Conciliation as a realistic alternative: Court disputes are a luxury the economy cannot afford. Court conciliation has made significant progress.
Vedrana Jelušić Kašić, Director of EBRD, Croatia For each Euro invested by us, €2.5 are invested by other investors
EUROmodul from Rijeka In the midst of the crisis, our business year 2013 was the best ever with €13.1 million earned
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Croatian Business & Finance Monthly Established in 1953 Monday / 7th April/ 2014 Year VII / No 0235 www.privredni.hr
S U P P O R T E D
Burilović: Work more with fewer people “Having in mind the importance of institutions, I am extremely satisfied we have managed to preserve such a significant institution as the CCE. All of us, especially the officials, are expected to protect institutions since the strength of the country depends on the strength of its institutions”, Burilović opined. The CCE Assembly covers the representatives of all the top companies that will stimulate the recovery in the overall economy, Burilović is convinced. “Being familiar with the difficulties of the real sector I come from, I will be guided only by the interest of the Chamber members, with the goal of turning the Chamber into an even better service for providing help to all”, the new CCE President promised. He also added the Chamber is faced with a lot of work and announced a radical reform. “The Chamber must change and adapt to the times in which we live. We will have to work more with fewer people and perform our primary role of the protector and promoter of the Croatian economy”, he said. He stressed that 96% of Chamber members pay a membership fee of €5; around 3% pay €142, and the remaining 1% (the biggest companies) pay €520. Therefore, Burilović concluded the Chamber must offer quality service and justify each euro spent.
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pvinternational pv international C R O A T I A N
C H A M B E R
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CROATIAN CHAMBER OF ECONOMY ASSEMBLY
Beginning of systematic reform and radical changes CCE is a quality system that must start meeting the needs of the economy rapidly Drago Živković adical changes await the Croatian Chamber of Economy, and the basics of these reforms are contained in the clean start analysis and recommendations that the CCE’s acting President, Sabina Škrtić, presented to the Assembly. At her proposal, members of the Assembly brought a unanimous decision to discharge the acting President of her duties, so that her place could be taken by the newly elected President, Luka Burilović, on the 1st April. She handed President Burilović a list of recommendations with a general restructuring of the Chamber with defined goals and strategies for achieving them, as the top priority; the CCE is a quality system which must be redefined so that it may start meeting the needs of the economy rapidly. From reorganisation to changing the business process, setting up a coherent information system and a unique database, introducing internal revision, controlling and reporting – all this needs to be performed in order to secure overall business transparency. What will the new president do, depends on his goals, vision and the strategy it defines, Sabina Škrtić highlighted.
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Entrance to the VAT system The Chamber will have to consider entering the VAT system for the services it charges, but which are excluded from its public authority. The funds it allocates to county chambers are not related to concrete projects; project planning does not exist, and the space for improving corporate communications system is vast. Operational restructuring should radically change the organisation; a unique database should be implemented, and the administrative staff strengthened in places where adequate expertise is lacking. Termination of leasing contracts of those facilities which do not have a business func-
tion should be one of the saving measures. Sabina Škrtić also recommends regionalisation, not in the sense that county chambers should be discharged; rather they should join forces when working on projects. The CCE has quality expertise, enabling the expansion of the scope of services that could be offered to the economy, and in the mid-term period the CCE would earn 30% of its income from mandatory membership fees, and at least 70% from the market. The Chamber must be the first among equals, using good practice to show an example to all other economic operators.
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Privredni vjesnik Year VII No 235
( 2340 procedures
from start of conciliation court proceedings to date
CONCILIATION AS A REALISTIC ALTERNATIVE
Court disputes are a the economy cannot
Court conciliation has made significant progress. This year, in only two and a half months the County Civil Court i companies include a clause on mandatory conciliation, on, companies p like Končar Electrical Industryy Inc. and Ericsson Eric N Drago Živković onciliation, as an alternative solution for settling disputes, found solid ground in the Croatian legislative system, but the number of related proceedings is still low, which is why new legislative solutions should be considered. Experts and professionals agree conciliation is important for the economy, since companies can save and still be able to preserve their business relations, usually permanently effected during court proceedings. Even though Croatia’s legal framework and the institutions for conciliation are not that much different from the legal frameworks of similar countries, the President of the Mediation Centre with the Croatian Chamber of Economy, Krešimir Sajko, sees several neuralgic items in the Conciliation Act from 2011. Some solutions regarding the start of the conciliations and the end of the statute of limitation, solutions on settlements set out by law and mandatory conciliations issues have proven to be problematic in practice.
