IN LIGHT OF ITS 65TH ANNIVERSARY → Privredni vjesnik is a reliable witness to economic changes PAGES 2-8
SUPPORTED BY THE CROATIAN CHAMBER OF ECONOMY
www.privredni.hr
CROATIAN TOURISM DAYS → All-year-round tourist season for the first time
CONSTRUCTION → End of the horrific economic fall, in quantity and quality in the construction sector PAGES 18-21
PAGES 16-17
PVinternational C R O A T I A N
B U S I N E S S
&
F I N A N C E
M O N T H L Y
November 2017, Year X, No 274
GOVERNMENT BUDGET
Deficit last year of 0.9% of GDP Increase in tax revenues had the greatest impact on deficit improvement in 2016 compared with previous years, stated Krištof by Ilijana Grgić
T
he Croatian government budget deficit in 2016 reached €3.15 billion, equating to a record low of 0.9% of GDP. It should be noted that public debt fell to 82.9% of GDP, whilst in 2015 it was 85.4% of GDP, according to the audited data on annual GDP for the period between 2010 and 2016, published by the Croatian Bureau of Statistics. The audited report shows that the consolidated general government deficit in 2015 stood at €1.49 billion or 3.3% of GDP. In 2016 the primary surplus reached 2.3% of GDP, whilst in 2015 it was 0.2% of GDP. “A significant fall in the general government budget balance in relation to that planned, from €0.99 billion to €0.45 billion, had a considerable impact on the budget deficit recorded in 2016, due to positive economic trends. An increase in tax revenue had the greatest impact on defi-
cit improvement in 2016 compared with previous years. Throughout 2016, tax revenue from production and imports was €0.04 billion, 4.8% up in relation to 2015. Current income tax, and on savings, etc. was €3.05 billion, a rise of 10.4%. Capital tax at €1.88 million, rose by an annualised level of 41.7%”, noted the Director of the Croatian Bureau of Statistics, Marko Krištof. According to data provided by Eurostat for
last year, due to the public deficit reaching 82.9% of GDP, Croatia was amongst 16 member states whose debt exceeded 60% of GDP. The highest debt to GDP ratio was seen in Greece, (180% of GDP), Italy (132%) and 130% in Portugal, 107% in Cyprus, and Belgium at 105%. Low debt to GDP ratios were seen in Estonia (9.4%), Luxembourg (20.8%), 29% in Bulgaria, 36.8% in the Czech Republic, 37.6% in Romania and Denmark (37.7%).
COMMENTS FROM THE CROATIAN CHAMBER OF ECONOMY
Comments from the Croatian Chamber of Economy In comments provided by the CCE about the deficit of 0.9% of GDP and a fall in public debt to 82.9% of GDP recorded last year, it was pointed out that the data confirm that Croatia made a significant breakthrough in fiscal consolidation last year. “In addition to a successfully implemented fiscal policy, the decrease both
in budget deficit and the share of public debt in GDP was also affected by slightly higher GDP growth that was achieved against a backdrop of the favourable cumulative effect of internal and external factors, primarily due to a successful tourist season and the rise in foreign demand. In the context of increasing local con-
sumption, on rising salaries and positive trends on the labour market, tax revenues and social contributions were up, contributing to a significant drop in the budget deficit and enabling the continuation in achieving the primary budget surplus”, as was emphasised amongst other points, in the comments from the CCE.
PRIVREDNI VJESNIK IN LIGHT OF ITS 65TH ANNIVERSARY
ALL OUR YEARS ARE REMEMBERED In 2014 new leadership of the CCE gives additional support to the role, work and promotion of Privredni vjesnik in informing the economy
L IN 2005 PRIVREDNI VJESNIK TAKEN OVER BY THE CROATIAN CHAMBER OF ECONOMY WHICH IT HAD ACTUALLY FOUNDED IT BACK IN 1953
ooking back from today’s perspective, the circumstances in which Privredni vjesnik was established were all but easy or motivating. Under the auspices of the Trade Chamber of the National Republic of Croatia (TKH), an idea was born, an idea which saw the light of day on May 9, 1953 - the Victory over Fascism Day. A great deal of symbolic which should have opened up a period of winning numerous battles on the economic field, primarily during the post-war renovation period. 1953 was the year which will be remembered by many things – the death of Stalin, discovery of the DNA chemical structure, start of the production of Cocta beverage, Tito becoming the first president of Yugoslavia and coronation of Queen Elizabeth II; but also for the first issue of Playboy and Privredni vjesnik. This was the time context of the first weekly magazine for internal and foreign trade issues, as well as industry, hospitality and tourism – a magazine which would encompass our entire economy. The magazine should be a manual and a reliable advisor to each and every of our entrepreneurs and man interested in affairs of the local and international economic life – as written in the editorial of PV’s first issue. 1959 final year acting as special part of TKH when it turns to independent newspaper – publishing institution. The magazine picks
up the rhythm with two weekly issues, on Wednesdays and Saturdays. It mainly deals with trade issues and exchange of goods, less with other economic issues.
THEN... 1962 – with the establishment of the Croatian Chamber of Economy (Privredna komora Hrvatske), Privredni vjesnik is brought back to the Chamber system. The group was then joined by UT magazine, published by the Croatian Chamber of Hospitality (Ugostiteljska komora Hrvatske) and Zanatski list magazine, published by the Croatian Craft Economy (Zanatska komora Hrvatske). This was the beginning of the first general economic weekly magazine, the first such in Croatia. 1968 PV switches to smaller format, expanding its interest to all areas of economic activities. It is firstly transformed to NIU and then to NIRO Privredni vjesnik. 1972 first issue in colour paper as recognisable trademark of the magazine 1973 ABC privrede Jugoslavije edition started, as first member of the association of publishers of business address books in Europe outside the Iron Curtain. 1977 it establishes AGEMA business agency 1979 it establishes Tourist propaganda (Turistička propaganda) which publishes busi-
Time Line or... how we marched to new victories
First edition of Playboy
Labello packaged in plastic slider casing
Radio Sljeme fi b d first broadcast
Tito is the first president of Yugoslavia
1440.
Coronati of Queen Coronation Eliza Elizabeth II in Westmi W Westminster Abbey
Francis Crick ck and James D. W t di Watson discover th the DNA structure
JOHANNES GUTENBERG 2 | PVinternational | November 2017 | No 274
Ernest Hemingway awarded the Pulitzer Prize for the Old Man and the Sea
End of the Korean War
First to be remembered - Privredni vjesnik was: the FIRST in former Yugoslavia to establish special editions, whether theme editions or about foreign countries. the FIRST to introduce broad foreign cooperation of professional economists as a permanent form of working, creating room for various opinions. the FIRST, besides the Hrvatsko proljeće movement (Croatian Spring), to introduce the elements of market economy to economic print. the FIRST inYugoslavia to establish special column BUSINESS ANTICIPATIONS, where the entrepreneurs discussed business and development anticipations, in addition to the analysis of the previous yearandanticipationsofeconomicpolicyforthefollowingyear.This column was a hit on the market hungryforthis type of information. ness tourist guides. 1992 it operated in this framework until 1992, when the companies underwent the privatisation process and continued its work in majority ownership of small shareholders. That same year Zanatski list, UT magazine, Revijalna izdanja and AGEMA agency become separated and the ABC privrede Jugoslavije edition shut down (whose editorial board was in Belgrade) 1993 PV continues with its work as a weekly magazine, when first ranking of Croatian companies in these areas are organised 1997 special business unit is established – Revijalna izdanja; BINOZA publishing unit is established in 2000 and both are included in the Privredni vjesnik Group 2005 Privredni vjesnik taken over by the Croatian Chamber of Economy
the FIRST to develop a series of products, especially rankings, such as Bank and TOP 400 as well as other columns like Construction, Textile and Clothing, Transport, Mining, Wood and Furniture, Food and Drinks, hotel suppliers which became PV’s brands, increasing its influence and popularity. the FIRST in Yugoslavia to pay attention to the European Union. Back in 1985 it issued special edition – Cecchini’s White Book, established the EURO newsletter and informed the economic public on the processes inside the EU. the FIRST to initiate Economic Trends (Privredni barometer), with experts of the Economic Institute Zagreb (Marijan Korošić, Gorazd Nikić), which resulted in regular publishing of economic activities tests, the first of its kind in Croatia.
ditional, but considerably modernised in terms of its expression, method of reporting information and with new staff consisting of younger generations, but also those experienced. Privredni vjesnik thrusts itself into modern business journalism. The new ownership and staff organisation contributed to the magazine’s quality, strengthening its multiple-year commitment of reporting exact, complete and bold information focusing on the theme core 2008 –redesign of the magazine. Smaller newspaper format was created due to transparent trends on the market of business papers and awareness that the paper’s quality depends on the content, authors and texts not the format. 2014 in conjunction with the CCE restructuring programme, the new leadership headed by President Luka Burilović ensures Privredni vjesnik an even stronger role in economic reporting and further strengthening on the market 2015 in line with market demands the weekly magazine takes over its present magazine look, ock. but still with newspaper of a book block.
TURNING POINT FOR A NEW STRONG THRUST 2005 53rd anniversary brings Privredni vjesnik significant positive changes. Its work received strong support of the CCE which took over the ownership share of a weekly magazine which it had actually established. Still tra-
MULTIPLE EDITORS IN CHIEF
Milivoj Huber from May 9 1953 to March 1967 Ante Gavranović from March 1967 to January 1981 Franjo Žilić from January 1981 to the end of 2005 Darko Buković from April 1 2006. to date
First Esperanto congress held in Zagreb Fidel Castro raises rebellion on Cuba
Start of the first business-financial weekly magazine in the region - Privredni vjesnik
1953.
