NEW GOVERNMENT Prime Minister Orešković presented to the parliament “generators of transformation”
INTERVIEW Juroslav Buljubašić: Creativity and innovation are imperative
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February 2016, Year IX, No 255
DATA PROVIDED BY THE CROATIAN NATIONAL BANK FOR THE FIRST NINE MONTHS OF 2015.
€666.1 MILLION NETT INVESTMENT DURING THE FIRST NINE MONTHS
T
he investment by the company British American Tobacco worth €518.3 million in the takeover of Rovinj Tobacco Factory (TDR) has greatly improved the level of foreign direct investment, according to data provided by the Croatian National Bank, for the first nine months of 2015. Total nett investment was €666.1 million. In addition to the tobacco industry, owner investment in real estate worth €122 million was recorded, whilst an additional investment of €76.5 million into the construction sector confirmed its slight recovery.
DUE TO CURRENCY ADJUSTMENTS FOR LOANS, BANKS SHOWED LOSSES RESULTING IN AN OUTFLOW OF €604.8 MILLION Around €71 million was invested in wholesale and trade mediation, with €44 million being invested in retail and household goods repair. The value of investment into culture and sports stood at €48.6 million. The chemical industry attracted investment of €36 million; on the other hand, the value of investment into
carriage by land and pipelines was €14.7 million, whilst the production of motor vehicles and trailers attracted investment of €13.7 million. The overall results would have been considerably better had not banks recorded losses as a result of currency adjustments for loans, due to which they showed an outflow of €604.8 million. The oil and gas extraction sector also showed an outflow (€27.5 million), as did the clothing production sector (€23.5 million) and leather processing and footwear sector (€22.4 million).
ON A PAR WITH 2013 Owner investment during the first three quarters of 2015 stood at €904 million, of which €380 million in retained profits needs to be deducted to get nett inves-
tment of €666.1 million. These results were on a par with those of 2013, when investment reached €709.7 million. The overall results recorded in 2014 reached €2.9 billion that also included €1.5 billion of ‘round tripping’ through Croatia – the Mercator takeover by Agrokor, where nett investment went to Slovenia and other Mercator shareholders. Since 1993, Croatia has attracted €27.7 billion in foreign direct investment. Financial intermediation in the banking system attracted around €6.7 billion. According to country of origin, capital came from Holland (€6 billion), Austria (€5.9 billion), Germany (€2.5 billion), Hungary (€2.2 billion), Luxembourg (€2.02 billion), Italy (€1.4 billion), France (€1.38 billion), Slovenia (€1.27 billion), Switzerland (€1.06 billion) and Great Britain (€1.06 billion). (I.V.)
CROATIA HAS A NEW GOVERNMENT
ACCEPT CHALLENGES: CROATIA’S TRANSFORMATION STRATEGY Prime Minister Orešković presented to the parliament representatives five key generators for achieving the government’s goals which he calls the “generators of transformation”. They are: efficient public sector, business competition, investment & EU funds, stemming the rise of the public debt and deficit as well as reform of the education and health system by Ilijana Grgić, Igor Vukić
A
verage annual 3% growth rate of gross domestic product over the next couple of years, cutting the budget deficit below 3% by 2017 and reducing the public debt share below 80% of GDP by 2020 are the main macroeconomic goals of the cabinet of Prime Minister Tihomir Orešković that he presented to the Croatian parliament. The government’s work plan, drafted by the Domoboljubna koalicija (Patriotic Coalition) and Most (Bridge), is called Accept challenges: Croatia’s transformation strategy.
the present 17% unemployment rate to below 14%. Prime Minister Orešković presented to the parliament representatives five key generators for achieving the government’s goals which he calls the „generators of transformation“. Efficient public sector is first. Productivity of the public administration will be reinforced with the e-administration system and changed processes which will ensure quality and timely service. Business competition is second. The implementation of measures, which improved Croatia’s ranking on the Doing Busi-
department of investment and EU funds. Prime Minister also announced that property tax for non-active property would be introduced. Reduction of debt and deficit is another important issue. This year will be crucial for stemming the rise of the public debt which should be followed by its reduction. Expenses control, redistribution of funds and advice of the European Commission will be some of the elements within the process of restraining the public debt. Stability of the monetary policy is one of top priorities. Education and health system reform comes fifth. The Croati-
IMPROVE ECONOMIC AND SOCIAL CONDITIONS The general goal is to improve economic and social conditions in Croatia and raise the public’s life standard. Orešković announced that the result of the work of his cabinet will be to increase GDP per capita by €2,000 from the present €10,350. Improved business environment will intensify the inflow of direct foreign investment which should total at least €1 billion a year. A goal has been set to draw billions of euros from European funds every year. Export should increase by 30%. Croatia should become regional leader in the field of energy. The implementation of these measures will reduce 2 | PVinternational | February 2016 | No 255
IMPROVED BUSINESS ENVIRONMENT WILL INTENSIFY THE INFLOW OF DIRECT FOREIGN INVESTMENT WHICH SHOULD TOTAL AT LEAST €1 BILLION A YEAR
ness list, shall continue. Common sense approach will be used to reduce red tape and business expenses. Stimulation of strategic investment and privatisation of non-strategic companies and property have been announced for the
an society requires informatisation and closer connection between the academic community and the private sector, especially in strategic fields such as engineering and information industry. The health system will increase productivity
Sanjin Strukic/PIXSELL
CROATIAN BUSINESS & FINANCE MONTHLY
if administration and procurement are more closely connected. Croatia has great potential which can be realised if we work together. Everyone should look to themselves first, take responsibility and risk. We should learn from those who are better and make changes. If not know, when?, Orešković said.
SIMPLER BUSINESS FOR COMPANIES In addition to the main highlights of the government’s programme, parliament members also received key guidelines from individual ministries. The Ministry of Economy, to be led by Tomislav Panenić, announced thorough simplification of laws and regulations related to establishing companies and their business activities. There will be a revision and procedures for solving insolvency of companies (pre-bankruptcy settlement, bankruptcy and liquidation) will be simplified. A united system of non-returnable economic subsidies will be created and real effect will be measured. Furthermo-
A GOAL HAS BEEN SET TO DRAW BILLIONS OF EUROS FROM THE EUROPEAN FUNDS EVERY YEAR. EXPORT SHOULD INCREASE 30%
re, the conditions for simplifying access to financial means, with competitive crediting conditions in kuna, will be created. Tasks and work of the supporting economic institutions (Croatian Chamber of Economy, Croatian Chamber of Trade and Crafts, entrepreneurial centres and incubators) shall be redefined with reduction and elimination of compen-
sations and membership fees. All other fiscal and parafiscal contributions will be analysed and those taxing economic operators shall be eliminated. The Ministry of Economy will analyse the effects of introducing tax on dividend and profit shares. It will also attempt to reduce and eliminate tax rates. Energy stock exchange will be set up urgently and it will be linked to regional markets. However, temporary moratorium on the construction of thermal power plants will be introduced as well as a moratorium on the present project of researching and exploiting gas and oil in the Adriatic. The Ministry of Entrepreneurship and Crafts, headed by Darko Horvat, will prepare amendments to the Public Procurement Act which shall prescribe that small and medium sized companies would have to be contracted up to a determined percentage. Models for unloading the entrepreneurs of taxes are in their preparation phase. Lower VAT would be paid for the basket of locally produced food products. Flexibilisation of labour legislature and February 2016 | No 255 | PVinternational | 3
CROATIA HAS A NEW GOVERNMENT
Croatia has great potential which can be realised if we work together. Everyone should look to themselves first, take responsibility and risk. We should learn from those who are better and change. If not know, when? Tihomir Orešković, Croatian Prime Minister
simplification of keeping records of working hours will continue.