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Effect on the statute of limitation Lawyer Vesna Kovačević Fras highlights the need to start and complete the conciliation procedure as an obligation of the conciliator, and the need to set the start and end date of the conciliation in cases where settlement is not reached and legal action
is taken. Whether the conciliaiation implies the end of the statute ute of limitation and how that effects the limitation deadlines and nd deadlines for taking legal actions ons is also considered. According to data provided by Judge Tanja nja Hučera, Head of the Conciliaiation Department of the County nty Civil Court, conciliation in court urt has made significant progress. ss. This year, in only two and a half alf months the County Civil Court in Zagreb reached 45 settlements, nts, already half of the settlements nts reached in 2013. Since the start art of the court conciliation proceededings, there have been 2,340 proroceedings, 121 proceedings are in progress, 2,219 proceedings have ve been finalised, and 712 settlelements reached, which is a 32% 2% increase.
Entrepreneurs need to be told how they can save with conciliations In legal terms, conciliation is becoming more complex. Therefore, it is important to determine the subject of conciliation as precisely as possible. Lawyers share different opinions when it comes to introducing legal laymen as conciliators. While some experts support maximum control and precisely defined settlements, others believe the goal of conciliation is not only to reach a settlement, but also to rekindle the related parties. Even though only a few Croatian
companies implement conciliation systematically and insert a mandatory conciliation clause in their contracts, some companies stand out, especially Končar Electrical Industry Inc. and Ericsson Nikola Tesla. Conciliation clause Končar is experienced in conciliation procedures in Croatia and abroad. Even though there were not many of them, they were significant in terms of their value and they affected their annual operations substantially, expert associate of Končar’s Board member, Gordana Štanfel, says. Končar also uses arbitration as an alternative dispute resolution avenue since the company cannot
afford time-consuming dispute resolution proceedings. Conciliation in economy should be used in disputes appropriate for conciliation, and entrepreneurs need to understand how they could actually save with this solution, Gordana Štanfel says. Končar always inserts conciliation and arbitration clauses in their contracts and these proceedings often take place before the CCE Mediation Centre. If the business partner is a foreigner, conciliation takes place before the ICC International Court of Arbitration or International Institute for Conflict Prevention & Resolution (CPR) in New York. For example, Končar successfully concluded a conciliation proce-
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( 712 settlements reached during the proceedings
( 18 conciliators has Grupa Končar
a luxury t afford
in Zagreb reached 45 settlements, already half the settlements reached in 2013. Even though not many Croatian ikola Tesla do. Corporate lawyers want their centre in the CCE Corporate lawyers support conciliation since they are aware of the burden court disputes can put on a company. These disputes bring business instability that can affect even liquidity, points out Josipa Jurinić who is also the President of the Corporate Lawyers Association. Corporate lawyers assess the outcome of a court dispute. If there is a possibility it could be lost, funds must be reserved, which often affects the balance sheet and the results of a company. Hence why corporate lawyers introduced a provision in their codex in which it is stated they will attempt to resolve all disputes through mediation, conciliation or some other peaceful manner. However, the problem is that unlike attorneys and public notaries, corporate lawyers are not a regulated profession. They do not have a chamber, even though an initiative was launched in 2005, Gordana Štanfel from Končar says. Josipa Jurinić adds they do not even insist on a special chamber, they would be satisfied with a separate class inside a mutual chamber. Having no chamber of their own, they founded an association, a representative association of corporate lawyers, since it encompasses some 200 of them, and is active at a European level. Notwithstanding, in order to strengthen the position of corporate lawyers, they also advocate a Centre for Corporate Law with the CCE, since they see in the CCE their natural partner that covers all Croatian companies. dure with an Egyptian company before the CPR. In compliance with the international FIDIC regulations, investment agreements usual contain a clause on arbitration and a council for resolving the disputes. The conciliators come from various professions: lawyers, economists, even psychologists or engineers in commercial disputes; however, the text of the settlement is generally composed by a lawyer. The company in conciliation is represented by a director, in a kind of a symbiosis with a corporate lawyer who makes sure the settlement is legally grounded. Aida Marijan, the Director of Legal Affairs and Representation, notes that Končar has been
implementing conciliation procedures since 1999, which means even before the law and regulation had been adopted, considering the fact that the first Conciliation Act was adopted in 2003. Končar implemented conciliation in collective agreements in individual labour disputes, where the Metalworkers’ Trade Union is a partner. High success rate in labour disputes Conciliation spread among the Union’s members, and many of them participated in training seminars. As a result, Končar has 18 conciliators, employees and union members, trained to co-operate with the Croatian
Mediation Association. Končar has five to six conciliations in labour disputes per year, which mainly end in settlements, in most cases already after the initial meeting of the parties and conciliation. Since 2000, they have been implementing conciliation in commercial disputes between member companies of the Končar Group. As a result, there has not been a single court dispute for the past five years. According to data provided by Aida Marijan, conciliation procedures are implemented in public company like Hrvatske šume, Hrvatske ceste and Hrvatska elektroprivreda, but also in private companies (IGH, Tehnika, Agrokor and Konzum).