Death of Stalin
Start of the production of Cokta, the first non-alcoholic pop drink on the entire market of Yugoslavia
Audrey Hepburn wins Best Actress Oscar for Roman Holiday
New Zealand climber Edmund Hillary and Sherpa Tenzing Norgay climb the Himalayas A new era
PRIVREDNI VJESNIK
November 2017 | No 274 | PVinternational | 3
PRIVREDNI VJESNIK IN LIGHT OF ITS 65TH ANNIVERSARY
Privredni vjesnik still innovative... Unique in content and visual aspect, strong because of its comprehensive scope and recognised by all active Croatian companies, Privredni vjesnik is a strong economic group of publications in Croatia. Today we are talking about a system which has, in addition to the weekly printed issue and two more electronic issues, a TV show, a monthly magazine in English and a series of prestigious themed special editions, its library, and since recently a graphic design studio.
Privredni vjesnik was the FIRST... ... to unite bank ranking and set up the FINANCIAL INDUSTRY project, which brings bank ranking, leasing and fund insurance every year with reflections from the leading people
... to initiate ranking of entrepreneurs and counties offering a review of TOP 400 in each of the 21 Croatian counties
Today Privredni vjesnik is the only medium which is a member of the Croatian Business Council for Sustainable Development (HRPSOR). Privredni vjesnik is also the signatory of the CCE Business Code of Ethics.
HRPSOR
KODEKS ETIKE HRVATSKA GOSPODARSKA KOMORA
... weekly magazine to initiate its radio show PV POVEĆALO, broadcasted on Narodni radio with a national concession and a network of several radio stations.
... to issue PV INTERNATIONAL, business e-magazine in English whose value has been recognised by the European Commission.
... to organise the Gorazd Nikić Award for Economic Analyst where the selection is conducted based on a survey of the economic activities of companies
2006.
2008.
2013.
2015.
new Privredni vjesnik came out after a break
redesign of the weekly magazine marked by the reissue of the first issue in the light of the 55th anniversary
marking the 60th anniversary of the weekly magazine
redesigned to a weekly magazine
4 | PVinternational | November 2017 | No 274
LUKA BURILOVIĆ, CCE President
JOINT EFFORTS GUARANTEE PROSPERITY ... weekly magazine which initiated weekly television business TV magazine – PRIVREDNI.HR, the only one on Croatian media TV scene carrying the name of a weekly magazine and broadcast on 12 regional and local television networks.
... Croatian partner of Biznis plus, regional business club, consisting of Oslobođenje from Sarajevo, Finance from Slovenia, Novi magazine from Serbia, Vijesti from Montenegro and Kapital from Macedonia.
... to set a unique 2in1 premium magazine B&L magazine on business life-style as well as LaMode, fashion magazine.
Superbrands, one of the strongest Croatian brands, was received by Privredni vjesnik several years in a row (2008, 2009, 2010, 2011 and 2012). 2008. 2009. 2010. 2011. 2012.
Privredni vjesnik is the winner of the prestigious Regional Media Business Partner Award for 2012, 2015 and 2016.
2017. PRIVREDNI VJESNIK 4000
towards 65th anniversary of Privredni vjesnik
2018.
In today’s modern way of living, rapid changes and exchange of information, leaving business people little time to think, the decision of the Croatian Chamber of Economy, which in 1953 issued the first business weekly magazine in this region, becomes more significant. This tradition proves that its members justifiably created the weekly magazine, which had been called previously weekly magazine for internal and foreign trade, industry, hospitality and tourism. At that time, the leading idea of the editorial policy was to offer its members a publication which would issue weekly reports across the complete economic scene on the work, efforts and activities of the Chamber as well as all other important present, competent regulations, interpretations of every area of economic life here and abroad. Having in mind the Croatian circumstances within general global conditions and adapting to the ever-changing world, we have to work together and find new successful models, being aware of that this approach is the only guarantee for prospering on the vast regional, European and global markets. The CCE offers a series of information, data bases, entrepreneurial seminars and legal counsel; it helps find business partners, co-finances exhibitions at fairs; offers information on entrepreneurial financing sources and gives advice on applying for EU funds, as well as reports on international tenders. Since we know that the value of fast, exact and complete information placed at the right moment is valuable more than ever, in conjunction with the CCE Restructuring Programme, the new leadership has shown support for the work of Privredni vjesnik through numerous activities, conferences, round tables, international co-operation and work of member companies. For 65 years, Privredni vjesnik has been an important source of information on economic activity in Croatia, the region and globally. It has always been known for its latest analyses on the economy, demanded and valued by the wider economic public. The basic characteristic of Privredni vjesnik has remained its serious and analytical approach, providing information and something which pleases me as the President of the CCE - and that is that it presents good examples from practice, new concepts and successes by Croatian entrepreneurs on both the local and foreign markets. We, in the Croatian Chamber of Economy, recognise the importance of informing our membership and this is, and will always be, our primary task. November 2017 | No 274 | PVinternational | 5
PRIVREDNI VJESNIK EDITOR IN CHIEF EDITORIAL
RELIABLE WITNESS TO ECONOMIC CHANGES If we wish to survive, we have to accept the rules of the game and new strict rules imposed by life. The rules are strict, but they are rules nonetheless! Let’s not forget – an adult’s game of life is called work
I Darko Buković Executive and Editor in chief of Privredni vjesnik
am proud. I am proud of Privredni vjesnik and the group of issues it has developed under this roof during the past decade. I am proud of our team, a group of enthusiasts who follow a set vision and mission; I am proud of the reaction of our readers who have recognised the effort we have invested and still invest, so that Privredni vjesnik can be a stage where all economic players have an important role to play and also a mirror in which they may see themselves for what they are or what they would like to be. We defined the weekly magazine as a “newsletter of the economy” and also the “voice of entrepreneurs”, excelling in - as you had proved by numerous congratulations in light of the 4,000th issue – for which I thank you once again – precision, truth, journalist integrity, quality, tradition and positive approach. PV was, is and will continue to be strong communication leverage in the economy, witness to its problems, successes, aspirations, innovations and stories of success… actually everything that I am convinced simplifies work and swimming in a sea of legality, implementing, ordering, executive, and other regulations. On each of our pages we discuss business, all its modifications and specific characteristics; we offer full current information, analyses, additional advice; we create room for expressing opinions, attitudes; we report tenders, giving space for offering goods and services.
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I can still remember the preparations for the first issue under my leadership, after a break – I insisted on the yellow paper so I could send out a message to everyone – the only yellow thing about our weekly magazine was the paper! From then on – May 2006 – when we issued our first and special edition Croatia and the EU (Hrvatska i EU) – since I found it necessary that each entrepreneur receives all relevant information for his or her business, including business conditions, surrounding trends, trends in the region or the EU, legal or other changes – until today, our readers, mainly entrepreneurs, expect business news, current information, analyses, advice, attitudes and opinions week after week. We merged tradition and future, a small circle and comprehensiveness, theory and practice, science and innovation, result and analysis, information and service speed, monologue with panel discussion, local and global. We knew the new era wanted timely, precise and concise information. We know that information and knowledge are becoming the foremost capital in Croatia also. We believe that conciseness is competitive. Otherwise, it is difficult to attract the attention of the Croatian business community which has little time, both in the short- and long-run. If we want to survive, we have to accept the rules of the game and new strict rules imposed by life. The rules are strict, but they are rules nonetheless! Let’s not forget – the adult’s game of life is called work
MORE THAN JUST DATA I am proud on our special, often quoted and sought for editions, with credible rankings of activities. They are the ones performing the role of the economic diplomacy since data, tables or charts speak more than 1,000 words and need no translation. What must be done to have competitive advantage as a medium? A British expert in attention economy, that is, communication planning and research, John Griffiths, stressed many times that the answer consists of four steps. The first step is to have an audience which pays attention to you and those who can afford it; the second step is that you have to be independent in terms of editing and publishing; the third step is to have content which can be reusable several times in different ways and finally, the fourth step is to know how to achieve practical partnership, that is, to know how to use it. We managed to achieve Griffiths’ four-step synergy. Our TOP 400 ranking of Croatian companies has been completed with TOP 400 county companies and the Financial industry with comprehensive data on the performance of banks, insurance and leasing as well as Business Anticipations for the forthcoming year found their place on the tables of the decision-makers until a new edition comes out. In our story information is in the right place. Just to be reminded, Business Intelligence (BI) System can be defined as a way of delivering real (verified) data and information in the right moment and in the right hands. Therefore, the key is in generating quality data which creates new value. The changes in media and economic life, new technologies, ways of thinking and speed of receiving information is something we did not want just to follow. We actually actively prepared, changed and amended our offer and activity. Therefore, I can proudly say that besides the printed edition we have over 40,000 online readers a week; and we established the only weekly television economic magazine,
PV WAS, IS AND IT WILL CONTINUE TO BE A STRONG COMMUNICATION LEVERAGE IN THE ECONOMY, WITNESS TO ITS PROBLEMS, SUCCESS, ASPIRATIONS, NOVELTIES AND STORIES OF SUCCESS… carrying the name of the weekly magazine privredni.hr. Produced by us, it is broadcasted on 12 Croatian local and regional television channels in addition to regular posting on YouTube. We also founded two new premium magazines – 2in1 magazine, which includes in one place and under one cover the B&L magazine on business life-style and LaMode, the first fashion magazine for reading, where the texts include QR codes for viewing videos. Actively, as a Croatian partner, we are part of the regional business club Biznis plus, which also includes Oslobođenje from Sarajevo, Finance from Slovenia, Kapital (Macedonia), Novi magazine(Serbia) and Vijesti (Montenegro) – with the goal of strengthening business relations and economic activities of the surrounding companies. Today, a brand, as something which identifies a product, is the strongest weapon for attracting attention and quality. We have prepared our brand meticulously and attentively since the brand, as we all know, gains trust. We, as Privredni vjesnik, have shown and proved our faithful readers that we communicate what the market demands – that we are a place of verified data, we are informative, analytical, quoted and credible overview of the economy – conditions on the Croatian economic scene. Therefore, our brand is the one telling a story. Let us continue to tell the story – together!
