Pvi0263

INTERVIEW → Croatian gas market is extremely volatile, says Ivana Ivančić, Prvo plinarsko društvo PAGES 6-9

SUPPORTED BY THE CROATIAN CHAMBER OF ECONOMY

www.privredni.hr

120th ANNIVERSARY → Viktor Lenac shipyard is currently a modern shipyard with three shipbuilding areas PAGES 12-13

LIBERALISATION → Croatian maritime transport market is opening to international shippers PAGES 14-15

PVinternational C R O A T I A N

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M O N T H L Y

November 2016, Year IX, No 263

ACCELERATED DEVELOPMENT THROUGH FIVE GOVERNMENTAL PILLARS

Plenković: We will identify entrepreneurs’ needs A comprehensive tax reform is the priority, as well as aiding business conditions both for entrepreneurs and investors through further cuts in non-tax levies by Ilijana Grgić grgic@privredni.hr

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roatia has a new government and it is to be led by Prime Minister, Andrej Plenković, until 2020. The specific objectives highlighted by the Prime Minister are the achievement of stable and continuous economic growth and the creation of quality jobs, as well as halting the brain drain.

“We will be the government best able to identify the requirements of both entrepreneurs and the public. Economic growth will be the priority. Business conditions will be developed, and tax reforms implemented throughout the economy.

We are aiming to provide a straightforward system that will ensure competitiveness”, noted the Prime Minister, Andrej Plenković, whilst presenting the new government and its programme in Parliament. According to the new government programme, the forthcoming 12 months will be crucial for initiating change and accelerating development, which is currently a prerequisite for Croatia. The new programme will be implemented through five basic pillars.

A comprehensive tax reform is the priority, as well as enhancing business conditions and activities both for entrepreneurs and investors through further cuts in nontax levies. Moreover, the specific objective

is to prevent the introduction of additional administrative burdens. Inactive stateowned property will be used for economic benefit, and public companies will undergo a comprehensive business and financial restructuring. The second pillar covers government measures in areas showing the highest growth potential, such as agriculture. Tourism has immense growth potential. According to Plenković and his team, tourism revenue could be doubled through investment in levels of accommodation, the expansion of tourism programmes and a lengthening of the season. Furthermore, industry has been neglected for years, notwithstanding ample growth potential in a wide cross-section of its branches. Thus, the government has decided to provide incentives mainly to exporters. The third pillar concerns the

issue of improving institutional effectiveness; this implies simplifying the rules and accelerating administrative and court operations. The government will primarily focus on the digitisation of all processes, e-services and on connecting all the bodies of the administration in order to provide more effective and efficient services both for entrepreneurs and the public.

The fourth pillar is strengthening public finance sustainability or the continuation of slashing the budget deficit that will result in reducing the debt to GDP ratio and in general provide the potential to reduce interest expenses on public debt. According to government sources, Croatia is therefore expected to exit the excessive deficit procedure and her credit rating could yet again on a par with the investment rating.

The government expects to see the state budget balanced by 2020. Moreover, public debt is expected to drop by 10%. Finally, the fifth pillar is the reform of the education system, aiming to modernise it further in order to meet the requirements of both society and the economy.

In addition, the government is planning to increase pensions by 5% by the end of its mandate, as well as to introduce a national retirement pension and provide the opportunity to work after age 65.

FOREIGN INVESTORS COUNCIL IN CROATIA PUBLISH THEIR WHITE BOOK

FOGEC: THE GOVERNMENT DOES NOT HAVE 100 DAYS President of the Foreign Investors Council highlighted the most urgent measures that need to be implemented by Ilijana Grgić grgic@privredni.hr

T Taxes are not the principal obstacle to attract Foreign Direct Investment, yet they are considered crucial.

Saša Drezgić, Deputy Minister of Finance

he Foreign Investors Council in Croatia has recently presented its White Book for the fourth time, with recommendations for the government aimed at improving the business climate and boosting investment potential. Their recommendations were presented a week following the formation of the new Croatian government, which foreign investors expect to focus on an improvement of the business climate and reducing operating expenditure, as well as ensuring legal security and transparency in public administration. Moreover, the new government is expected to reduce the duration of court proceedings, as well as to provide Labour Law amendments and reduce compulsory non-tax payments and importantly, the implementation of the eagerly awaited tax reform.

SUBSTANTIAL CHANGES FUNDAMENTAL Mladen Fogec, President of the Foreign Investors Council and President of the Management

Board of Siemens, pointed out that announcements of the first measures planned to be implemented by the government are in harmony with the findings and recommendations put forward by foreign investors. The most urgent measures needing implementation were highlighted - such as tackling issues of legal uncertainty that negatively impact on foreign investors, as well as tax reform and the allocation of capital to entrepreneurs for development, specifically concerning start-ups. Moreover, Fogec pointed out the importance of public administration reform that is expected to result in reducing bureaucracy and an acceleration of all procedures.

“I believe that the government should not use their first 100 days to act, but the first seven days or a month and start performing immediately, starting with the implementation of reforms. We are delighted with the announcements of tax system reform, since we have long pointed out the importance of this issue.

FOREIGN INVESTORS COUNCIL PROPOSALS

Positive productivity shock to private sector The key aspect for the turning point needs to be a positive productivity shock amongst private companies, showing required results in at least four areas

1. Internal devaluation needs to be continued, primarily through tax reform and cuts in parafiscal charges, in addition to tax system simplification and tax base expansion, as well as models for its financing 2. Reforms on the supply-side of the economy need to range between further labour market flexibility and product and services market, to restructuring of

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state-owned companies, state administration and assistance with business conditions 3. Whilst the new Bankruptcy Act reduces bankruptcy application procedures, the important amendments aimed at addressing the issue of bad debts are still not implemented, such as acceleration of tax deduction for bad debt write-off and increasing recoverability of overdue receivables 4. Authorities need to encourage the financing of SME’s and their inclusion into broader economic developments, as well as non-banking financial instru-

ments. Economic policies need to be selected sensibly with minimal effects of deflation and aimed at avoiding the uncertainty that greatly prolongs investment decision-making and restrains potential growth rate that is required to exceed 2% in order for sustainable job creation

K 2016

We are looking forward to finding out whether it will happen this time – whether ideas will finally start being implemented – in order to avoid remaining at the merely declarative”, stressed Fogec who believes Croatian mentality needs substantial changes.

“Significant changes are fundamental, as well as vigorous activity, hence the level of preparedness for change needs to be improved.

We need to change and be on a par with developments in global industry. The world is currently undergoing an ‘industrial revolution 4.0’, is being digitised and consequently minds need to undergo comprehensive change and adapt to a new age”, emphasised Fogec, pointing out that these changes need to occur daily.

NETT FOREIGN DIRECT INVESTMENT ALMOST ZERO Further product-market integration, removal of barriers to Foreign Direct Investment and business activity, effectiveness of both the judicial and educational systems and a shortage of both equity and venture capital financing are critical areas pointed out by Boris Vujčić, Gov-

FOGEC HIGHLIGHTED PUBLIC ADMINISTRATION REFORM THAT IS SUPPOSED TO RESULT IN REDUCED BUREAUCRACY ernor of the Croatian National Bank. He believes that urgent action in these areas is vital in order to improve the business climate. The tax system is certainly considered one of the fundamental areas that need to be addressed.

“Concerning the tax burden, Croatia is competitive compared with other countries due to lower salaries, yet her competitiveness decreases as salaries increase. Where salaries are triple the average, Croatia ranks as the second least competitive country in the region, which is also considered a problem in terms of attracting Foreign Direct Investment”, noted Vujčić who believes that the announced tax reform needs to take that direction.

On the other hand, regarding total F.D.I, the Governor of the Croatian Central Bank stressed the fact that nett foreign investment – foreign investment into Croatia less investment from Croatia into other countries – was virtually zero, whereas prior to the crisis it was up to 4.5% of GDP. “Against a backdrop of a broader perspective, Croatia is not alone in facing problems in attracting Foreign Direct Investment, yet ranks particularly low concerning green field investment. We rank second lowest, with only Slovenia showing inferior results in this area”, noted Governor Vujčić.

DECREASING DIRECT TAXES “Taxes are not the principal obstacle to attract Foreign Direct Investment, yet they are considered crucial”, concluded Saša Drezgić, Deputy Minister of Finance, pointing out that the Croatian economy needs to adapt to its environment and also to be competitive concerning taxation.

“The first steps taken should be leading towards amendments in the realm of direct taxation, or personal income tax and profit tax, suggesting a reduced tax burden whereby both employees and companies will be left with a higher level of after-tax income”, stated Drezgić, adding that on preparing comprehensive tax reform, the Ministry of Finance needs to pay particular attention to not making any amendments to the public sector financing system, primarily regarding local government financing.

WHITE BOOK

The toughest business climate challenges identified Legal uncertainty – changes in legal environment, amendments to rules, inadequate implementation of EU legislation Tax liabilities – amendments to Tax Act, non-harmonised solutions at various levels of tax authorities Parafiscal charges – the number of additional expenditures that need to be paid, with no clear connection to business activity Public administration and judiciary – length of court proceedings, occasionally a completely different treatment at local level compared with national level Labour issues – rigid and inadequate labour law Access to financial resources

November 2016 | No 263 | PVinternational | 3

CROATIAN FINANCIAL INSTITUTIONS DAY

NEW FINANCING OPPORTUNITIES NECESSARY FOR THE ECONOMY The value of financial institutions’ assets in 2015 stood at €74.36 billion; thus their value exceeded Croatian GDP by 67% by Ilijana Grgić grgic@privredni.hr

The fundamental issues of the Croatian economy include difficult access to financial resources and the impossibility of borrowing at an acceptable interest rate, as well as high taxes and contributions on salaries, income tax and high VAT. Luka Burilović, CCE

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he process of globalisation and modern technology that result in increasing the mobility of capital, products and services, lead to new trends throughout all areas of business, as well as in financial industry. In line with global trends, the Sector for Financial Institutions, Business Information and Economic Analysis at CCE and the Faculty of Economics Zagreb recently organised a conference “Croatian Financial Institutions Day” in Zagreb, aiming to bring together representatives of all financial and regulatory institutions, relevant ministries and entrepreneurs.