BUDGET DEFICIT AND PUBLIC DEBT CUTS The Ministry of Finances, which will be taken over by Zdravko Marić, will lead constant fiscal consolidation to gradually decrease budget deficit and public debt. Public debt management agency will be set up. This ministry announced a stable tax environment on the foundations of fair-play and simplicity as well as gradual reduction of the tax load. Tomislav Tolušić will be in charge of the Ministry of Regional Development and EU Funds. This ministry announced it would introduce a regional development strategy by 2020, evaluating it as the most important key document for even development of all areas in Croatia. By accelerating tender procedures, this ministry wants to double annual sums of money drawn from the European funds. A model for stimulating officers participating in these procedures will be introduced and success in drawing the funds will be rewarded. Last year, Croatia drew around €400 million, but we could have drawn much more. This process should be accelerated as well as adoption of the regional development strategy which has been delayed for the past two years, Tolušić said. The Ministry of Tourism, led by Anton Kliman, will try to decrease tourist VAT from the present 13%. The system of tourist boards will be reorganised and privatisation of state hotels and tourist companies will continue. State land and other property will be activated to the benefit of tourist activities. One of the models
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will include establishing so called excellence centres which will present a network of interests – fisherman, renters, traders, organiser of events, transporters, hotel owners, restaurant owners… - this will enable synergy of all those included in the centre. One of the more efficient ways to attract foreign investment is to activate the neglected military property. We will implement a series of such projects, Kliman announced. Nada Šikić, Minister of Labour and Pension System, announced that her ministry, in cooperation with the Croatian Employers’ Association, would prepare a plan of professions in demand for the young entering the world of labour. Fast requalification will enable employment for young people who are not competitive on the market. The Ministry of Agriculture is preparing a revision of the “repressive tax policy endangering the survival of agricultural producers”. The programme of Minister Davor Romić states that the irrigation system will continue to be developed at a cost-effective way.
ACCELERATION OF BIG INVESTMENT PROJECTS Agriculturalists will have simpler market access if associating, marketing, consulting and infrastructural investing is stimulated. The Ministry of Construction and Physical Planning will also stimulate entrepreneurial activities. Minister Lovro Kušćević will propose amendments to the Strategic Investment Act which will accelerate big investment projects. The procedure for unifying land registri-
CROATIAN BUSINESS & FINANCE MONTHLY
CCE PRESIDENT LUKA BARILOVIĆ ON NEW CROATIAN GOVERNMENT
Not enough time for the new government to break in
N
ew President of the Croatian government Tihomir Orešković has shown a modern as well as concrete approach and vision with focus on economic problems, which are Croatia’s issue No 1. Croatian economy is frail and it carries a lot of problems on its back. It’s high time for the public administration to implement structural reforms and adapt to the backbone of economic development. The Croatian Chamber of Economy has already set an example that a lot can be done in a short period of time – CCE first cleaned its own mess. Public administration has to do the same to the advantage of the economy and the entire society. We waited for the new government for too long, and it does not have enough time for breaking in. The newly appointed officials have to roll up their sleeves. All of the society’s components have to help them and they have full support of the CCE. I am convinced Prime Minister
Orešković will be a successful leader. Moreover, he will not hesitate to make changes in case of any obstacles. The guidelines of the new government have finally set end goals for the recovery of national economy and the entire society. Without a doubt, the measures and moves of the new government will open possibilities for faster and more sustainable development of the Croatian economy and they have our full support, especially since the growth of the economy and public standards are in the central focus, together with a serious budget consolidation and ending the dynamic growth of the public debt. The focus is also on the efficiency of the public sector, improvement of the business environment and competition. Concerning investment in energy and infrastructure, these investment projects have to achieve optimal results and avoid failed investment. Above all, it is important to stimulate the private sector to invest in production
es and cadastre will be initiated which should enable faster issuing of building permits. Subsidising housing loans for young families has been announced and it should awaken the sleepy markets of apartments. We will try to change the laws regulating this field. I am convinced that the public and entrepreneurs will soon recognise progress in this sector, Kuščević said. The Ministry of Maritime Affairs, Transport and Infrastructure will try to create space for developing entrepreneurship. The ministry will be led by Oleg Butković, and their programme also includes finalising the construction of motorways and connecting them to the European traffic directions. There is also the
which will increase the employment rate and export as well as absorption capacity of using EU funds since they are almost our only source of funding public investment projects and we need them now more than ever. In short, the guidelines have been set well. However, it is of extreme importance to approach their realisation seriously with complete responsibility since former governments had also set their guidelines, strategies, goals and measures well, but their complete realisation missed out.
project of constructing the Pelješac bridge and Adriatic-Ionian motorway. Port infrastructure in sea ports shall be completed. New facilities will be built in the sector of air traffic. With money from the EU funds, railway infrastructure will be developed and renovated. The development of the river traffic system will be invested in. Prime Minister Orešković announced that each ministry would be allocated concrete tasks and deadlines for completing them in compliance with corporative practice the Minister gained a lot of experience in. The public – private individuals and entrepreneurs – will be able to transparently monitor the realization of the government’s programme, Prime Minister concluded. February 2016 | No 255 | PVinternational | 5
INTERVIEW JUROSLAV BULJUBAŠIĆ, Split-based entrepreneur
Should my shares in a company stop generating profits, irrespective of the fact that that company may be run by my own son, I will quit and invest my capital in more lucrative businesses
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CROATIAN BUSINESS & FINANCE MONTHLY
ENTREPRENEURS ARE ABOUT TO FACE INCREASINGLY TOUGH TIMES Croatian entrepreneurs cannot succeed if they oppose globalisation or if they just copy global products. Creativity and innovation are imperative. Consequently, it is extremely important to analyse the operating environment and deepen their insight into the rules that apply in a specific environment, which is becoming increasingly globalised by Jozo Vrdoljak
J
uroslav Buljubašić, founder of the Split-based company SEM, as well as a large number of companies both abroad and in Croatia, withdrew five years ago from the operational management of his companies and ceased being an “active entrepreneur”, as he states. Nevertheless, he noted that he was not able to resist his ‘entrepreneurial genes’ – that which shaped him and made a huge impact on him. He is co-owner of several companies and his entrepreneurial appetites are satisfied through investment and the transfer of capital from less successful companies into more lucrative areas. His view is that increasingly widespread globalisation implies keeping abreast with global developments and thus Croatian entrepreneurs, primarily those who are young and less experienced, need to operate on the global market which is possible only if they create original products, and their businesses are professionally run. Why do you consider yourself retired? I withdrew from active entrepreneurship five years ago, both from operational management and from the supervision of companies in which I am a stakeholder, and those that I founded. Nevertheless, in most companies, both in Croatia and abroad, I am still a minority shareholder. Each company in which I am a minority shareholder positions itself on the market and its managers aim to achieve positive results. As a shareholder, I am interested