privredni vjesnik
Behind every job there are the people... :)
Darko Buković
:)
Vesna Antonić
:)
Ilijana Grgić
:)
Boris Odorčić
:)
Sanja Plješa
:)
Krešimir Sočković
:)
Miro Soldić
:)
Jozo Vrdoljak
:)
Svetozar Sarkanjac
:)
Ljiljana Lukić
:)
Franjo Maltar
:)
Sandra Baksa
:)
Bruna Ivić Bajamić
:)
Nela Zorančić
:)
Stanislav Bohaček
:)
Mirjana Kapitan
:)
Tihomir Turčinović
:)
Milan Vukelić
November 2017 | No 274 | PVinternational | 7
RUSSIAN-CROATIAN ECONOMIC FORUM
A NEW ERA IN RELATIONS BET A Co-operation Agreement between the CCE and the Moscow Chamber of Commerce and Industry has recently been signed in Moscow. President Putin and I have reached agreement on the direction of future development of our bilateral relationship. The agreements will provide new foundations for our economic co-operation, stated the Croatian President, Kolinda Grabar Kitarović
O 10% growth of Croatian exports to Russia achieved during the first seven months of this year, compared with the same period last year, is a positive indicator of business stabilisation following EU sanctions. Business will be additionally enhanced by the recently signed Co-operation Agreement. Luka Burilović, President of the CCE
ver 300 representatives of Russian companies and around 90 Croatian companies participated in the Russian-Croatian Economic Forum in Moscow, organised by the Croatian Chamber of Economy, within an official visit of the Croatian President, Kolinda Grabar Kitarović to Russia, where a Co-operation Agreement was signed between the CCE and the Moscow Chamber of Commerce and Industry. “This visit turns marks new era in relations between our two countries”, stressed the President of the CCE, Luka Burilović, quoting the words of the Chairman of the Government of the Russian Federation, Dmitry Anatoljevič Medvedev, from the previously held meeting. He added that there was a 10% growth in Croatian exports to Russia during the first seven months of this year, compared with the same period last year, a positive indicator of business stabilisation following EU sanctions. Business will be additionally enhanced by the recently signed Co-operation Agreement. The President of the CCE noted that the Chamber had recognised the value of the market of the Russian Federation. Hence, in 2010 Croatian Representative Offices were opened in Moscow, which resulted in a large number of contracts signed between Croatian and Russian companies. “President Putin and I have reached agreement about the direction of the future development of our bilateral relations. The agree-
ment will provide the new foundations for our economic co-operation”, stated the Croatian President, Kolinda Grabar Kitarović, adding that boosting exports of Croatian products remains a priority in the further development of economic relations.
TRADING VARIATIONS Moreover, the President stressed that her arrival at the Economic Forum confirms the strong wish by Croatia to strengthen closer economic links between Croatia and Russia, which this
BOOSTING EXPORTS OF CROATIAN PRODUCTS REMAINS A PRIORITY IN THE FURTHER DEVELOPMENT OF ECONOMIC RELATIONS, EMPHASISED KOLINDA GRABAR KITAROVIĆ year mark the 25th anniversary of economic co-operation. The President also noted that reciprocal investment has almost reached €0.5 billion. The energy sector and tourism have proved to be areas with the greatest potential in Croatia, whilst in Russia it was the automo-
KOLINDA GRABAR KITAROVIĆ, THE CROATIAN PRESIDENT
Open issues can be discussed against a backdrop of open dialogue and m The official visit paid by the Croatian President Kolinda Grabar Kitarović to the Russian Federation began with a meeting with the President of the Russian Federation, Vladimir Putin at the Bocharov Ruchei Residence in Sochi. “I am delighted to have
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met you here in Russia and for the opportunity to talk about bilateral relations, as well as regional issues. Welcome!”, said the President of the Russian Federation to the Croatian President at the start of the meeting held in the Bocharov Ruchei
Residence, as published on the website of the Croatian President’s Office. In addition to the opening of a new phase in bilateral relations, President Kolinda Grabar Kitarović added that there are currently several open issues between the two countries.
TWEEN CROATIA AND RUSSIA
tive industry. Furthermore, the Croatian President pointed out that trade variations were seen in trade and that the actual potential has not been shown thus far. “The visit paid by the Croatian President was a wise political move, since it will result in a new dynamic in economic co-operation between the two countries”, noted Ambassador of the Russian Federation to Croatia, Anvar Sarvarovič Azimov. He emphasised that he believes there is a bright future ahead in mutual relations between the two countries. The Croatian Ambassador to the Russian Federation, Tonči Staničić stated that excellent results achieved by the political visit mark the start of a new phase in long-awaited economic relations between the two countries and through which we are revisiting the positions held in the distant past. The President of the Chamber of Commerce and Industry, Sergej Nikolajevič Katirin, stressed that they will reach the level of economic co-operation on a par with that prior to the crisis, by the end of the year and even exceed it. Vladimir Pučkov, Russian Minister of Emergency Situations and Co-Chairman of Intergovernmental Commission for Commercial- Industrial and Scientific-Technical Co-operation between Croatia and the Russian Federation, highlighted
mutuall respect She expressed hope that they could be addressed against a backdrop of “open dialogue and mutual respect”. The Croatian President used the opportunity to invite President Putin on an official visit to Croatia. On the second day of her official vi-
that Croatia is one of the most important Russian partners in the region.
FOREIGN DIRECT INVESTMENT Over the last several years, Croatian exports to Russia primarily comprised of pharmaceutical products, chemical products, machinery and equipment, electrical transformers and specific types of vessels. It has to be noted that several Croatian companies operate in the Russian Federation, such as AD Plastik, Podravka, JGL, Atlantic Group, Končar and Sardina. According to data provided by the Croatian National Bank (HNB), the value of investment by Russia into Croatia from 1993 to the end of 2016 was €390.5 million, indicating that Russia ranks 14th according to the value of foreign direct investment in Croatia. During the same period, Croatia invested €101 million into Russia and, according to these indicators, Russia ranks 6th concerning the volume of total foreign direct investment. (B.O.)
CROATIA IS ONE OF THE MOST IMPORTANT RUSSIAN PARTNERS, STATED VLADIMIR PUČKOV
sit, the Croatian President met in Moscow with the Chairman of the Government of the Russian Federation Dmitry Medvedev. During the conversation Medvedev stressed the fact that “a pragmatic dialogue held on a regular basis” is imperative, which has been absent during the last several years. The Croatian President agreed with him concerning this issue, and stated that the relationship between the two countries had been neglected.
November 2017 | No 274 | PVinternational | 9
INTERVIEW IGOR MILJAK, PRESIDENT, MANAGEMENT BOARD OF PPK KARL
We welcome the announcement of measures in pig husbandry intended to boost production in breeding centres
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OVAC MEAT INDUSTRY
WE WILL SOON GENERATE REVENUE OF €0.13 BILLION All profits generated during previous years is reinvested, which enables us to constantly promote production, as well as on-going investment into quality and improvement of competitiveness by Ilijana Grgić
S
Photo: Vedran Tolić
ince 2003, when PPK Karlovac Meat Industry became a member of the Pivac Group, it has continuously invested into production and facilities. Consequently, the total value of investment has exceeded €46.7 million. The latest threeyear investment project implemented through the Rural Development Programme - Adding Value to Agricultural Products - included the construction of a new facility for the production of fresh meat, due to which the annual capacity now exceeds 20,000 tonnes. Privredni vjesnik spoke with the President of the Management Board of PPK Karlovac Meat Industry, Igor Miljak, about the investment and plans of this Karlovac-based food company. The total value of investment into the company has exceeded €46.7 million. How has it affected production? We have purchased new machinery for production and packaging of processed meat products, as well as labelling and metal detection. Moreover, all production capacities and machinery intended for the filling of semi-long shelf life salami and sausages have been fully renovated and expanded. In addition, white rooms have been constructed for the packaging of sliced products. The construction of the largest in Europe facility for the production of lard and “čvarci” or pork rinds, has to be particularly emphasised, which enables us to provide annual output exceeding 250 tonnes of “čvarci” and over 1,000 tonnes of lard. Due to the latest investment, as well as that previous, PPK currently owns a comprehensive production line for the cutting and deboning of fresh meat, with a daily capacity of 60 tonnes, as well as a new facility for the production of sterilised cans, with an annual capacity of
2,000 tonnes. Furthermore, we have doubled the production capacity of long shelf life salami, which currently reaches 2,000 tonnes annually. In addition, we have procured new vehicles, which has significantly increased capacities of goods transport. How were the investment projects implemented? What was the share of reinvested profit and what were additional sources of financing? All generated profits are continuously reinvested and used as a driver of development. On the other hand, during EU accession, we already actively exploited the opportunities provided by EU funding through a wide range of measures and we are still doing it now Croatia is a fully-fledged EU member state. Other sources of finance were short-term loans granted by local commercial banks. What problems did you meet in absorbing these funds? Could you tell us about your experiences on this issue? We are delighted that PPK ranks amongst the leading companies in the private sector that actively absorb EU funds. We believe that developing a solid and high-quality project is of fundamental importance for the successful absorption of EU funds, in addition to committed team members who can provide the required expertise for the project implementation. We have thus far implemented investment through IPARD Programme worth €1.5 million of non-repayable funding intended for the modernisation and development of the entire production process. The implementation of two large-scale investment projects through the Rural Development Programme is currently ongoing, co-financed through
46.7
€ million
invested into PPK since the integrated into Pivac Group
300
over products produced
around
650
staff employed in PPK Karlovac Meat Industry
November 2017 | No 274 | PVinternational | 11
INTERVIEW
Each challenge needs to be transformed into an opportunity Croatia is part of the European Single Market. How does your company tackle potential challenges? A large number of issues originated from EU accession, yet we identified them as new opportunities for further development and progress, and we have been achieving significant breakthroughs in this field. It is an additional opportunity for us for the better placement on the market with our dry-cured meat products, as well as with our other meat product range, primarily those that bear Protected Geographical Indication label, as well as of other products with a long shelf life. The production of brands for large retail chains provides additional room for strengthening competitiveness, since we have already established excellent co-operation with them. Each challenge needs to be transformed into an opportunity.