Ericsson Nikola Tesla understands what conciliation represents, which is why it supports the idea that negotiations before the signing of a contract are a form of conciliation, says Chief Legal Advisor for Ericsson Josipa Jurinić. As a result, Ericsson does not have any commercial court disputes, building an image of a future-oriented company. They always insert a conciliation clause in their commercial contracts, and if it is unsuccessful, the next step is always arbitration, Josipa Jurinić concludes. She also supports closer cooperation between the CCE and corporate lawyers in order to convince SME’s of the benefits of conciliation.
4 ::: news
Privredni vjesnik Year VII No 235
( 142 vessels
owned by members of the Mare Nostrum Association fleet
SHIPPING: WORLD FLEET INCREASED 60% IN SIX YEARS
Croatia below EU average according to costs per hour With average €8.8 labour costs per hour, Croatia was below the EU average in 2013. In the EU, such costs totalled €23.7 per hour, according to a report provided by the EU Statistical Office. The differences between individual countries are substantial, ranging from €3.7 in Bulgaria to €40.1 in Sweden, reported Eurostat whose assessment included companies with over 10 employees. 17.2% average unemployment rate On the basis of the International Labour Organisation (ILO) methodology, the Central Bureau for Statistics (DZS) conducts a survey regarding the work force. According to the survey results, the unemployment rate increased during the third quarter of last year compared with the second quarter. The unemployment rate was 17.5% compared with 16.5% in the third. Considering the negative economic movements and the increasing number of unemployed throughout 2013, the average ILO unemployment rate is 17.2%. Podravka – top food brand
Research of the Best Buy Award shows that regional spenders value Podravka’s food products the highest. Podravka’s products are the most popular products in Serbia, Bosnia and Herzegovina, Slovenia and Croatia, offering the best price/quality ratio. Besides being a top brand, their products often come second or third in the researched categories.
Is excess fleet capa the shipping compa
In the forthcoming period, we anticipate market stagnation for crude oil transport and tra Jozo Vrdoljak roatian shipping companies who are members of the Mare Nostrum Association, owned 142 ships last year, mainly ferries (41), since Jadrolinija and other liner shipping companies are members of the that association. The fleet also includes 35 bulk carriers, 21 carrier ships, 7 platform suppliers, 7 product carriers, 9 catamarans, 5 crude carriers, 2 heavy cargo ships, 2 general cargo ships, 3 passenger ships and 10 other ships. Their total capacity is over 2.9 million DWT (deadweight tonnes – total ship capacity in tons) or 1.75 million GT (gross tonnes – measuring unit
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The increasing number of ship construction orders points to a slight recovery, but the depression continues of the volume of total enclosed ship space). The highest share of total capacity relates to the bulk carriers (61.4%). In relation to 2012, last year the fleet decreased by 14 ships; however, the shipping companies took over two ships at the same time. Last year one of the most reputable Croatian shipping companies shut down. Lošinjska plovidba – Brodarstvo lost its ships and closed after 55 years of production. Furthermore, the last ship of their fleet (Maja) was sold in 2013. In the past, over 120 ships sailed for the Lošinjska plovidba fleet.