in enjoying the fruits of my previous long-term and intensive work, generating profits from shares. Should my shares in a company cease generating profits, irrespective of the fact that that company may be run by my own son, I will quit and invest my capital in more lucrative businesses. Nevertheless, you have not really clarified the reason for your withdrawal from operational business. The reason is simple: as an entrepreneur with over 30 years of intense experience I noticed that a wide range of issues remain unnoticed on a daily basis, and I started to believe that it was far wiser to withdraw from this exhausting way of life in good time and dedicate
ENTREPRENEURS, AS OPPOSED TO MANAGERS, NEED TO FOCUS ON DEVELOPING INTUITION myself to other interests. I travel extensively and have considerably more time to dedicate to my family and friends in times of need. I believe that a large number of people do not fully
One cannot simply quit entrepreneurship; similarly, one cannot merely cease being a sports player, an actor or a writer throughout one’s life. Hence, I have not quit entrepreneurship; I have only quit active entrepreneurship
February 2016 | No 255 | PVinternational | 7
INTERVIEW
understand me, which is not surprising, as it is not easy to explain to someone who had not been an entrepreneur for eight years under the socialist system and some twenty plus years operating in the market economy, burdened by destructive administration. This was extremely exhausting and stressful, yet there were benefits and satisfactions to it all, in addition to the accumulation of work, financial resources and property. Is there an ‘entrepreneurial gene’? I feel there is, since one cannot simply quit entrepreneurship, as one cannot simply cease being a sports player, an actor or a writer throughout one’s life. Hence, I have not quit entrepreneurship, I have only quit active entrepreneurship. I still keep abreast of global developments in order to be able to quit some business on time or invest in another, more lucrative one. I do all this without full involvement. Entrepreneurs, as opposed to managers, need to focus on developing their intuition. What are the crucial characteristics of a successful manager? Primarily the need to have extensive knowledge, analytical skills and manage and run the company in compliance with the demands of the economy. As opposed to managers, entrepreneurs need to consider and respect their economic profession, yet they need not necessarily opt for the most common scenarios. It is primarily on those occasions – when entrepreneurs opt for their own specific path – that they generate the most significant profits. When one follows the most 8 | PVinternational | February 2016 | No 255
popular trends, one needs to withdraw on time and opt for other trends in order to generate anticipated profits. What are the principal constraints for entrepreneurship in Croatia? In addition to the well-known and familiar constraints, I believe entrepreneurs are about to face increasingly tough times. Banks are 98% foreign-owned and huge financial requirements are needed when launching any business. Hence, high interest rates on loans are imposed on both entrepreneurs and the state. Moreover, they (banks) are unlikely to consider business capital, which would significantly simplify both the launching of projects and business activity. They generate profits through high interest rates and the proceeds eventually flow out of Croatia. The situation is additionally aggravated by the fact that the number of Croatians with several million euros at their disposal that could be used to launch a serious business that requires some €15 million of investment is more than somewhat restricted. Banks have imposed extremely low interest rates on the general public with huge savings, whilst there are excessive interest rates on loans for entrepreneurs and the state. Why is this the case? Since we in Croatia have not strategically managed the sale of our banks since the 1990’s and the same applies to the sale of our other important companies or resources. We have not created leverage in order to boost Croatian GDP or growth. The tourism sector has been successful since it is the least influenced by the impact of
politics and banks, and it is a resource that remained from the past. Nevertheless, even tourism is not on a par with indicators from 1989. The same applies in Split, irrespective of the fact that it is being mentioned as a tourism ‘miracle’, it still has not reached its pre-war levels, which implies that we have primarily regressed. Where have we made mistakes? During socialism, our resources and property were considered as ‘social ownership’ and were managed in an ineffective manner. Telecommunications, the oil company, banks and all the resources belonged to the Croatian public. In my opinion, our current situation shows that only 1% of strategic resources are owned by local entrepreneurs, whilst the remainder is foreign-owned. Nevertheless, the public has directed its anger towards domestic entrepreneurs whose share of ownership is insignificant. There is currently no return, since globalisation has won and hence one needs to keep abreast with it. We need a head of state who will make the best out of it for all. What is the impact of the political environment on the development of an entrepreneur? Politics is extremely important for those venturing into entrepreneurship, since deep insight into political developments is a prerequisite for success, yet one must consider the fact that globalisation is the winner in this competition with different countries and regions. Consequently, an entrepreneur needs to constantly keep abreast of both economic and political trends as well as global developments.
CO-OPERATION AGREEMENT CO-OPERATION BETWEEN THE CROATIAN CHAMBER OF ECONOMY AND THE HUNGARIAN CHAMBER OF AGRICULTURE
HUGE INTEREST AND OPPORTUNITIES The countries of the Visegrád Group – the Czech Republic, Hungary, Poland and Slovakia – are extremely important for Croatia, as an economic bloc with considerable future potential, noted Luka Burilović
T
he Croatian Chamber of Economy and the Hungarian Chamber of Agriculture have recently signed a Cooperation Agreement. “The Agreement will contribute significantly towards more intense co-operation and trade of goods, and will eventually ensure easier access to more affordable and higher quality raw materials for both Croatian and Hungarian companies. It will also enhance the use of processing and warehousing facilities and simplify product sales on both markets”, pointed out Luka Burilović, President of the Croatian Chamber of Economy, upon signing the Agreement. He believes that agricultural production is of extreme importance for both countries and that strengthening co-operation is imperative. In addition, he stated that the Croatian Chamber of Economy and the Hungarian Chamber of Agriculture (which covers 320,000 members through a system of 19 county chambers and the city of Budapest) have adopted similar systems. This ensures the performance of a wide range of activities and an exchange of ideas and experiences will be ensured using the system of chambers, adequate logistics and following the signing of the Co-operation Agreement. “Furthermore, the members of the Visegrád Group are extremely important for Croatia as an economic bloc with immense future potential”, explained the President, highlighting the importance of last year’s visit by a Croatian delegation to Slovakia, the planned visit to Poland in the near future, as well as the planned economic forums to be held in Hungary and the Czech Republic.
COMPATIBLE COUNTRIES Ljerka Puljić, President of the Trade Association at the Croatian Chamber of Economy, emphasised the excellent co-operation between Agrokor and the Hungarian agricultural sector. “Croatia and Hungary are compatible countries and they share common interests that we could jointly strive to advocate for in Brussels. We expect on-
going communication that will be welcomed by our economies”, noted Ljerka Puljić. Győrffy Balázs, President of the Hungarian Chamber of Agriculture, stated that he is anticipating the new Croatian government with optimism, as well as the establishment of a stronger and more dynamic co-operation, adding that the recently signed Co-operation Agreement is significant concerning any exchange of information, further education and development and is expected to boost investment. Hungary is third concerning overall Croatian agricultural and food products exports (following Germany and Italy), as the value of her imports of agricultural and food products is $291.2 million. Moreover, she is fifth according to her exports (following Bosnia and Herzegovina, Italy, Slovenia and Serbia), since her exports in 2014 were worth $114.4 million. During the first six months of 2015, imports of agricultural and food products from Hungary were $133.86 million, whilst the value of exports to Hungary was $45.879 million. Imports of agricultural and food products mainly comprise of milk, poultry meat, animal feed, sunflower oil, pork, corn, oil cakes, beef and wheat, whereas exports mainly include sugar, sunflower oil, corn, oil cakes, pork, animal feed, ice cream, water, other carbonated drinks and citrus fruits, amongst others. (B.O.)