the Measure Adding Value to Agricultural Products worth around €4.9 million of non-repayable funds and the Measure Decreasing the Negative Effect of Liquid Pig Manure (€1.85 million) of non-repayable funds. We are currently preparing several large-scale projects in food and primary production and we are convinced we will acquire additional positive experiences during their implementation. It has to be emphasised that applications to tender are always a challenging and a long-term process, yet we believe they eventually result in multiple benefits. Our previous investment resulted in technological advancement and a significant increase in our production capacities. Nevertheless, it is important to point out that it also resulted in the creation of new jobs. We are delighted to be able to look back and conclude that all these activities resulted in immense progress. I would like to exploit the opportunity and express gratitude to our employees who have been actively involved in the entire process, as well as the consultants we co-operate with during our project implementation. Which companies in Croatia are more or less on a par with you in terms of revenue, profit and employee numbers? We can certainly claim to be one of the leading companies involved in the meat industry regionally. We employ around 650 staff. During the last year our revenue has increased substantially and so we are soon expecting to generate revenue of €0.13 billion. I would like to point out yet again that all profits generated over past years is continuously 12 | PVinternational | November 2017 | No 274
reinvested, which enables us to further promote the production processes, as well as on-going investment into quality standards and improved competitiveness. It is also important to stress the fact that PPK Karlovac Meat Industry is a member of the Pivac Group, which currently employs over 2,000 staff and whose products are distributed through over 270 own butcher’s shops and retail stores. Moreover, it operates in compliance with the most important and latest global quality standards. Due to close cooperation with other companies within the Group - Mesna industrija Braća Pivac (Pivac Brothers Meat Industry), the Čakovec-based Vajda Meat Industry and Dalmesso – we have met all the prerequisites for successful further develop-
WE CAN CERTAINLY CLAIM TO BE ONE OF THE LEADING COMPANIES INVOLVED IN THE REGIONAL MEAT INDUSTRY ment and advancement. We share the same values and the same focus on excellence in our business activity, as well as a strong focus on the highest quality products for our customers, to the mutual satisfaction of all our employees and business partners.
In addition to distributing your products locally, what other markets do you sell your products on? Our current product range exceeds 300 products, whose quality has been proven by a large number of customers in Germany, Hungary, Slovenia and other European countries. Our products are distributed on these markets primarily through large retail chains, with whom we cooperate also in Croatia. Our exports to the EU market are recording a constant and significant increase, yet they have not yet reached double-digit figures, which is perhaps difficult to expect in our business. Consequently, we are primarily focused on the home market and we see export as a challenge from which we anticipate to improve our results over time. What are your annual production capacities and what is your output primary output? We slice over 25,000 tonnes of fresh meat annually, of which 90% is pork and 10% baby beef. Concerning production, there are two departments. One involves fresh meat and the other processed meat. In the fresh meat department, our fresh meat product range intended for the grilling is the most popular. It comprises of ćevapčići (grilled meat dumplings), hamburger steaks, cutlets, steaks and other products, as well as minced meat and meat preparations. Concerning processed meat products, most of our product range includes long shelf life salami, whose annual capacity is around 2,000 tonnes and around 6,000 tonnes of semi-long shelf life salami and sausages. Furthermore, there are also canned meat products, such as canned luncheon meat and canned meat spreads, with an annual capacity of around 2,000 tonnes. When all is considered, our facilities process over 100 tonnes of meat daily, irrespective of whether we are talking about fresh meat or meat products. The work in the Production Department is normally organised in two shifts, whilst there are three shifts in the Distribution Department. It appears that both in Croatia and the rest of Europe deli meat products, such as lard or “čvarci” – pork rinds are being rediscovered. Do you keep abreast with these trends? Most certainly. We believe that Croatia has an extremely rich gastronomic herit-
mented, since a lower VAT rate on food products would reduce the “shadow” economy and unfair competition in Croatia. We are aware of the fact that such measures would be a short-term burden on the budget, yet they would achieve long-term results concerning both primary and processing industries and revive the entire economy. We welcome any announcement of measures in pig husbandry intended to boost production in breeding centres and we believe it is a major step forward made by the relevant ministry.
Exports in the processing industry directly or indirectly generate €7.7 billion gross value and they account for 20.5% of gross value in the overall economy. How could the relevant ministries contribute to the Croatian food industry? I believe motivating people to return to primary production is imperative. Yet this requires concrete and effective measures. Since Croatia is far from selfsufficiency in terms of pig husbandry and pork products, there is the question of a lack of stock. It is important to stress that Croatian pig husbandry provides around 800,000 pigs, whilst Croatian demand reaches around 2.5 million. Croatia participates in the European Single Market, yet, one of our neighbouring countries – Hungary – has a lower VAT on live pigs, baby beef and half carcases. In addition, Hungarian output exceeds ours and their VAT on food products is considerably lower. This is certainly one of the measures that needs to be imple-
And what of the future? Since we are moving to further promote our business activities, we will continue keeping abreast with technological trends, the development of new products, as well as focus on the continuous improvement of existing products. I am delighted that we have successfully completed our latest investment cycle in PPK Karlovac Meat Industry and are looking forward to implementing Group level investment that will directly affect the business activity of all companies in the Group. It is important to mention the currently ongoing investment project worth €6.67 million into upgrading, reconstruction and modernisation of the facility, the purchase of production machinery and equipment, expansion of warehouse storage capacity, as well as the modernisation of the cooling system of the Čakovec-based Vajda Meat Industry. Furthermore, Mesna industrija Braća Pivac (Pivac Brothers Meat Industry) is initiating the implementation of invest-
Photo: Vedran Tolić
age and we need to focus on its promotion and protection, as well as on following traditional recipes. In the production of “čvarci” we use the latest technology, new equipment and machinery that increases our production capacity, yet we use traditional and old-fashioned recipes in order to preserve the original flavour and quality. Hence, new technology is used to do the work in the same way as it was once done in rural households. In addition to “čvarci” and lard, we provide also other traditional products. Some of them regularly win recognition awards at Fairs, especially Dalmatian pršut (Dalmatian Smoked Ham) which bears the Protected Geographical Indication label and Vajda’s Drniški pršut (Smoked ham from the Drniš Region). Moreover, it is important to highlight Vajda’s traditional deli meat products ‘z tiblice i slanine (smoked pork kept in lard and bacon, a traditional product from the Međimurje region), which is currently undergoing the process of being awarded the Protected Geographical Indication status. Our strength lies primarily in using traditional recipes and methods of preparation of traditional meat products. These trends are, amongst other things, the result of long-term efforts exerted by a large number of associations involved in issues of protection of geographical indication.
I BELIEVE MOTIVATING PEOPLE TO RETURN TO PRIMARY PRODUCTION IS IMPERATIVE, BUT THIS REQUIRES CONCRETE AND EFFECTIVE MEASURES ment into the construction of a new multi-functional facility for the production of pršut (smoked ham), with an estimated value exceeding €10 million. The capacity of the smoked ham production facility will be 350,000 pieces, whilst the existing facility, which will continue operating, currently produces around 150,000 pieces, of which 70,000 bear the Protected Geographical Indication (Dalmatian smoked ham) label. These are all the basics for the intended increase in co-operation with farms specialised in pig fattening and thus also to increase the share of local stock in final products. The current primary production of pigs within the overall Group this year will reach around 90,000 pigs, and our plan is to reach an annual output of around 200,000 pigs in two years. Finally, all these projects will result in the creation of new jobs and new value added for the entire community. November 2017 | No 274 | PVinternational | 13
AQUACULTURE IN EUROPE
AQUACULTURE A STRATEGIC BRANCH Europe imports over 65% of its fish, but we could turn this to our favour through Croatian aquaculture, Tolušić highlights by Jozo Vrdoljak and present experiences in aquaculture have been positive. However, we could achieve more and we could become even more competitive globally,” Tolušić noted. Croatian aquaculture is an important production branch, particularly in rural areas. Annual production stands at around 9,500 tonnes of white fish, mainly gilthead bream and European bass, around 4,000 tonnes of freshwater consumer fish, ,3000 tonnes of tuna and around 800 tonnes of shellfish. Almost the entire total quantity of produced tuna is exported to Japan, and the majority share of whitefish is exported to demanding EU markets. The majority of the freshwater fish is similarly exported to the EU.