According to Luka Burilović, President of Croatian Chamber of Economy, the Croatian financial sector is worth €74.36 billion, 60% of total GDP. Burilović pointed out that the fundamental issues of the Croatian economy include difficult access to financial resources and the impossibility of borrowing at an acceptable interest rate, as well as overly high taxes and contributions on salaries, income tax and high VAT. “According to our estimates, Croatian GDP is likely to grow around 2.2%. Provided these estimates come true over the several

TAX REFORM TO BE ONE OF THE FIRST MOVES BY THE NEW GOVERNMENT forthcoming years, the Croatian economy would be on a par with the results of 2008 only in 2021. Hence, we need to be extremely ambitious concerning growth rates”, noted 4 | PVinternational | November 2016 | No 263

Burilović. Marko Jurčić, Economic Affairs Adviser to the President of Croatia, highlighted the fact that the new government is starting its mandate against a backdrop of probably the most favourable circumstances over the last eight years.

“On the one hand there are positive trends and on the other there is a government that is certainly willing to do whatever it takes to boost growth. The current situation is optimistic. The trends are favourable. Nevertheless, we need to take advantage of this wave of optimism in the best way”, noted Jurčić, adding that sources at the Office of the President have taken an optimistic stance on the current situation in the government.

FOUR MAJOR CHALLENGES During the conference, Maximilien Lambertson, Research Analyst for Eastern Europe at the London-based Economist Intelligence Unit, also provided his analysis and forecasts about the Croatian economy. He pointed out four major challenges – Brexit, low energy prices on the global market, a period of low interest rates and a potential Chinese economic slowdown.

“Brexit is not expected to exert a significant impact given the level of trade between Croatia and Great Britain. Secondly, interest rates are expected to remain low over the next five years which will benefit Croatia in terms of debt refinancing. Similarly, China’s economic slowdown is not expected to significantly affect Croatia, whilst the increase in energy prices is expected to result in mild inflation”, stated Lambertson, stressing that both this and next year are a turning point for Croatia. Accord-

ing to his forecasts, the average annual GDP growth rate by 2021 is likely to be 2.1%, whilst this year it is likely to record 2.3% growth. According to him, major challenges for Croatia are growth slowdown in the Eurozone, demographic movements, high demand for financing and structural issues in healthcare and pension systems.

WAITING FOR TAX REFORM Concerning the forecasts of GDP growth, the Vice-Governor of the Croatian National Bank, Vedran Šošić, emphasised that economic growth of 2.3% that had been forecast earlier this year could also be slightly higher.

Ivan Jandrić, member of the Management Board, Addiko Bank and President of the Croatian Banking Association at CCE, also provided optimistic forecasts quoting analysts working in his bank and their forecast of a 2.7% growth in 2016. One of the first moves by the new government concerns the implementation of tax reform. Conference participants were interested in some details regarding this issue, yet Saša Drezgić from the Ministry of Finance was reluctant to elaborate on this topic.

“Reform is an extremely complex process and so my reservations concerning any announcements is not accidental. We have been working with considerable commitment and conducting comprehensive analyses on economic, fiscal and social impacts and we are aiming to reduce the tax burden and simplify the system”, pointed out Drezgić.

Luka Burilović, President of the CCE, emphasised the importance of tax reform, reiterating that the issue of frequent amendments to tax laws have been pointed out by entrepreneurs several times as one of the burning issues, as well the issue of tax uncertainty.

Moreover, he reminded those present of the slowness of the Croatian judiciary. “The business sector needs to be reminded again of the Arbitration Court at CCE which enables effi-

cient and accelerated dispute settlement. In addition, striving to reduce the burden on the Croatian judiciary, I will propose to the new government we take over the register of the Commercial Court, since such issues do not need to be addressed by courts, given the fact that the CCE has both the capacity and expertise to tackle this issue far more effectively, at more affordable fees and providing higher quality services”, stated Burilović.

Capital markets are insufficiently developed. New programmes and financing opportunities, financial support provided to businesses and instruments for protection against risk are the major problems entrepreneurs are facing, according to research conducted by the CCE amongst its members prior to the conference. The importance of addressing these issues was also stressed by Ivan Mrvoš, CEO and founder of Include and Nikola Dujmović, Director of SPAN during the panel discussion.

“The financial support was not provided when we needed it most. We do not currently need it, yet everyone is providing it”, noted Dujmović, pointing out that the education system needs reforming and that it needs to start providing comprehensive lectures on entrepreneurship and the tools required for successful business.

Petar Pierre Matek, President of the Management Board, Hanfa, believes that the capital markets in Croatia are not nearly as developed as in some other countries, primarily due to a high level of savings. On the other hand, Marijan Kralj, President of Association of Insurers at CCE, believes the Croatian insurance sector does not lag behind the rest of Europe.

“We are keeping abreast with trends and preparing new insurance products, ranging from insurance of guarantees and receivables, to insurance from loss of computer data”, stressed Kralj, adding that insurers have thus far provided more support to institutional and infrastructure projects compared with the private sector.

Reform is an extremely complex process and hence my reservations concerning any announcement is not accidental.

We have been working with extreme dedication and conducting comprehensive analyses on economic, fiscal and social impacts and we are primarily aiming to reduce the tax burden and simplify the system.

Saša Drezgić, Ministry of Finance

November 2016 | No 263 | PVinternational | 5

INTERVIEW IVANA IVANČIĆ, MEMBER, MANAGEMENT BOARD, PRVO PLINA

CROATIAN GAS MARKET IS EXTREMELY VOLA Against the backdrop of a decrease in domestic production and an expected mild growth of natural gas consumption in Croatia, gas imports are expected to rise. Thus, in future Croatia will face a similar situation to most of Europe whose gas market is import-oriented

by Boris Odorčić

P

over

10,000 end users supplied by PPD

40% market share of PPD

1,3 billion m

3

of gas sold in 2015

33.3% growth compared with 2014

rvo plinarsko društvo (PPD) is a company founded in 2001, involved in the import, sale, supply and distribution of natural gas. Ivana Ivančić, Member of the Management Board, stated that PPD is a privately-owned Croatian company, a natural gas distribution system operator in the South-eastern Vukovar-Srijem County where it manages its own distribution network and provides natural gas for over 10,000 end users, acting as both a retail and wholesale supplier. Its role on the Croatian gas market is significant - PPD is registered with the Croatian Energy Market Operator (HROTE) as the balance group leader and it is fully authorised to import natural gas, imported through both Croatian interconnectors (Rogatec and Drávaszerdahely). Moreover, it is a market leader amongst Croatian natural gas importers with a market share of 40%. In 2015, the company saw the sale of 1.3 billion m3 of natural gas, 33.3% up over 2014.

It is important to mention Energia Naturalis – an investment and holding company – 100% owned by PPD. The company operates on both traditional and renewable energy markets. It is currently involved in a wide range of activities –from the distribution and supply of gas, electricity trading throughout the region, oil derivatives, information and communication technologies through investment projects and transport. Moreover, the Group expanded its activities to cover the liquefied natural gas (LNG) market and in the Port of Ploče it has la-

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unched the construction of a terminal intended to provide access to liquefied natural gas from other sources for both Croatia and other countries in the region, whilst the diversification of LNG supply will contribute to further market development and the security of gas supplies.

Total revenue generated by Energia Natura-

PPD IS THE LEADER AMONGST THE CROATIAN NATURAL GAS IMPORTERS WITH A MARKET SHARE OF 40% lis Group in 2015 was €0.52 billion, and gross profit of €35.7 million. The companies operating in Hungary, Slovenia and Serbia generated revenue of €54 million in 2015.

 What is your assessment of the Croatian natural gas market?

The natural gas market in Croatia was liberalised from the legal aspect in 2008, yet it remained closed until 2012 due to regulated prices, incomplete by-laws and the previous long-term monopoly. The si-

ARSKO DRUŠTVO

ATILE The natural gas market in Croatia was liberalised from the legal aspect in 2008, says Ivana Ivančić

November 2016 | No 263 | PVinternational | 7

INTERVIEW

There are currently 15 registered balance group leaders and 56 organisations holding gas supply licences. Gas consumption is considerably lower compared with the period prior to the recession which implies an increasing number of players in a reducing market.

tuation changed when two fundamental prerequisites were provided: the construction and commissioning of the second Croatian interstate interconnector pipeline towards Hungary (Drávaszerdahely) and the additional improvement of laws and by-laws that addressed the previous problems concerning the implementation of regulatory provisions in real situations. There are currently a large number of players on the Croatian market and it can be concluded that the Croatian market is extremely volatile. There are currently 15 registered balance group leaders and 56 organisations holding gas supply licences. Gas consumption is far lower compared with the period prior to the recession, which indicates an increasing number of players on a decreasing market. We hope that the downward trend in consumption has been halted, since 2015 saw mild consumption growth of around 2.6% in relation to 2014.

SOUTHEAST EUROPE STILL LACKS INTERCONNECTIONS WITH BIDIRECTIONAL GAS FLOW AND LNG MARKET ACCESS

 What will be the impact, both on the market and on your operations, of the new Gas Market Act that is expected to be passed this year?

We expect the new Gas Market Act to initiate specific changes concerning the supply to end users using public services. The Croatian Energy Regulatory Agency (HERA) provided the methodology by which the amounts of tariff items for gas supply public services are specified, guaranteeing the supply that will be implemented until 1st April 2017. This mo-

effective system of change of gas supplier for households. Furthermore, an absence of daily consumption diagrams and a low level of technical development of individual distribution system operators still need to be tackled whilst aiming towards the full opening of the market. In addition, there is the issue of sustainability of the current number of suppliers/ distributors, since the current problems on the market have already resulted in potential bankruptcies which significantly affects the issue

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del of gas price regulation was intended for the transitional period or until the fulfilment of the prerequisites for full price deregulation.