Győrffy Balázs and Luka Burilović
133.86
$
million imports of agricultural and food products from Hungary during the first 6 months of 2015
45.879
$
million Croatian exports of agroproducts to Hungary during the same period
February 2016 | No 255 | PVinternational | 9
VIKTOR LENAC SHIPYARD
REVENUE DOUBLED REVENUE; PROFIT UP 56 TIMES The first nine months of 2015 saw total revenue of €56.9 million, 93% up over the same period during the previous year, with a nett profit of €2.71 million by Vladimir Rončević
T 57 overhauls performed during the first 9 months plus an additional 11
2.82
€ million
consolidated profit of Viktor Lenac Shipyard Group for the first 9 months of 2015
106,500
€
generated by Viktor Servisi
48,000
€
nett profit in 2014
he Rijeka-based Viktor Lenac Shipyard saw the end of 2015 with record-breaking results. The figures recorded during the first three quarters of 2015 may be considered of historical significance. During the first nine months of 2015, total revenue was €56.9 million (93% up) compared with the same period of 2014, with a nett profit of €2.71 million. Total expenditure increased by 85% over the same period. The company has not recorded such excellent results over the last twenty plus years and, according to company sources, total revenue in 2015 could approach €65.2 million. According to data included in the financial report for the first nine months of 2015, total consolidated profit by the Viktor Lenac Shipyard Group was €2.82 million, with €106,500 being generated by Viktor Servisi, a company 100% owned by the Viktor Lenac Shipyard Group. When comparing nett profit for 2015 with the figures for 2014 when nett profit was €48,000, according the official data provided by the Shipyard, it might be seen that the Shipyard increased its profit 56 times.
CO-OPERATION WITH THE US NAVY A substantial increase in the volume of work related to the overhaul of USS Mount Whitney, a US Navy command ship; this significantly contributed to the increase in revenue and thereby greatly affected the overall financial results. Rather than the initial $20.9 million as previously agreed, the value of the work performed exceeded $30 million. Moreover, €3.58 million in revenue was generated through renting the rental one of the ships under overhaul (Delphin cruise ship), to provide accommodation to USS Mount Whitney crew over several months required for the
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overhaul. It has to be noted that this is the first US Navy command ship to have been overhauled outside US borders. Viktor Lenac won this tender against severe competition from several reputable European shipyards. This was the first step in co-operation between Viktor Lenac Shipyard and the US Navy and was extremely successful –deadlines were met and the work was performed successfully. Moreover, the revenue generated from other standard overhaul work also increased, exceeding €17 million. According to official data provided by Viktor Lenac, during the first nine months of 2015, the Shipyard performed 57 overhauls with 11 additional overhauls worth over €2 million. Shipyard sources state that the current situation on the overhaul market is still on the verge of profitability and a significant recovery is uncertain and unpredictable, since ship operators are currently still investing minimal resources in the maintenance of their fleets. Considering current circumstances, Viktor Lenac aims to keep abreast with Eastern Mediterranean shipyards through the provision of competitive prices and shorter deadlines.
120 YEARS OF TRADITION Viktor Lenac Shipyard is involved in one of the largest overhaul and reconstruction activities and one of only a few currently operating shipyards specialising in ship reconstruction and offshore projects across the whole of the Mediterranean. It was founded in 1896 and now marks its 120 anniversary. It began operating under the name of Lazarus and was initially involved in the construction and repair of Austro-Hungarian and Italian commercial and fishing vessels. It has been operating under its current name since 1948, as it was named after
CROATIAN BUSINESS & FINANCE MONTHLY
Viktor Lenac, a national hero from the Second World War, who was also an employee at the shipyard. Increase in demand for large scale and comprehensive overhauls encouraged the relocation of the Shipyard from Rijeka during the 1960’s to a location some two nautical mi-
TOTAL REVENUE IN 2015 COULD APPROACH €65.2 MILLION les away. Moreover, the Shipyard purchased two floating dry docks and cranes, aiming to focus primarily on the development of overhaul and reconstruction activities and to become involved in offshore projects. At the beginning of 1990’s the shipyard was re-organised and in 1993 was registered as a joint stock company. In December 2003, the company filed for bankruptcy as a result of a failed investment programme. Following 4 years of operation under
the supervision of the Commercial Court of Rijeka, bankruptcy proceedings were successfully finalised with new shareholders. The majority shareholders are the Zadar-based Tankerska plovidba owning 36.95% and the Pula-based Uljanik owning 34.67%. It is now a modern shipyard comprising of three docks, one of which can accommodate vessels up to 160,000 tonnes load capacity. The shipyard has over 1,000 meters of berths, seven quay cranes with maximum load capacity of 100 tonnes, a work site for offshore platforms covering 130,000m2 with 300 meters of berths and a highly qualified workforce. Furthermore, it has acquired extensive experience in overhaul and reconstruction work. It is important to stress that it was amongst the first shipyards globally to engage in ship lengthening. Consequently, it is capable of successfully implementing the most complex projects, meeting tight deadlines in accordance with the highest international standards. It faces no significant difficulties concerning the settlement of its liabilities towards the state, banks and employees. February 2016 | No 255 | PVinternational | 11
CROATIAN CONSTRUCTION: SIGNS OF RECOVERY
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CROATIAN BUSINESS & FINANCE MONTHLY
INSTEAD OF A MYRIAD OF REGULATIONS, WE WANT A MYRIAD OF CRANES Cranes can be seen again in Zagreb, which means the market of new construction is slowly awakening. It is a positive sign that real-estate prices decreased 3% last year compared to a much higher 9% fall in 2014. In a state with almost 300,000 of unemployed, the unstable construction sector is faced with shortage of workforce piše Igor Vukić
W
hen businessman Ciril Zovko returned from Canada and started building Importanne shopping malls in Zagreb, he explained to the media that the easiest way to follow the development of an economy is to check the number of construction cranes in operation. This scene, very dear to Zovko, was not common during the past couple of years in Croatia. However, some things have started to change for the better. Cranes can be seen again in Zagreb, which means the market of new construction is slowly awakening, says Boro Vujović, owner of Opereta Nekretnine. It is a positive sign that real-estate prices decreased 3% last year compared to a much higher 9% fall in 2014. Even though the Croatian construction sector has been hit by heavy crisis during the past couple of years, signs of recovery are becoming visible. Compared to the nine months of 2014, solid 8.3% growth in the value of contracts was registered during the same period of 2015, Vice-President of the Croatian Chamber of Economy for Construction, Transport and Connections Mirjana Čagalj said. The value of works on buildings was slightly higher
(10.7%) compared with the value of works on other constructions (6.4%). The number of bought and sold real-estate during the past year also reflects conditions of the Croatian market – 30,000 compared to 60,000 during the pre-crisis 2008. The construction has been in a continuous crisis since April 2009, resulting in a defeating outcome: over 53,000 jobs have been lost, Mirjana Čagalj highlighted. Even the
OVER 53,000 JOBS HAVE BEEN LOST IN CONSTRUCTION SINCE 2009 construction’s share in GVA (gross value added) decreased from 8.5% to 5.1%. We are now below the EU average which is 6-6.5%. Total scope of construction works reduced 46.6% and the value of completed reduced 49.3%. The number of constructed apartments February 2016 | No 255 | PVinternational | 13
CROATIAN CONSTRUCTION
8.3% total value growth of works during the nine of 2015
10.7% value growth of works on buildings
around
30,000
bought ugh ht an a and d so ssold old dd during uring ur in ng 20 2 2015 0 015 15 15 (60,000 in 2008)
We cannot say that people working in offices deliberately delay projects. However, laws, regulations and other guidelines are so complicated that even with good will, it is still difficult to obtain permits without waiting a couple of years
Nikša Musulin, Pomgrad CEO
is 69.2% lower and the number of building permits is 46.3% lower compared to the precrisis period.