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round 1,600 participants from 70 countries gathered at the Aquaculture Europe international conference, consisting of a scientific conference, an exhibition of aquaculture products and equipment, presentations of latest technologies, related achievements and workshops. The Aquaculture Europe event is organised in a different country annually, by the European Aquaculture Society. This year’s biggest European exhibition of aquaculture, entitled Co-operation for Growth, was held in Dubrovnik.
A TRADITION SPANNING SEVERAL YEARS At the opening session, Agricultural Minister, Tomislav Tolušić, highlighted that
the Government sees aquaculture as a strategic branch for developing fisheries and all other related industries. Excessive fish catching is a threat to marine species, but aquaculture offers long-term solutions for a stable future. Last year, Croatia produced 17,000 tonnes of aquaculture products worth €110 million. Fisheries, whether maritime or freshwater, is a Croatian tradition. It is an important sector of the Croatian Economy. “I support the plans and continuous investment of our producers who intend to double current fish production by 2020, due to the increasing demand. We have great potential – let’s use it. Europe imports over 65% of its fish, and we could turn this figure to our favour through Croatian aquaculture. We are not new to this. Our past
CONTINUOUS GROWTH For the past few years, particularly since 2013, production and exports have been in constant and continuous growth, except where natural disasters, such as droughts, which hit freshwater farming last year. It is anticipated that the importance of aquaculture will continue to increase rapidly given the demand for fish products and endangered fishing resources. Due to excessive fishing indices, more rigorous fishing limitations are being introduced, and the catch is growing. Under these conditions aquaculture is the only way to meet the growing demand, CCE Vice-President for Agriculture, Forestry and Fisheries Ivan Škorić highlighted.
CCE presents Croatian Fish – Eat What’s Good project! In conjunction with the four-day event, the CCE, special sponsor of Aquaculture Europe, also presented their Croatian Fish – Eat What’s Good! project, financed by the European Maritime and Fisheries
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Fund, with the goal of increasing sales and local consumption of fish as well as promoting fish consumption in Croatia. The project aims at promoting Croatian fisheries products by highlighting their com-
parative advantages in relation to other foods and imported fish: nutritional value, origin of sustainable aquaculture and fisheries, as well as an organised food safety system and beneficial influence on health.
BUY CROATIAN IN VINKOVCI
Producers are the heroes of today Croatia’s strength depends on the strength of her economy, and the strength of the economy depends on the strength of companies. We have a lot to offer and this event proves it, Josip Dabro highlighted
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roducers are the heroes of today. We have almost 300 events and 2,000 companies and Buy Croatian is the most successful national event in Croatia and beyond. Croatian entrepreneurs, large and small, have much to offer, said President of the Croatian Chamber of Economy, Luka Burilović, at the opening session of the 20th anniversary of the Buy Croatian event held in Vinkovci. He
to stop the export of Croatian oak so that our quality could be recognised in final products and the production of furniture,
I WANT CROATIAN FURNITURE TO BE EXPORTED, NOT OAK, BURILOVIĆ SAYS expressed gratitude to consumers as the generators of the economy and for being ready to spend even more on quality and local products. He said our products are known for their quality, which has also been recognised by consumers, but we should work more on increasing the share of final products. This primarily concerns the wood processing industry. Croatian producers of furniture and equipment made of Slavonian oak, have a bright future. It is our task, both the Chamber and the Government as well as other institutions,
Burilović said. I want Croatian furniture to be exported, not oak. This will create new job opportunities, Burilović says.
BUY CROATIA IS AN EXPRESSION OF PATRIOTISM The mayor of Vinkovci, Ivan Bosančić, said that Slavonian oak is local to the County of Vukovar and Srijem and that the people living in this area of natural wealth are most suitable to manage it. This is where the highest profit from wood is made. This area should be able to develop from this profit and that is
why our administration should be able to manage these resources, Bosančić opined. The raw material is best managed by those who inherited it. Oak should end up in the hands of Croatian producers and the end product should placed on the shelves of European buyers, Bosančić highlighted. Bosančić expressed gratitude to the CCE for having decided to celebrate the event’s 20th anniversary in Vinkovci. Buy Croatian is an expression of patriotism. Our producers, fighting on the European market, are the heroes of today. We have a lot to offer, despite being a small country, Bosančić concludes. Croatia’s strength depends on the strength of her economy, and the strength of the economy depends on the strength of companies. We have a lot to offer and this event proves it, Deputy Prefect for Vukovar and Srijem Josip Dabro highlighted. He also sent out the message to the gathered public: Buy Croatian. November 2017 | No 274 | PVinternational | 15
CROATIAN TOURISM DAYS
ALL-YEAR-ROUND TOURI FOR THE FIRST TIME We need to prepare for the next period in the best possible way and constantly stress that sustainable development is the only possible approach to tourism development and future tourist arrivals, noted Cappelli by Jozo Vrdoljak
The results achieved by the tourism sector show a high level of dependency by the economy on this activity and an insufficient level of development of other sectors. Hence, a more vigorous promotion of growth in other sectors through Croatian tourism is fundamental. Josip Zaher, VicePresident of the CCE for Tourism, Trade and Finances
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his year’s Croatian Tourism Days held on 25th and 26th October 2017 in Mali Lošinj, organised by the Ministry of Tourism, the Croatian Chamber of Economy and the Croatian National Tourist Board, brought together around 1,500 participants. During the opening ceremony, the Minister of Tourism, Gari Cappelli, stated that he had decided not to congratulate all those involved in tourism and the success achieved during the tourist season, as he will do that on the last day of the year. This was due to the fact that this year Croatia is seeing an all-the-yearround tourist season for the first time. “This year a huge breakthrough has been made in Croatian tourism. We need to prepare for the future in the best possible way and constantly stress that sustainable development is the only possible approach to tourism development and future tourist arrivals”, emphasised Cappelli. According to him, all those involved in the tourism sector have performed excellently this year. “All Croatian individuals are interested in and welcome tourism, yet they are aiming for more efficiently peak season crowds in July
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and August. Hence, a more active pursuit of sustainable development is imperative within local communities The Ministry will provide the parameters to be used in order to determine the maximum number of tourists that could be accommodated at certain destinations or beaches. The destinations to apply this will greatly increase the quality of their services. We need to focus on such issues, as well as on attracting the greatest possible number of tourists during both pre- and post-season, and that by primarily using air traffic, in order to increase the long-term occupancy rates in tourism facilities”, emphasised Cappelli.
LEVEL OF TOURISM WITHIN GDP RISES TO 19% According to Josip Zaher, Vice-President of the CCE for Tourism, Trade and Finances, a high proportion of tourism in GDP, currently reaching 19%, as well as significant investment implemented, show the role of the tourism sector within the overall economy. “This year, for the first time since records began, Croatia will record the 100 millionth overnight stay and tourism revenue exceeding €10 billion. Consequently, all those involved in tourism
ST SEASON need to be congratulated on the results achieved. In addition to all the recordbreaking results for Croatian tourism, further growth and development are imperative in order to meet the objectives of the Tourism Development Strategy, by 2020. More favourable conditions in the business environment can substantially contribute to raising the ranking of Croatia on the global tourism competitiveness index and ensure the sustainability of Croatian tourism”, pointed out Zaher. In
his opinion, the results achieved show a high dependence of the economy on this activity and an insufficient level of development of other sectors. “Hence, a more vigorous promotion of growth in other sectors through Croatian tourism is fundamental”, highlighted Zaher, whilst inviting both manufacturers and tourism operators to participate in the Buy Croatian initiative Croatian Products for Croatian Tourism, which will be held in Zagreb in November.
