Mate Rimac: A success story We would prefer to be like Ferrari, a small business with a significant impact on the national economy
Stellar Aerospace Cluster First aerospace cluster in Croatia, will be a focal point for gathering companies, teams and individuals
Richard Weber, Eurochambres The less involvement by the state, the better for the investment climate and entrepreneurs
PAGES 2-3
PAGES 6-7
PAGES 8-9 2008 2009 2010 2011 2012
Croatian Business & Finance Monthly Established in 1953 Monday / 2nd February / 2015 Year VIII / No 0244 www.privredni.hr
S U P P O R T E D
B Y
T H E
pvinternational pv international C R O A T I A N
C H A M B E R
O F
E C O N O M Y
SOLUTIONS FOR TACKLING YOUTH UNEMPLOYMENT
New promising measures Entrepreneurs who give permanent employment to a young person will be given relief of contributions for five years Svetozar Sarkanjac he Youth Guarantee is a new incentive from the Ministry of Labour and Pension System for fighting one of the biggest problems facing Croatia today – youth unemployment. Moreover, the intention is to stop or at least slow the brain drain, especially of those just entering the labour market. This measure also includes reform of vocational education, and is one of the best employment promotion measures for employers, Labour Minister Mirando
T
The intention is to stop or at least slow the brain drain, especially of those just entering the labour market Mrsić highlighted on presenting the project in CCE Osijek County Chamber. The announced amendments to the Act on Contributions entered into force at the beginning of this year. All employers in Croatia, whether they used incentives from the Employment Service or not, are entitled to a five-year period of contribution relief if they hire an individual up to 30 years of age, and sign an indefinite term contract. This is a very important
measure since young people, with an indefinite term contract, will be able to start a family and solve their life issues, Mrsić stated. Employees who hire a young person for a fixed term and change the contract into an indefinite term will also be given five years contributions relief. Employers who met for the presentation in Osijek were especially interested in finding out whether other employment incentives would be withheld if they wish to use the youth Guarantee. Population measure The Minister claims that other incentives will not be excluded, that is, the employer will be able to use this measure even when a young employee asks for ad-
ditional training. Notwithstanding, it is important to point out that the employer will not be entitled to the Youth Guarantee if the employer handed his previous employee notice due to business reasons for the same work position, prior to the request for employing a young person. Employers were also interested in the duration of these measures and whether the salary of the employee depends on the possibility to use the incentive. The Minister replied there are no restrictions, and that they are entitled to the 17.2% fiscal relief regardless of the amount of income. The relief relates to the obligation of paying contributions for health insurance, protection at work and employment for all employers who
sign an indefinite term contract with a person of up to 30 years of age; and is valid for five years. Many young people attended the presentation, interested in learning about options when they look for work. The Minister vividly described that when young people look for work, they bring with them their knowledge, motivation and capabilities as well as a voucher for fiscal relief and incentives. For all those who are making their first steps on the Croatian labour market, the Youth Guarantee measure has a simple goal – to offer employment, traineeship, apprenticeship or continued education within four months of them leaving formal education or registering with the Employment Service.
2
Privredni vjesnik Year VIII No 244
we are currently dev “ What The Croatian market is curr
EBRD FINANCING JGL EXPANSION
€20 million loan
The European Bank for Reconstruction and Development (EBRD) has granted a multicurrency loan of €20 million to the Croatian company, Jadran Galenski Laboratorij (JGL), to provide assistance to the company strategy of further expansion. Consequently, JGL is planning to become one of the leading global producers of sterile solutions. The loan granted through EBRD will enable the
pharmaceutical company to double its production capacity. The company was founded in 1991 and it is currently the second largest pharmaceutical company in Croatia, specialised in the production of sterile ear-drops, eye-drops and nose-drops. It exports around 75% of its products. According to JGL sources, the company is planning to construct a new factory under the name of Pharma Valley, which will double the production of sterile solutions and create 100 jobs. Moreover, through the EBRD loan the company will provide capacity for further research and development, production and warehousing. Nevertheless, the loan through EBRD is only a proportion of total investment that was also assisted by the Croatian Bank for Reconstruction and Development (HBOR) through a loan of €32.7 million. (S.P.)
BRODOSPLIT HELPING TO PROTECT VENICE
€50 million contract Shipbuilding company SplitBrodosplit has recently signed a contract with Costruzioni Mose Arsenale in Venice on the construction of 41 steel gates for the inlets Malamocco and Chioggia. These are two of the three inlets leading towards Venice through the Venetian lagoon. The specific objective is the reduction of the impact of high tides on the city. Following an international tender, Brodosplit was selected as the best bidder and officially selected to do the construction work. The project, which will be implemented by Brodosplit,
comprises over 12,000 tonnes of built-in steel and along with the work and logistics its value is around €50 million. “Against the backdrop of rising sea levels, endangered architecture and horrendous flooding over St. Mark’s Square and the surrounding streets, Venice would be likely to become a dying relic, had it not been for this project”, pointed out Tomislav Debeljak, Management Board President of Brodosplit. The work on construction will start immediately and involve several hundred workers over two years. (J.V.)
aiming to opt for a similar
Mate Rimac: A CROATIAN SUCCESS STORY
Against all th to operate a
We are not aiming to be Toyota, we would prefer to be like F Krešimir Sočković fter 10 years of business activity his company is extremely well-known. Several years ago he was included on the Bloomberg list of most promising entrepreneurs Mate Rimac is a Croatian innovator and entrepreneur, the founder and director of the companies Rimac Automobili and Greyp Bikes. He has recently been known as the €70 million-man. “Those referring to me in this way have assumed the wrong stance. There is no magic formula for success. I have brought together my work and my love of electronics, electricity and automobiles and it remains to be seen where the market niche for electric vehicles will take us over the next several years” stated Rimac recently at the Zagreb-based Convention Centre Forum during a lecture organised by MBA Croatia.
A
Self-education and rewards He told participants about his self-education, award winning at innovation competitions, as well as winning the race with an electric vehicle from his own garage, all of which had all led him to produce a type of hyper-sport electric vehicle. At secondary school, he won contests for electronics technicians and innovators at state level. His final practical work at secondary school was a prototype glove replacing both the keyboard and the mouse. In ad-
dition, he won Golden Tesla’s Egg award and VIDI innovation award for the best ICT product in Croatia. He presented his second innovation through international competitions – a system for the removal of the ‘blind spot’ in cars, and ranked first again. As a first year university student, he won an award for the best business plan for the commercialisation of inventions. From his first receipts, he purchased a second hand BMW with which he participated in races
and, following the explosion of his petroleum-based engine in 2007, he decided to reorganise the car and transform it into an electric car. A year later, he began testing and developing his own car components. In order to
www.privredni.hr Business & Finance Weekly
3
veloping will yield results in at least 18 months, and we are primarily focused on exports. rently not in our sphere of interest. I am only aiming to employ local staff, provide advice to those direction, and assist the domestic economy.