PARADOX WITH WORKERS The strong growth in construction works during the middle of the past decade was stimulated by investment projects in the traffic infrastructure and residential construction. The recession hit rock bottom in 2013 and it has been slowly subsiding ever since. However, competition has become weaker in the meantime as a consequence of losing expert workforce and references for building bigger and more complex facilities. According to data provided by the Croatian Employment Service, there were slightly below 20,000 of unemployed people at the end of 2015. Even though a lot of construction workers are registered with the Service, well-skilled experts often lack in practice. Masons, carpenters, tile installers, painters and fitters of dry elements are only some of the scarce professions the employers search for in various ways. Even though many are registered with the Employment Service, the employers cannot seem to find them, Mirjana Čagalj pointed out. Qualified workforce from Croatia is wanted and accepted in the EU for its quality, which is why many workers decide to leave the country and go abroad. Those who have been unemployed for many years now, have already
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lost their touch with the latest technologies. Others work illegally or abroad and their registration with the Service is only a formality. On the other hand, Croatian construction companies cannot import foreigners from non-EU countries. Our common practice was to hire workers from Bosnia and Herzegovina. But this was made impossible by the government’s decision on establishing annual quota of working
THE VOLUME OF WORKS PLUMMETED 46.6% DURING FIVE YEARS AND THE VALUE OF WORK REDUCED 49.3% permits for foreigners. New jobs for foreign workers in the sector of construction and shipbuilding were not planned for 2015. The Ministry reached its decision based on the fact there are many related workers registered with the Croatian Employment Service, Mirjana Čagalj explains. Croatian salaries are lower compared to the foreign ones, and Croatian companies would have a hard time keeping up with
CROATIAN BUSINESS & FINANCE MONTHLY them even if they were not in the process of restructuring. Many companies still have to cut their expenses even if related to the workforce. The state should help by relieving the entrepreneurs. This would stimulate new employment, CCE Vice-President says. She also added that the education system was another problem since it does not keep up with the needs of the labour market, and therefore generates new unemployed people. Furthermore, the belief that the profession of a construction worker is bad has to change. We lack skilled artisans so the young should be motivated to apply for vocational schools. Liberalisation of importing skilled workers from the neighbouring non-EU countries, which could help our young workforce to inprove, would solve the problem of its scarcity. If big and important projects arrive to Croatia, we will not be able to implement them, Mirjana Čagalj warns.
EU COMPETITION Dražen Leko, owner of company Alfa-inženjering from Slavonski Bord also noticed positive changes. There are signs of new works, but one should be realistic because the time of massi-
THE NUMBER OF COMPLETED APARTMENTS IS 69.2% LOWER, AND THE NUMBER OF BUILDING PERMITS IS 46.3% LOWER COMPARED WITH THE PRE-CRISIS PERIOD ve infrastructural constructing, for example motorways, will not return. Croatian companies are now exposed to stronger competition from other EU countries. European companies, which can offer better prices since they are financially stronger, have already started to compete for some contracts. The same thing will happen as in Slovenia, where foreign players have started to take over the market. Only two or three big-sized Croatian companies will be strong enough to endure this pressure, Leko evaluates. Leko says that smaller companies, especially engineering ones, will have to find market niches. One of them will be the sector of energy efficiency. One should prepare well, pass the necessary exams and obtain various
licenses in order to work in the field of energy renovation. Therefore, it is important to keep up with market trends and respond to them. The money from the EU funds will procure new contracts. Even Leko confirms signs of increased volume of works in the water supply and drainage as well as rural development, some of the sectors commonly funded by the EU. Therefore, it is a matter of life and death for the constructors to improve the procedures for accepting the money from the funds. Acceleration of administrative procedures, important for faster implementation of investment projects, is a top priority. Nikša Musulin, CEO of Pomgrad from Split, says this is a big problem for specific works, for example those relating to maritime goods, when it is required to obtain an approval for a concession and a series of specialised documents in addition to regular construction permits. Pomgrad actually work on this type of construction projects (construction of marinas, ports and sea pipelines) and have a lot of experience. We cannot say that people working in offices deliberately delay projects. However, laws, regulations and other guidelines are so complicated that even with good will, it is still difficult to obtain permits without waiting a couple of years, Musulin says.
STRUGGLE WITH INSTITUTIONS In this kind of situation contractors can only hope the investors will have the strength, will and dedication to handle the myriad of regulations. Musulin says that Danko Končar is one of them: Pomgrad works with them on the construction site in Trogir. However, Končar’s project in Pula is progressing slowly since the investors have to win the battle with institutions protecting cultural goods. It is interesting that many projects progress at a slower pace because of the fear of public criticism. The public is sensitive to any suspicion of corruption and many want to be sure they will not be held responsible for making a certain decision. This is also one of the things slowing down some of the projects, Musulin evaluates. Besides the marina in Trogir, Pomgrad is building a cruise terminal in Split, but bigger contracts are not in sight. They also turned to the Mediterranean market. The have just finished constructing a fishing port in Albania and they are in the process of completing a port in Algiers. Notwithstanding, the unstable political situation and low oil prices decrease investment projects even in these countries. We have 200 employees and I think we will need to invest a lot of effort in trying to maintain our present level of work and revenue during the next couple of years. As you can see, I am not optimistic, Musulin concluded.
Our common practice was hiring workers from Bosnia and Herzegovina. But this was made impossible by the government’s decision on establishing annual quota of working permits for foreigners. New jobs for foreign workers in the sector of construction and shipbuilding were not planned for 2015. Mirjana Čagalj, CCE Vice-President for Construction, Traffic and Connections
February 2016 | No 255 | PVinternational | 15
RECENT CROATIAN TOURISM IN 2015
MORE RECORDS BROKEN The financial results from tourism processed thus far are in accordance with the previously made announcements that 2015 will be a recordbreaking year concerning tourism revenue and total revenue, including that generated during the fourth quarter, will exceed €8 billion, as stated by the former Minister of Tourism Darko Lorencin by Sanja Plješa pljesa@privredni.hr
greatest satisfaction and stated that, according to preliminary official data provided by tourist boards on the Adriatic and by the Zagreb Tourist Board, 2015 recorded 14.15 million tourist arrivals, 8.3% up compared with 2014. Additionally, Croatia saw 78.57 million overnight stays in 2015, or 6.8% up in relation to 2014. Concerning the total number of tourists, international tourists accounted for 12.73 million, an increase of 8.08%, whilst 1.41 million domestic tourists were recorded or 10.3% up.