AWARDS FOR THE MOST SUCCESSFUL TOURISM OPERATORS
SPLIT – THE TOURIST DESTINATION OF THE YEAR
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uring the recently held Croatian Tourism Days event, awards were given to the most successful tourism operators in 10 categories. Split was declared as the tourist destination of the year. Awards were presented by the Prime Minister, Andrej Plenković, Tourism Minister Gari Cappelli, Director of the Head Office of the Croatian Tourist Board, Kristjan Staničić and Vice-President of the CCE, Josip Zaher. Whilst congratulating all those involved in tourism industry on yet another successful tourism season, Plenković pointed out that the percentage level for tourism in GDP exceeds 18%. “This has been the best season since records began. We have seen a considerable increase in arrivals, overnight stays, revenue and
investment. Croatian international positioning is primarily due to tourism. This year, investment implemented in tourism exceeded €800 million, whilst 2018 is expected to record around €940 million of investment. This suggests we will further boost the service quality and increase capacities. Moreover, we are planning to become one of the most attractive destinations both in Europe and globally”, stressed Plenković, adding that this year we have started talking about sustainability of the Croatian tourism, which is excellent. “It has to be noted that people are the key to success in tourism and hence I would hereby like to congratulate all award winners, award nominees, as well as all those involved in the Croatian tourism industry, since the competitiveness
of Croatian tourism depends primarily on them. It is mainly due to their creativity and committed work that Croatia owes her attractiveness and currently ranks as one of the most attractive international tourist destinations”, noted Cappelli. The importance of all those involved in tourism and of their contribution to the success achieved was also emphasised by the Director of the Head Office of the Croatian Tourist Board Kristjan Staničić. “I hereby invite all stakeholders to participate in the dialogue about the major issues in this sector in order to prepare for next season even more successfully and to achieve even better results. I would like to extend my warmest congratulations to the award winners, the champions of the Croatian tourism”, stated Zaher. (J.V.) November 2017 | No 274 | PVinternational | 17
CONSTRUCTION
THERE IS WORK - BUT NO WORKERS The horrific economic fall, both in quantity and quality in the construction sector, which lasted almost six years, has finally come to an end, but is are now faced with the problem of a lack of workforce, Mirjana Čagalj highlights by Ilijana Grgić
4,854 new buildings completed in 2016 (CBS data)
1,7% increase in volume of construction works during first 6 months of 2017
49,8% increase in the value of anticipated work during the same period
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onstruction is most certainly the area that suffered the severest blow of the six-year long recession. This is quite evident from data on the swings in GDP, according to which Construction saw the largest fall in gross added value over the six years (-43.9%). Slow progress has been seen during the past two years and it can be concluded that this sector is slowly exiting the crisis. The statistical data are in favour of this fact. Based on data provided by the Central Bureau of Statistics, last year 4,854 new buildings of over 1.83 million m2 were completed, 3,811 of which (79%) were residential, and 21% non-residential. Concerning new flats, 7,809 were completed last year with an average usable area of 94.8 m2. The majority were threeroom apartments (2,131) and only 41 had eight or more rooms. Due to the lack of investment projects, construction suffered the most severe blow in the recession. It is now on a tipping point, since better results of the past quarters give signs for hope that there is still potential for smart and sustainable growth based on the country’s former advantages and potential, CCE Vice-President for Construction, Transport and Connections Mirjana Čagalj said, and added that construction is now facing other problems.
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MASONS, CARPENTERS AND STEEL WORKERS REQUIRED The lack of staff is the most significant problem, which is a consequence of an inappropriate education policy and poor salaries in construction. There have not been enough workers for quite some time, so this has become a limiting factor and one of the critical
IT IS BECOMING QUITE COMMON THAT COMPANIES REJECT WORK AS THEY DO NOT HAVE SUFFICIENT WORKERS, CCE VICEPRESIDENT SAYS problems faced by construction companies. There are more and more examples of companies rejecting work due to the lack of quality workforce. Masons, carpenters, steel workers, painters, tile installers, dry-wall assemblers, façade workers are only some of the
November 2017 | No 274 | PVinternational | 19
CONSTRUCTION Buildings and flats completed in 2015 and 2016 Completed buildings Total
Residential buildings
Completed apartments Non-residential buildings
Number
Area, m2
Number
Area, m2
Number
Area, m2
Number
Area, m2
4641
1.898.127
3678
979.014
963
919.113
8059
733.413
2016.
4824
1.832.144
3811
1.012.270
1013
819.874
7809
740.429
2016/2015 indexes
103,9
96,5
103,6
103,4
105,2
89,2
96,9
101,0
2015.
The import of foreign workforce is a measure offering a shortterm solution, but if larger and more significant
projects come to Croatia, and there have been some indicators, it will be impossible to implement them due to the deficit of qualified professionals. Mirjana Čagalj, CCE Vice-President for Construction, Traffic and Connections
occupations in deficit, sought by employers in different ways. This is a national problem, not exclusively connected to the construction sector alone, so it should be solved with measures taken at a national level, in the national labour policy and the education system. With the decision on establishing annual quotas for hiring foreigners for 2017 and the amendment to that decision, the Government tried to soften the problem, but this does not mean that it has disappeared, Mirjana Čagalj warned. She also added that considering the increasing outflow of quality workforce, it will still be necessary to import foreign workers for some time, or until a real labour market is established in Croatia, followed by well planned mid-term measures like the restructuring process of the economy and the promotion of its competitiveness, giving incentives to employees to continue their education and life-long learning, re-qualification and training of unemployed, more flexibility and freedom in the educational system. The import of foreign workforce is a measure offering a short-term solution, but if larger and more significant projects come to Croatia, and there have been some indicators, it will be impossible to implement them due to the deficit of qualified professionals, Mirjana Čagalj thinks. The CCE, in co-operation with ministries and state bodies, sees dual education and other educational activities, as well as the popularisation and affirmation of currently unpopular construction occupations, as the long-term solution to the problem. The goal of dual education is to connect the education and construction system based on the Austrian and German models – and this is what employers actually look for. Such education includes young people on the labour market during their vocational high school education or high education.
CRISIS SWEEPS AWAY LARGE AND SMALL Concerning non-residential buildings, CBS statistics show that 69 hotels, 48 office buildings, 87 buildings for retail and wholesale were completed last year, together with 166 industrial buildings and warehouses. Before the crisis hit, there was a trend of
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excessive growth based on intensive state investment in infrastructure projects and private individuals investing in housing. The analysis, conducted by the CCE, shows that the GAV share of construction in total GAV reached an extremely high 8.5% in 2008, before slumping to 5.2% in 2016. The state, companies and private individuals did not invest during the crisis and this resulted in the horrendous fall-off in
THE CCE SEES DUAL EDUCATION AND OTHER EDUCATIONAL ACTIVITIES AS THE LONG-TERM SOLUTION TO THE PROBLEM OF A LACK OF WORKFORCE construction activities and insolvable problems in a considerable share of construction companies which failed to compensate the fall in the local demand by moving into the foreign market. Therefore, the crisis was long-lasting and probably one of the largest crises of all other areas. This is evident from the fact that in relation to pre-crisis 2008, 546,000 people lost their jobs in 2016; the volume of construction work was 45.6% down; the number of issued construction permits decreased by 34.7% and the number of licences issued for apartments decreased by 61.8%. All this resulted in large construction companies perishing, whilst those who stayed still feel the consequences of a series of bad business years. The crisis, lasting for full six years, was much deeper and longer-lasting than in other activities and compared with other European countries, which actually reduced Croatian competitiveness. The construction crisis is partly connected to state indebtedness, an over-sized construction sector before the crisis, formed on the foundations of inappropriate
Number and construction size of completed buildings based on building and work type Completed buildings
development policies, both in Croatia and the European Union, excessive investment in the construction of infrastructure and residential building. It is, therefore, not surprising that the majority of large-sized and many small-sized companies filed for bankruptcy, said Zlatko Sirovec, CEO of Tehnika and President of the CCE Construction Association. Sirovec highlights that there are many construction companies in Croatia fighting for their market positions, but the lack of workforce presents a serious problem and is a limiting factor since they find it hard to plan and fulfil their contracts.
LIGHT AT THE END OF THE TUNNEL “We deal with this problem in many ways. We have permanent job openings; we use subcontractors to a much greater extent. They are sometimes of poorer quality, so we have to correct their failures; we import workers – if we manage to find them in third countries; we finance students enrolled in construction schools”, Sirovec pointed out. He also mentioned that companies, weakened by the crisis, are now in a situation in which they have to adjust to new challenges and market opportunities to create capital and ensure their future. This primarily concerns contracts deriving from development priorities of the EU, its investment plans and possibilities of financing from the European cohesion and structural funds as well as the companies’ creativity and capability of attracting funds of the EU. We certainly hope that the crisis years are behind us since the pre-crisis growth was uncontrolled and at the expense of further debt, and it is now based on GDP growth. Sirovec also said that there is light at the end of the tunnel, but there is still have a long way to go. The positive trends, which stabilised last year, continued during this year. Data analysed by the CCE show that during the first half of this year and in relation to the same period of the last year, the volume of construction work increased 1.7%; the value of completed construc-
number of buildings
area, m2
volume, m3
Total
4824
1.832.144
6.940.450
New buildings
4076
1.616.568
6.126.914
Residential buildings
3224
911.094
2.764.177
One apartment
2199
399.788
1.210.861
Two apartments
401
107.841
321.251
Three or more apartments
619
395.380
1.205.740
Buildings for communities
5
8085
26.325
Non-residential buildings
852
705.474
3.362.737
Hotels and similar buildings
68
84.805
280.495
Office buildings
48
94.878
304.425
Buildings for retail and wholesale
87
102.350
525.546
Building for Transport and communications
145
15.828
53.787
Industrial buildings and warehouses
166
272.243
1.573.482
Buildings for cultural-art activities, entertainment, education, hospitals and other health care buildings
59
58.167
288.524
Other non-residential buildings
279
77.203
336.478
Appendages and extensions
748
215.576
813.536
Residential buildings
587
101.176
301.901
Non-residential buildings
161
114.400
511.635
tion work increased 4.2% and the number of issued construction permits increased 27.7%. Furthermore, the value of anticipated work increased 49.8%, and the value of new orders 17.4% with a constant rise in the number of licenses issued for flats (41.9%). In conclusion, the recovery of construction was motivated by
COMPANIES HIT BY THE CRISIS NOW HAVE TO ADAPT TO NEW CHALLENGES AND MARKET OPPORTUNITIES, SIROVEC NOTES overall economic growth and a strengthening of investment activities, both in the private and the public sector, with large amount of available funds via the European Union. However, on the other hand, the dynamics of the recovery was burdened by the low price of contracted works and insufficient professional workers. November 2017 | No 274 | PVinternational | 21
TRANSPORTATION 42ND CONFERENCE OF THE INTERNATIONAL ASSOCIATION OF PASSENGER VESSEL OPERATORS INTERFERRY
PASSENGER VESSEL OPERATORS ARE TO AN EXTENT MORE IMPORTANT THAN AIRLINES The aim of Interferry is to further the development of safe maritime transport, through the development of regulations and new technologies, in compliance with the highest environmental standards, pointed out Grainger piše Jozo Vrdoljak
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he 42nd Conference of the International Association of Passenger Vessel Operators Interferry, recently held in Podstrana, brought together over 400 participants. The Conference was organised by Jadrolinija and was attended by owners and directors of the largest and most prestigious of international passenger vessel operators, equipment manufacturers, shipbuilding companies, internationally acclaimed suppliers, naval architects and financial institution representatives. Interferry is the best known international association of the global ferry industry and the Conference was one of the leading conferences on maritime transport globally. “The specific aim of Interferry is the further development of safe maritime transport, through the development of regulations and new technologies in compliance with the highest environmental standards. Interferry is not only a lobbying organisation, as all its members constantly focus on
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increasing the safety; it also closely cooperates with regulatory agencies and institutions in order to improve members operations. Our role is to develop communication within regular services and represent this institution in compliance with the legislative framework. Moreover, we are working to harmonise our operations with environmental protection requirements”, stressed Mike Grainger, Moderator of the Interferry Conference and Director of Liferaft Systems Australia. According to data provided by Interferry, the global ferry industry transports around 2.1 billion passengers and 250 million vehicles, and covers a fleet of around 1,300 ferries of over 1,300 GT, as well as around 1,000 smaller ferries. To put this into perspective, commercial airlines transport around 2.3 million passengers annually.