”
he odds, I am here and develop
Ferrari, a small business with a significant impact on the national economy and indirectly with high market value assess the quality, he tested the car at races. He worked wholeheartedly on the car after each race and it became faster, more lightweight, more effective and more reliable. In 2011, the car became one of the fastest in the region. In addition, during the same year he broke five FIA Land Speed Records and the Guinness World Record for the fastest electric car. Meanwhile, he founded the company Rimac Automobili to produce the best electric sports car globally. In 2011, Concept-One was presented at the Frankfurtbased IAA and two years later the first such car was delivered to a client, which was simultaneously the first produced and exported Croatian car on record. The company became an engineering and production company that, in addition to its own cars and prototypes, also develops and produces diverse cars
and prototypes to order. In 2013 Rimac founded a new company – Greyp Bikes focusing on the production of high-end electric bicycles. Ups and downs Entrepreneurs are commonly faced with ups and down, stressed Rimac. “Thus, we were in the so-called “valley of death” for a substantial period of time when we lacked funds for the rent of business premises, we could not afford to settle our utilities invoices and we were facing a gas shutdown. Yet a turning-point occurred. What we are currently developing will yield results in at least 18 months, and we are primarily focused on exports. The Croatian market is currently not in our sphere of interest. I am only aiming to employ local staff, provide advice to those aiming to opt for a similar direction, and assist the domestic economy”, highlighted Rimac. Irrespective of having consid-
ered relocation to Dubai or Germany, primarily in search of an investor who could ensure safe growth and stable operation, it never occurred. The investment he attracted was directly into his company rather than through an off shore company. “Against all
companies is lack of investment, according to Rimac. “We are extremely small compared with the motor giants. Ford invests $6 billion in car development, BMW invests $3 billion in its electric cars, Fisker invested $1.4 billion of which $500 million was pro-
Our know-how approach with engineers tackling issues within the company have proved successful the odds, I am here to operate and develop”. We could not be doing better than we currently are in my opinion. However, I am sure next year we will be doing even better”, announced Rimac. We are planning two new models that will be comparable with the Lamborghini Aventador and Ferrari 458 Italia regarding value and performance, and in 2020, we are planning to employ 350 staff and produce around 1,000 vehicles. The major issue: lack of investment We are not aiming to be Toyota, we would prefer to be like Ferrari, a small business with a significant impact on the national economy and indirectly with high market value. We are aiming to create technology, focus on research and development inside the company and sell our knowledge,” explained Rimac. The most pressing problem faced by start-up
vided by the American government, yet it did not succeed. Tesla Motors is a small company and it invested $100 million in its first car, the ‘Roadster’, primarily in the machinery, as the remainder was based on the Lotus Elise. We were forced to operate differently. Our know-how approach with engineers tackling issues inside the company proved a success in our case”, pointed out Rimac. Irrespective of the fact that his view of the future of the motor industry is in search of mobility rather than in search of a car as a product that will be seldom used and stored in a garage, Rimac believes that there is still market potential for his ideas. “There will always be enthusiasts (like me) who will be interested in similar sports cars. I am not interested in producing a car which would generate savings nor in large-scale production. I am focused on attractive sports cars for enthusiasts who are prepared to pay a price”, concluded Rimac.
4
Privredni vjesnik Year VIII No 244
( €28.6 million
turnover for TIM Kabel at the end of 2014
IVAN TOPČIĆ, FOUNDER, OWNER AND DIRECTOR OF TIM KABEL
We started in a garage export to 63 countries
I always say half of my people are cleverer than I and this is true. My job, as an entrepreneur and manager, is to enco should only listen to the boss, but this is not good Ilijana Grgić or TIM Kabel 2014 was extremely successful. They celebrated their 20th anniversary; for the first time turnover exceeded €26 million (40% exports), and the Croatian Managers’ and Entrepreneurs’ Association (CROMA) selected founder, owner and director of TIM Kabel, Ivan Topčić, as Entrepreneur of the Year. “When I remember my early days and compare the present, I see a great difference. I can say we are a typical ‘garage’ company”, Topčić says, highlighting they are also a family company.
F
What has it been like to operate on the market for over two decades? I like to joke that both we and Google started from a garage. They are slightly ahead of us now, but we will catch up. In 1994 the market had room for everyone, and do not forget the war was still ongoing. We were very responsible in our work, and it was in these times that work was coming to us. We used market circumstances and potential; we were stable, and success came rapidly. After three years, we needed more space. Now, after 20 years, we are proud to say that in addition to our Head Office in Zagreb, we also have affiliates in Split and Osijek. Our staff consists of 40 employees. When I look back, I can say with all certainty we are very pleased with our position on the market.
What is your main activity? We deal with the wholesale and distribution of cables, and I can say we are the only company of this type in the entire region. I come to work with a smile on my face. I have a wonderful team of colleagues with whom I am very satisfied and to whom I am grateful. All my colleagues are top notch in their work. You managed to survive all these years, especially 2008 that was a turning point for many companies. With the recession still ongoing, what is it like to operate under such conditions? Firstly, I must say that when the crisis hit, and I know the exact day (it was 1st September 2008), we had €5 million worth of copper goods in stock that we bought at a price of €5,300 per tonne. When the market started to decline, the price of copper (our main product and raw material) almost halved four months later. This was a heavy blow. Not only the market declined, but the value of goods halved. Almost any company in this situation would perish. Notwithstanding, due to our personal accumulation of funds, and the fact we set our funds aside for bad days, we overcame the crisis, with ‘injuries’ of course. I will only say that we had €100,000 loss monthly in December 2008 and January 2009. However, we did such a great job; our customers did not feel we had problems. More impor-
My job is to co-ordinate my people Your colleague managers recognised you as the top entrepreneur for 2014. Has the perception of managers in Croatia changed for the past 20 years of your experience in the world of entrepreneurship? Things are slowly changing. I am certainly proud oft the title, even though I know who I am and what I am like. I always say half my people are cleverer than I and this is true. My job, as an entrepreneur and manager, is to encourage them to show their knowledge, skills and capabilities. Unfortunately, the mentality of our society is that we should only listen to the boss, but this is not good, and there is no great progress in such companies. I really do see my people as generators of company development. My job is to co-ordinate them.
www.privredni.hr Business & Finance Weekly
(
5
% growth achieved by the company in the past two years
e. Today we
ourage them to show their knowledge, skills and capabilities. Unfortunately, the mentality of our society is that we
tantly, we realised we were in a crisis and we managed to stay strong and stable under such duress. We proved ourselves as a tough company, even though we were shocked at first since we had never experienced anything similar. However, we managed to cover our losses from our personal funds; remember that the banks withdrew then, and it was not possible to obtain loans. We realised we could overcome the crisis and become even stronger.
