 10,000 people leaving the railway sector. They received solid severance pay, and the railways had an opportunity to operate on market principles. Now, the amount of €0.3 billion does not have to be set aside an-
CCE: Export growth is slowing As anticipated, in the second half of last year Croatian EU accession had lesser influence on the export of goods compared with the first half, according to an evaluation by the Croatian Chamber of Economy. During the first six months, the value of exports was down compared with last year’s period prior to accession, when a significant 13.3% rise in export growth was registered on an annual level. Between July and October, exports increased only 3.9% on a similar basis. Even though it is anticipated that Croatian exit from CEFTA will
harm trade relations with other members, exports to CEFTA increased by 13.4% during the first ten months, with the trade surplus for Croatia increased 36%. The largest export increase was registered in Serbia. EU accession also contributed to the increase in the export of Croatian products and the export of products originating from other countries. Clothing, electricity, machines, devices and food products saw the highest export level during the first 10 months, while shipbuilding, computers and electronic products regis-
tered the largest fall. On the other hand, the value of total imports increased 5.2%, mainly due to the import of oil derivatives, clothes, food products and motor vehicles. Due to decreased local production, the import of crude oil saw the largest fall. Lower prices of some raw materials and energy globally had a considerable effect on the movements of total imports and exports. For example, the average price of crude oil decreased around 3.5% dur-
i n g t h e first ten months. However, by the end of this period, the decrease was even more striking, specifically with crude oil, gas, electricity and metal ore. Consequent to these movements, during the first ten months the Croatian trade deficit increased by a mere 0.1% on an annual level, standing at €5.9 billion.
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( some €58.8 million investment in tourism this year
atia in plus this year…
ć, explained this is a result of the still negative condition of the
t of goods should be compensation nually for settling their deficit. The trend in contracting and paying projects from EU funds is becoming more popular. Last year, Croatia obtained from the EU €88 million more than it paid into the European budget. Finance Minister, Boris Lalovac, pointed out the main problem of his sector was fighting illiquidity and helping over-indebted companies. Two years ago, illiquidity reached €5.5 billion, and now, after a series of measures, it has reduced to €4 billion. It should continue to decrease further this year, together with the number of frozen companies. There are now 51,822 frozen companies compared with three years ago, when there were 30,000 more. Pre-bankruptcy settlements secured a new business opportunity for 2,362 companies with 33,507 staff. A further 580 settlements are in process for companies, with a total of 11,045 employees. Minister Lalovac is convinced
that personal spending, as an important component of GDP, will grow this year. This growth should be assisted by lower income tax for almost a million employees. Preliminary results concerning cash transactions show a 0.7% increase this year compared with January 2014. Tourism and energy supply Tourism is a sector where the crisis was not felt overly much – at least concerning the number of arrivals and overnight stays, both which are constantly increasing. Tourism Minister Darko Lorencin says the number of investment projects in tourism capacities is also growing. Last year €52.3 million was invested and this year investments will range around €450 million. Privatisation of state-owned hotels will continue this year as well as the completion of a large tourist pro-
Analysts: There are still no decisive measures This year was a loss to business, and according to the budget and statements of government officials, next year may mark a second loss. Unfortunately, the Government still lacks determination to make changes, Executive Director of HUP, Davor Majetić, commented for Croatian radio. Economic analyst nalyst Damir Novotny stressed essed in his statements for or the press that there iss certain progress, but the attitude towards SME’s
remains bad and there are no instruments that could stimulate development. The Chief Economist at Splitska banka Zdeslav Šantić says industrial production increased mainly in the processing industry, while other industries registered a decrease. Improvements in the Impro business environment busin are not sufficient, which is visible in investment projects in local economy, Šantić e said. said
ment, Minister Vrdoljak pointed out.
ject i n Kupari. With only few moves made in the energy supply sector, Croatia is becoming an important European energy player, Minister of Economy, Ivan Vrdoljak, noted. In addition to the construction of Plomin C and the potential LNG terminal, tenders for oil and gas testing in the Adriatic have been invited. The Ministry of Economy secured around €250 million subsidies for entrepreneurs, and the World Bank has confirmed progress in the business climate, ranking Croatia as the 62nd country in terms of Ease of Doing Business –20 places higher during the mandate of this Govern-
Construction sector the heaviest millstone The Construction sector owes 30% of total banking debts, equating to €9.1 billion. When companies operating in real estate are added, total debt reaches the sum of €11.4 billion, 39% of total economic indebtedness in 2013. Indebtedness in construction exceeded the income of this sector, hence the ratio equates to a high 167% (€5.4 billion income and €9.1 billion debt). Prior to 2008, construction sector income was €9.5 billion, with debt standing at €4.3 billion. Government Vice-President Grčić hopes the construction sector will find new contracts in infrastructure projects that will be initiated with EU funding. Investment projects funded from these sources should total around €0.9 billion this year.
Savić: No drastic cuts yet
There was no significant progress in 2014 in terms of default payments, even though the value of non-performing loans decreased around 12%, the CCE Director of the Sector for Financial Institutions, Business Information and Economic Analysis, Zvonimir Savić evaluates. This
area of the economy should see significant improvements during 2015. Due to the new Bankruptcy Act that will harmonise bankruptcy instruments and pre-bankruptcy settlement with the changes, the procedures should improve and accelerate. The amendment to the VAT Act will also contribute to this, by applying a cash payment system for SME’s which should make liquidity easier. Notwithstanding, drastic cuts which would change the inefficient structure of the system, will not happen this year, Savić concluded.
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Privredni vjesnik Year VIII No 243
CROATIAN EXPORT OF GOODS AND SERVICES OVER THE 11 MONTHS OF 2014
EXPORTS GROW MONTH-ON-MONTH Export reached €9.35 billion by the end of November 2014 up €0.75 billion compared with the same period of 2013
( 150 investment p currently monitored by the Agency
INTERVIEW: DAMIR NOVINIĆ, DIRECTOR OF INVESTME
It is not true
It will take more time for others to be able to see wh creating new jobs. When projects are completed, th Ilijana Grgić hen anyone in Croatia mentions investment, it is often that we hear that investors tend to avoid us. However, the situation has improved over the past year, Director of Investment and Competition Agency, Damir Novinić, claims, verifying his statement with numbers showing increased investment activities, since the Agency now monitors 150 investment projects valued at €6.5 billion, which could create almost 17,000 new jobs when they are completed.
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roatian exports of goods and services over the first 11 months of 2014 increased by €0.75 billion, according to preliminary data provided by the Central Bureau for Statistics, reaching €9.35 billion by the end of November 2014. This indicates exports increased 8%. As usual, the highest level of exports went to the countries of the European Union. During 11 months of 2013, exports to the EU totalled €5.36 billion, showing Croatia’s EU membership brought a 9% increase. Slightly lower export growth was seen on the markets outside the EU: a total of €3.2 billion of goods exported. During the same period of 2013, this figure was €3.4 billion. Imports from the European Union also increased last year. By the end of November, a total of HRK90.9 billion of goods was imported compared with HRK85.1 billion in 2013. Imports from non-EU countries decreased 6% last year and totalled €3.8 billion. The negative in total balance of exchange with foreign countries stood at €6.3 billion compared with €6.4 billion during 11 months of 2013. For this reason, the Croatian import/export ratio increased from 57.2% in 2013 to 59.7% last year.