UPTURN IN DOMESTIC TOURISM
D 7,298 8billion (7.6% up) revenue generated by international tourism over the first nine months of 2015.
around €1 billion of domestic tourism consumption through 2015
uring the first nine months of 2015 international tourism revenue generated €7.298 billion, a 7.6% increase compared with the same period of 2014. Revenue generated by tourists for personal spending was €7.120 billion, 7.5% up in relation to the figures shown during the first nine months of 2014, with revenue generated for business purposes stood at €177 million, a rise of 16.4%, according to data provided by the Croatian National Bank. Commenting on this data during a recently held press conference, the former Minister of Tourism, Darko Lorencin, stressed the fact that the data was in accordance with the previously made announcements that 2015 would be a record-breaking year also concerning tourism revenue and the total revenue from tourism, including that generated during the fourth quarter, will exceed €8 billion. Nevertheless, domestic tourism consumption needs to be included and consequently tourism revenue for the whole of 2015 is expected to reach €9.3 billion, added Lorencin. In addition to promising financial results, Croatia also saw excellent tourism results in 2015, and Lorencin expressed his
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“The increase in overnight stays, as well as in tourist arrivals, shows a domestic market recovery, whilst excellent tourism results in 2015 are due to co-operation between the private and the public sector, the synergy in the implementation of tourism activities, an increase in investment and prolific marketing activities. According to arrivals, domestic tourists ranked second, whilst according to overnight stays, they ranked third in 2015, on overall tourism arrivals in Croatia”, highlighted Lorencin. He added that Istria recorded the greatest number of overnight stays in 2015 at 23.6 million or 5.95% up, followed by Split-Dalmatia County – 14.65 million (up 8.45%) and Kvarner County recording 13.21 million (7.8% up) compared with 2014. According to country of origin, German tourists accounted for the largest number of overnight stays – 16.73 million (6.6% up), followed by Slovenian tourists – over 8 million (4.6% up) and Austrian tourists - around 6.5 million, an increase of over 8%. Ratomir Ivčić, Director of the Head Office of the Croatian National Tourist Board, also pointed out excellent results achieved during last year’s tourism season. Furthermore, he emphasised the fact that success was also due to the implementation of Croatia 365 programme, as well as the effective promotional advertising of Croatia and an ongoing increase in recognition of the tourism brand of Croatia globally.
CROATIAN BUSINESS & FINANCE MONTHLY COMMENTARY FROM THE CROATIAN CHAMBER OF ECONOMY
SECOND CONSECUTIVE YEAR SHOWING A DECREASE IN THE NUMBER OF UNEMPLOYED Should the number of unemployed continue to drop showing average unemployment dynamics on a par with the currently recorded dynamics, it would fall below the 2008 level not before 2018. Nevertheless, in that case the unemployment rate would still be extremely high at 13.2%, suggest analysts
F
ollowing five consecutive years of growth, the number of unemployed in 2014 decreased by 4.9%. The downward trend also continued during 2015, when it stood at 12.9%, implying it is now on a par with 2009. During the last two years, the average number of unemployed decreased by 59,200, which implies a halt in the growth of unemployment that has been seen for five consecutive years. This is certainly a positive trend, yet it also needs to be evaluated on its dynamics and foundations. The level of decrease in the rate during the last two years was an average of 8.9%. However it should be noted that, against a backdrop of substantial administrative amendment (stricter conditions for eligibility for and retaining the status of an unemployed person, which implies that maintenance of such dynamics over the forthcoming years is uncertain, primarily through forecasts of modest economic growth), and through the dynamics of economic migration (according to data released by the Croatian Employment Service, during the last two years the number of persons who have found employment abroad was 2.3 times greater compared with the average recorded during the previous six years), as pointed out by analysts with the Croatian Chamber of Economy.
TOURISM TRIGGERS EMPLOYMENT Nevertheless, should the number of unemployed continue to drop showing an average unemployment level on a par with currently recorded levels, it would take 10 years for it to drop below the levels recorded in 2008. Moreover, it has to be stressed that in such a case, the unemployment rate would still be an extremely high 13.2%, as pointed out by analysts. On the other hand, a drop in unemployment is not
significant unless there is simultaneous employment recovery that is better indicators of labour market strength compared solely with unemployment. Consequently, it is obvious that employment dynamics were more modest compared with a drop in the unemployment rate: 232,500 found employment through the Croatian Employment Service in 2015, only 3.1% up over 2014. Hence, positive developments concerning employment and overall activity primarily amount to halting the negative trends, and can hardly be considered as a recovery, according to analysts. Furthermore, according to current estimates (data for December has not been provided thus far), the annual average number of registered employed will see a drop for the seventh consecutive year (according to preliminary data), which also applied to the average number of economically active population. Should final data show an increase in
12,9% fall in unemployed in 2015
59.200 unemployed in work over the last 2 years
232,500 persons employed through the Croatian Employment Service in 2015
POSITIVE DEVELOPMENTS ON EMPLOYMENT ARE PRIMARILY THE RESULT OF A HALT TO NEGATIVE TRENDS the number of employed (there are normally higher figures according to final data), any increase will be modest at best, and will be due to a record-breaking tourism season. According to currently available data, the increase in employment is primarily linked with tourism activity and sectors linked to the state, whilst manufacturing still shows no recovery, concluded analysts at the Croatian Chamber of Economy. (V.A.) February 2016 | No 255 | PVinternational | 17
NEWS DOMOTEX FAIR 2016
CROATIAN PARQUET CONQUERS UK, MIDDLE AND FAR EAST During a visit organised by the Croatian Chamber of Economy, nine Croatian parquet producers presented their products at the largest world Fair for floor coverings in Hannover
N 1320 exhibitors from 67 countries at Domotex
60% of exhibitors and visitors not from Germany
ine Croatian parquet producers Pan parket, Evolen, Spačva, Monolitinvest, Drvoproizvod, PPS Galeković, Exportdrvo, DIN Novoselec and Pana presented their products at Domotex 2016, the international Fair for floor coverings, held from 16th to 19th January in Hannover, Germany. The visit was organised by the Croatian Chamber of Economy. Evolen CEO, Slaven Suknjajić, opines that Domotex is crucial for positioning Croatian parquet at both European and global level. He also says they managed to find buyers, critical for their development, and also opened new markets in Azerbaijan and Iran. “We put a lot of effort in gaining a reputation in both Europe and globally”, Filip Galeković, CEO of PPS Galeković added. “Regardless of the reputation of Croatian Slavonian oak, our most valuable raw material, and products like
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parquet and rustic floors, we are always aware of the fact that our constant work helped us maintain quality and standards, find new
WE PUT A LOT OF EFFORT INTO GAINING A REPUTATION IN BOTH EUROPE AND GLOBALLY, FILIP GALEKOVIĆ, EXPLAINS markets and buyers as well as maintaining our advertising and marketing activities. It is very easy to lose all this as well as our market
CROATIAN BUSINESS & FINANCE MONTHLY
Wood industry exports increase 8% Statistics confirm positive trends, since the Croatian wood industry sells almost two thirds of its total production for export. Imports are only 5%, which increases the added value of this sector several times. During the first nine months of 2015, €780 million of goods were exported. The trade balance surplus totalled €209 million; this is 8% up in relation to the same period of 2014 when exports were €722 million. Some 45% of total exports are comprised of finished products – furniture, floor coverings, parquet, construction woodwork, wood houses, wooden thresholds, with the remainder being material, elements, panels or similar. The index of physical volume of the industrial production was 113.2% and 99.9% in furniture, during the ten months of 2015 over the same period of 2014.
generator of European and global economies, as well as the traditional market for exporting wood, wood products and furniture. The new trend certainly suits Croatian parquet producers, since solid wood parquet, such as Slavonian oak or ash, are back in style, whether they are ru-
SOLID WOOD PARQUET MADE OF SLAVONIAN OAK AND ASH, BACK IN TREND share, since competition is highly aggressive”, Galeković noted. Many local companies have already gained a reputation on the German market and they hold a high share of the Croatian wood exports. Since over 60% of exhibitors and visitors are not from Germany, the four-day Fair is an opportunity to renew co-operation with former buyers and partners, and search for new potential buyers and markets, say Secretary for Fairs and Marketing, and Secretary of the Wood Processing Industry Association within the CCE, Petar Ćurić.