One of the ways out was to turn to exports. We turned to exporting since the local market declined, and we had to compensate for our loss externally. You have to know that there were only 40 of us in the company, doing the same amount of work as 400 in a state company. It was not easy. In the beginning, we even asked ourselves how we would export to say Africa or Asia; we did not know where to start, which way to go and how to reach contacts. I must say one great and passionate individual did this great work - Ivan Brevulj – who now receives around 300 e-mails a day from all parts of the world. He formed a team within the company. Then, we invested a lot in travelling, promotions and showrooms. This year we will make our fourth trip to Dubai – the showroom was a great opportunity for finding contacts in the Middle East. Today we have no problems with shipping to Iraq, Jordan and other Middle Eastern countries. It is also important to mention our path to big purchasers yielded no results initially. We even doubted our competence. However, the situation reversed in 2013, and especially in 2014. When things get going, business starts to develop on its own momentum, since good news travels fast. I will mention an example of work we did with a Belgian company that wanted to invest in Central Africa. The project was worth €700,000. This was our first job with them. We did it so
professionally that they sent us a letter of acknowledgement for a job well done, saying we were one of few who do their job in a professional manner. This letter brought us a lot of satisfaction. Today we export to 63 countries. What were your results in 2014? We will have €28.6 million turnover for 2014, compared with €24.4 million in 2013. Not many
Good economy of a state is comprised of good companies, and good companies are comprised of good managers companies in our sector manage to show 20% in annual growth. I must also say our profit level decreased, but we compensated for this with the volume and achievements in our business, so we are looking forward to a positive 2015. What is your perception of entrepreneurship? I am disappointed that we did not move a long way from the belief of a large share of the public and even the state, which with its moves perpetuates the myth of entrepreneurs as tycoons or exploiters. I am convinced that only capable entrepreneurs and managers can boost the Croatian economy. Good economy of a state is comprised of good
companies, and good companies are comprised of good managers only. If there are no investors ready to invest and create, there is no progress for the Croatian economy. The education of our managers is another key item. I am disappointed with institutions that educate future human resources. I have a feeling it is all on a declarative level. We lack awareness that managers and entrepreneurs can pull the Croatian economy out of the current crisis. Not all is that grim, would you say? Some areas show signs of progress, primarily in drawing from EU funds. The Government did much here, but full potential has still not been used, and for the majority of entrepreneurs it is crucial how they will achieve and use the potential offered to them. I will elaborate using our personal experience. We struggled extremely hard, and almost bled while working on the procurement of a machine worth almost €300,000, of which €170,000 was drawn from EU funds. We learned this the hard way in a process that lasted 14 months, when most companies would give up. I expect the Government and related ministries to be there for all of us, and to not only say they are. They should support, inform and encourage companies. However, I see some progress as far as this issue is concerned. I am not afraid for my company, but I would be much happier if more of us were like that.
6
Privredni vjesnik Year VIII No 244
PENETRATING THE ALBANIAN MARKET
Ferry line as additional trigger point
( $613 billion market
for space and aviation technology in 2013
Stellar Aerospace Cluster
JOINT DEVE THE FUTUR
Stellar Aerospace Industries has established the first aerosp teams and individuals. The concept is to co-operate in resea space and aviation technologies Krešimir Sočković
Joint Albania-Croatia Economic Commission to meet and discuss greater co-operation on infrastructure, tourism, agriculture and energy Between January and October 2014, Croatian exports to Albania totalled slightly over €50.5 million, up 3.5% compared with the same period of 2013. At the same time, data provided by the Central Bureau for Statistics show that imports from Albania totalled almost €2.2 million (1.3% more) compared with the first ten months in 2013.
€50.5 million Croatian exports to Albania during first 10 months of 2014 We would like to see more Croatian companies as investors in Albania, but also as contractors, exporters and partners with Albanian companies. We will do everything in our power to turn our good political relations into better economic relations, Albanian Ambassador, Ilir Melo, highlighted at a recently held meeting with the President of the Croatian Chamber of Economy Luka Barilović. Ambassador Melo also met with Stjepan Šafran from Metal Product, a successful Croatian entrepreneur working in Albania and representatives of the company Cro-Team Albania who represent
the interests of several Croatian companies, who also confirmed the vast potential of this market. Furthermore, as Melo pointed out, the Joint Albania-Croatia Economic Commission will meet in Tirana in March to discuss greater co-operation in infrastructure, tourism, agriculture and energy. Moreover, he highlighted he will put all his diplomatic efforts to introduce a DračŠibenik ferry line which could act as an additional trigger point for better exchange between the two countries. Trade surplus CCE President, Luka Barilović, agrees with the need for investing greater effort in bringing the Albanian market, and the potential it offers, to exporters in particular, closer to Croatian companies. He also supported a series of elaborately planned and concentrated activities for increasing mutual interest in economic co-operation. We really cannot be satisfied with the present situation even if we know that the CroatianAlbanian trade surplus exceeded €55 billion in 2013. The numbers are still too low compared with the obviously existing potential, and we have to do everything in our power to help entrepreneurs increase this surplus, Burilović noted. (B.O.)
lthough many think Croatia is superior only in producing food and wood products, and high earnings from tourism, there is a group of companies in Croatia whose products are used in the space industry. The company Stellar Aerospace Industries has established the first aerospace cluster to unite related Croatian companies and promote the growth and identity of the industrial sector of space and aviation technologies within the Croatian economy. Stellar could become a focus for encompassing companies, teams and individuals to co-operate in research project development, production, integration, delivery and counselling in robotics, space and aviation technologies.
A
Expanding market The global market for space and aviation technologies is continuously expanding, says Teo Valić
from Stellar Aerospace Industries. “We are a company with
employees in the United States, Singapore and Australia. In Europe, we are interested in attracting employees and expertise both of which are abundant in Croatia. We are interested in scientists and engineers with previous experience in space technology production”, Valić highlights. There is a group of companies in Croatia producing high-tech products and supplying them to Italian companies or companies from other countries. It is inter-
esting that subsidies for developing these products, often designed and produced entirely in Croatia, are allocated to foreign companies who sell these same products to space agencies, Valić points out.