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Surplus with Cefta The final data on the November export results show that the same trend seen during the first nine
months of last year continues. Each month last year showed higher exports compared with the previous year. During the period up to the end of October, which offers more detailed data, the Croatian processing industry increased its exports by 8.4%. The best results were achieved by clothing producers who increased their sales abroad by 45% (from €0.3 billion to €0.5 billion). Similar results were gained by wood processors (excluding furniture): a total of €0.4 billion were sold, or almost €78.4 million more compared with the same period of 2013. Production of chemicals and chemical products was positive with 5.5% growth, as was growth in the production of metal, textiles, rubber and plastic. However, the export of tobacco products fell, as well as pharmaceutical products and electric equipment. Higher exports were achieved in all countries representing Croatia’s main trade partners. Exports to Germany grew 2.4%, and to Austria 6.9%. Exports to Italy increased 6.1%, even though this country experienced a negative rate of economic growth. Croatian exporters also achieved success in Slovenia, selling 21.5% more goods compared with ten months in 2013. Exports to CEFTA countries also increased (13.4%). Since imports from these countries decreased 7% during the same period, a surplus of €1 billion was achieved during ten months of 2014. (I.V.)
How does Croatia stand today in terms of investment projects? According to all parameters we keep track of (statistical data and the Agency’s experience), the number of queries from investors is increasing and the number of investment projects is growing continually. We see this not only in our data, but in data provided by the Croatian National Bank also. Since the Investment Promotion Act entered into force a year and a half ago, we have had over 360 users of subsidies and projects currently in the development phase. We had 100 such projects between 2007 and 2012. Nevertheless, we are realistic and do not go on about hundreds of new projects and investors we would like to have, although the trend is positive. Then why do we have a feeling the situation concerning investment projects is so grim? When we look at the statistics, the numbers we see show industrial production and exports are growing; the number of unemployed was 30,000 higher in October
2013 than in 2014. This data is corroborated by the numbers, but this is still not a scenario in which a large portion of the currently unemployed could find work. The media add to the grimness of
Business zones have had potential for many years, but perhaps their development and method of development has not been right the present perception since the phrase no investment, nothing is happening has become standard. It will take more time for others to be able to see what we in the Agency see – investment projects in progress that will contribute significantly to new jobs. When projects are completed, the result will be visible in the field, and the perception of a lack of invest-
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rojects
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( some €6.5 billion
total value of these investment projects
ENT AND COMPETITION AGENCY
there is no investment
hat we in the Agency see – investment projects in progress that will contribute significantly to he result will be visible in the field, and the perception of the lack of investment will change in Jalžabet Business Zone near Varaždin that will hire 250 people during the first year and perhaps more later. Then there is an investment project of Polish company Press Glass which started the construction of a unit and which will hire 300 people. These companies did not come to Croatia and say they would like to invest only in Croatia. They performed an analysis of all the surrounding countries. As I said, the decision about the location of investment depends on a group of factors, like the price of land, infrastructure, electricity and work force.
ment will change. In any case, I think we have solid arguments to be able to say the situation is not that grim as some wish to put it. What do potential investors state as Croatia’s greatest advantage? The answer is different for every industry. Concerning tourism, we have a beautiful sea and preserved nature, a good basis for top quality tourist products. In industrial investment projects, a group of factors contribute to investment costs, and in this respect, we talk about low initial costs, land, work force, and its productivity. It is commonly said we are more expensive than some of our neighbours. That may be true, but no investor will take into consideration the cost of work force alone. An investor will also consider productivity, availability and add all of it into one factor. It is an important fact we are now a member of the European Un-
ion and share a unique market of 510 million people. It is difficult to single out one factor. I would rather say it is a group of factors different for each industry. What would you say to an investor who expresses his desire to invest in Croatia? This answer would also depend on the type of industry. There are several ongoing investment projects in Croatia or projects recently completed; for example, investment projects by the Austrian company Wollsdorf
For some investors subsidies tipped the scales in favour of Croatia. I have to agree with you on that. The Croatian law on investment subsidies and promotion of an investment environment offers subsidies which are very competitive compared with other subsidies in the region. I would say subsidies are always important, but never crucial. To what extent has the potential of Croatian business zones been used? I think the potential is increasingly used. Business zones have had potential for many years, but perhaps their development and method of operation has not been
right. It was common that almost every municipality had its business zone, so they were relatively small with weak infrastructure. After we had drawn up the Catalogue of Business Zones together with local administrations, we determined we had 150 zones in Croatia which were well prepared to accept investors; which in some activities were already happening or they would happen soon; which had good infrastructure or which were well positioned. You also have to take into consideration that the investors are interested in the availability of the work force. Other advantages would be when a business zone can meet other demands, for example, obtain a building permit in one day. These are the reasons why investors recognised business zones as places in which they want to invest. In fact, when a zone has solved everything in terms of physical planning and property law, and it has good infrastructure; when the investor has relevant information or when communication at a local level is supported by us at a national level, the investor does not have any problems. Moreover, it is very important we have business zones, but their infrastructure and competitiveness is also very important. Prices of industrial space, that is land, range in these zones between €2.5 and €20 m2.
More investors should learn about the possibilities Croatia has to offer After the Catalogue of Business Zones, does the Agency have other activities planned? We continue to expand the Catalogue in co-operation with local administrations. I must say some parts of Croatia stand out in terms of business activities since the local community recognise the meaning of investment – and they mean employment. Local communities understood the importance of doing everything
they can to attract and keep investors. We plan to continue co-operating with them, expand the Catalogue and actively promote it, which will depend on our budget of course. In my opinion, this is an area we can do the most. We are still a young agency, active for only two years, but our plan is to communicate in the right way everything we have done so far so that more investors can learn about the potential Croatia has on offer.
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Privredni vjesnik Year VIII No 243
( some €0.4 billion
invested in entrepreneurial zones from 2004 to end 2013
ENTREPRENEURIAL ZONES IN CROATIA
There are virtually no cities in or entrepreneurial zone
“We primarily focused on state incentives. Having analysed the locations in Serbia, Croatia and Slovenia and being a explained Ivan Mišetić General Secretary to Adriatic Group, noting that all the required documentation was provided in Ilijana Grgić ust over a year ago, senior officials from Atlantic Group, one of the most successful Croatian companies, were looking for a location on which they would have a factory constructed for the production of energy bars. Following the analysis and an inspection of 93 locations, they opted for Nova Gradiška Industrial Park. The Atlantic Group investment is valued at €15.7 million and during the first year of operation they plan to create 50, and eventually 160, new jobs. “We primarily focused on state incentives. Having analysed the locations in Serbia, Croatia and Slovenia and being aware of the incentives provided by the Croatian government we opted for the Nova Gradiška-based Industrial Park”, explained Ivan Mišetić General Secretary of Adriatic Group, adding that all the required documentation was finalised in three days. Construction started in June 2014 and the pilot product completed at Christmas.