Nevertheless, prerequisites for the full opening up of the household gas market need to be ensured. They include the enhancement of end user protection, improvement of organisational and technical qualifications of suppliers in public services and the implementation of an

of gas supply. Our stance and appearance in that market greatly depends on the new model of household gas supply and on the new legal solution provided.

 Does the existing gas infrastructure meet both market requirements and the requirements of your company as the leading importer of this product?

As opposed to Western European markets with diversified gas supply routes and develo-

WE HAVE BECOME CO-OWNER OF THE PORT OF PLOČE DUE TO ITS STRATEGIC POSITION TO THE MEDITERRANEAN ped infrastructure, Southeast Europe still lacks interconnections with bidirectional gas flow and access to the LNG market. National markets are relatively small and transport systems have not been fully harmonised with technical and legal requirements. Nevertheless, in the Croatian gas infrastructure the current facts are slightly different. The Hungarian-Croatian interconnector pipeline is still largely unexploited and it has to be pointed out that Croatian gas transport tariffs rank amongst the highest in the EU. This is certainly due to a drop in natural gas consumption, yet we need to focus on the cost-effectiveness of future investments in infrastructure, as otherwise we cannot expect consumption to increase. The capacity of the only Croatian underground gas storage system has been partly available to market stakeholders since 2014, which is important since the availability of storage capacity provides gas suppliers with significant flexibility both seasonal (summer-winter) and daily level, and guarantees compliance with gas supply standards to customers.

 What benefits are there for the Croatian gas market, both for consumers and suppliers, from large infrastructure projects such as the LNG terminal and the Ionian-Adriatic pipeline?

As a result of a drop in domestic gas production and the expected mild growth in natural gas consumption, Croatia can expect an increase in requirements for natural gas imports.

We are about to face the similar situation to

most of Europe, whose gas market is largely import-oriented. According to the Annual Report for 2015 released by the Agency for the Co-operation of Energy Regulators, the natural gas import price is currently still higher in our area compared with that in North-West Europe. Such large projects would positively affect the region in several ways: supply routes would be diversified, there would be a technical possibility for gas transport from areas with more affordable gas prices to areas with higher gas prices and pressure would be exerted on prices stated in long-term contracts, as well as increased price competition between sources.

Consequently, the involvement of Croatia in European gas flows and the regional natural gas market is entirely justified. Both the LNG terminal project and the Ionian-Adriatic pipeline are primarily of regional importance, since the markets of neighbouring countries depend on them. Nevertheless, the strategic position of Croatia with respect to both projects provides the opportunity of significant transit through the Croatian gas system and can substantially affect regional gas market development where PPD sees potential for further growth.

 You have become co-owner of the Port of Ploče and have taken over Adria Transport, the domestic alternative railway cargo carrier. Are you planning further diversification activity?

We have become co-owner of the Port of Ploče due to its strategic position for the Mediterranean and for its immense potential for growth and development. Moreover, we are working on a project for the construction of liquefied natural gas and oil derivatives storage which, when complete, will certainly have a positive synergistic effect. It is frequently pointed out that the railway is an extended arm of the port and the value of the port is in the possibility of transmission of cargo and its forwarding towards various destinations. Hence, the acquisition of a transport company and involvement in the logistics business is a logical continuation of diversification, as well as a possibility to achieve synergistic effects.

As opposed to Western European markets with diversified gas supply routes and developed infrastructure, Southeast Europe still lacks interconnections with bidirectional gas flow and access to the LNG market

 Lastly, PPD is aiming to become a regional gas market player.

We can say we already are a regional player, since PPD has been involved in international trade with around 500 million m3 of gas. We have been supplying commercial customers through our company in Hungary with around 120 million m3 of gas and we are also present in Serbia and Bosnia and Herzegovina to which we have been looking forward to market opening.

November 2016 | No 263 | PVinternational | 9

SUCCESS 16th BRITISH INVENTION SHOW

ZAGREB INNOVATOR WINS EXCELLENT SUCCESS AT BRITISH INVENTION SHOW Tomislav Bronzin, owner of Citus, won first prize, special recognition and a gold medal for his innovation C@N PersonRecog – Gender&Age Group Recognition Software

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omislav Bronzin, owner of Citus, an innovator from Zagreb and Vice-President of the IT Association at the CCE, was the most successful exhibitor at this year’s British Invention Show (BIS). He was awarded first prize for his innovation C@N PersonRecog – Gender&Age Group Recognition Software, as well as special recognition and a gold medal.

Croatian entrepreneurs were awarded 11 medals in the face of severe international competition.

“Innovation is the cornerstone of economic growth and identifying and valuing them are fundamental tasks that need to be performed by the principal bearers of economic policy”, noted the Director of Industry and IT Sector at CCE, Tajana

CROATIAN ENTREPRENEURS GAIN 11 MEDALS NOTWITHSTANDING SEVERE INTERNATIONAL COMPETITION Kesić Šapić, adding that, irrespective of lack of financial allocations for research and development, Croatia needs to exploit the opportunity to absorb €664 million from EU Operational Programme Competitiveness and Cohesion, aimed at

enhancing research potential.

Mirjana Brlečić, was awarded a gold medal and a special prize for her design of exclusive cosmetics Nikel prive. Melita and Mira Moćan, from Cosmel, received a special prize and a gold medal for their Creamy poppy milk and attracted a great deal of commercial interest in exporting their high-quality product to Great Britain, Malaysia and Taiwan.

Gold medals were also gained by Slobodan Rajić, from Telecor Zagreb, for his Anti-terrorist lock on the manhole covers, and Tomislav Juratovac, from Prohepro, for Helloquent Wi-fi. This innovation aroused substantial commercial and scientific interest in the visitors to the Show.

In addition to receiving a gold medal, Matej and Filip Bošnjak, gained a plati-

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num medal, the second ranking medal at the show, for their innovation Model for welding round objects. Their innovation was developed at Technical School Zagreb, under the mentorship of Professor Željko Blažek, and they subsequently perfected it into a final product in a family owned business E.T. Industrijska elektronika.

The 16th British Invention Show was held at the Barbican Exhibition Centre, in the centre of London between 19th and 22nd October.

This year’s appearance of Croatian innovators at the Show was organised by the Croatian Association of Inventors and the Union of Inventors Zagreb with support being provided by the Croatian Chamber of Economy and the mayor of Zagreb.

EUROPEAN PARLIAMENT OF ENTERPRISES SIX CROATIAN COMPANIES PARTICIPATING IN EPE IN BRUSSELS

CHAMBERS OF ECONOMY FUNDAMENTAL TO STRENGTHEN EU ECONOMY Entrepreneurs demand that European institutions assist business activities and to abolish barriers primarily for small and medium-sized businesses who comprise the majority of the European economy

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he Croatian Chamber of Economy in co-operation with its umbrella organisation Eurochambres organised a meeting of the European Parliament of Enterprises (EPE) between EU officials and European entrepreneurs in Brussels with the participation of six Croatian companies: Agrokor, Đuro Đaković, Opereta, Kognosko, MStart and Stražaplastika.

“The role of Chambers of Economy in the strengthening of the European economy is fundamental”, noted Jyrki Katainen, Vice-President of the European Commission, where over 800 entrepreneurs from 45 countries were brought together for wide-ranging discussions. Foremost were the topics of trade, the single market, sustainability and skills were addressed. Throughout, conclusions were

reached on the importance of further work to the single market and assistance for business activities particularly small and medium-sized businesses.

Addressing the issue of the improvement in the business climate, entrepreneurs requested the European institutions to assist business activities and to abolish barriers primarily for small and medium-sized businesses that make up the majority of the European economy.

Strengthening the EU digital market was

highlighted as one of the most important policies of the European Commission.

Moreover, the Croatian Chamber of Economy organised a meeting between Croatian entrepreneurs and the President of Croatia, Kolinda Grabar Kitarović, in the European Parliament. The entrepreneurs and the President tackled the importance of strengthening the Croatian economy that is currently an integral segment of European efforts aimed at strengthening competitiveness.

EUROCHAMBRES

Luka Burilović appointed Member of the Management Board

L

uka Burilović, President of the Croatian Chamber of Economy, has again been appointed Member of the Management Board of Eurochambres during the recent General Assembly meeting in Brussels. “The EU market is crucial for our exporters. Through our work in Eurochambres we aim to protect the interests of our companies and provide them with new opportunities”, point-

ed out Burilović, adding that the Croatian Chamber of Economy in co-operation with the Austrian Federal Economic Chamber is launching a dual education project that could be a springboard for recovery in the Croatian economy.

The CCE has been a member of Eurochambres since 2000. Through its participation in the work of umbrella associations, networks and initiatives, it actively represents the interests of Croatian

companies at European institutions.

Eurochambres is an association of European Chambers of Commerce and Industry founded in 1958 and headquartered in Brussels, representing the interests of the business community. It represents over 20 million companies in Europe with 45 members and a European network of 1,700 regional and local chambers. Member companies employ over 120 million people and small and medium sizes businesses account for over 93% of the membership.

November 2016 | No 263 | PVinternational | 11

120TH ANNIVERSARY OF VIKTOR LENAC SHIPYARD

NEW LIFE FOR A RE

The shipyard commenced operating under the name of Lazarus in 1896 in Rijeka, w The company is currently a modern shipyard with three shipbuilding areas capab as the giant vessels such as Aframax and Suezmax. In addition to extremely succe 20 Croatian offshore drilling rigs for gas extraction over the last decade by Miro Soldić

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his year, the Viktor Lenac Shipyard marks its 120th anniversary. During this impressive period the company has faced both success and failure but is currently established as a leading shipyard specialised in the overhaul and reconstruction of vessels in the Mediterranean. The shipyard began operating under the name Lazarus in 1896 in Rijeka, which at the time was the most important port in the Austro-Hungarian Empire. Following WW11, the shipyard changed its name to Viktor Lenac. At the end of the 1960’s the company relocated to Martinšćica Bay that, because of its depth, was more appropriate for the accommodation of deep-draught vessels. The company is now a modern shipyard with three large building areas capable of accommodating vessels up to 160,000 dwt (deadweight tonnes) and as well as the giant Aframax and Suezmax vessels. The shipyard has over 1,400 meters of dry dock space with 20 cranes and a construction site covering an area of 120,000 m2 and has built 15 of the 20 offshore drilling rigs for gas extraction in the Northern Adriatic over the last decade.