The Cluster aims to join up capacities so creating and developing products that could compete globally In 2003, the market for space and aviation technology stood at US$157 billion, doubling to US$320 billion during the following decade. Market growth that reached $613 billion in 2013 is limited mainly by low capacity. The lack of production facilities points to a need to develop and expand the range of products, services and technologies as well
www.privredni.hr Business & Finance Weekly
7 ::: news
( 7.5% annual growth In the industry
ELOPMENT INTO RE
pace cluster in Croatia, which could become a focal point for gathering companies, rch project development, production, integration, delivery and counselling in robotics, Cluster members Stellar Aerospace Industries Affiliate - supporting services and connections with foreign markets, partners and clients Robotic Systems - company co-ordinates projects for producing the Lunar Rover and Lander for GLXP Team Stellar Rudex 2000 - producer of robotic systems and production tools as further growth. The industry growth rate is 7.5% a year, while non-delivered orders grow at the rate of 12.6% a year. Croatia participates in this industry with scarce but quality resources and great potential due to highly educated and skilled human resources as well as lower business costs. Products of extreme importance for Croatia Previous work of Croatian companies has related mainly to partial participation on large projects for foreign customers. The cluster aims at joining capacities, creating and developing products that could compete on the global market. Stellar Aerospace Industries encompasses newly founded and well-known companies from the industry in a cluster initiative in order to work jointly on developing, producing and marketing finished products and services, of strategic im-
portance for Croatia. “When we performed our analysis, which took us almost two years, we noticed there are many companies in Croatia that motivated us to work in this country. Croatia is not the only focus of Stellar Aerospace Industries since the majority of our employees work outside Croatia. Notwithstanding, we started from zero in November 2012, and today we have around 30 permanent employees, and plan to hire 400 more during the next couple of years”, Valić highlights. One cluster member is the company Samoborski Rudex 2000 which produces parts for manipulators and robots working in inspection facilities in nuclear power plants. “Our interest in this project goes much deeper”, Mihael Lehpamer from Rudex 2000 points out. “We will see what the future has to offer us depending on cluster development. In any event, it is a future
Majestic elektronika inovacije - company designs robotic systems and laboratory testing of materials Arctic, Slovenia - research and development of new space technologies
Podravka severance pay scheme Following a proposal put forward by the Trade Union, Podravka Management Board is providing staff eligible for redundancy with severance pay of €650 nett for each year of uninterrupted employment. According to Podravka sources, the severance pay scheme is the continuation of the restructuring process that is imperative, whilst aiming to optimise costs and improve operational effectiveness, as well as ensure the sustainability of existing jobs. AZ Mandatory Pension Fund (OMF) profits of €0.34 billion According to preliminary and unaudited results, profits by the investment team of AZ Mandatory Pension Fund of B category stood at €0.34 billion in 2014. The profit per average member of the B category AZ mandatory pension fund was €558. As emphasised by AZ Mandatory Pension Fund sources, the largest contribution to last year’s high yields was made by Treasury Bonds, primarily long-term dollar-denominated bonds. Moreover, high yields were also due to international shares, primarily those from the pharmaceutical sector, which accounted for the highest proportion of the international shareholder portfolio. Đuro Đaković sign a new contract with French company
Evolve - planning, industrial design, quality management E.Tech - project management, new technologies, system modelling and planning Tim Stellar Organisation - science popularisation and channel for recruiting students and future employees that could define and position all members as stronger and bigger players on the global market. With over 35 years of experience in high-technology, I believe this is possible”, Lehpamer concludes.
Đuro Đaković Special Vehicles and the French company Ermewa Ferroviaire, have recently signed a contract for the production and delivery of rail freight wagons worth €7.9 million, as stated by sources in Đuro Đaković Holding. This is a continuation of the implementation of a contract for the same client concluded in August 2014, and the wagons will be delivered during the second and the third quarters of 2015. The client will take delivery of the type Falns 64 wagons.
8
Privredni vjesnik Year VIII No 244
leaders in co-operation with Chambers of Economy “ Political investment and there will be movement away from a dead end. RICHARD WEBER, PRESIDENT OF EUROCHAMBRES
The less involvement by th investment climate and ent I believe that things appear more hopeful when considered from the outside compared with ones assessment from t Igor Vukić osip Leko, President of Parliament, gave Richard Weber several presents typical of Croatia - a tie, a fountain pen and a model parachute by Faust Vrančić - all products of Croatian inventors. “Wonderful! These are true symbols of the Croatian spirit, this innovativeness, this inventiveness that has persisted here for centuries. It
J
Focus on the stability of the system and strengthen independence from the state. Investment will happen when we are convinced it is worth kick-starting implies you are capable of making and creating amazing things, you only need to be encouraged. Your business people will reveal and exploit their potential against the backdrop of an adequate legal framework”, stated Richard Weber, President of Eurochambres, the umbrella association of European Chambers of Economy during his recent visit to Zagreb. Eurochambres does not only cover European Union, since it brings together Chambers of Economy from Turkey and promotes strong support to entrepreneurs and investors pursuing similar objectives in both the West and the East. They are all aiming to invest, create new values, employment and new jobs and to be able to do it without
much interference from the state. Politics needs to provide a framework and open the doors, leaving the rest to investors”, reiterated Richard Weber. He arrived to Zagreb to share his stance on the amendments to the legal status of the Croatian Chamber of Economy. “My principal message is that countries in which there is mandatory membership in Chambers of Economy have the lowest unemployment rates. Consider the situation in Germany or Austria with mandatory membership, and on the other hand countries such as Italy or Spain with voluntary membership. It particularly reflects upon high youth unemployment levels in countries with voluntary membership. Turkey also has a Chamber system with mandatory membership. They followed the German and Austrian experiences and hence Turkey shows a far lower youth unemployment level. I believe this is a consequence of the fact that in any country with mandatory membership, entrepreneurs have a higher level of responsibility both towards institutions and towards the general public. The crisis has provided additional support to the idea of mandatory membership. The dialogue, which occurred through Chambers, resulted in more adequate solutions for social problems. Moreover, Chambers need to be independent from the government and from politics. It is the idea I pointed out to your political representatives, to the President of Parliament, Josip Leko, and to Minister of Entrepreneurship, Ivan Vrdoljak. I emphasised the importance of this issue for
a country whose democracy is relatively recent and which transcended the former one-party system only some twenty years ago. Croatia is a new European Union member state and it remains yet to be seen which model of organisation of the business system is the most appropriate for her. Politicians can occasionally create some jobs, yet it will certainly not be sufficient for the progress of overall society. Entrepreneurs are in charge of job creation and they must be given an opportunity to do what they can do best. What did your Croatian interlocutors reply? I believe they are aware that the European Union is an immense opportunity for Croatian companies and that the solutions which proved effective in Europe need to be implemented. The EU and its system of democracy at times provide solutions that are not easy to accept. Upon your EU accession, you did not enter Heaven, yet the system is broad enough to provide an opportunity of progress to everyone. You have been on the Management Board of the Chamber of Economy in the German Saar Region. What happened in the Chambers of Economy in Germany during the outbreak of the crisis? Primarily we did not expect much assistance from the state. Austerity measures were pointed out at state level, yet we were aware as entrepreneurs that we would not have much benefit from that in the short term. Consequently, we discussed possibilities and the
measures to implement in order to improve our positions. During Chamber Forums and meetings of diverse bodies, we analysed what could be done to enhance youth employment. Inadequate reactions to this issue lead to deep-seated damage for the entire society. Youth employment and employment in general is at the crux of discussions amongst German business people. The initiatives for youth employment put forward by Chambers are normally particularly valued by state bodies and, more importantly, by the general public. Consequently, the Chambers need to consider not only the interests of their members, but also the requirements of the broad social community. I am convinced you
www.privredni.hr Business & Finance Weekly
9
need to invest additional effort to gain entrepreneurial confidence regarding Only entrepreneurs can create jobs.