J
Entrepreneurial zones everywhere Nova Gradiška Industrial Park has been repeatedly highlighted as one of the best examples of entrepreneurial zones in Croatia. In addition to Atlantic, it has been viewed as the most desirable venue for production by 15 other companies. One of the largest investments is currently being implemented by the Samobor-based Klimaoprema, which is planning to complete the first phase of construction
of its production facilities this year. The final construction phase has been planned for 2020 when their industrial are expected to cover an area of almost 15,000m2.
“The location, by an international motorway, covering 142 hectares, is ideal for investors focused on the markets of SouthEast Europe. Moreover, high quality infrastructure, at a price
of €3.25/m2, in addition to an extremely competitive package of local incentives and investment privileges, the ability to meet investor requests and meeting tight deadlines with quality, result in
A Catalogue of Entrepreneurial Zones The Agency for Investment and Competitiveness has decided to develop a Catalogue of Entrepreneurial Zones to facilitate dealing with the vast array of information on entrepreneurial zones currently available. In addition to providing a unique overview of the most competitive business zones in Croatia, the Catalogue substantially reduces the time between first contact with the investor and the provision of the required information. Exclusively, those business zones that were prepared to accept immediately the investment or those with adequate infrastructure facilities, from electricity, water and gas, through Internet and transport connections, that were considered for the Catalogue. Damir Novinić, Director of the Agency for Investment and Competitiveness, highlighted that investors who are fully aware of their objectives do not face any problems in the implementation of their investment and in selecting the most adequate location. The Catalogue is available on the Agency’s website and it can be searched by County, size of available land, utility infrastructure or the intended use of the business zones and the distance from the target markets. The catalogue includes 108 zones throughout Croatia and the 786 entrepreneurs operating there. On average five zones per county have been presented in the Catalogue providing all necessary information. The Catalogue does not present all the business zones in Croatia, and a second phase is being planned which implies a further presentation of entrepreneurial zones which are prepared for the investors.
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( of which €113.5 million from the state budget
n Croatia without a business
aware of the incentives provided by the Croatian government, we opted for the Nova Gradiška-based Industrial Park”, three days Investments in enterprise zones by county from 2014 to 2013 in kunas County 1
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
2
Zagrebačka Krapinskozagorska Sisačko moslavačka Karlovačka Varaždinska Koprivničkokriževačka Bjelovarskobilogorska Primorskogoranska Ličko-senjska Virovitičkopodravska Požeškoslavonska Brodskoposavska Zadarska Osječkobaranjska Šibenskokninska Vukovarskosrijemska Splitskodalmatinska Istarska Dubrovačkoneretvanska Međimurska Total
Number Number % zona LA* of zones 3
4
15 13
5
2004.
2005.
2006.
2007.
2008.
2009.
2010.
2011.
2012.
2013.
Total
6
7
8
9
10
11
12
13
14
15
16(6-15)
1.200.000 1.950.000
2.400.000 2.700.000
4.850.000 5.350.000
6.980.000 7.434.000
4.430.000 6.538.000
4.600.000 500.000
7.480.000 1.850.000
3.520.000 1.100.000
21 14
6,0 4,0
9.436.250 2.184.953
822.653 1.867.603
10
14
4,0
1.450.000
3.240.000
2.900.000
2.050.000
3.400.000
400.000
1.080.000
14 19
15 22
4,4 6,3
2.020.000 4.225.102
6.000.000 5.470.000
6.400.000 8.200.000
6.600.000 5.700.000
5.000.000 5.680.000
550.000 6.400.000
1.030.000 6.131.831
9
11
3,2
2.450.000
2.700.000
2.750.000
3.070.000
6.590.000
5.620.000
12
15
4,3
4.200.000
4.300.000
3.800.000
4.800.000
10.987.000
20 8
26 12
7,5 3,4
1.700.000 2.900.000
2.500.000 4.200.000
3.124.000 4.800.000
2.660.000 6.000.000
6
15
4,4
2.600.000
3.550.000
5.850.000
7 19 15 26 7
8 21 20 32 10
2,3 6,0 5,7 9,2 2,9
2.800.000 1.600.000 1.400.000 3.900.000 4.060.000
1.400.000 3.500.000 5.690.000 11.450.000 4.459.000
12
13
3,7
1.250.000
16
18
5,2
45.718.903 31.474.555
2.350.000
570.294
745.377
18.185.671
1.730.000 3.710.000
1.737.000 4.325.190
527.571 0
31.594.571 49.842.123
6.450.000
250.000
0
0
29.880.000
8.500.000
2.370.000
4.000.000
0
0
42.957.000
2.370.000 4.600.000
2.850.000 900.000
4.750.000 2.950.000
1.980.000 2.745.000
1.345.000 0
915.182 0
24.194.182 29.095.000
2.872.000
4.395.000
2.500.000
4.370.000
1.730.000
1.272.960
0
29.139.960
1.400.000 4.800.000 8.000.000 7.800.000 3.100.000
3.421.000 5.118.000 7.900.000 7.750.000 4.500.000
4.000.000 6.320.000 6.400.000 11.800.000 3.100.000
2.500.000 4.100.000 8.200.000 3.250.000 1.050.000
2.830.000 4.100.000 4.971.000 6.709.000 555.656
2.700.000 4.000.000 2.000.000 3.050.000 2.070.000
2.478.000 0 3.374.158 2.776.196 4.000.000
0 1.377.539 1.032.888 0 0
23.529.000 34.915.539 48.968.045 58.485.196 26.894.656
6.300.000
4.200.000
7.900.000
6.500.000
2.050.000
2.600.000
680.000
0
759.947
32.239.947
4.800.000
7.450.000
5.150.000
5.250.000
6.750.000
8.500.000
6.880.000
5.830.000
3.800.000
956.531
55.366.531
18
21
6,0
3.350.000
4.600.000
3.400.000
1.960.000
6.700.000
1.250.000
5.600.000
3.785.000
4.000.000
961.957
35.606.957
10
10
2,9
3.700.000
4.140.000
1.126.000
1.750.000
1.500.000
200.000
2.890.000
1.070.000
0
0
16.376.000
20 276
30 348
8,6 3.400.000 100,0 54.955.102
4.803.165 90.852.165
5.484.763 92.484.763
4.495.000 98.210.000
5.400.000 80.997.487
2.700.000 51.000.000
6.150.000 4.290.000 113.210.000 68.210.000
Source: State audit
our being one of the highest quality and one of the most competitive investment destinations in Croatia and throughout the region”, emphasised Ivan Sertić, Director of Nova Gradiška Industrial Park. There are virtually no cities or municipalities in Croatia without a business or entrepreneurial zone, with the exception of Zagreb, which in its development strategy has not planned such construction. An entrepreneurial or a business zone is a fully equipped area intended exclusively for the performance of
700.000 42.000.000
0 37.422.928 9.967.249 701.886.766
*Number LA = Number of local administration
economic activity. According to the Single Register of Entrepreneurial Infrastructure managed
Nova Gradiška Industrial Park has been repeatedly highlighted as one of the best examples of entrepreneurial zones in Croatia by the Ministry of Entrepreneurship and Crafts, there are 426 entrepreneurial zones in Croatia.