THE IMPORTANCE OF MARITIME PASSENGER TRANSPORT The Croatian Prime Minister, Andrej
Plenković, assured that the government would carefully consider the conclusions reached at the Conference and to ensure they are integrated throughout Croatian strategies and documentation. “Croatia is a Mediterranean and an Adriatic country, with a long tradition in the shipping industry and maritime transport. She has 1,244 islands of which 54 are permanently inhabited and most revenue originates from tourism. Passenger transport, as well as the transport of vehicles to the islands is extremely significant during the tourist season. Jadrolinija and other operators play a fundamental role concerning this issue”, noted Plenković. In his opinion, in terms of passenger numbers, shipping companies and operators may be compared with airlines, yet shipping operators have a higher global importance in that they also transport vehicles. He emphasised that the Ministry of Regional Development and EU Funds has been drafting a law on the islands and the national plan of island development. It is a document that includes economic and energy-efficiency measures, as well as environmentally friendly measures intended to improve the islanders living standards. The fact that the Conference was held in Croatia was primarily due to Alan Klanac, who until recently was the Director of Jadrolinija and is currently President of Interferry. “We discussed navigation safety, environmental impact, yet we also focused on commercial activities and methods of passenger approach. Travelling by ferry, irrespective of its length, needs to develop passenger transport”, pointed out Klanac.
FINANCE CROATIAN NATIONAL BANK
€162.2 million Foreign Direct Investment in the second quarter During the period from 1993 to the end of the second quarter of 2017, Croatia saw €31.4 billion of Foreign Direct Investment. If round-tripping is excluded, the value of FDI was €29 billion
A
ccording to preliminary data provided by the Croatian National Bank, total FDI into Croatia during the second quarter of 2017, reached €162.2 million. Compared with the same period last year, FDI has increased by €53.4 million or 49%. It should be noted that, after a 90% annualised fall in 2015, data for 2016, in which the total value of FDI reached €1.7 billion, showed a slight recovery. During the first six months of 2017, it totalled €617 million, a drop of 7% in relation to the same period for 2016. According to RBA analysts, for the full year of 2017, the situation is expected to be similar to that for 2016. The statistical analysis on outward FDI, the largest proportion for the first six months of 2017 came from Hungary (€460 million), Austria (€239.8 million) and Holland (€89.5 million). According to audited data, during the period from 1993 (since statistical
data on FDI has been available) to the end of the second quarter of 2017, Croatia saw inward foreign direct investment of €31.4 billion. Stripping out round-tripping is excluded, the value of FDI was lower at €29 billion.
FINANCIAL MEDIATION AT THE TOP During the overall cumulative period, the largest value of FDI into Croatia was in the financial mediation sector (around 30%), as well as from investment into the wholesale sector, with the exception of trade in motor vehicles and motorcycles (8.9%) and real estate business (6.9%), whilst tradable goods did not record any significant investment. According to the Foreign Investors Council (FIC), the exceptional role of FDI in the growth and development of a host country has been confirmed through a wide range of empirical research studies. All groupings of FDI companies have shown a faster increase in both revenue,
capital and productivity compared with other local companies. FDI companies have a significant share of the Croatian economy, concerning capital, total revenue, exports, employment or investment. The capital of FDI companies accounts for almost a third of the total capital in Croatia, and their percentage share in the total exports reaches almost 40%. On the other hand, as stated in the FIC White Book, major problems in the
THE LARGEST AMOUNT OF FDI DURING THE FIRST SIX MONTHS OF 2017 CAME FROM HUNGARY (€460 MILLION) business climate faced by Croatia, which negatively affect the implementation of FDI can be summarised as follows: legal insecurity in terms of changes in the legal environment, amendments to regulations, undue implementation of EU regulations, tax liabilities (tax law amendments, non-uniform solutions provided by differing levels of tax authorities), parafiscal charges (the number of additional charges levied, with no clear connection to business), public administration and the judiciary – length of court proceedings, occasionally a completely different treatment at the local level in relation to that at the national level, labour issues (rigid and inadequate Labour Act), as well as access to financial resources. November 2017 | No 274 | PVinternational | 23
140TH ANNIVERSARY OF MIRNA FACTORY
FISH, SALT AND OIL – A RECIPE FOR SUCCESS This important anniversary saw the completion of an investment cycle worth €6.7 million into a new processing and production facility for sardines, mackerel and tuna, which will integrate the production of Podravka fish brands Eva and Mirna under one roof by Ilijana Grgić strong brands and top-quality products. The importance of Mirna for Podravka was is confirmed by investment in Istria, and thus into Mirna, has been the top priority for us this year. We were moving to integrate fish brand production in one venue and this investment into a new processing facility will ensure our future, as well as growth and development of canned fish products in Mirna”, noted a member of the Management Board of Podravka, Ljiljana Šapina.
HEALTHY MEALS VIA SOPHISTICATED PRODUCTION Several fish species, such as sardines, mackerel and tuna, are currently processed in Mirna. The Adriatic Sea sardines currently account for the highest proportion. Notwithstanding
M 15
over million cans annual fish production from Mirna
over
90%
of output exported
60.000 0m
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of factory premises
arking a 140th anniversary is an important milestone for the Rovinj-based factory Mirna. The factory was founded in 1877 when fish processing was amongst the primary sources of income for the local population. Moreover, Mirna is of historic importance in the global canned fish industry, having been one of the first factories of this type. This important anniversary saw the completion of an investment cycle worth €6.7 million into a new facility for processing and production of sardines, mackerel and tuna, integrating the production of Podravka fish brands Eva and Mirna under one roof. This will have a significant impact on the strategic development of canned fish, whilst enabling more effective cost management, boosting profitability and enhancing competitiveness across existing markets, as well as enabling entry to the new markets. “Podravka has based its development on
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PODRAVKA FISH BRANDS MIRNA AND EVA USE ADRIATIC SEA SARDINES EXCLUSIVELY AND THERE IS NO COMPROMISING ON THIS ISSUE the fact that production is highly sophisticated technologically, the products are natural, whilst canned fish produced in Mirna primarily consists of three main ingredients: fish, oil and salt. Consequently, they rank amongst the
healthiest dishes with multiple health benefits, primarily as they contain blue fish, which is one of the best known natural sources of omega 3 fatty acids, whose beneficial effects on health are well known. The most popular product across the region is Canned Sardine in Vegetable Oil, since it contains Adriatic Sea sardines ranking amongst the top quality fish globally, with their unique and undoubted flavour. Podravka fish brands Mirna and Eva use the Adriatic Sea sardines exclusively and there is no compromise concerning this issue. Adriatic Sea sardines have an undoubted taste, flavour and quality. Thus, imported sardines are not their choice. This certainly requires a special relationship with local fishermen, which frequently transcends business relationships. The factory employs around 150 staff and they are involved in production and processing of fish and processed fish products. The factory premises cover an area of 60,000 m2, and is located adjacent to the sea, to ensure top quality fresh delivery of blue fish, as the basic raw material required in production. Around 3,500 tonnes of blue fish are caught in the Adriatic Sea annually, in order to meet the requirements of production in Mirna.