�
he state, the better for the trepreneurs
he inside. Perhaps this is an aspect of your mentality, perhaps a legacy from the previous system
in Croatia operate according to these principles. When business people focus on job creation, encouragement of vocational education and training and development of innovative products they will certainly obtain recognition by the wider community. What were the reactions of German entrepreneurs to the proposals put forward by the Chambers? There is always immense interest in our services and it has intensified against the backdrop of the crisis. I am aware of the fact that countries without a strong tradition or those that underwent substantial changes in their social systems, such as those in Eastern Europe, tend to have an attitude
of resignation towards the services provided by public bodies. Nevertheless, one must never surrender. Entrepreneurs need to inquire about the services available and they need to request them. In Germany, there are 82 local and regional Chambers and an umbrella organisation bringing them together. It is our bridge to politicians, to the Ministers and to Chancellor Angela Merkel leading them. If we are seriously committed to pursuing our interests, our voices will certainly be heard. I have been working in France a lot, and I see they operate in this manner as well. Entrepreneurs voiced their interests through Chambers and President Hollande began to respect and acknowledging them as well.
You have been President of Eurochambres since 2013. What are your experiences of co-operation with leading politicians of the European Union? I have recently asked those employed in Jean-Claude Junker’s office, what can be done by entrepreneurs to improve the situation on the European market. According to them, investment and new innovative products are fundamental. Where should they invest? I asked them. What to invest in, against the political and economic climate influenced by state authorities? They were bewildered and were not able to provide an answer. I told them that political leaders in co-operation with the Chambers need to invest additional effort to create entrepreneurial confidence in investment. Then things will start to move away from the dead end. Only entrepreneurs can create jobs. We do not even need to discuss the incentives that can be provided by the state to businesses. Actually, we do not need incentives once we have been convinced of the requirement of investment, of the fact that there is a legislative framework that enables unhindered investment. Confidence and trust, a stable economic system, laws that do not change upon the proposal of one Minister or another, these are imperatives and more required than incentives. This is our message to Croatian entrepreneurs. Focus on the stability of the system and strengthen your independence from the state. The investment will occur when all have been convinced it is worth kick-starting.
What is the role of the Chambers in attracting foreign investment into individual countries? Eurochambres has three principal objectives: Firstly, the promotion of professional education, secondly, the development of innovative business activity and industry, and thirdly the creation of a new European Electricity Grid and energy policy. Our proposals for the enhancement of youth employment focus on the rĂ´le of investors who are fundamental for job creation. We promote the encouragement of investment and simplified procedures and the abolition of administrative barriers. Business requires a wide range of accompanying services and this is where the Chambers need to provide assistance, through informing, consulting and organising business forums. Consequently, they require a stable financing source that must not undergo amendments overnight. Could you provide some advice for the Croatian economy that is facing recession for the sixth consecutive year? I believe that things appear more hopeful when considered from the outside compared with how one assesses them from the inside. Perhaps this is an aspect of your mentality, perhaps a legacy from the previous system. I have noticed that in Poland and Russia, also. Everyone keeps complaining and lamenting, yet there have been so many positive changes during the last several years in these countries.
10
Privredni vjesnik Year VIII No 244
( 5.5 million olive trees in Croatia
( 80%
harvest failure on Brač
OLIVE GROWING: CATASTROPHIC 2014
Harvest fails, poor
Over the whole of Croatia, the olive harvest 2014/2015 is not even half that from the previous season, and in some a Jozo Vrdoljak roatia has around 5.5 million olive trees (20% unprocessed) covering 30,000 hectares. Olive groves account for 0.5% of total agricultural land, with around 45,000 households work in olive growing. The most common variety is oblica (60%), followed by buža and leccino each with 5%. The yield oscillates from year to year,
C
Due to shortages and poorer olive oil quality, I think different qualities of oil will be mixed ranging from 25,000 to 35,000 tonnes of fruit producing 4.5-5.5 million litres of oil, or at least that was the case until 2014 - that go down in history as the worst year. This is also the reason why, of a total of 180 olive mill owners, less than 50% of them operated last year. Although official data and harvest assessment have not yet been published, the Co-operative Alliance of Dalmatia conducted a survey that points to certain indicators of the past harvest. According to their results, the situation is extremely bad. On the basis of statements provided by the mill owners, it is evident the harvest was catastrophic; harvests also failed in other Mediterranean countries, but not to the same extent as in Croatia since olive groves in the biggest producers - Spain, Greece, Italy and France - are processed using modern techniques and are treated with pesticides.
Evidently poorer harvest There is not one single olive growing area in Croatia that did not suffer losses. Throughout Croatia, the olive harvest 2014/2015 is not even half that from the previous season, and in some areas it did not even reach 10%, a true catastrophe. Furthermore, the quality of olive oil will be poorer. True, there are microlocations that suffered less damage; some even had good quality harvests, but this is a very small percentage, President of the Cooperative Alliance of Dalmatia, Lordan Ljubenkov, stated. According to the survey results, one of the most important olive growing islands – Brač – produced a far worse harvest than the year before. In some locations, the crop fell by 80%. The harvests on Hvar and Korčula dropped 60%. In the areas around Makarska, Kaštela and Šibenik, no one remembers a worst harvest, even though in some microlocations (Promina), the harvest was excellent. In the County of Zadar, the harvest slumped 70%-80%, and an early harvest was also neces-
sary, which will result in poorer oil quality. Southern Istria was hit hard by Rhynchites cribripennis; the area of Vodnjan collected 500,000 litres less than the year before.
There are many reasons why the harvest failed, starting from negative weather conditions, since last year was marked by aboveaverage high temperatures and humidity. Abundant rain washed out the pollen, which affected pollination. Furthermore, olives were hit hard by pests, especially the olive fruit fly, which has not been seen for 10 years; as well as Rhynchites cribripennis, and moths. In Istria and Kvarner, in addition to the olive fruit fly, great damage to the fruit was caused by Rhynchites cribripennis, a pest that attacks the small-
est fruit, Ljubenkov explains, adding the market responded to these problems by raising the price of extra virgin olive oil by around 25%. Eco-producers hit The owner of one of the most modern olive mills and the Sveti Ivan Centre for Olive Oil, in Vodice, Ante Duvnjak, says the olive harvest is definitely 85% worse than the year before. It is true the price will increase, but this is the least of the problems. Due to the shortage of olive oil and its lower quality, I fear dif-
www.privredni.hr Business & Finance Weekly
1111
( 45.000 households work in olive growing
oil quality
areas it did not reach even 10% - a complete catastrophe trophe Stricter control of oil distribution and production Croatian share in global olive oil production is 0.2%. Additionally, she imports around 20%, and this import is growing. Oil consumption per capita equates to 2 litres a year; in Greece it is 20 litres a year. The European Union produces 80% and consumes 70% of global olive oil production covering 5.2 million hectares, which is 4% of the total agricultural area of the European Union. Around 2.5 million growers deal in production. Tunisia, Syria, Morocco and Turkey produce the remaining 20% of total global production. On a global level, the production ranges, depending on the yield, between 2.6 and 3.4 billion litres of olive oil, with a mild growth tendency. Economic experts, specialised in the EU olive oil market, estimate the price of oil will slowly increase by 30%, and there will not be enough to cover demand until 2020, Ljubenkov said. He also added that the drafting of quality standards of the extra virgin olive oil is in progress, and will be implemented globally. The USA, in co-operation with Australia, is becoming more involved in the market and is introducing regulations on implementation and control of quality. When these standards become fully implemented, many olive oils, now standardised as extra virgin olive oils, will no longer be categorised as such. Stricter control over production and distribution of this oil will significantly decrease, and its price will rise, Ljubenkov concludes.
ferent types of oils will be mixed on the ‘grey’ market. I am concerned about the quality of olive oil on the shelves. I cannot understand how a litre of extra virgin olive oil on the shelves of supermarkets could cost under €3.90, when input costs are at least €5.20, Duvnjak highlights. He also warned about the damage that eco-producers suffered this year, including him. This is why some of them consider giving up eco-production. The substances that eco-producers use are too mild to provide protection in such extreme conditions.