According to the data provided by the Ministry, the construction of 348 entrepreneurial zones, with 2,870 entrepreneurs operating and employing around 47,000 staff, has been co-financed in Croatia to date. Of 426 registered zones, 217 are fully active or show a medium level of activity, 86 are currently undergoing initial activation, and 107 zones are still inactive. In addition to entrepreneurial zones, entrepreneurial infrastructure comprises 33 development agencies, 36 entrepreneurial centres, 9 technological parks and 30 business incubators.
EU funding for zones A major financial injection into entrepreneurial zones will be received in the forthcoming years from the European Regional Development Fund – Operational Programme Competitiveness and Cohesion. The Programme of Subsidies for Investment into Local Infrastructure worth €70 million will be operational this year, and the development of entrepreneurial infrastructure in the existing entrepreneurial zones will be one of the most appealing activities for the absorption of this funding.
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Privredni vjesnik Year VIII No 243
DIJANA KOBAS DEŠKOVIĆ, INSTITUTE FOR RESEARCH INTERVIEW: KREŠIMIR MLINARIĆ, DIRECTOR, ADACTA AND EDUCATION “BUSY MUM”
Are we really equal?
It would be sad if
In their first jobs men and women enjoy Croatia has potentially immense ICT sector and can also sell gender equality, yet as they start climbing the Planning) solutions on the local Boris Odorčić hierarchy there are significantly more men market. dacta is a leading rethan women on top positions
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e are currently living in the time of gender equality. We enrol in primary school treated as equals, we continue our education in secondary school and some pupils opt for higher education. Throughout primary school, female pupils achieve significantly superior results compared with male pupils, since the educational system is adapted to the functioning of the female brain
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According to statistical data over the last 25 years, Croatia has seen a prevalence of female graduates – accuracy, meticulousness and focus on the task itself are considered fundamental. Secondary schools are predominantly specialised and hence the differences in results according to gender are less apparent, whilst at faculties, according to statistical data over the last 25 years, Croatia has seen a prevalence of female graduates. In their first jobs men and women enjoy gender equality, yet as they start climbing the hierarchy there are significantly more men than women in top positions. An interesting piece of information, considering the fact that during the first 25 years male and female students enjoy full gender equality. They were never actually equal, as girls showed substantially superior results compared with boys, yet it only became important in the work environment. Can you imagine how much is lost in each company due to insufficient exploitation of the potential of female staff when around €80,000 is invested through the public school system in their education? What happens on their path from school to high-ranking positions? According to research conducted
by us, motherhood is a significant bone of contention during career development. Women estimate they do not have sufficient time available for career development as a result of a lack of understanding in the business environment and additional private duties. Paradoxical, albeit true: irrespective of being better educated, women do not have equal opportunities as their male counterparts against a backdrop of gender equality. Nevertheless, mothers are currently striving to work. 70% state they would not accept a life without a job and a career, yet they want to be provided with equal opportunities. They highly value the balance between private and work life, which is feasible only providing the dominant work culture has been substantially changed. Irrespective of meeting their obligations and their duties, working mothers are commonly considered as insufficiently committed to work due to the fact that they normally do not work long hours. The solution to this issue is raising awareness on the importance of a healthier work culture where meeting deadlines is fundamental irrespective of venue where the work has been completed. Workplace flexibility and flexible working conditions rank extremely high on a list of priorities amongst working mothers, and hence 71% of them would opt for an employer providing flexible working conditions.
gional company in the implementation of Microsoft Dynamics solutions for business activity management. The company has shown continuous revenue growth and is increasing the number employees. Krešimir Mlinarić, Director, stated that in 2013 Adacta achieved a 20% increase in revenue. According to latest indicators, it appears that it also managed to be highly successful in 2014. The company has seen a 30% increase in the number of employees and has recently opened a new subsidiary in Osijek. Mlinarić stressed that they are highly satisfied with the results achieved and are hoping this development trend will continue into the future. They are particularly satisfied with the fact that, as the largest Microsoft Dynamics partner both in Croatia and the region, they have significantly enhanced the development of MS Dynamics Business and made a substantial contribution to its stronger positioning and assuming the leading role in ERP (Enterprise Resource
To what extent do you believe the Croatian market of ICT products and services is developed? Croatian ICT products and services are currently still not in top gear, irrespective of the potential which it undoubtedly has. We have recently seen several positive movements in that direction and I hope the process will continue. ICT is one of the industries with immense room for growth and development and it is particularly important to point out
The Croatian ICT products and services market is not yet into top gear its export potential. It has to be stressed that Croatian ICT exports have soared 78% during the last five years. What is the attitude of the state towards the ICT sector in Croatia? Unfortunately, the state does not realise and does not exploit its
INTERVIEW: JOSIP KRZNARIĆ, DIRECTOR, OWNER OF RHEA
Changes need to b Boris Odorčić he Zagreb-based company Rhea started providing express package delivery services under a subsidiary company, A2B Express Logistika. In addition to door-to-door express delivery, A2B Express Logistika provides air cargo and maritime transport, international and domestic road transport, as well as distribution services throughout Croatia, warehousing and customs intermediation. In addition to new services, the company is constantly expanding into new markets; in October it
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opened a subsidiary in Macedonia and it is planning expansion into Kosovo and Albania. Josip Krznarić, Director and owner of Rhea and A2B Express Logistika stated that Rhea started operating in 2001 having obtained the FedEx licence for Croatia. The initial team comprised of some 10 staff, now the headcount is 60. “Our human assets are our key to success”, pointed out Krznarić. How developed is the Croatian logistics services market? Does it keep abreast with global trends?
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Croatia lagged behind these products in highly developed markets. The best proof is the export results of Croatian ICT companies A vigorous breakthrough to the global market What are the plans for Adacta in the near future? We are planning to expand our portfolio of services and products in order to assist the business activity of our users, and follow them by meeting the requirements of their development plans. Consequently, it has to be noted that we have launched a new product - Corporate Planning AG - and are in partnership with a German company involved in the development of business solutions in the area of business planning. This product will be provided by Adacta in co-operation with Corporate Performance Advisory, a company specialised in business consultancy and consulting. The first implementations of Corporate Planner solution are currently under way, and Adacta is anticipating further growth of this market in the near future. In addition, we are planning to make a more vigorous breakthrough globally. potential. Nevertheless, we have been encouraged by the news that, according to the new economic strategy, ICT has been recognised and ranks amongst the first six strategic branches of industry. The fact that the new economic strategy comprises of creation of 500 new jobs in ICT by 2020 certainly confirms the importance of this branch in the overall development of the country. Nevertheless, much more work needs to be done to create the groundwork for the accomplishment of current potential. The state can definitely provide assis-
tance in education of future ICT staff for which there is currently a high demand in the market, as well as through amendments to tax policy. It would be sad if Croatia lagged behind the other countries in the region due to their more rapid adaptation or the creation of a more attractive investment climate in ICT. What can the Croatian ICT sector offer to Europe and globally? Croatia has a potentially immense ICT sector and can sell her products in highly developed
markets. We can offer our expertise, our ideas, our products and services primarily to several niches and specific market segments. The best proof are export results from Croatian ICT companies who are constantly growing and achieving better results year on year. We have successful large IT companies and projects, as well as small start-ups, who have already established themselves on the global market due to their originality and good ideas, such as the latest PhotoMath application developed by Damir Sabol.