HEIGHTENED COMPETITION The resilience of the shipyard is best confirmed in that it managed to survive bankruptcy in 2003 caused by adverse market conditions, as well as at the time overly ambitious managerial plans and decisions that resulted in unsustainable investment.

The situation was critical, yet the shipyard succeeded in tackling it after five years through immense effort, expertise and the loyalty of its employees, as well as with the assistance provided by the new owners, the Zadar-based Tankerska Plovidba and the Pula-based Uljanik, that currently own over 70% of the company.

Notwithstanding the fact that the hardships have been overcome, the shipyard 12 | PVinternational | November 2016 | No 263

still currently faces several challenges, pointed out the President, Management Board of Viktor Lenac Shipyard, Aljoša Pavelin, who assumed office in May 2016.

The shipping market is in recession due to an over- supply of capacity in relation to

THIS YEAR THE SHIPYARD HAS PERFORMED OVERHAUL OPERATIONS ON 62 VESSELS market demand, which is a direct consequence of the slowing of Chinese economy and a fall in oil prices. Against the backdrop of such market circumstances, shipbuilders have been reducing costs drastically, primarily fleet maintenance costs and the postponing of overhaul operations. This directly affects repair ship-

yards such as Viktor Lenac, concerning a fall in employment capacity and additional pressure on prices and severe competition.

“The previously announced large-scale increase in the number of projects of ballast water treatment systems (BWTS) has not occurred so far, and we need to wait and monitor further developments concerning this issue, by the end of 2017.

Nevertheless, irrespective of future developments concerning BWTS projects, this will not solve the structural problems in the shipping market, a surplus of vessels and shipyard surplus as a knock-on effect. Consequently, we are certainly about to face several highly challenging years”, pointed out Pavelin, adding that Viktor Lenac will tackle the recession in the only appropriate manner – through top quality.

Following last year, which was excellent, the first half of 2016 was extremely difficult and a nett loss by the shipyard was €1.25 million. Nevertheless, although the first six months were unsatisfactory these are expected to be compensated by new projects by the end of the year. “The results for the third quarter show a sig-

NOWNED BUILDER

which at the time was the most important port in Austro-Hungarian Empire. ble of accommodating vessels up to 160,000 dwt (deadweight tonnes) as well essful overhauls performed on ships, the company has also produced 15 of the

USS Mt. Whitney, a flagship of the 6th US Navy fleet, continues its modernisation in Viktor Lenac, which will accommodate it yet again in mid-December

nificant advancement and provide room for optimism. Following the fourth quarter which is expected to be very intense concerning projects and highly positive regarding generated revenue, we expect to see the end of the year seeing positive results”, stressed Pavelin, adding that the financial situation is also satisfactory. “Our loan status is currently at an acceptable level and we fully control our debt servicing. Cash flow is positive, inflows and outflows under control, we have provisions and I dare say we are stable. We are certainly aiming to maintain the continuity of revenue growth and positive results”, noted Pavelin, highlighting the most important projects the shipyard is currently focused on.

OVERHAULS STILL CORE BUSINESS During the first nine months of this year the shipyard has overhauled 62 vessels. One of the most important projects was the implementation of the BWTS NS Stream tanker, for the Russian shipping company Novoship of the Sovcomflot Group. It was a landmark project of this type, both for the shipping company and

the shipyard, and it is considered amongst the first projects of this type globally. The same system will also be implemented on the next tanker from the Sovcomflot Group, NS Power that was in for overhaul at the beginning of October and is expected to be completed by mid-November. Viktor Lenac is currently participating in a tender for the same type of work concerning another reputable Russian shipping company - Tavrichesky Bridge – that is supposed to arrive in November. In addition to the already mentioned three Russian tankers, the shipyard is currently working on a comprehensive reconstruction of the Icelandic fishing boat Antarctic Navigator, to be completed during the first quarter of 2017. Furthermore, a strategic project is the continuing modernisation of USS Mt. Whitney, a flagship of the 6th US Navy fleet. “This ship will be with us in mid-December for comprehensive modernisation of its communications system. It will be here for six months, five of which will be in dock. The contracted value of the basic project is $23 million and, with opportunities for additional work, the project could eventually be worth $31 million. In addition to high revenue, this project is also important in order to ensure stable employment capacity for a relatively long period, which is a constant challenge in repairs and shipbuilding”, stated Pavelin, adding that by the end of the year another ship - Ocean Star, for an Italian client Micoperi, is expected to be accommodated for a relatively small-scale repair, yet it will be an introduction to a large-scale repair to be performed next year.

“We are continuing with overhaul operations that maintain our core business. Moreover, our appearance on the ship repair market is currently more aggressive through modernised sales and we are striving to ensure two or three large-scale ship repair projects annually.

The shipyard also needs to enter a more

vigorous investment cycle in the immediate future. One segment is investment in new technology and capacity and the further reconstruction of the existing infrastructure and capacity. We are aiming to simplify business processes and reduce the time required for the performance of specific activities in addition to increasing the safety of our workers. This will directly boost productivity and foster the competitiveness in a continuously challenging market. We, as a relatively small shipyard, cannot rely on economies of scale and low prices. Efficiency and top quality work are fundamental”, explained Pavelin, announcing ambitious plans also in other fields. Through its partnership with the Italian company Micoperi, Viktor Lenac has already proved the quality of its work through its involvement in the Janaf terminal and underground pipeline construction, as well as work on the Omišalj-based Dina facilities. In addition, in co-operation with 3 May shipyard, Viktor Lenac has also constructed the Dubračina viaduct. Consequently, all these references are certainly expected to help it in being allocated part of the work for the construction of the LNG terminal on Krk which is about to start.

“We have been positioning ourselves deliberately as one of the contractors for the development of the LNG terminal project on the island of Krk. This project is of strategic importance for us, both concerning the phase of construction and exploitation. We have been involved in serious negotiations with potential partners and believe that we will be members of the project team in due time”, emphasised Pavelin, concluding that the shipyard is sufficiently motivated, as well as provided with good quality expertise and potential for a successful shipyard management regarding the recently allocated tasks and responsibilities which made its employees particularly honoured.

November 2016 | No 263 | PVinternational | 13

MARITIME TRANSPORT LIBERALISATION

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OPENING DOORS TO INTERNATIONAL SHIPPERS Foreign companies, primarily from Greece, Italy and Scandinavia, have shown great interest in concessions with the main criterion for granting a concession being the value of the bid. Jadrolinija, the local state-owned shipping company, operates on most maritime lines, mainly those considered unprofitable, competing with a large number of private Croatian shipping companies by Miro Soldić soldic@privredni.hr

L

iberalisation of the Croatian maritime transport market is expected to start on 1st January 2017, which means the opening up of the local market, held

by Jadrolinija for decades, to foreign investors.

Companies, as well as passengers, will surely see substantial changes. Sources at the Agency for Coastal Passenger Shipping Transport, provided Privredni vjesnik with comprehensive information on the process of liberalisation. Irrespective of the fact that there are only a few months prior to liberalisation, it is highly uncertain whether tenders will be implemented in accordance with the plan or everything will be postponed until further notice. Currently, the latter scenario appears to be much more likely.

“Tenders have not been invited thus far and at this point we cannot confirm that they will be implemented by 1st January 2017. What we can confirm is that we have been investing great effort in the performance of a number of activities aimed at complying with the requirements of maritime policy arising from the Treaty of Accession of Croatia to the European Union, or transitional measures for the Council Regulation (EEC) No. 3577/92 from 7th December 1992 on the implementation of the

principle of free provision of services in maritime transport within member states (maritime cabotage)”, stated sources at the Agency.

This is primarily due to the recent turmoil and instability politically, as well as resistance shown by the dominant structures towards change. Liberalisation has been announced for over a decade, yet little or nothing has been done concerning this issue during that time.

PRIVATE SHIPPING COMPANIES AND JADROLINIJA Notwithstanding the fact that Ivan Franičević Aga, Director of the Agency for Coastal Passenger Shipping Transport, has recently released a statement to the media implying that companies from Greece, Italy and Scandinavia have shown interest in concessions, sources at the Agency could not provide us with official confirmation on this. They pointed out that, once tenders have been invited, the main criterion for granting a concession will be the value of the bid. “The selection criterion will be the most economically favourable bid in terms of economic-financial and technical features in accordance with Articles 5 to 10; Regulations on conditions and the evaluation of criteria for concession grants and entering November 2016 | No 263 | PVinternational | 15

MARITIME TRANSPORT LIBERALISATION

What are the most important conditions that need to be met by the potential concessionaires?

Sources at the Agency for Coastal Passenger Shipping Transport have pointed out that the right to the provision of public maritime transport services with public service obligations can be granted to a shipping company within the European Economic Area (EEA) that meets the following conditions:

that the Certificate of Registry of the vessel that the shipping company intends to use for the provision of public transport services includes an entry of the shipping company in compliance with the provisions of the special law

that the company owns a vessel adequate for the provision of public transport services for the maritime transport line concerning which the shipping company has applied for a grant of concession or for the maritime transport line that is the subject-matter of public procurement

that the vessel meets the prescribed technical requirements as defined by the Act on Transport in Liner Shipping and Seasonal Coastal Maritime Transport of the Ordinance on Conditions for Implementation of Maritime Cabotage in Croatia and the Ordinance on the Conditions that need to me met both by the vessel and the shipping company for the provision of public transport services in the coastal liner maritime transport

PASSENGERS SHOULD BE THE ONES TO LOOK FORWARD TO LIBERALISATION AND A MORE SEVERE COMPETITION ON THE MARKET, AS IT ALL NORMALLY LEADS TO A FALL IN PASSENGER TRANSPORT FARES

that the crew members are citizens of the Republic of Croatia or any other EEA member state that have entered the contract with the shipping company, in accordance with labour and social standards defined in the National Collective Agreement

into agreements on public service provision on public transport in maitime transport”, as stated by sources, adding that all the conditions will be comprehensively regulated upon tender invitation and provisions stated in the Public Procurement Act or the Concessions Act will be applied accordingly.