RENOWNED BRAND OPENS NEW MARKETS The companies are highly satisfied with their 16th exhibition so far at the largest world Fair of floor coverings. However, it
is difficult to consider new contracts and work. Not only have new contracts with old buyers been renewed, but Croatian parquet has become a wanted product in UK, Iran, Azerbaijan, Lebanon and Japan, which formerly worked with Poland and China, but is now turning to products of greater quality where Croatian wood processors fit in in terms of price and delivery deadlines. It appears that the long-term work of the CCE, competent ministries and companies for the promotion of the Croatian parquet, especially Slavonian oak, has paid dividends, Ćurić opines. The Chamber highlights that products made of Slavonian oak have become a renowned brand and have started to develop an important position on the German market for wood products. Germany has always been a
stic, modern or extravagant and expensive. Furthermore, Croatian producers who have been maintaining quality and innovation from leading European producers over the past few years are able produce. It is time to unite parquet production under one marketing brand for the global market since this would increase orders and profit by 5% - 10%, suggests Nikolina Babić from Pan. Domotex 2016 is one of the largest and most important world Fairs for floor coverings, visited by over 1,330 exhibitors from 67 countries. Each year it presents new trends and is considered the most important business event for this sector. The fact that as many as 60% exhibitors and business visitors are not from Germany shows how important this event is. (K.S.) February 2016 | No 255 | PVinternational | 19
RECENT BRANDY PRODUCTION
THERE IS NO SOLACE IN W The intensification of production and boosting of exports of fruit brandy during the first nine months of 2015 resulted in a foreign currency inflow of $4,680,199, which, compared with imports of $2,620,704, results in a positive balance of slightly over $2 million by Svetozar Sarkanjac
I 20.000 small producers of high alcoholic level drinks registered since Croatian EU accession
43.253 producers registered by 4 branch offices of Customs Administration
rrespective of the awareness of the harmful effects of alcoholic beverages, Croatia, and globally, confront the multiple indications of widespread alcohol use. Wine appears to be the most popular,. and according to a text written by Mirko Kovač published in 2001, Antun Gustav Matoš claimed that true talent originates from areas where grapes are cultivated, whilst Tin Ujević dreamt about small wine fountains, rather than water-fountains Moreover, a passionate wine enthusiast, Charles Baudelaire stated “only bastards drink milk”. Nevertheless, brandy also provided the inspiration for literary work, and verses written by Dobriša Cesarić may be considered amongst the best-known local verse on brandy: “Alcohol kills.../ We know that, oh we sure do,/ We know that alcohol is harmful/ Yet, brandy, brandy, brandy we order ,/ For there is no solace in water”. Privredni vjesnik is certainly not a literary magazine nor is it our intention to quote poems on how wine or brandy can provide spiritual encouragement, but to focus on the economic aspects of brandy production in Croatia. According to the latest financial indicators, production intensification and the boosting of exports of fruit brandies resulted in foreign currency inflows of $4,680,199 during the first nine months of 2015, with imports of $2,620,704, giving a positive balance slightly exceeding $2 million.
OUR COMPETITIVE ADVANTAGE LIES IN TRADITION AND AUTHENTICITY OF OUR PRODUCTS, STRESSED ŽAKLINA JURIŠIĆ “Fruit brandy production by small producers of high alcohol level drinks during the last ten plus years were of non-standardised pro20 | PVinternational | February 2016 | No 255
duction of uneven quality with varying alcohol levels under the umbrella of a vast shadow economy. However, following the adoption of the Excise Tax Act and specific Ordinances, in addition to on-going professional development programmes provided for producers through the Chambers system, small producers of high alcohol level drinks have managed to develop the quality and production level. They have consequently become more seriously involved in exports to the demanding EU market”, explained Žaklina Jurišić, Assistant Director of the Agriculture, Food Industry and Forestry Department at the Croatian Chamber of Economy.
CHAMBER OF ECONOMY ACTIVITIES This has been confirmed by data provided by the Professional Development Programme for fruit brandy and liqueur quality at a national level, held at the end of 2015 for the 11th time and jointly organised by the Croatian Chamber of Economy Osijek County Chamber, the Osijek-based Faculty of Food Technology and the Semeljci Municipality. It was a national Fair for producers of alcoholic drinks in those products. The various alcoholic beverages undergo professional chemical and physical analyses, and their properties are assessed. All brandy samples as well as liqueurs undergo this complex professional assessment and evaluation. It should be noted that following the announcement of the results, all participating producers were provided with the analyses and a report on the quality of their products. Subsequently, producers may opt to contact the scientists at the Faculty of Food Technology to discuss the potential shortcomings of their products, as well as how to improve quality in future. Zoran Kovačević, President of the Croatian Chamber of Economy, Osijek County Chamber, pointed out the significance of the results of these long-term activities of the Croatian Chamber of Economy: “From the start of such activities at the Chamber, from when we began considering the promotion of local products such as bran-
CROATIAN BUSINESS & FINANCE MONTHLY
WATER
dy, wine, kulen (a type of flavoured sausage made of minced pork, traditionally produced in Croatia) and honey, our basic objective was the legalisation of production, since local products were mostly linked to the shadow economy and lacked required legal regulations. Consequently, the issue of defining the legal framework was extremely important, as was the involvement of scientific institutions such as Faculty of Food Technology. We intended to promote the importance of the quality of these products by performing physical and chemical analyses. It has to be said that all these products, in addition to the subjective impressions provided by tasting committees, include an impartial laboratory analysis. Consequently, in addition to legalising alcoholic drink production, we were aiming to boost product quality and eventually achieve the best results through competition. When comparing the first years of the competition and the samples of brandy then, with samples currently submitted great improvements may be seen. This is certainly not a subjective opinion, since it has been confirmed by chemical analyses performed”, stated Kovačević.
SALES CHALLENGES Nevertheless, irrespective of proven quality, there are currently still several challenges concerning product sales. However, as continental tourism developed, and Croatian EU accession
and the quality of products labelled with Protected Designations of Origin all significantly contribute towards stable growth and positive trends. Following Croatian EU accession, an additional 20,000 small producers of high alcohol level drinks have been registered and, according to the four branch offices of the Customs Administration, located in Zagreb, Split, Rijeka and Osijek, there are 43,253 registered producers, of which, over 17,000, are located in Slavonia. Following the adoption of a Rural Development Programme, further prerequisites and development opportunities are being provided, also keeping in mind the huge comparative Croatian advantage that primarily concerns a wide biodiversity and climatological values of the area, as well as the tradition of production. “One of the tools for strengthening competitiveness for the production of high alcohol level drinks, including fruit brandy types, is the Protection of Geographical Indication. In addition to existing protected products at EU level – Croatian Grape Brandy, Croatian Old Plum Brandy, Slavonian Plum Brandy, Croatian Wormwood Liqueur, Zadar Maraschino Liqueur (flavoured with Maraska cherries) and Croatian Herb Brandy – we believe there is still ample room for expansion of high alcohol level drinks. Our competitive advantages are tradition and product authenticity”, he emphasised.