Has Croatian EU accession impacted on your business activity? Croatian EU accession has helped with the penetration of global companies into the Croatian market, which resulted in adaptation by local companies and higher investment in the ICT sector. Since Adacta has been recognised as a reliable and high quality partner globally, we have seen an increasing number of projects for foreign companies present in Croatia, yet also an increase in the demand for our services abroad.
A AND A2B EXPRESS LOGISTIKA
be faster It has vast room for improvement, yet it constantly follows trends and is going in the right direction. Nevertheless, it is doing so rather slowly. In my opinion, changes and adaptation to market should be far more rapid. Has Croatia been contributing sufficiently to the development of the logistics sector? Considering her favourable geographic position, Croatia has huge potential in logistics services. Yet, I believe she is currently not adequately committed and not focusing sufficiently on becoming the leading logistics
centre in this part of Europe. She should firstly make an important and useful investment in the modernisation of the port of Rijeka and the Zagreb Airport cargo terminal project. In which areas do you expect to see growth and decline? Courier and logistics services always follow market impulses and it is obviously currently difficult to make any forecasts. Nevertheless, I am optimistic, and considering the investment cycle we have entered into, I expect to see growth in all areas. How much have you invested in the business in Croatia? We are always investing in the development of all our staff, in
What is your relationship with competitors like? I believe we have appropriate relationships with our competitors and in specific situations even a partner relationship. We have established the Association of International & Express Courier Services and are members.
IT and the expansion of our range of services. Our latest investment is linked with the opening of the logistics centre and the development of a distribution network both in Croatia and in the region.
What are some of your future business intentions? Our primary focus is the region into which we have been investing for a number of years and are planning to continue with this investment. We are present in Austria, Slovenia, Bosnia and Herzegovina, Serbia, Montenegro and, since recently, Macedonia. We will soon be present also in Albania.
10 ::: news Government co-organising UNWTO session The government has accepted the decision of the Ministry of Tourism on granting the approval and acceptance of co-organisation of the 100th Session of the Executive Council of the World Tourism Organisation (UNWTO) which will be held from 27th May to 29th May 2015 in Rovinj. 300 participants are expected at the session amongst whom will be representatives of Tourism Ministries throughout the world. €0.8 million for tourism projects The Ministry of Tourism has recently approved an additional €0.8 million of non-repayable funding for 15 projects to foster the development of tourism infrastructure and the preservation of the tourism resource basis. It is extra-budgetary revenue of the Ministry of Tourism generated from payments for temporary concession fees for tourism land that is included in the Tourism Development Fund. Consequently, the Fužine-based Vrata adrenaline centre, cycling transversal on the island of Mali Lošinj, the Opatija-based botanical gardens, the Požega-based visitor centre, the reconstruction of the mill in the cultural and tourism centre in Gorjani municipality in OsijekBaranja County, 3-D mapping of Pula, lighting installation Rovinj Wave and the Lighted Pomegranate Tree in Rovinj will be provided with financing. Valamar Riviera at the Zagreb Stock Exchange
The tourism company Valamar Riviera has recently started trading its shares on the Official market at the Zagreb Stock Exchange. This listing implies the appearance of a highly-liquid share on the Official market since, according to the average daily trading, Valamar share ranks amongst the top three most active shares on the Zagreb Stock Exchange.
Privredni vjesnik Year VIII No 243
( €483 million
planned investment in tourism sector in 2015
PRESENTATION OF TOURISM RESULTS
Tourism promotion months in advance
Irrespective of the fact that 2015 implies new challenges, we will show that Croatia is no quality products and entertainment for visitors, emphasised Ratomir Ivičić, Director of th Jozo Vrdoljak uring his presentation of the results of the tourism season for 2014, the Croatian Tourism Minister, Darko Lorencin, pointed out that he anticipated excellent financial indicators for this year’s tourist season that will perhaps reach the record results of 2008. “There may be a million more or less compared with 2008, yet we can say that according to several indicators we have achieved results from 2008 which were the highest on record”, estimated Lorencin, who made his assumptions based on excellent results achieved in October and December. According to data provided by the Croatian National Bank, during the first nine months of 2014, tourism revenue was €6.77 billion, implying a 2.5% increase or €168 million in relation to the same period last year. The percentage of revenue generated from tourism in GDP stood at 20.9% during the same period, which year-on-year implies a mild growth of 0.7%. According to the data based on surveys conducted by tourism
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companies and the public sector and presented by the Tourism Minister, planned investment in tourism in 2015 will stand at €483 million. The value of public sector investment is estimated at €191 million, whilst tourism companies will make investments of around €292 million. The largest investments are planned for Istria County, Dubrovnik-Neretva County, Primorje-Gorski Kotar County and Krapina-Zagorje County. The Minister has announced a new tourism slogan and a new visual identity that will be presented in the spring. Ratomir Ivičić, Director of the Head office of the Croatian Na-
tional Tourist Board pointed out that tourism promotion was launched four months earlier than last year. “Irrespective of the fact that 2015 implies new challenges, we will show that Croatia is not merely a destination of sun and sea, but a year-round destination providing high quality products and entertainment for visitors. We are optimistic due to our projects, the ambitious work programme, as well as the synergies created by all stakeholders in tourism industry”, highlighted Ivičić. Tourism statistics for 2014 According to the official data released by the tourist board sys-
More arrivals from Germany, Slovenia and Austria Based on their share of overnight stays in 2014, Croatia’s strongest home-country markets are Germany, Slovenia, Austria, the Czech Republic, Italy, Poland and Slovakia. Germany, Slovenia and Austria, as the three principal markets, showed growth, and after a long period Italian tourists also
showed an increase in arrivals and overnight stays. Poland and the Czech Republic saw a slight drop. Tourism Minister Lorencin primarily pointed out the importance of tourists from distant markets who normally arrive during the pre- and post-season and who showed a substantial increase in
arrivals and overnight stays. Foreign tourists recorded 11.7 million arrivals during the first eleven months, a 5.2% growth and 67 million overnight stays (2.2% up) compared with 2013, whereas domestic tourist arrivals increased by 1% and overnight stays were 0.6% up.
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( €292 million
invested by tourism companies
( €191 million
anticipated investment by the public sector ::: news
launched four
ot merely a destination of sun and sea, but a year-round destination providing high e Head office of the Croatian National Tourist Board
tem, counties bordering the Adriatic together with Zagreb saw 13.05 million arrivals during the period from January to December 2014, a 5% growth and 73.6 million overnight stays, which was 2% up in relation to 2013. The positive trend continued into December, showing a 16% increase in arrivals, whilst overnight stays were 8% up compared with December 2013. According to Lorencin, during the first eleven months of 2014 tourism saw almost 39,000 new jobs created, almost 12% up in relation to 2013. “Irrespective of the fact that 2014 was a year of challenges and an extremely demanding year, we
have achieved excellent results which show the stability of the Croatian tourism sector. The re-
We can say that, according to several indicators, we have achieved the results from 2008, which were the highest on record sults during the pre- and the postseason have to be highlighted, since they show the results of the measures implemented to extend the season. The results were highly unsatisfactory for March,
May and July, yet excellent results in June compensated for the unsatisfactory results in May and July, whilst August saw 1 million overnight stays - up compared with 2013. It is has to be pointed out that September results were similar to those in June, whilst October substantially decreased the difference in results in relation to September”, stressed Lorencin. During the presentation of tourism results in Split, the Director of the Head Office of the Croatian National Tourist Board emphasised that he was not surprised by the indicators of the tourism season. “Growth is due to the high quality work of all stakeholders in tourism, of the well-prepared year, as well as projects launched. Hence, we have addressed all the challenges posed by the recovery of destinations we consider our competitors, as well as adverse weather conditions, especially in July. Similarly, excellent indicators of tourism journeys, primarily during the post season, showed the success of the project Croatia 365 even during its pilot phase”, opined Ivičić.