Most maritime lines, particularly those considered unprofitable, are operated by the local state - owned shipping company, Jadrolinija, yet in addition, there are other shipping companies providing services throughout Croatia such as Rapska plovidba, Linijska nacionalna plovidba, G&V Line and Miatrade. It may appear at first sight that there is a certain level of competition on the market, since the monopoly of Jadrolinija has been challenged by many shipping companies, yet the reality is completely different. Smaller shipping companies have been complaining for years that Jadrolinija has been undermining them through ‘dumping’. Hence, many of them face bankruptcy. Linijska nacionalna plovidba (LNP) is one of the companies that have

16 | PVinternational | November 2016 | No 263

that the vessel has been entered into the relevant Commercial Vessel Register in Croatia or in any other EEA member state

the crew members need to meet language proficiency requirements in compliance with the regulations on cabotage in the Republic of Croatia

been highlighting for years the fact that small shipping companies have been discriminated against by legislators who favour Jadrolinija as the national state-owned shipping company.

Nevertheless, their appeals have been ignored and no government has attempted to address this issue thus far. “The legally binding maritime transport liberalisation requirement has thus far remained only a distant hope whilst private domestic shipping companies are currently facing a dire position, perhaps the worst to date, immediately prior to opening the market internationally”, as recently stated by Antonija Mišura, Director of LNP, a company that is currently facing pre-bankruptcy, adding that Jadrolinija has been using the resources provided by the government to increase its fleet, as well as its staff and maritime lines.

Sources within Jadrolinija state their fleet has been strengthened without state guarantees and through loans under commercial conditions. Moreover, they state they are prepared for any changes and their specific objectives are to continue with fleet modernisation,

as well as the further development of the eJadrolinija project and preparation of the strategy for concession tenders whose invitations have to be announced by the end of this year.

INTERNATIONAL SHIPPING COMPANIES ALLOWED TO OPERATE PRIOR TO LIBERALISATION “It has to be pointed out that what is being announced for the beginning of 2017 is actually not that revolutionary, as even now any foreign shipping company is allowed to operate in the Adriatic under the Croatian flag. One can say that 2017 will see the loosening of the rules on maritime transport, where companies involved in maritime transport with “flags of convenience” in the European Union, such as Cyprus or Malta, will be given the chance to apply for tenders”, stated sources at Jadrolinija.

Furthermore, they pointed out that this could lead to vessels with significantly different standards, such as, a reduction in crew numbers or lower safety standards. “It is a wellknown fact that Croatian maritime authorities require compliance to the highest standards, which Jadrolinija fully agrees with and implements on all vessels. Nevertheless, the fact that shipping companies will be allowed to operate in the Adriatic under flags of convenience and with (perhaps) significantly lower safety standards cannot be ignored”, said the source, stressing that they have been preparing for concession tenders for several years. “Preparation by Jadrolinija for concession tenders is not a one year project, since fleet renewal, as the prerequisite for competitiveness, has been constantly in our focus. Consequently, over the last 11 years the fleet has expanded by a total of 18 new vessels, 12 of which are newly-constructed. We believe that following a new round of concession tenders, we will retain the leading position in the Adriatic”, emphasised the source at Jadrolinija, pointing out that it has to be remembered that liberalisation is a bi-directional process, and that they will also be provided the opportunity to compete for shipping concession on other EU markets.

PASSENGER TRANSPORT CHARGES FALLING It remains to be seen to what extent local companies are currently prepared to face foreign competition, as well as what kind of fleet and the type of plans international companies will present. Nevertheless, passengers should be those to welcome liberalisation and more and tougher competition on the market, as it all normally leads to a drop in passenger transport fares. The issue of quality or value for money yet needs to be addressed, yet we have already seen positive changes through liberalisation of the telecommunications sector services, taxi services and in other areas. Following many postponements and significant opposition from previous monopolists, the opening of the market has normally resulted in economically more acceptable programmes, as well as new technology, a higher quality customer service and a comprehensive modernisation of business models.

The importance of tourism for the local economy has been pointed out frequently enough, yet stable and frequent maritime transport lines with the islands are a basic prerequisite for the development of tourism.

Nevertheless, one need not only focus on the economic aspect of this issue, since good connections with the mainland throughout the year are imperative in order to provide the island inhabitants with a quality life, yet in this case we are most frequently dealing with non-profitable maritime transport lines. Consequently, maritime infrastructure need not be considered short-term and primarily through the generation of profits, since a long-term vision through the improvement of demographic and economic perspectives of both the mainland and the islands are imperative. Once liberalisation has been opted for, it needs to be implemented in an intelligent manner through comprehensive state control, since long-term postponements and procrastination concerning the potential concessionaires can only adversely impact on both shipping companies involved and passengers.

The legally binding maritime transport

liberalisation has thus far remained only a vague hope, whilst private local shipping companies are currently facing a dire position, perhaps the worst to date, immediately prior to the international opening of the market.

Antonija Mišura, Director of LNP

November 2016 | No 263 | PVinternational | 17

20TH CROATIAN TOURISM DAY

IMPROVING AIR TRANS TRAN CONNECTIONS TO BOO TOURISM Croatian destinations are increasing in popularity, providing huge opportunities to be exploited. Direct flights towards transmissive markets are imperative throughout the year, pointed out Tonči Peović, President, Air Transport Association at the CCE by Jozo Vrdoljak

T

he 16th Croatian Tourism Forum organised by the Croatian Chamber of Economy has recently been held as part of the jubilee 20th of Croatian Tourism Day in Bol on the island of Brač. This year’s forum primarily addressed the issue of “Air Transport in Tourism – Across Borders throughout the Year”.

“Croatian destinations are increasing in popularity providing huge opportunities to be exploited. Direct flights to transmissive markets are imperative throughout the year, since if a destination is not accessible, it cannot be attractive”, stressed Tonči Peović, President, Air Transport Association at the CCE, adding that Croatian airports have seen the highest number of passengers since records began, which was also confirmed by the fact that they saw 1.5 million air passengers just in July. During the first

seven months of 2016, Croatia saw around 4.4 million air passengers or 12.4% up over the same period last year.

According to him, air transport access is primarily the result of the liberalisation and deregulation of air transport. “Moreover, a large number of airlines have been created mainly as a result of liberalisation and deregulation. Since 1990, the number of low-cost airlines has increased substantially, although the number of charter airlines has decreased considerably, albeit there has been a slow recovery over the last several years”, he pointed out.

Christina Russe, Deputy Secretary General of European Travel Agents and Tour Operators Associations (ECTAA), shares Pejović’s opinion and believes that air transport connections are fundamental for tourism, yet in Croatia they are currently insufficient and of poor quality. “This is

probably due to the fact that most visitors originate from neighbouring or nearby countries so they can opt for road transport.

Improvement in air transport connections would provide the potential to attract tourists from other European countries and further overseas”, she noted.

STRENGTHENING OF BOTH PRE - AND POST - SEASON “Connections are crucial and fundamental for destination selection”, she pointed out, adding that one of the most important aspects of the Strategy on Innovation in Tourism adopted by the EU is the signing of agreements with emerging Asian markets, primarily China. Furthermore, according to her, security is another important aspect and the collection and

Croatia Tickets – online ticketing service Croatia Tickets, a new project by Slobodna Dalmacija, was presented during the Days of Croatian Tourism in Opatija. It is a portal on which one can buy tickets for many tourism programmes throughout Croatia with just one click.

According to Miroslav Ivić, President of the Management Board, Slobodna Dalmacija, the portal promotes the natural beauty of Croatia and various tourism

18 | PVinternational | November 2016 | No 263

programmes. “The Croatia Tickets portal provides information on travel throughout the country using all means of transport, as well as the chance to buy tickets for journeys with comprehensive information on tour operators, ticket prices and travel routes. Furthermore, visitors will be given tickets for all Croatian National Parks, as well as museums, concerts, restaurants and information on

all the events in specific destinations and its surroundings for one week”, pointed out Ivana Vladović, the developer of the project and Marketing Director, Slobodna Dalmacija, during the presentation of the portal. The Croatian National Tourist Board has supported this project as a unique application provided at the national level intended to assist tourists in comprehensive planning of their holidays.

NSPORT SPORT OST

Tonči Peović

collation of a large amount of passenger data is necessary.

Vesna Zeneral, Director of Commercial Support at Product&Purchasing at the TUI Group, believes that spreading of risk on development and investment is required for the successful extension of the tourist season both in Croatia and in general. “An aircraft that does not fly generates losses”, she pointed out. She highlighted the fact that TUI Group, the leading tour operator on the Croatian market, carrying tourist groups in April and October operates on an occupancy rate estimate of 95%, which exceeds by 15% the level at which a flight becomes profit-making compared with what Peović believes, as he stated that an occupancy rate of 80% per flight is profitmaking.

During the Days of Croatian Tourism in Bol, Ratomir Ivičić, Director, Head Office of the Croatian National Tourist Board, presented an analysis of the strength of the Croatian tourism as a brand, as well as the activities planned by the Croatian National Tourist Board

for 2017. Within the presentation “The National Tourism Brand – Performance Measurement and Guidelines for 2017” Ivičić pointed out that research conducted in 2013 on the strength of Croatian tourism as a brand, showed it to be insufficiently strong. Of 258 million passengers originating from the EU who decided to travel, 43% did not gain any insight into Croatian tourism programmes. According to estimates, Croatian tourism programmes have been identified by around 147 million people, although 55% did not actually have an insight into the programmes and the brand in itself. “Research conducted in 2016 shows that the awareness of Croatian tourism as a brand was 23% up in relation to 2013, and brand insight increased by 16%”, stated Ivičić.