Furthermore, excessive humidity and warm weather contributed to rot. All this led to early harvesting, so the quality of oil this year is bad. I am not accusing anyone, but no one warned us in time about the pests; for example, four attacks of olive fruit fly, and how to protect against them. This year should be written down as the most extreme so far. It was catastrophic, and we should forget it as fast as we can. Expert services should pay more attention to the diseases hitting olive trees in the south of Italy since they could also hit us. We
started an initiative through the associations so that the Government could compensate for the losses, at least to some extent. However, I doubt anything will come of it. We need to understand that protection is important, and many olive growers will treat their olives and give up on eco-production to produce yields, Duvnjak explains. Istria varies According to him, the Sveti Ivan Centre for Olive Oil processed 72 tonnes of olives last year compared to 1,800 tonnes the year before. This is around 4%; and worst of all, the quality of oil is very low. Most of my colleagues did not even open their mills, in fact I think only a third of millers operated, Duvnjak added. Zdenko Barac, Secretary of the Association of Olive Producers
of Istria Region OLEA, evaluates last year as below average, adding that some olive producers produced record high yield, but there are also those who were left with nothing. To sum up, the year was bad in terms of quantity and quality. It is not worth comparing it even with the year before, since 2013 was not successful in Istria as opposed to Dalmatia. Actually, the yield was not that poor in the area of Poreština, but there was a high proportion of damaged fruit. Zdenko Barac thinks producers should listen to the advice of experts on how to protect the fruit and its quality. OLEA was founded in 1994 and it continued the activities of the FAO’s programme by organising international conferences and various lectures on promotion of olive growing and the quality of the olive oil.
12
Privredni vjesnik Year VIII No 244
::: news High level of interest in consultancy to LNG Eight bids have been submitted to the tender for legal, business and financial consultant to LNG Croatia for the development of the study for the construction project of the terminal of liquefied natural gas on the island of Krk. The bids will be evaluated over the forthcoming 30 days and particular attention will be paid to the financial aspect, technical conditions and professionalism required for the performance of the required work. Affordable loans for microcompanies and artisans Croatian micro-companies and artisans will be provided with the possibility of more affordable short and long-term financing in 2015, in accordance with a contract signed by the Croatian Chamber of Trades and Crafts and Zagrebačka banka. Members of the Croatian Chamber of Trades and Crafts will have the opportunity to obtain short-term loans at more affordable interest rates for the financing of seasonal work, as well as for contracted work for the delivery of goods or provision of services, and the financing of working capital requirements. On the other hand, long-term loans will be granted for the purpose of long-term working capital requirements. Croatian kuna-denominated loans are also available. Debt write-off The Croatian Prime Minister, Zoran Milanović, has recently signed an Agreement on debt write-off aimed at mitigating financial difficulties of the general public who are in debt collection procedures for claims of low value. The Agreement was also signed by mayors of Rijeka, Split and Osijek, Vojko Obersnel, Ivo Baldasar and Ivan Vrkić, Zagreb deputy mayor Sandra Švaljek. Signatories also included Management Board Presidents of the public companies Croatian Post and HEP, Alen Premužak and Perica Jukić, as well as Boris Sruk, Chief Operating Officer at Croatia Radiotelevision.
( €120 million
Croatian exports to Germany for 2014
CROATIAN COMPETITIVENESS - WOOD PROCESSING INDUSTRY CLUSTER
Designer furniture guarantees export growth The value of exports in the wood processing industry stood at $1.1 billion in 2014, an increase over the pre-crisis 2008 level
he value of exports to the German market by the Croatian wood processing industry stood at €120 million in 2014, a 30% rise compared with the previous year. This year the trend is expected to continue due to high quality, innovative products of sophisticated design. The Croatian Competitiveness Cluster for Wood Processing Industry focuses on the development and promotion of such products. It is one of 12 Competitiveness Clusters founded by the Agency for Investment and Competitiveness, as pointed out by Damir Novinić. “We founded the clusters as the most effective tools to boost competitiveness, as well as for the absorption of EU funds. The Agency supports the clusters concerning the administrative and technical aspects and it also provides some financial assistance, as they are likely to easily attract investment”, emphasised Novinić. Ivana Mezak, Head of the Competitiveness Clusters Department
T
at the Agency, highlighted the fact that the Competitiveness Cluster for the Wood Processing Industry is the most active cluster. “It has launched 26 project ideas of which 6 are considered projects of national importance. One of them, Pannonian Competence Centre for Wood, is already being implemented in Virovitica and we can anticipate the implementation of the idea of the Competence Centre for Slavonian Oak in Vinkovci in the forthcoming future”, she pointed out. Whilst exports saw a 10% increase in 2014, the wood processing industry (which accounts for 10% of total exports), shows figures now exceed those during the pre-crisis years. Pop-up kitchen According to estimates, in 2014 the value of exports for the wood processing industry stood at $1.1 billion. Tomislav Knezović, Management Board member of Prostorije, told the success story behind these figures.
“Our export soared by 100% due to the fact that all aspects of our work have been brought together aimed at primarily boosting exports. The principal tool to achieve this is through exhibitions at fairs, yet even the products with top quality design need to be presented in a highly skilful manner to arouse interest– at a stall of impressive design, through high quality promotional materials and presented by highly trained staff qualified to promote our internationally awarded products”, stressed Knezović. Alenka Kostanjević Špiljarić, Director of Inkea, the company that focuses greatly on high quality and sophisticated design, has announced a new export initiative. “International markets are our priority and we are about to present our space-saving ‘pop-up’ kitchen. It is fully equipped, yet takes up only 1.6m2 of space. It has already won a German Design Award and has aroused substantial interest from German architects”, she added. Nikola Radeljković with Numen Group, expressed his utmost satisfaction for the fact that there are an increasing number of companies providing high valueadded products. “Introduction of design in all aspects of production guarantees an identity, and an independent position in the market. We will never be able to cut production costs significantly, yet we have top quality staff and top quality designers with technologically advanced products for which there is immense market potential”, pointed out Radeljković.
www.privredni.hr Business & Finance Weekly
13
Innovators from Osijek
Toys make a business success Damir Samardžić has certificates of excellence for his products and he is authorised to sell them throughout the European Union. Academic sculptor, Margareta Lekić, whose 3D cubes are not in full production yet, says that market interest is already very high Svetozar Sarkanjac n an economic sense, the first association relevant to Osijek is the food industry or more recently the IT sector, if we disregard unemployment, ruined industry and the pillaging privatisation 20 years ago. This is an entirely different story. An entrepreneurial story based on toy production has recently developed in Osijek, modestly, but persistently. These are not just any kind of toys. They are eco-friendly didactic wooden toys.