The highest number of overnight stays in Istria The highest number of overnight stays was recorded in Istria, with a 1% increase in arrivals (a total of 22.2 million), whilst the most substantial increases were recorded in Zagreb with 1.6 million, (13% up) over 2013. Split-Dalmatia County saw 13.5 million overnight stays, which was 5% up in relation to the previous
year. Kvarner showed 12.29 million overnight stays - a drop of 3% compared with 2013. Dubrovnik-Neretva County saw 6.5 million overnight stays, a 4% increase over 2013. An increase in overnight stays was recorded also in Zadar County which saw a 5% increase (10 million) and Lika-Senj County in which over-
night stays were also 5% up (2 million), whereas in Šibenik-Knin County overnight stays dropped slightly by 1% (5.33 million).
Lošinj competing for UNWTO Award
Mali Lošinj and its Tourist Board have been selected amongst the top three finalists competing for the prestigious Award for Excellence and Innovation in Tourism that has been awarded every year since 2003 by the World Tourism Organisation (UNWTO). The panel of judges comprises of 11 independent members and the decision on the winner is about to be published in Madrid, the headquarters of UNWTO. The Lošinj project entitled “Fragrances and Tastes of Lošinj” which presents the concept of Lošinj as an island of vitality is competing with the Vienna Tourist Board and the Commission for the Promotion of Export and Tourism of Peru in the category Innovations in Public Institutions and the Government. Škraping trekking race The jubilee 10th edition of the Škraping trekking race 2015 will be held on 7th March 2015 on the island of Pašman, starting in Tkon, with over 1,000 participants and around 500 visitors. In conjunction with the race, the Island Products Fair will be held, as well as a cross-section of educational lectures, workshops and eco activities focusing on the environmental maintenance of Pašman. Tourism co-operation between Croatia and Qatar A Memorandum of Understanding has recently been signed between the Croatian government and the government of the State of Qatar on tourism co-operation. It defines the areas of co-operation such as promotion between institutions and co-operation in the area of private sector tourism.
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Privredni vjesnik Year VIII No 243
::: news Interest in the purchase of Hotel Imperial and Plat The State Administrative Office for State Property Managementt has stated that it has received four letters of interest for the purchase of the shares of the Rab-based tourist company Imperial, whilst for the Dubrovnik-based Plat Hotels nine letters were submitted. The initial price for the purchase of 92.49% of the state-owned shares in Plat Hotels stands at €13.1 million, and the initial price for a 50.08% stake in the Rab-based Imperial Hotel stands at €32.6 million, according to the decision made by the Administrative Council of the Centre for Restructuring and Sale. Adris Group to purchase Sava Re The Croatian company Adris Group is currently negotiating with KD Group on the purchase of the shares of Pozavarovalnica Sava (Sava Re), as stated in the Slovenian daily newspaper Dnevnik. Should the negotiations succeed, Adris would increase its share in the second largest Slovenian insurance company to over 20%. Nevertheless, it is currently uncertain against a backdrop of high share prices on the stock market and recent decisions made by the Ministry of Finance. KD Group is negotiating with the Croatian insurance company Croatia insurance whose majority owner is the Adris Group. Optimism in construction companies
The construction sector has been facing continuous decline since the first quarter of 2009. Nevertheless, construction companies will start operating with optimism this year, in spite of their warnings of currently still operating under dire conditions. From January 2009 to the end of 2014, the volume of work saw a constant drop. According to data released by the Croatian Bureau of Statistics, October 2014 saw a drop of 4.9% in construction work compared with the same month in 2013.
( 12% interest on savings (around €46 tax on €13,070)
New Year brings new laws
VAT collection, higher threshold on profit tax The threshold for mandatory inclusion in the profit tax payment system based on registered income, increased from €0.26 million to €0.39 million Igor Vukić series of new regulations entered into force on 1st January, which will affect conditions of performing business activities in Croatia. One of the most significant refers to paying VAT only after the issued invoice has been paid. All taxpayers who invoiced up to €0.39 million of goods and services in the previous calendar year will be affected. To make it easier for artisans to perform their business activities, that is, individuals performing independent activities, the threshold for mandatory inclusion in the profit tax payment system based on registered income, increased from €0.26 million to €0.39 million. It will also be possible to change the method of taxing individuals performing a particular independent activity (profit or income) over a period of three years.
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Minimum gross salary of €396 Furthermore, employers who sign an employment contract with an undefined time period, that is, five years since the beginning of their employment, with young people (up to 30 years old), are relieved of paying contributions for health insurance, health protection at work and employment. The fee for professional qualification of young interns also increased from €210 to €314. Minimal gross salary for 2015 will stand at €396. As a result, the share of minimum salary in average gross salary paid in companies in August 2014, in Croatia
New Year also brings higher salaries for about a million employed will total 38.1%. The government backed down on the complete elimination of incentives for housing savings, and a variable percentage of state subsidies has been introduced, which will be determined every year. The percentage will depend on market rates of interests on saving. Furthermore, exercising the right of employment privileges for the disabled has been organised in more detail. At the same time, the procedure of exercising the right to benefits when employing a disabled person has been simplified. A unique body has been formed to regulate the complex system of medical expertise for exercising rights on social welfare and related rights. The expertise will be performed in one place by permanent teams of medical experts and according to a unique methodology. The aim is to prevent discrepancies in medical reports and subjective evaluations of
medical experts hired occasionally. The Distraint Law introduced electronic auctions for selling property, and thus secured the most efficient implementation of distraint orders on property. Moreover, the entire procedure is transparent. The electronic auction will be implemented by the Financial Agency. The interest rate on savings in banks will be 12%; some €46 will be paid a year on €13,070 of savings. Lottery winnings of up to €100, that had been exempt from tax, will now be taxed at a rate of 10%. The New Year has also brought increased salaries for around a million employees. According to Income Tax, the monthly basic personal deduction increased from €287 to €340, and from €444 to €497 for retired individuals. Tax classes have also been changed. The 25% tax rate is applied on the tax base between €280 and €1,725, whilst the 40% tax rate applies above €1,725. Moreover, personal deductions will increase for nonmarital spouses, life partners and informal life partners to whom the taxpayer pays alimony.