According to Oxford Economics, the estimated growth rate in tourism for 2017 at a global level will be 4.2%, with 3.2% in Europe and 2% in the Mediterranean. Estimates for Croatia indicate a 3.3% rise in overnight stays; thus, Croatia ranks amongst the countries, such as

Spain, Portugal, Greece, Malta, Cyprus, Slovenia and Bulgaria, whose growth rates will exceed the overall average.

Throughout 2017 the Croatian National Tourist Board will focus on boosting hotel occupancy rates both pre-season and post-season. According to the Ivičić, analyses, conducted through eVisitor, they show that during the summer months of the peak season, hotel occupancy rate is extremely high at 93% in July, and in August it reaches 98%. During the peak season, there is almost no room for further significant increase in occupancy rates, bearing in mind existing hotel capacities, yet in May, June and September there certainly is room for improvement.

Ivićić pointed out that 2017 will see the continuation of implementation of integrated communication, with a special emphasis on both the pre-season and post-season, as well as in markets with high growth potential, such as Germany, Austria, Italy, Great Britain, France, the Scandinavian countries, Switzerland and Poland.

November 2016 | No 263 | PVinternational | 19

AWARDS PRESENTED AT THE CROATIAN TOURISM DAYS

2016

20th Tourism Flower – Quality for Croatia 2016

HOTEL OF THE YEAR

RESORT HOTEL 3*

Nominees for the campsite of the year:

1. Bluesun Hotel Soline, Brela

Kovačine Campsite, Cres

2. Valamar Koralj Romantic Hotel, Krk

Lupis Campsite, Lovište

3. Bluesun Hotel Marina, Brela

Villa Dubrovnik, Dubrovnik

WELLNESS HOTEL

1. Valalta Naturist Campsite, Rovinj

1. Valamar Dubrovnik President Hotel,

2. Lanterna Campsite, Tar

Dubrovnik

3.Aminess Park Mareda Campsite, Novigrad

2. Vitality Hotel Punta, Mali Lošinj

Nominees for the hotel of the year:

3. Bluesun Hotel Elaphusa, Bol

Neptun Hotel, Dubrovnik The Pucić Palace, Dubrovnik

LARGE CAMPSITE

SMALL CAMPSITE 1. Lupis Campsite, Lovište

BOUTIQUE HOTEL

2. Lando Resort Campsite, Kampor

1. The Pucić Palace, Dubrovnik

3. Odmoree Campsite, Rtina

BUSINESS HOTEL

2. Waldinger Hotel, Osijek

1. Park Hotel, Split

3. Jägerhorn Hotel, Zagreb

2. Esplanade Zagreb Hotel, Zagreb

ECO CAMPSITE 1. Kovačine Campsite, Cres

3. Doubletree by Hilton Zagreb Hotel,

UNIQUE LUXURY HOTEL

2. Krk Campsite, Krk

Zagreb

1. Villa Dubrovnik, Dubrovnik

3. Glavotok Campsite, Krk

2. Bevanda Hotel, Opatija CONGRESS HOTEL

MARINA OF THE YEAR

3. Adriana Hotel, Hvar

1. Valamar Lacroma Dubrovnik Hotel, Dubrovnik

LUXURY HOTEL

2. Lone Hotel, Rovinj

1. Villa Dubrovnik, Dubrovnik

3. Dubrovnik Palace Hotel, Dubrovnik

2. Monte Mulini Hotel, Rovinj 3. Vestibul Palace, Split

RESORT HOTEL 5* 1. Dubrovnik Palace Hotel, Dubrovnik

CAMPSITE OF THE YEAR

2. Lone Hotel, Rovinj

Marina Frapa, Rogoznica Nominees for the marina of the year:

3. Le Meridien Lav, Split

Hramina Marina, Murter RESORT HOTEL 4*

Olive Island Marina, Sutomišćica

1. Neptun Hotel, Dubrovnik LARGE MARINA

2. Valamar Isabella Island Resort, Poreč

1. Marina Frapa, Rogoznica

3. Valamar Argosy Hotel,

Valalta Naturist Campsite, Rovinj

Dubrovnik

Days of Croatian Tourism CROATIAN TOURISM CHAMPION

The city of Dubrovnik

2. D-Marin Marina Dalmatia, Bibinje-Sukošan 3. Kornati Marina, Biograd na moru

– awards and winners according to categories

CROATIAN TOURISM LIFETIME ACHIEVEMENT AWARD Mr Selimir Ognjenović

CULTURAL ATTRACTION OF THE YEAR Barone Fortress,

TOURISM EVENT VEN OF THE YEAR Advent in Zagreb

INNOVATION OF THE YEAR Apoxyomenos project

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Šibenik

on the Island of Vitality

DESTINATION OF THE YEAR • THE MOST SUCCESSFUL RURAL TOURISM DESTINATION:

Konavle municipality • THE MOST SUCCESSFUL HEALTH TOURISM DESTINATION :

The city of Mali Lošinj

MEDIUM-SIZE MARINA

CHARTER COMPANY OFTHE YEAR

SPA/HEALTH RETREATOFTHEYEAR

Navigare Yachting d.o.o., Zagreb

Thalassotherapia Opatija, Opatija

Nominee for the charter company of the year

Specialist Hospital for Medical

Jadranska jedrenja d.o.o., Zagreb

Rehabilitation Daruvar Spa, Daruvar

Croatia Yachting d.o.o., Split

Specialist Hospitalfor Medic. Rehabilitation

1. Hramina Marina, Murter 2. D-Marin Marina Mandalina, Šibenik 3. ACI Marina Dubrovnik, Komolac SMALL MARINA 1. Olive Island Marina, Sutomišćica 2. Vrsar Marina, Vrsar 3. ACI Marina Skradin, Skradin

DMC TRAVEL AGENCY OF THE YEAR

Nominees for SPA/health retreat of the year:

Stubičke Spa, Stubičke Toplice

HOSTEL OF THE YEAR RESTAURANT OF THE YEAR

Katarina Line d.o.o., Opatija Nominees for DMC travel agency of the year:

Gulliver Travel d.o.o., Dubrovnik Uniline d.o.o., Pula SMALL DMC TRAVEL AGENCY 1. Fiore d.o.o., Poreč 2. Terra Travel d.o.o., Zadar 3. M-G Express d.o.o., Kanfanar Special recognition for contribution to development of luxury and experiential tourism - Calvados Club d.o.o.,, Split p

Forum Boutique Hostel, Zadar

Bevanda Restaurant, Opatija

Nominees for the hostel of the year:

Bokeria kitchen & wine, Split

Swanky Mint Hostel, Zagreb

San Rocco Gourmet Restaurant,

Casablanca Hostel, Zagreb

Brtonigla

Nominees for the restaurant of the year:

Special recognition for contribution to Tourism Specia Flower – Quality for Croatia initiative

Đuro Tomljenović

• THE MOST SUCCESSFUL CITY BREAK DESTINATION

The city of Dubrovnik

• THE MOST SUCCESSFUL DESTINATION FOR SUMMER RESORT TOURISM

ATTRACTION OF THE YEAR

PEOPLE IN TOURISM

• NATURAL ATTRACTION OF THE YEAR – BEACH OF THE YEAR

• “ANTON ŠTIFANIĆ” AWARD In the category for individuals:

Banj Beach, Šibenik

• AUTHENTIC COASTAL DESTINATION “MALO MISTO”

• RECREATION AND ENTERTAINMENT

In the category for the best company, institution or association:

The city of Poreč SUSTAINABLE TOURISM AWARD The city of Komiža

Zlatna Greda House in Nature

1. Ivan Srakovčić 2. Zvonko Šupe

Aquae Vivae Aqua Park

1. 50th Đakovo Embroidery Programme 2. Mala Hiža Restaurantt in Čakovec

November 2016 | No 263 | PVinternational | 21

10TH CROATIAN CAMPING CONGRESS

FROM CAMPING TO GLAMPING Croatia is currently a mature camping destination. Nevertheless, campsite owners still need to show more self-confidence and courage in creating unique products for campers, noted Stefan Thurn from ADAC, the General German Automotive Club by Sanja Plješa

A

s a result of increased investment in campsites over the last several years, Croatia currently provides one of the most competitive camping countries in the Mediterranean basin, as concluded during the recently held 10th Croatian Camping Congress, in LifeClass Terme St. Martin located in Sveti Martin on the River Mura, and organised by the Croatian Camping Association. During the conference, Stefan Thurn from ADAC, the General German Automotive Club, pointed out that several years earlier the club had told Croatian campsite owners that the promotion of their sites was imperative in order to become competitive on the market. “Subsequently, Croatia is currently a mature camping destination.

Nevertheless, campsite owners still need to show more self-confidence and courage in the creation of unique products for campers”, noted Thurn.

He presented his conclusions reached in an analysis conducted by ADAC on the quality and prices of campsites in the Mediterranean basin countries.

Comparing prices for a family of three in the French province of Languedoc-Roussillon, Spanish Catalonia, Italian Veneto and in Croatia, Thurn concluded that the daily costs for such a family in Croatia came in at €41.42, Catalonia €54.23, Veneto €50.84 and in Languedoc-Roussillon €47.61. This indicates that Croatian campsites rank as the most affordable, pointed out Thurn.

EXCELLENT RESOURCES According to the ADAC classification, campsite quality is assessed across 5 main sections and 10 sub-sections. Primarily, toilet facilities are assessed and

hence the assessment of the reception desk and parking areas ensues, as well as of the quality of signing. Furthermore, a high quality campsite needs to have well-equipped and well-stocked stores, news-stands and restaurants available within the campsite. Considering the number of four and five-star campsites,

atian campsites received a grade of 7.13, ranking second after Germany with 7.28.