over
17.000 registered solely in Slavonia
February 2016 | No 255 | PVinternational | 21
FISHING QUOTAS OF TUNA INCREASE
CROATIAN TUNA FOR BETTER SUSHI Kristijan Zanki is satisfied with the increased quotas since they could ease the 20% fall in the price of tuna on the world market, that is, in Japan. He says that Croatian tuna farms raise highly esteemed tuna so there should be no problem with its placement by Jozo Vrdoljak
I 515.38 tonnes total fishing quota of bluefin tuna for 2016
30-40
€
million Croatian export of tuna on a year level
11 purse seiners will catch tuna this year
n November 2014, the International Commission for the Conservation of Atlantic Tunas (ICCAT) decided to increase fishing quotas of the bluefin tuna by 20% for the following three years. Therefore, after years of decreasing, the fishing quota of the bluefin tuna living in the Adriatic increased approximately 17% last year. The ICCAT’s decision was confirmed at last year’s meeting in Malta, meaning that the fishing quota should reach the level of 2010 during the period of three years. The Croatian Embassy explained that the reason behind increasing the fishing quotas was to reduce the stock of small blue fish tuna feeds on and to recover the stock of the bluefin tuna. These facts were also confirmed by the Science Committee with the ICCAT. On the basis of expert parameters, a conclusion was made that the tuna stock has recovered and the conditions for increasing the fishing quotas have been met, President of the Group of Tuna Farmers with the Marikultura Cluster and Sardina’s fisheries manager in Postira Kristijan Zanki highlighted.
77.22 TONNES QUOTA INCREASE This year’s January edition of the Official Gazette published the Regulation on fishing, farming and trading of tuna, swordfish and Mediterranean spearfish, based on which the fishing quota of the bluefin tuna totals 515.38 tonnes for 2016. Director of the Fisheries Administration and Deputy Minister of Agriculture Ante Mišura says that tuna farming will increase due to the higher fishing quota. Due to the increa-
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sed offer, there i s a risk of a price fall on the Japanese market. The increase of the fishing quota led to the increase in the capacity of the purse seine fleet. Actually, nine seiners participated in catching tuna last year. This year there will be eleven of them, which will simplify and speed up the utilisation of the quota for this year. It should be highlighted that the quota intended for economic tuna fishing,
AFTER YEARS OF DECREASING, FISHING QUOTAS OF THE BLUEFIN TUNA WILL BE 17% HIGHER THIS YEAR
using hook tools, has been increased to 30 tonnes for this year compared with last year’s 19 tonnes. Furthermore, it is anticipated this segment of fishing will increase during the
CROATIAN BUSINESS & FINANCE MONTHLY
TUNA AND BLUE FISH
Around 50 ships sell tuna to tuna farms The delivery of the tuna farmed for the Japanese market lasted since before Christmas until the end of this year’s January. The value of the Croatian tuna export ranges from €30 million to €40 million on a year level. The farms employ around a total of 200 workers. Croatia’s serious tuna farmers are companies Sardina, Jadran tuna, Kali tuna and Pelagos net farma, whose co-owner is General Ante Gotovina. Actually, this company will soon have its second delivery of tuna. Some companies perished. Tuna farming has a relatively great impact on the fishing of small blue fish. Based on rough estimates, around 50% of the most significant purse seine fleet cooperates with farms and sells a share of its catch to the farmers, Mišura says. He also adds that around 50 ships sell its fish this way.
following years. Moreover, the quota for recreational fishing has also been increased. It will total 3.84 tonnes in 2016. As a result, this important segment of the tourist offer could gain a more significant place in the distribution of quotas, especially due to great interest of potential users, Mišura explains.
PLACEMENT IS NOT A PROBLEM Kristijan Zanki is satisfied with the increased quotas since they could ease the 20% fall in the price of tuna on the world market, that is, in Japan. He says that Croatian tuna farms raise highly esteemed tuna so there should be no problem with its placement. We alone farm tuna for 18 months, and deliver it when it weighs around 30 kilograms. Tuna farmers from other countries farm tuna for six months and deliver it much heavier. This is why Adriatic tuna is highly esteemed on the Japanese market. It is much fattier, exceeding other countries in its quality. Its fattiness actually makes it perfect for sushi or sashimi, Zanki explained. He also added that the price of tuna would increase in three years. The increasing fishing quotas will help us reach optimal quantities, and every other increase in the fishing quota, which equals bigger deliveries, would lower the price even more, Zanki explained. Sardina and other Croatian tuna farmers obtained a national concession for farms during a period of 30 years. Since they have concessions and relatively new farms, there is no need for new investment or construction of new seiners since the existing ones
are seven to eight years old and they are in excellent shape. Our seiners used to catch tuna in the Mediterranean sea, but because of high costs of tuna transport, its complexity and non-profitability, we no longer procure tuna outside the Adriatic. However, we have our tuna
IT IS ANTICIPATED THAT TUNA FARMING WILL INCREASE DUE TO HIGHER FISHING QUOTAS, ANTE MIŠURA SAYS
The increasing fishing quotas will help us reach optimal quantities, and every other increase in the fishing quota, which equals bigger deliveries, would lower the price even more Kristijan Zanki, Group of Tuna Farmers with the Cluster of Mariculture
and we work with fishermen who sell us small blue fish for farming the tuna. Thereurchase fore, they have the market, and the purchase m, wheprice is around HRK3.7 per kilogram, pensive. reas as herring is slightly more expensive. en tuna But the best quality is achieved when is caught in combination with otherr fish, Zanki explains. Croatian tuna farmerss communicate their problems through the Fisheries Administration with the CCE Cluster and through ICCAT. Considering the uniqueness of this type of work and activity, I am pleased we have so far managed to solve a lot of problems, Zanki points out. February 2016 | No 255 | PVinternational | 23
BOOKING.COM: 2015 GUEST REVIEW AWARD
Croatian facilities rank amongst the best in the world The total number of accommodation facilities that were awarded recognition national level was 9,310 with an average grade given by visitors of 8.9, which was an excellent result
O
ne of the best known web portals globally has yet again played an important role in promoting Croatian tourism. Booking.com, a global leader in connecting travellers with the widest selection of venues to visit globally, has recently published their 2015 Guest Review Award results – annual recognition for partners. Their recognition was awarded to over 280,000 accommodation facilities across 196 countries, which have proved to consistently meet and even exceed the expectations of a broad range of visitors, irrespective
SPECIAL RECOGNITION GIVEN TO BELLEVUE TROGIR, VILLA HARMONIE APARTMENTS AND ANKORA HOLIDAY RENTALS of their age, origin and cultural background. The total number of accommodation facilities recognised at the national level was 9,310 and the average rank awarded by visitors was 8.9, 24 | PVinternational | February 2016 | No 255
which was an excellent result. Moreover, the leading 10 accommodation facilities that provided an exceptional experience in five categories were awarded recognition by Booking. com. The categories included – Breakfast of Champions, Home, Sweet Home, Exceptional Value, the Best Host and the Warmest Welcome. Amongst those facilities, three Booking. com portal partners from Croatia won awards. These were Aparthotel Bellevue Trogir that was awarded in the category the Warmest Welcome, and Villa Harmonie apartments in the category Breakfast of Champions, and Ankora holiday rental in the category the Best Host. Commenting on the awards, Goran Pleše, regional manager of Booking.com, pointed out that behind each grade given by visitors to an accommodation facility, there is a whole year of operation of that accommodation facility, aiming primarily to fully meet visitor requirements. “We strongly believe that the highest-rated visitor experiences should not be kept secret. We would like to identify our partners who create the best experiences for our visitors. This Booking.com award programme can be considered as a global standard in reviews provided by visitors”, concluded Pleše. (S.P.)