I
Croatian alphabet Margareta Lekić, an academic sculptor from Osijek, has been nurturing the idea about producing toys since her childhood. Unlike many who dream about having at least a toy store, if not a toy factory, Margareta still has the same dream. However, in her case the dream has turned into reality. On the other hand, Damir Samardžić, also from Osijek, came up with the idea of producing toys when he was working in printing services. In 2011, he established a small factory creating wooden toys Ponge producing wooden cubes called Croatian alphabet. The concept of wooden cubes was spinning in my mind for a long time, but I wanted to have all the necessary certification
prior to producing and marketing top quality products. I tried in Croatia, but it did not work. I then learned about one of three European companies specialising in certifying toys for children Eurofins Product Testing Services Limited from Manchester. Our cubes now have a certificate of excellence, and we can sell them throughout the European Union, Samardžić explains. Croatian alphabet consists of 20 coloured wooden cubes. This is an entirely Croatian product intended for developing the children’s motor and didactic skills, as well as logical thinking. The toys have been on the market for over half a year. The cubes are sold in retail outlets in several Zagreb shops and bookstores as well as web shops,
but Ponge also owns its own internet shop. Mr Samardžić would like to find a good distributor to deal with, while he and another two employees would dedicate themselves to creating new ideas and expanding their product line. The story of Croatian alphabet does not finish here, as they have received queries from interested parties from other countries who would like have the product in their national alphabet. One of the projects they would like to accomplish this year includes wooden cubes in Braille. Designer puzzles Almost simultaneously, Margareta Lekić also developed her idea for producing didactic toys for children. After years of artistic experience and teaching children
of various ages, she managed to combine her loves of art and logic. With some entrepreneurial spirit, her idea resulted in product called Margareta – didactic toys for children. As she stated, Margareta is a Croatian brand of high-quality hand-made and eco-friendly toys for children. This colourful set of wooden geometrical shapes transforms from didactical puzzles into 3D shapes - houses, trees and mountains - and is ideal for child development. For now, the toys are sold via specialised design fairs in Zagreb, Rijeka, Ljubljana, Budapest and Osijek. However, Margareta puzzles can also be bought in several designer shops, mainly in Zagreb. She anticipates a full market breakthrough after obtaining the required documentation and certification. Furthermore, additional investment is necessary for entering into full production. “I cannot wait for everything to be in full swing since market interest is extremely high. I was contacted by people from the Netherlands, England, Russia and Hong Kong,” Margareta Lekić says. Actually, Margareta sees herself doing research in the future and creating innovative and stimulating toys for children. As she says, parents want their children to develop and learn through play, and these toys offer this possibility.
14
Privredni vjesnik Year VIII No 244
INVESTORS ATTRACTED
The sixth generation of start-ups completed the ZIP programme A new round of tenders for enrolment in the incubator programme to create the fundamentals for new start-ups to operate is expected in spring modation providers, Tradee web - a platform for B2B supply and demand networking, LegalTie –law practice management software, and MAPP – a system for rewarding users of mobile advertising. The Incubator programme was successfully completed also by SportRuler, an online programme for sports league and team management and RentaShopper, a service aimed at providing opportunities for shopping in distant stores via the Internet. A new round of tenders for enrolment in the incubator programme to create the fundamentals for operation for new start-ups is expected by the end of the first quarter. (K.S.)
he sixth generation of start-ups completed the Zagreb-based incubator programme ZIP. On the closing day, 10 of the 11 teams provided an overview of their progress during the three months spent in the incubator. Four teams were allocated initial funding to start operations whilst they were still at the incubator. Colomb.io is a free mobile application (intended to provide an opportunity for each smartphone owner to become a crowd reporter) and received €25,000 of initial investment from the Bulgarian start-up accelerator Eleven; it is conceivable it will be allocated an additional €75,000 following
T
a month of work on product development. Three more projects SnapTap, a contactless solution for entry and drinks and snacks purchase at music festivals, ThoriumA+ platform for energy certification and Tutotod ipad, an application for th4 development of young children, attracted investment from 190 small investors through a micro-investment campaign conducted by ZIP. In addition to the investment provided, the teams are entitled to use the incubator premises until the summer. Four systems for enhanced productivity also saw a successful stay at the incubator – Tourism4me –software for accom-
INFORMATION TECHNOLOGIES
AGRICULTURE PAYMENT AGENCY
Around €1.56 million IPARD: To Marinada for entrepreneurs €1.5 million
Contracts have been for nonrepayable funding allocated through the project Application of Information and Communication Technology which aims to improve business processes for 24 Croatian entrepreneurs. The total contract value is €1.56 million. “The tender is still open and therefore I invite entrepreneurs to exploit the opportunity to implement and adopt advanced e-business models in their businesses”, stressed Gordan Maras, Minister of Entrepreneurship.
The project is financed through the European Regional Development Fund under the Regional Competitiveness Operational Programme 2007-2013. The tender will be open until the entire funding has been used, or until 30th June 2015. Financial assistance ranges from €19,500 to €97,400. “The strengthening of the economy through research and innovation and through the application of information and communication technologies, are some of the priorities of investment included in our operational programmes. Our objective is to enhance competitiveness in the economy and to provide support to research and development projects, for which we have almost €2 billion at our disposal through the European Regional Development Fund”, highlighted government Vice President, Branko Grčić. (I.G.)
The Agriculture Payment Agency, Fisheries and Rural Development has recently allocated €1.5 million to the company Marinada for the purpose of investment into equipment for the processing of fruit and vegetables. It is the final investment under the IPARD Measure 103 Investment in the processing and marketing of agriculture and fishery products. Equipment for drying, washing, peeling and sorting of fruit and vegetables, as well as equipment for sterilisation/pasteurisation and for processing, packaging, labelling and temporary conservation have all been purchased through IPARD funding to date. This investment has enhanced production capacity by 50%. The total investment implemented by Marinada stood at €2.9 million. Marinada has to date seen annual quantities of
processed fruit and vegetables of 15,000 tonnes and is considered as one of the largest producers of pasteurised fruit and vegetables regionally. In addition to operating in the domestic market, the company exports to Australia, Canada, USA, Switzerland, Sweden, Germany, the Czech Republic, Israel, Slovenia, Serbia and Bosnia and Herzegovina. Furthermore, the company has implemented and introduced the IFS-Food Standard and obtained Halal and Kosher certification. (I.G.)