Toilet facilities in French campsites received the grade 6.85, with the average grade in European campsites was 6.6.

Regarding stores and restaurants available at campsites, both Croatia and Spain ranked first with a grade 5.43, followed by Italy (4.94) and France (3.07).

Nevertheless, concerning beauty and natural environment the Croatian campsites ranked first at 3.71, Italian campsites 2.80 and German campsites 1.88. Thurn emphasised the fact that Croatian grades were primarily due to the beautiful beaches within or close to Croatian campsites.

CAMPING EVOLUTION

Thurn stated that Croatia has the largest number of this level campsites in Europe; 27% of Croatian campsites are four and five-star, followed by Italy with 13%, both France and Spain with 12% and Germany with 7%. “Croatia has excellent resources for the development of camping tourism and campsite owners can feel highly satisfied with this fact”, stressed Thurn.

The quality of toilet facilities is assessed with grades from 1 to 10 and Cro-

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Loek van der Loo from the Dutch tour operator Vacanceselect also gave his opinion on the quality and amenities provided. He pointed out that contemporary tourists more frequently opt for campsites located in a natural and quiet environment. He also pointed out the evolution of campsites from camping to expensive and fashionable and trendy ‘glamping’ – a holiday spent in luxury tents. “Tourists value the integration of accommodation and location, as well as their privacy, which means that such tents need to be provided with special features, such as an open roof through which campers will be able to observe the sky, or the tent needs to be located on a tree”, stated Loek van der Loo. He also stressed that contemporary tourists wish for quality time with their families, as well as time within a natural environment, yet they are also fond of quality and luxury in addition to originality. Camping tourism is highly impor-

tant in the overall accommodation programme of Croatia. As with other forms of accommodation, in this segment reference also has to be made to the German market. Irrespective of the currently decreasing importance of the German market globally, Germany still remains the strongest transmission market in Europe. Of total revenue generated through tourism, Germany saw €30 billion generated by tour operators, stated Romeo Draghicchio, Director of the Representative Office of the Croatian National Tourist Board in Germany. He added that around 53 million Germans travel on holiday annually, of whom some 30% remain in their own country, with 40% taking a holiday in Mediterranean countries and thus Croatia.

2.2 million German tourists visited Croatia last year; in 2016 Croatia saw around 2.3 million tourists from Germany. 2015 saw a total of 14.8 million tourist arrivals. Of the total 80 million overnight stays registered in Croatia, German tourists accounted for 16.8 million.

Germans enjoy spending their time in campsites and, according to statistical data for 2013, Croatian campsites saw 38% of overnight stays by German tourists. Nevertheless, in 2014 and 2015 the percentage decreased, since German tourists increasingly started opting for

privately-owned accommodation. Nevertheless, German tourists rank fourth in Croatian camping tourism, following tourists from Holland, Denmark and Slovenia. Their average consumption in Croatia is about €863. It has to be noted that this amount is slightly lower compared with their consumption in other Mediterranean countries where consumption stands at around €1,000.

percentage of families with children 26%.

They opt for holidays in a natural environment and thus tourism programmes need to be adapted to meet their requirements”, noted Šikić. He added that Danish tourists record 10.2 million journeys annually and travel abroad twice a year.

Their average stay in foreign countries is 7.1 nights with tourism consumption of €1,305. Notwithstanding the fact that

SCANDINAVIAN TOURISTS The Scandinavian market is extremely important for Croatian camping tourism.

200,000 Swedish, 123,362 Norwegian and 81,500 Finnish tourists stayed at Croatian campsites last year. Nevertheless, Denmark is the most significant for this camping segment, due to its longerterm camping tradition, pointed out Paul Šikić, Director of the Representative Office of the Croatian National Tourist Board for Scandinavian countries.

He stated that, due to their relatively high salaries, people in Scandinavian countries have the opportunity to take long holidays of between five and six weeks.

“Fully understanding the requirements of Scandinavian tourists, as well as their motives, it is important to stress that the level of single travellers amongst Scandinavian tourists is about 30.8%, young childless couples 10.9% and the

CROATIAN CAMPSITES RANK FIRST ACCORDING TO THEIR BEAUTY AND UNIQUE NATURAL ENVIRONMENT they primarily opt for hotel accommodation, still 9.8% of Danish tourists opt for camping holidays. “Special attention needs to be paid to meeting the requirements of female Danish tourists, since 51% of them plan their journey one year ahead. They are also interested in camping and so we also need to focus on this segment”, concluded Šikić.

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65TH ANNIVERSARY OF GALEB

CLOTHING IS FIRE-RE AND WATERPROOF

According to its business success and its relationships within the community, this co in foreign markets to which they export almost 50% of their production. In addition waterproof line of clothing and an electric shook-proof clothing line – by so doing, t

G

aleb is an exception within the Croatian textile industry, but it presence is also felt in many other countries. It has successfully avoided the negative trends that affected the industry during the crisis and whilst other companies are dealing with redundancies, Galeb is creating jobs. Over the last two years, the company has created over 90 new jobs and now the number of employees is 400.

Almost all employees have full-time contracts and regularly paid overtime, they receive ‘jubilee’ awards for service and all the other benefits that have unfortunately become inaccessible to an increasing number of Croatian workers.

This year the company has been marking its 65th anniversary and throughout its existence Galeb has been one of the most recognisable local brands. The company has organised a special fashion show to mark its anniversary aiming to present new product lines of its three brands: Galeb, Adriatic and GLB. “Our three brands have their basic collections and they present their seasonal collections (spring/summer and autumn/winter) at shows organised twice a year. The basic collection covers clothing items in basic colours (most commonly black and white) for which there is large interest on the market.

Through its seasonal collections, Galeb

has been making breakthrough advances towards being on a par with international fashion trends. Consequently, we are striving to continuously provide our existing customers with new products and attract potential customers by giving them one more reason to become a Galeb product customer”, explained the Director of Galeb, Stjepan Pezo, adding that the company has already in-

THE COMPANY BECAME INVOLVED IN TOURISM IN 2000 THROUGH A CONCESSION ON A CAMPSITE NEAR OMIŠ WITH WHICH IT HAS ACHIEVED EXCELLENT RESULTS vested substantial resources in knitted clothing line. During the forthcoming six months, the company is planning to implement substantial investment into its knitted clothing line. “This investment

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is intended to foster competitiveness and promote knitwear both on the Croatian and international markets. Moreover, through this investment we are aiming to accelerate specific phases in the textile processing and additionally expand our product range”, pointed out Pezo.

EXPANSION INTO TOURISM In addition to a strong base locally, the company is increasingly focusing on exports through increased sale of their own brands, although it currently already exports around 50% of its products, mostly into developed Western-European markets. Furthermore, the company believes there is high potential also in B2B projects that primarily concern the opportunity to participate in tenders for the procurement of equipment for the military, police, customs officers and firefighters, to name a few. The company currently focuses on strengthening its sales through retail by opening new stores and increasing sales in existing retail stores.

Company sources have pointed out that significant local growth in the wholesale market can be expected only after the implementation of some projects concerning the narrow market segments or through focus on customers with special requirements.

Its success is largely a result of corporate diversification, not only concerning

ESISTANT

ompany is an exception in the textile industry. Moreover, it is increasingly present n to functional underwear that manages moisture and temperature, there is also a he company has achieved an unprecedented breakthrough by Miro Soldić soldic@privredni.hr its core business, but also its expansion into other areas, primarily tourism. Since 2000 the company has had a concession agreement concerning Galeb Campsite near Omiš with which has been seeing excellent results. “Corporate diversification towards tourism has enabled operational success, positive results, as well as stability and liquidity. Mid-2016 saw the implementation of large-scale investment that significantly expanded the product range provided by our campsite. We have been managing the campsite with the due care and diligence of a prudent businessman for 16 years, in a socially responsible manner. In 2015 the campsite recorded 120,000 overnight stays, which has also had a significant positive impact on Omiš as a destination”, stated Pezo. He also highlighted the importance of the B2B operating segment in which partners are provided specific product lines produced from special materials.

FUNCTIONAL WEAR “Products in the B2B segment are most frequently developed according to detailed specifications provided by customers whose requirements we are always striving to meet irrespective of the level of the challenge involved. Galeb produces several types of functional wear that can be divided into three groups: underwear with improved moisture management (Wet Free Fresh programme); underwear with improved temperature management, or improved regulation of the impact of climate conditions on human body (Wet Free Warm and Ultra Thermal programmes), as well as underwear with improved protection from fire, heat stress and the elimination of static electricity (Fire Stop programme)”, explained Pezo, adding that

In the year in which Galeb is marking its 65th anniversary we need to highlight the following features of our company: top quality, Croatian product, tradition and corporate social responsibility.

In addition to top quality and long-term tradition we have become a socially responsible business through establishing and strengthening of customer relationships, the relationships with the users of our services and our partners, as well as high quality relationships with our employees, the environment and the overall social and economic environment.

Stjepan Pezo, Director

special attention is paid to product quality testing. It has to be said out that the company is the holder of a wide range of certification, recognition and licences: Croatian quality, Best Buy Award, Confidence in Textiles, ISO 9001, ISO 14001, OHSAS 18001, ISO 50001, GOTS and Superbrands 2016/2017 in textile product category.

In addition to a deep network of retail stores throughout the country, the company also sells its products through its online store providing customers with the possibility to select the desired product from the online catalogue and a door-to-door delivery service.

“In the year in which Galeb is marking its 65th anniversary we need to highlight the following features of our company: top quality, a Croatian product, tradition and corporate social responsibility. In addition to top quality and long-term tradition we have become a socially responsible business through establishing and strengthening of customer relationships, the relationships with the users of our services and our partners, as well as high quality relationships with our employees, the environment and the overall social and economic environment”, concluded Pezo.