LABOUR REQUIREMENTS The production programme of Mirna is based on canned sardine, mackerel and tuna products, as well as fish pate products, fish salads and fish spreads. The development potential of the new production programmes is based on long-standing traditions, production and processing of fish, as well as the professionalism of the staff and the vicinity of the source of the basic raw material. “The production in Mirna has exceeded 15 million units of canned fish. Nevertheless, following the installation of new production lines
and the completion of the investment cycle, this will see a significant increase. The demand for Mirna products is substantial, and we are convinced that production will soon more than double. This will present a new challenge for us and that is an increase in demand for additional labour. We currently need 25 workers in order to fill the first shift. Due to the transfer of Eva production to Mirna, we need to launch a second shift for canned sardine production; this will require around 60 new workers”, stressed the Director of Marketing of the Business Programme Podravka Fish, Marcel Janeković, adding that they believed an adequate solution could be found in the immediate future. After 140 years of business, Mirna is a company whose products occupy a significant market position in 11 regional markets and has the potential for substantial expansion into other markets. It currently exports over 90% of its output. Following its takeover by Podravka, Mirna gained access to international markets, through the network of Podravka international subsidiaries. Consequently, in addition to strengthening its position regionally, it anticipates expansion into Western markets. “The success achieved by Mirna shows that Croatia is currently competitive in fish processing. It is a complex business, since it requires an effective makeover and organisation of a sea-to-table supply chain. Nevertheless, Mirna and Podravka have proved that, once production has been appropriately arranged and connected with a vigorous sales organisation throughout the markets, with marketing approach, recognisable brands and the geographic indicator of Adriatic Sea sardines, one has established a competitive business, on a par both with local businesses and large multinational producers”, concluded Janeković.
The importance of Mirna for Podravka are confirmed by the fact that investment in Istria, and hence into Mirna, has been the top
priority this year. We were moving to integrate fish brand production under one roof, and this investment will ensure our future, as well as growth and development of canned fish products in Mirna. Ljiljana Šapina, a member of the Management Board of Podravka
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PRESENTING CROATIAN WINES IN SWITZERLAND
Wines made from indigenous varietals are popular The presentation of local wines on the Swiss market is a project worth €0.2 million, of which 80% is financed by the CCE Wine Association from the EU Wine Envelope fund by Sanja Plješa
H The Swiss have their own production also. According to some research up to 75% of wines in restaurants are of Swiss origin, making Croatia’s place on market limited to begin with. However, producers could do well with quality wines.
Gianfranco Kozlović, President of the CCE Wine Association
ow to thread our way through the demanding Swiss market and what types of wines do the Swiss like – that was the main question for the representatives of Croatian wine producers who travelled to Zürich and Geneva recently to hold B2B meetings with distributers and the press. The presentation of local wines to the Swiss market is a project worth €0.2 million, of which 80% is financed by the CCE Wine Association from the EU Wine Envelope fund. A total of 17 Croatian wineries participated at the event: Galić, Krauthaker, Zlatan otok, Jako vino, Iločki podrumi, Badel 1862, Vina Matošević, PP Orahovica, Kozlović winery, Bodren, PG Jagunić, Rizman, Miloš, Osilovac, Kutjevo, Dingač-Skaramuča and KatunarEstate Winery. Organised wine tasting, business meetings and two master class dinners – professional wine tasting with food - gave signs of an optimistic future for wine distributers. All wine producers agreed on one thing - the demanding market requires wines made from indigenous varietals and producers should work on that if they wish to make progress. Looking back on the presentation of Croatian wineries, the Secretary to the CCE Wine Association, Igor Barbarić, stressed that Switzerland ranks seventh in Croatian exports of wines. Nonetheless Croatian wines are still not well enough known there. These types of events promote the development of Croatian wines which we brought together under one brand - Vina Croatia-vina mosaic – due to their popularity on the foreign markets. The professional wine tasting was led by Ivan Barbić, a renowned Swiss wine expert of Croatian origin. The wine producers talked
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with buyers and experts about placing wines on the Swiss market and all the related challenges. In addition to working on the quality, Croatian wine makers should pay more attention to the production of wines made from local varietals, such as zeleni silvanac, frankovka, plavac mali, crljenak, pošip and žlahtina.
SWITZERLAND DOES NOT NEED TO EXPORT Concerning the placing of Croatian wines on the Swiss market, Gianfranco Kozlović, President of the CCE Wine Association, stressed that the Swiss market has no competitors regard-
17 CROATIAN WINERIES PRESENTED TO DISTRIBUTERS AND THE PRESS IN ZÜRICH AND GENEVA ing its’ purchasing power and living standards compared with other European countries. The Swiss are gourmets who eat in restaurants on a regular basis, enjoying wine with food and for whom fine table manners are a way of life. In Switzerland, perhaps even more than any other market, Croatian wine producers have the important task of presenting their products. The Swiss have their own production also. According to some research up to 75% of wines in restaurants are of Swiss origin, making Croatian place on the market limited for a start. However, producers may perform
well with quality wines. This is good news for Croatia considering the quantities and prices, Kozlović highlighted. He also added that the Swiss sell their wines mainly in the local market, and thus do not have a need to export. Dominik Jagunić of OPG Jagunić also participated at the event. His winery presented three types of wines and one sparkling wine. This specific sparkling wine, and the family’s other wines, are their method to manoeuvre their way on the demanding Swiss market. “The production of our Three Stars sparkling wine comprises 30% of our total production. Our winery is a family boutique type of winery with an annual production of 35,000 to 40,000 bottles. The quantity is limited since we aim to produce good quality wine”, Jagunić said. He also added that their wish is to produce macerated wines which they would like to sell on local and foreign markets. Zeleni silvanac is an indigenous variety and it is this wine that was presented by Poljoprivredno poduzeće Orahovica (Orahovica Agricultural Company). Igor Huškar from PP Orahovica highlighted that the interest shown
SWITZERLAND IS OUR SEVENTH LARGEST WINE EXPORT MARKET, BUT CROATIAN WINES ARE NOT WELL ENOUGH KNOWN, BARBARIĆ HIGHLIGHTS by the Wine Association in participating on the project clearly shows the potential of the Swiss market. “Our present experience of exporting Croatian wines has shown a high level of gastro-awareness by the Swiss. Naturally, they go hand in hand with top wines. They want the best wines and they are willing to pay for them. Based on average prices of Croatian exports, Switzerland ranks somewhere near the top. This is particularly important for the future development of Croatian wine production, since we wish to build an image of a broad range of top quality wines, not mass or cheap production. The awards won by Croatian wines at international competitions certainly support this, Hruškar concluded.
Croatian wine exports to Switzerland up 75% In 2016, Croatia exported a total of €398,000 of wine to Switzerland. We did not import any wine from this, so it can be concluded that last year’s exports to Switzerland increased by 75% compared with 2015. Actually, two years ago we exported 47,000 litres of wine there, and last year we exported 73,500 litres.
We export mainly bottled wine, with an average price of €5.38 per litre. The Wine Association stresses that this rise in exports in just one year shows the huge potential of Croatian wines in Switzerland with further investment and promotion of Croatian wines and the Vina Croatia-vina mosaic brand on this demanding market.
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BOUTIQUE HOTEL ALHAMBRA
White Flag awarded to the Lošinj-based hotel White Flag, the international symbol of clean water and sea bed, was awarded to Boutique Hotel Alhambra for the preservation of water in an area of Čikat Bay on the island of Mali Lošinj. This flag is the sole symbol globally that guarantees clean sea, whilst striving to protect life in them and is owned by the Prince Albert II of Monaco Foundation and Global Under Water Awareness Association (GUWAA). The White Flag was presented during a formal ceremony on behalf of the Prince Albert II of Monaco Foundation by the diver Kristijan Curavić, the founder and President of Global Under Water Awareness Association (GUWAA) and the International Union for the Conservation and Protection of the Sea, Rivers and Lakes. GUWAA is an organisation involved in
cleaning and conservation of oceans and seas, lakes and rivers globally, and is integrated into one of the largest international diving networks, protectors of all water resources. On the occasion of the awarding ceremony, the President of the Management Board of Jadranka Group, Sanjin Šolić, highlighted that the company, in co-operation with the local community, is constantly involved in the care
and cleanliness of beaches, the sea and seabed. “The fact that starting from now there will be two White Flags in Čikat Bay confirms the natural beauty both of the coast and the island. Moreover, it is recognition awarded to all of us in the Jadranka Group who are involved in initiatives regarding cleaning of beaches, coast and seabed, moving to preserve the pristine beauty surrounding us», noted Sanjin Šolić. It has to be noted that, in addition to Alhambra, the five-star Hotel Bellevue also located in Čikat Bay, was awarded a White Flag in 2015. (S.P.)
HUMANITARIAN CELEBRITY DOUBLES TENNIS TOURNAMENT - COLOURS OF TENNIS
PLAYING TENNIS TO A PURCHASE RADIOLOGICAL MACHINE The first humanitarian celebrity doubles tennis tournament Colours Of Tennis was held at the Umag-based Tennis Academy and the Aminess Maestral Hotel. 24 players participated in the tournament, amongst whom were local celebrities, such as the former water polo player Dubravko Šimenc, a member of the Croatian pop-rock band Parni valjak, Berislav Blažević, the Croatian singer Miro Ungar, a former sportsman and sports commentator Božo Sušec, to name a few. Božo Sušec and Ivan Paoletić played against Miro Ungar and Tomislav Raca in the finals double of Ungar-Raca won the tie-break. Marko Škorić and Sergio Cittar played against Dubravko Šimenc and Marin Filiplić for third place and the double Šimenc-Filiplić also won the tie-break. The sporting event included entertainment programme with Foto, Food & Wine Point, bingo and music with valuable prizes for the most successful 28 | PVinternational | November 2017 | No 274
teams. The funds collected are intended for the purchase of a radiological machine to meet the neds of the Umag-based Medical Centre and Emergency Department. (J.V.)