www.privredni.hr Business & Finance Weekly
15
RBA ANALYSIS
€46.5 billion gross external debt The relatively high growth of gross external debt on a monthly level is mainly a consequence of the growing state debt that increased almost €700 million in relation to August ith monthly growth of 1.3% (€580 million), total gross external debt of Croatia reached €46.5 billion at the end of September 2014, which is 107.8% of GDP. On an annual level, it rose 2.4% (€1.1 billion), and was 1.2% (€535 million) higher in relation to the end of 2013. The relatively high growth of gross external debt on a monthly basis is mainly a consequence of the growing state debt, which increased almost €700 million (5.4%) in relation to August. At
W
Companies also contributed to the growth of gross external debt on a monthly level the end of September gross external debt of the state stood at €13.5 billion, which is almost €2 billion or 16.9% more on a year-on-year level. In relation to the end of 2013, the state increased its external debt by €835 million (6.6%). With the excep-
tion of April 2014, the state gross foreign debt has been continuously registering positive annual growth rate since September 2009. The state has a high demand for new debt, is directly connected to postponed and/or extremely weak fiscal consolidation. Therefore, the state continued to sink into deeper debt on the foreign financial market due to the accumulation of budget deficits and overdue claims of the state. Consequently, the state share in total gross external debt
shows a continuous increase, and by the end of last September, it reached 29.2% (12.5% more than in September 2009). Financial institutions reduce debt Companies also contributed to the growth of gross external debt on a monthly level, with a debt of €18.4 billion (0.2% increase). On an annual level the debt increased by €128 million (0.7%). Compared with the end of 2013, the debt is €54.5 million higher (2.3%). Regardless of the monthly and annual debt growth,
the corporate sector decreased its share in total gross external debt from 39.9% in August to 39.5% in September. Other financial institutions owed €1.05 billion, (a 17.5% share), showing a decrease of monthly (2.2%) and yearly (13.6%) level. This sector also sees continuing negative annual rates in the amount of foreign debt, confirming the long-term debt reduction from May 2012. In relation to the end of 2013, the debt of other financial institutions decreased by €1 billion an 11.2% fall. In the conditions of the anticipated economic decline for the sixth consecutive year, it is anticipated that the level of foreign debt could finish around 108% of estimated GDP by the end of 2014. It is important to highlight that euro depreciation against the dollar affects the level of foreign debt expressed in euros. However, the state protected its dollar-denominated debt through hedging. Therefore, the debt expressed in euros is lower in real terms, as evaluated by RBA analysts. (RBA)
OUTLOOK BY INSTITUTE OF ECONOMICS, ZAGREB
Mild GDP growth anticipated An anticipated recovery this year in overall economic activity will intensify further next year, and will be followed by a decreasing rate of unemployment and budget deficit share of GDP, although improvements will be modest The Institute of Economics Zagreb anticipates 0.2% GDP growth in 2015 and 0.9% in 2016. The present prognosis according to which GDP fell 0.6% in 2014 with mild growth in 2015 is not different from earlier prognoses. It is anticipated that the negative effect of consumer spending on growth will be prevented by changes in income tax that entered into force on 1st
January. However, debt clearing, low consumer trust and high unemployment levels will continue moving in the opposite direction. Mild investment growth in Q3 of 2014 and recovery signs in industrial production suggest the negative trend might turn to positive, with a growing tendency in 2016, if planned investment projects are achieved, and the draw-down of EU funds is successful. Grow-
ing export and import trends should continue, but slower. Moreover, it is anticipated that state spending will show a constant decrease. An anticipated recovery this year in overall economic activity will intensify next year, followed by a reduction in unemployment and budget deficit share of GDP, although the improvements will be very modest.
16
Privredni vjesnik Year VIII No 244
( €5.7 million
Croatian exports through Lidl Croatia in 2014
Croatian products are mainly exported to Slovenia, Bulgaria, Hungary and the Czech Republic
Lidl paving the way to European shelves Lidl suppliers achieving the highest export levels are PPK Karlovac Meat Industry, Gavrilović, Osatina Group and Alba M.S. Ilijana Grgić he value of Croatian exports through Lidl Croatia stood at €5.7 million in 2014, a significant growth compared with 2013 when exports stood at €2.5 million. Lidl suppliers achieving the highest export levels are PPK Karlovac Meat Industry, Gavrilović, Osatina Group and Alba M.S. PPK Karlovac Meat Industry has been cooperating with Lidl since 2007. “Our value of exports exceeded €700,000 through Lidl Croatia during 2014”, stated Igor Miljak, Management Board President of PPK Karlovac Meat Industry. Croatian products are primarily exported to Slovenia, Bulgaria, Hungary and the Czech Republic through the Lidl network of retail stores and there are plans for exports to Spain and Portugal, as well as other European Union states. Gavrilović achieved exports of almost €450,000 through Lidl in 2014.
T
“We export well-known products which can meet the requirements of all interested parties concerning their quality and price, as well as volume. We are striving to expand our exports through Lidl relying on the knowledge, high quality, accuracy and the rapidity of product deliveries and keeping in mind current conditions and opportunities of the EU market”, stressed Mario Zbiljski, Director of Gavrilović.
Week of Croatian products The company Osatina from Đakovo, sees exports of fresh fruit and vegetables worth over €12,000 at an annual level. “The total value of exports achieved through Lidl retail stores in the Czech Republic, Slovakia, Bulgaria and Romania exceeds €1 million. We anticipate the strengthening of our cooperation with Lidl and ensuring continuity concerning quality
and competitiveness, enhanced product sales and a stronger positioning” stated Mirko Ervačić, Director of Osatina Group. A substantial quantity of Croatian products is exported through a Croatian product week, an event that provides international customers with an insight into the Croatian local products. A proportion of Croatian products are sold under Lidl brands, which are recognised by international customers, and the remainder are well-known Croatian brands. “The value of exports achieved in 2014 through Lidl stood at around €500,000. The exporting programme comprises roasted ground coffee, cappuccino, instant coffee mixes 3 in 1 and 2 in 1 and espresso coffee. Hence, our products are available in Lidl retail stores throughout Slovenia and Bulgaria”, stressed Tihon Dedić, Director of Finance and Sales in Alba M.S., the company is planning further expansion of its product range.
BRODOTROGIR OPERATING AT FULL CAPACITY
$20 million contract Brodotrogir has recently signed a contract for the construction of a 45,000-tonne tanker for the transportation of chemical and oil products for a company from the Virgin Islands. The estimated value of the work is $20 million with a 12-month deadline. The vessel is already being inspected by the owner at the shipyard and preparations to start the work are under way. “Through the outfitting and construction
of ‘Novogradnja 325 and 326’ for our own shipping company, the completion of construction of an oil platform for a French company, as well as outfitting this tanker, the shipyard is operating at full capacity, creating additional jobs and providing work for other companies in Croatia”, emphasised Mateo Tramontana, Management Board Member of Brodotrogir. The overhaul facilities of the shipyard are facing a
similar situation with ships constantly arriving and departing. Following the completion of the overhaul, passenger ships ‘Athena and Bios Two’ departed. Subsequently, the vessel ‘Arne’, registered for the transport of general cargo, arrived, followed by the motor yacht ‘Mustique’ for its annual technical inspection, as well as the cruise ship ‘Vilma’ which requires protection of the underwater part of the hull, which will
also be cleaned and painted and zinc anodes replaced. The luxury cruise ship ‘Artemis’ is about to depart, it is alongside the outfitting quay where final work is under way, while the ship ‘Beautiful Star’ is being intensively revamped, from a fishing boat into a luxury cruiser. (J.V.)