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HONEY PRODUCTION

2016 – A YEAR SLIGHTLY ABSOLUTE CATASTROPH Difficulties are not entirely and primarily a result of an unfavourable year. They are also due to the excessive imports of low quality honey of unknown origin. The implementation of the EU Directive following which honey of unknown origin can be mixed with honey from within the EU has also negatively affected honey producers by Svetozar Sarkanjac sarkanjac@privredni.hr

The competitive advantage of Croatian honey producers is in an extremely wide range of varieties. Some locally produced honey varieties are amongst the most expensive in Europe, such as thick forest honey or some Mediterranean varieties such as sage honey. Sage is widespread throughout Europe, yet it is actually grown on plantations.

According to its taste and smell, Croatian sage is unique.

Dr. Nikola Kezić, Ph.D

his year will see only slightly better results compared with the catastrophe of 2014. Frequent and abundant spring rain and frost have had a significant impact on honey production. Nevertheless, honey producers are hoping that sunflowers will provide the solution for this years’ honey production, as Nikola Kezić, a retired Beekeeping Professor at the Faculty of Agriculture, stated for Privredni vjesnik.

Unfortunately, the results achieved from sunflowers have failed to meet expectations both of beekeepers and sunflower growers.

This years’ honey production in Croatia will slump by some 30% compared with the average recorded over several years, according to the organisers of the traditional business event entitled “Days of honey” recently been held for the 21st consecutive year and organised by the Croatian Chamber of Economy – Osijek County Chamber, in co-operation with the Croatian Beekeepers Federation, County Beekeepers Association of Osijek-Baranja County, the city of Osijek, Osijek-Baranja County and the Osijek-based Faculty of Food Technology.

A substantial drop in the number of submitted samples marked this year’s National Honey Board assessment, as 98 samples of diverse types of honey were submitted from across the country. It has to be highlighted that 139 honey samples were submitted for assessment by the National Honey Board in 2015, amongst which 50 samples were of acacia honey, whereas during this year’s assessment only 16 samples of this honey were submitted.

T

“This is insufficient for a significant market supply. Honey production in Croatia currently ranges between an unsatisfactory 8,000 tonnes and a more satisfactory 10,000 tonnes.

This year honey production is hardly expected to reach 7,000 tonnes. Imports of honey in 2015 were 962 tonnes, as opposed to 400 tonnes exported. This trend also continued during the first five months of this year, when 645 tonnes of honey worth €1.4 million were imported, whilst only 184 tonnes of honey worth €700,000 were exported”, explained Ernest Nad, Secretary of the Organising Committee of the 21st honey assessment and Head of Department of Agriculture at Osijek County Chamber.

It appears that Croatian honey production does not lag behind other areas of agricultural production concerning the number of problems it faces. The unfavourable year is not the only cause of difficulties seen. According to statistical data, the crucial issue is the excessive import of low quality honey of unknown origin. The implementation of the EU Directive following which honey of unknown origin can be mixed with honey from the EU has also adversely affected honey producers.

Nad believes that Croatia can provide assistance for local honey producers through the enactment of current legal regulations aimed at protecting them. Sources at the Ministry of Agriculture have recently announced a law on compliance with good agricultural practice where local honey and other domestic agricultural products will be given specific priority.

LEGAL ASSISTANCE VITAL

SUCCESS BUILT ON HIGH QUALITY

Experts claim that from a climatological aspect, this year was extremely unfavourable for honey production, since frost and abundant rain during the blooming period caused modest honey harvest ranging around 10 kilos per hive. Average honey harvest during favourable years’ ranges between 20 kg and 30 kg per hive.

Nikola Kezić, Ph.D explained that honey production in Croatia does not result only in bitterness, as there is also a sweet aspect to it. He pointed out the fact that high quality Croatian honey has to be “sold” if they wish to succeed.

This need to emphasise that Croatian honey is excellent quality neds to be stressed as its rating is extremely high amongst European

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Y BETTER THAN HE

honey producers.

“The competitive advantage of Croatian honey producers is in an extremely wide range of varieties. Some of the locally produced honey varieties are amongst the most expensive in Europe, such as thick forest honey or some Mediterranean varieties such as sage honey.

Sage is widespread throughout Europe, yet it is actually grown on plantations. According to its taste and smell, Croatian sage is unique and hence its comparative advantage in relation to other types of sage throughout Europe”, noted Professor Kezić.

Croatian honey producers, on average, own 50 hives and, according to connoisseurs, this is sufficient to meet their personal needs, yet it is insufficient for wider market supply. A family owning between 300 and 400 hives could generate profit through sales at fairs or through door-to-door sales only with extremely committed hard work and effort invested.

Marin Kovačić, a young beekeeper, stated that beekeeping has been operating in his family for generations and although the family currently owns 600 hives, one unfavourable year and a considerable fall in prices compared with previous years, have left many feeling devastated. This is primarily due to the import of cheap honey from China, yet he stated there is a huge difference in quality between local and imported honey - something is absolutely obvious at first glance.

“High quality honey is pure and largely affected by nature and the environment within which it originated. Hence, I highly recommend buying honey directly from beekeepers rather than large retail chains”, said Kovačić.

DUBIOUS QUALITY OF IMPORTS The Croatian Beekeepers Federation has been pointing out the importance of the issue of the highly dubious quality of imported honey for quite some time.

“The Croatian Beekeepers Federation has been the first to address this issue, yet it cannot be tackled overnight. In order to manage to solve it we need to start by talking about it with the authorities in Europe, since the European Union prescribed the criteria according to which it only has to be stated whether the honey originates from EU countries or from non-EU countries. We are dissatisfied with this and are demanding an amendment following which honey producers will have to clearly state the country of origin. The problem is that large quantities of honey are currently imported from China through Spain and Greece and Chinese honey is of dubious origin. How can our suppliers sell Chinese honey at a price of €2.25 per kilo? What is the original price and what kind of honey is it? We are talking about real honey in this case, after all. The same suppliers buy our high quality real honey without any additives at a price of €2.66 per kilo”, explained Slavko Stojanović, President of the County Beekeepers’ Association of OsijekBaranja County for Privredni vjesnik.

It has to be noted that the prices of honey produced by Croatian beekeepers by door-todoor sales range between €5.33 and €6.60 per kilo. Consequently, the Croatian Beekeepers Federation recommends the purchase of honey produced by Croatian beekeepers through door-to-door sales in order to avoid the risks of buying ‘fake’ honey of unknown origin.

HONEY PRODUCTION IN CROATIA CURRENTLY RANGES BETWEEN AN UNSATISFACTORY 8,000 TONNES AND A HIGHLY SATISFACTORY 10,000 TONNES. THIS YEAR PRODUCTION IS HARDLY EXPECTED TO REACH 7,000 TONNES

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WINE EXPO IN POLAND

THREE GOLD MEDALS FOR LAGUNA WINES Agrolaguna presented its Laguna wines at the large international wine fair event Wine Expo Poland held in Warsaw from 28th to 29th October and received three gold medals at its first appearance at this Fair.

Gold medals were awarded for the following wines: Vina Laguna Castello 2013, Vina Laguna Festigia Merlot 2013 and Vina Laguna Festigia Cabernet Sauvignon 2013.

Agrolaguna has made a significant breakthrough on the Polish market with its Laguna wines through exports of 300,000 bottles this year.

This was also certainly the result of vigorous promotional activities. In addition to the presentation, a promotion of Laguna wines was also held in the Amber Room restaurant, attended by the Ambassador of Croatia to Poland, Andrea Bekić, as well as the company business partners and media representatives.

In addition to specialities of Polish cuisine, as well as traditional Istrian products such as olive oils and Istrian cheeses, there was a presentation

of Vina Laguna Malvasia, Festigia Malvasia, Festigia Merlot, Festigia Castello and Yellow Muscat.

“We are delighted with the results achieved by Laguna wines on the Polish market and gold medals awarded to us at Wine Expo Poland are an additional confirmation of the

Agrolaguna has exported 300,000 bottles of Laguna wine to the Polish market

quality of our wines. We will continue with vigorous promotion of these wines on the Polish market, as well as on other important export markets such as Germany, Austria and Great Britain. Moreover, we are planning new investment in Agrolaguna aimed at further developing and enhancing the quality of Laguna wines”, noted Suzana Diklić, Marketing Manager for Agrolaguna.

THE LARGEST GLOBAL WINE TASTING EVENT OF MERLOT AND CABERNET SAUVIGNON

YET ANOTHER CHAMPION FOR VINA BELJE Following a gold medal awarded to Cabernet Sauvignon Vina Belje Harvest 2009 and the title of the best Croatian red wine at this year’s Mundus Vini wine tasting event, more medals for red wines have recently arrived from Bergamo, Italy.

Cabernet Sauvignon Harvest 2012 and Cabernet Sauvignon and Merlot Harvest 2011 coupage won gold medals, with Cabernet Sauvignon Merlot being declared the best Croatian wine at this event.

The international wine tasting event of Cabernet Sauvignon and Merlot entitled “Emozioni dal mondo: Merlot e Cabernet insieme” (“Emotions from the world: Merlot and Cabernet together”) held in Bergamo annually in October, attracts a large number of Croatian wine producers whose portfolio includes red wines, since awards given in Bergamo are highly valued both amongst professionals and

Belje is reputable for its top quality Graševina wine, we also provide top quality red wines, winners of international awards, primarily Cabernet Sauvignon and Merlot. We rank among the

Cabernet Sauvignon Merlot declared the best Croatian wine in Bergamo

consumers. Vina Belje winery participates annually at the wine tasting event of Cabernet Sauvignon and Merlot.

“Notwithstanding the fact that Vina

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top Croatian producers of these wine varieties as has been confirmed by the awards we have won in Bergamo over the last five years”, stated Suzana Zovko, Head Oenologist at Vina Belje. Additional gold medals are yet further confirmation of the huge potential of Baranja and the Croatian Danube basin concerning the production of exceptional and authentic wines with which international connoisseurs are utterly delighted.