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( €46.3 billion
foreign debt at year end (107% GDP)
( €0.21 billion profit
earned by banks in the first half of 2014
HALF-YEAR DATA ON FINANCIAL SITUATION
Export growth did not impede stagnation A very modest net capital foreign inflow was achieved last year. During the first six months, it stood at around €500 million, relating mainly to ownership investment lion at the end of the year (107% of GDP). Financial stability has been preserved, and the banking industry results are better. During the first half of the year, banks earned €0.21 billion in nett profit, up 24.6% over with the same period of 2013. The reports on bad loans are worrying since they increased from 15.7% to 16.6%. The percentage of non-performing corporate loans reached 30%, which is another element preventing economic activity, Lalovac said.
Igor Vukić ncreased export growth was not enough to stimulate economic recovery last year. Economic activity during the first part of 2014 stagnated after its fall in 2013. There was no discernible improvement on the labour market, and the fall in prices of imported food materials, together with weaker local demand, resulted in a negative annual inflation rate. The above is the assessment of the half-year data on the financial situation, devised by the Croatian National Bank. The report has been recently adopted by the Government and has been sent for discussion to the Croatian Parliament. In such economic conditions, HNB continued to lead expansive monetary policy, promoting high liquidity in the banking system. Corporate crediting was also promoted through the redemption of mandatory bank bills. Exchange rate remained stable, a precondition for general financial stability, due to the high level of Euroisation. A more intensive economic recovery is limited by low economic competitiveness, and any improvement cannot be expected without implementing structural reforms for strengthening the business and investment climate, HNB reports.
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Fewer loans to companies A very modest nett capital foreign inflow was achieved. During the first six months, it stood at around €500 million, relating mainly to ownership investment. During the first six months of 2014, banks had at their disposal €1.01 billion of excess liquidity,
CCE: Foreign investment below expectations The Croatian Chamber of Economy agrees with the HNB assessment of the modest nett inflow of foreign investment. Despite certain positive changes, especially in the legislative sense, there are no considerable positive long-term results, which clearly shows that additional effort needs to be invested in improving the general business climate, not only for foreign, but also for local investors, notes the Deputy Director of International Relations and Managing Director of the Investment Promotion Centre with the CCE. some €0.35 billion higher than the average for 2013. Hence, interest rates on long-term corporate loans gradually decreased, and the interest rates on shortterm loans remained at favourable levels at the end of 2013. However, weak local demand for corporate loans, low business optimism and bank increasing fears of risk, limited the strengthening of crediting activities. In such conditions, private companies registered a slight loan increase
during the first six months of 2014, whilst total corporate lending decreased as the result of public companies repaying. This trend has lasted for six years in the sphere of private individuals, according to HNB experts. During the discussion on HNB’s half-yearly report on financial conditions, Finance Minister, Borisa Lalovac evaluated that Croatian GDP for 2014 will probably show a 0.7% fall. Total foreign debt reached €46.3 bil-
Prime Minister’s comment on deficit Prime Minister Zoran Milanović commented that the state budget finished the year with a deficit below €0.39 billion. It could be said Croatia should have made better plans, but this is the first time a government has spent less than planned. “We proved it is possible to spend less in every department, and I believe the budget for 2015 will not exceed the proposed framework”, Milanović said. The Government directive also changed the internal organisation of the State Office for Central Public Procure-
Non-performing corporate loans reaches 30% ment. Some public procurement procedures will be harmonised according to models of similar EU offices that proved to be more efficient and act primarily on commercial principles, Government Vice-President Branko Grčić said.
14 “It is important to note the application keeps track of every detail. For example,
during calculations, you can choose your residence on which the value of surtax and final salary depend.“ Katarina Dijan, Executive Director at EY Tax Services - EY salary calculator
EY SALARY CALCULATOR
So easy to calculate tax The application is intended for employed people in Bosnia and Herzegovina, Slovenia, Serbia and Croatia, as well as for employers. Besides the basic tools (simple calculating of gross and nett salary as well as total salary costs for the employer), the application also takes into consideration basic tax parameters like tax relief Boris Odorčić n amendment to the Law on Income Tax entered into force on 1st January and provided those employed in Croatia with a slightly higher income. The audit and consulting company, Ernst &Young, designed and produced their free mobile application EY salary calculator, intended for calculating salary tax. Besides the basics (simple calculating of gross and nett salary as well as total salary costs for the employer), the application also takes into consideration basic tax parameters – for example tax relief for supported family members.
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Simple tool The salary calculator is available for all Android and iOS operating systems. It is very simple, clear and may be adapted to user needs. A special feature is that it can be applied to income tax systems in not only Croatia, but also Bosnia and Herzegovina, Slovenia and Serbia. Furthermore, users are able to select a version in their local and English languages. Katarina Dijan, Executive Director at EY Tax Services, says the company decided to develop this application for practical reasons. “We received phone calls almost on a daily basis from clients, colleagues and friends needing information in various situations. For example, information on the amount of nett salary in relation to agreed gross income, or the amount of salary cost for an employer who would like to of-
fer an employee a certain nett salary. This application now offers tax calculations for all situations. Questions on tax came into force with announced and now amended tax regulations on 1st January. This motivated us to
Salary calculator is available for all Android and iOS operating systems publish the application as soon as possible”. Katarina Dijan also highlighted that the salary calculator is intended for all employed people in Bosnia and Herzegovina, Slovenia, Serbia and Croroatia, but also so for employers rs who can usee it as a practi-cal planning tool.
Select your residence “The application development process took several months. In addition to our local EY team, colleagues from Bosnia and Herzegovina, Serbia and Slovenia also worked on its development. The software was designed by a team of young experts from the Zagreb agency Virtualni atelier”, Katarina Dijan explains. The salary calculator is not a unique product, and according to EY knowledge, similar applications exist in several regions. Notwithstanding, the EY salary calculator stands out for the number of countries in which it may be used and its elaborated items available for each calculation. It is important to note the application keeps track of every detail. For example, during calculations, you can choose your residence on which the value of surtax and final salary depend, Katarina a Dijan highlights. She D adds that contempoa rary IT innovations are r no n longer exclusively in the form of computer programmes or elecpr tronic communication tr with w Tax Administration orr other institutions. Various interactive programmes enabling fast textual and visual communication and linked with different databases are slowly becoming a reality
for many companies in Croatia, she commented. Positive perception of entrepreneurship Since EY is a company that stresses the development of a better working world as a global priority, one of its goals is to contribute to the development of both community and business environments in Croatia. At the same time, we want to stress that today EY employs young and innovative people with new ideas and solutions that contribute to the development of the working world, she says. Concerning new projects, Katarina Dijan mentioned the EY programme Entrepreneur of the Year, initiated in Croatia last year. The programme is a world award for entrepreneurs held in over 60 countries globally. The award has been held for 28 years, and it is designed to promote successful entrepreneurial practices. One of the reasons for introducing it in Croatia is the desire to contribute to creating a positive perception of entrepreneurship. The grand finale will take place in March, when we will have our first Croatian EY entrepreneur of the year who will represent Croatia at the EY award ceremony of the best world entrepreneur of the year, held in June in Monte Carlo. As in the case of the EY salary calculator application and EY Entrepreneur of the Year Programme, the company will continue to listen to the needs of our environment, clients and colleagues so that we may make our contribution to building a better and more successful society, Katarina Dijan concludes.
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“Since the application daShow is a cloud application,
geographical distance is irrelevant and the solution can be used globally. “ Andrija Frinčić, Director of Dream Implementation
daSHOW SOLUTION
A digital notice board The web application is cloud-based and can be integrated with all major social networks Boris Odorčić he Zagreb-based company Dream Implementation has developed an application daShow. It is a web application for the management of content displayed on digital panels that are located in areas such as catering or retail facilities, airports and conference centres. The data being displayed is stored in the cloud, reducing the need for user equipment. The interface can be accessed from any device provided with an Internet browser.
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Export product Andrija Frinčić, Director of Dream Implementation, pointed out that the idea behind this solution began soon after the development of their daShef system of digital menus for restaurants. “We realised that a similar system would be logical, and be considered perhaps an indispen-
sable upgrade to digital menus. Since the core team of Dream Implementation came from the company Sagena, which developed its own digital advertising system, we agreed with Sagena to co-operate and proceed with development and adaptation of the system focusing primarily on
restaurants, coffee bars, hotels, conferences and similar arenas”, he explained. The application displays the weather forecast, information from social networks, the product and services range of the facility where daShow is located, or advertisements that can provide
additional revenue. “Basically, daShow enables you to communicate anything you might be striving to communicate with your visitors via a digital notice board which, through the display of multimedia content, provides almost limitless opportunities”, he stressed. Irrespective of the fact that there are currently a large number of similar products, Frinčić emphasised that the competitive advantage of daShow is the fact that is it cloud-based and can be integrated with all major social networks – Facebook, Twitter, Instagram and Foursquare. “This integration provides immense opportunities, ranging from twoway communication to inclusion of visitors in competition contests based on content sharing on social networks, promoting the user’s restaurant, coffee bar, hotel or conference and festival, to name a few”, highlighted Frinčić.
AN EXTREMELY SUCCESSFUL YEAR FOR GERMAN RETAIL CHAIN
Lidl achieves €0.5 billion gross revenue 2014 was an extremely successful year for the retail chain Lidl – it generated €0.5 billion in gross revenue. Irrespective of the fact
86 stores in Croatia employing 1,700 staff that its financial year finishes at the end of February, according to the plans implemented thus far, Lidl is expecting to see an 8% growth in revenue, whilst profits are expected to almost double. There are currently 86 Lidl stores
in Croatia employing 1,700 staff, with an average gross salary of sales staff standing around €810. The opening of new stores is planned, but company sources did not reveal the number. This year, a special project entitled Potential development will be launched. The project will be aimed at individual development and management training in its 86 stores throughout Croatia. “We will conduct a comprehensive analysis of the current issues in the company and then compile an individual plan for each manager aiming to enhance their
competencies. Those who complete the process will be provided with the opportunity to sign new contracts implying greater responsibilities, higher salaries and a company car available 24 hours a day”, pointed out Boris Lukšić,
Management Board President of Lidl Croatia, adding that the specific objective of this programme will be clearly and transparently structured career advancement opportunities in the company. According to the Management Board President, it is estimated that the programme is valued between €0.5 million and €0.6 million in Croatia. Potential development is an international investment project into human assets by Lidl in which 10,000 store managers throughout Europe will participate. (I.G.)
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Privredni vjesnik Year VIII No 243
( €50 million
to be invested in Mandalina Dogus Group Croatia in 2015
THE FIRST MARINA IN CROATIA TO BE AWARDED WITH THE HIGHEST RATING
Mandalina awarded Five Gold Anchors Mandalina marina has been constructed to accommodate mega yachts and its high rating accounts for Šibenik being considered as a luxury destination on the global nautical market Croatian nautical tourism revenue generated from berths accounts for 60% to 70%, whilst in other countries the situation is completely different –revenue generated from berths accounts for 30% to 40%, with the remainder being revenue ancillary services. Amongst the problems
Sanja Plješa he Šibenik-based DMarin Mandalina is the first marina in Croatia to have received the highest rating – Five Gold Anchors. During the ceremony in which the Minister of Tourism Darko Lorencin presented the award to Burak Baykan, Regional Director of the company Dogus Group Croatia, it was announced that the company would make a further investment of €50 million in the marina by the end of the year. Mandalina marina has been constructed to accommodate mega yachts and its high rating accounts for Šibenik being considered as a luxury destination on the global nautical market. D-Marin Mandalina marina has 400 berths of which 80 are intended for 30-140 metre mega yachts. As pointed out by Baykan, Dogus Group has to date invested €200 million in diverse investment projects in Croatia. The company owns 10 marinas
T
and, in addition to investment in D-Marin Mandalina, Dogus Group Croatia owns 10.86% of the shares of ACI Croatia. Speaking about nautical tourists who arrive to Croatia with their mega yachts, Baykan highlighted that their demand for additional content in the marina and hence the construction of a boutique hotel with wellness, restaurants and accompanying activities, is underway and the hotel opening is anticipated in summer 2015. Marinas need to generate higher revenue Tourism Minister Lorencin emphasised that Croatia is considered as a highly popular destina-
tion globally which attracts an increasing number of enthusiasts of sea and boats year after year. Nevertheless, in order to enhance competitiveness Croatia needs to focus on on-going investment in quality and diversity of tourism activities and services, primarily in nautical tourism, he stressed. “15,000 more berths need to be constructed on the Croatian side of the Adriatic coast, of which 5,000 need to be dry berths. Until recently, there were only three marinas in Croatia with the rating of Four Gold Anchors; however, they require further investment and need to be further exploited in terms of revenue generation”, he pointed out. He added that
A boutique hotel with wellness, restaurants and accompanying programmes to be constructed in D-Marin Mandalina by summer 2015 faced by Croatian marinas, Lorencin pointed out the problem of 25% VAT per berth. In Greece, the VAT rate ranges between 7.5% and 8%. Lorencin added that last year the Ministry of Tourism managed to reduce the VAT rate on charter services and it currently stands at 10%.
MAISTRA PROCEEDS WITH INVESTMENT
INVESTMENT IN HOTEL INDUSTRY
FALKENSTEINER HOTELS AWARDED
The tourist company Maistra, operating within the Adris Group, is planning to invest an additional €0.2 billion following an almost €0.4 billion invested to date, with the aim of upgrading 95% of its hotel capacities to four or five star by 2017. Consequently, in 2015 the company plans to invest over €19.6 million, with €3.27 million earmarked for the refurbishment of the Rovinj-based hotel Adriatic.
The Adria Hotel Forum Conference will be held on 11th and 12th February 2015 in the Zagreb-based Sheraton Hotel, covering “Investment in hotel industry: Successful models”. It is anticipated that over 50 panellists, amongst whom there will be over 25 international tourism experts, will participate. The specific objective is to encourage communication and opinion exchange, as well as the presentation of global models, which have enabled the development of various cities and countries.
Three Falkensteiner hotels in Croatia have received HolidayCheck Awards this year. Two hotels are located on the Punta Skala peninsula near Zadar – Falkensteiner Hotel&Spa Iadera and Falkensteiner Family Hotel Diadora who have won this award for the third consecutive time. Falkensteiner Club Funimation Borik has won HolidayCheck Awards for the second consecutive year.