Regarding the fleet of the Mare Nostrum members, 119 ships sailed under the Croatian flag last year, 8 under the flag of the Marshall Islands, 7 under the Maltese flag, 3 under the flag of the Bahamas, 2 under the Venezuelan flag and 2 under the flag of Luxembourg, and 1 sailed under the Norwegian flag. A difficult year Board President of Tankerska plovidba from Zadar, Mario Pavić, reveals that the average age of their fleet is 6.5 years. “Another difficult year is behind us, during which we managed to sell three ships, so the positive final balance for 2013 with a profit of €4.9 million is mainly due to the ships sold”, Pavić notes. “In the forthcoming period, we anticipate market stagnation for crude oil transport and the transport of dry cargo
but mild growth for the transport of oil derivatives. We were ready for the crisis, and minimised our business expenditure. Furthermore, we anticipate the market will recover during the next two or three years. We will do all it takes to welcome a market recovery with a fleet no smaller than that at present, Pavić highlighted. Concerning new construction, Tankerska plovidba has a product carrier in the Korean shipyard SPP – an MR tanker for transporting derivatives and chemicals with a capacity of 50,300 tons, to be delivered in September 2015. Global market The global fleet exceeded a capacity of 1 billion tons in 2006, and in 2012 it exceeded 1.6 billion tons, which means capacity increased 60%. This excess represents a problem to the market
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( over 2.9 million DWTT total capacity of entire fleet
acity on the market a sign anies are forgetful
ansport of dry cargo but mild growth for the transport of oil derivatives Roje: Depression is a normal state, and boom an exception
Captain Ante Roje, who was once the leading man of the successful Jadroplov, points out that vast experience is required for managing a shipping company, as well as knowledge of history and constant monitoring of the conditions on the world market for marine transport. It is necessary to monitor the orders of ships and only then make the necessary moves. Even though no one actually knows what will happen on the market in a year or two, such experience and knowledge helps to decide when to commission a construction, when to dispose of tonnage and how to conclude contracts considering the price of the freight. “I always like to say depression is a normal state, and a boom is an exception. This has been proven correct recently, since the depression has been longer and stronger, and the boom, except the last one, was short. For example, we have a case concerning a ship built in 1985. It cost $20 million and was sold for $40 million in 2007. This means it was used for 12 years and its owner earned twice as much when it was sold. Concerning freight charges, we have seen that some shipping companies concluded contracts even at negative freight rates. China has around 1,650 shipyards, and not even 40 of them received new orders last year, which is why they are seriously considering reducing shipyard capacity by 30%, Captain Roje explains. and everyone wonders how it can be solved. Current market conditions lasted too long, almost seven years, says one of the top Croatian experts in global market conditions of the marine transport, Captain Ante Roje. However, a drastic freight fall followed, leading to a still present depression. The increasing orders for ships points to a slight recovery, but the depression continues. The number of orders increased around 40% in relation to the same period last year. This means the ships are being ordered, but freight prices are still increasing, depending on the ship type, Roje pointed out. The fact is that the ships built today are gigantic, with a capacity of 19,000 containers, Roje continues. These ships are giants. By using such monsters, the shipping companies wanted
to reduce freight costs by $10 per ton. However, China decided it would not weigh these ships in their ports. This forced the owners of these giant ships to turn to berths outside China and transfer their cargo to smaller vessels. What is interesting is that some of these vessels were actually built in Chinese shipyards. As a result, freight costs were reduced by only $5 per ton; marine transport is in fact mainly linked with China, and the Greeks are one of the most skilful transporters since they ship over half of total Chinese cargo, Captain Roje explains. The fact is there is an evident fleet excess on the market, and according to Roje it is only logical to ask whether shipping companies tend to forget. This might be true, since the banks supporting the shipping companies often change the people
responsible for lending on ships. For example, a bank that was an expert in marine transport affairs was left with $40 million of risky loans in 2008, Roje revealed. Croatian shipping companies Captain Roje notes that Croatian shipping companies do not play a significant role globally: many of them perished, especially liner shipping companies. Those who have survived now work for larger global companies and in most cases rent out their ships. But this was not easy to do 25 years ago. At the beginning of the 1990’s the fleet consisted of 200 merchant ships. Today, 20 years later, the number of ships has fallen to 100. Croatian shipping companies accounted for almost 70% of the cargo fleet and over
90% of the passenger fleet of former Yugoslavia. In 1990 the merchant navy of Yugoslavia, whose fleet was mainly Croatian, ranked 27 on Lloyd’s list of developed marine countries. Croatian companies had a large market in Yugoslavia and the Yugoslavian bank for international and economic co-operation and support. A bank like this one does not exist today. The Croatian Bank for Reconstruction and Development does not have the related financing – the ships are too expensive for the bank to be able to support them, Roje opines. He claims that marine transport will be affected next year when the Panama Canal opens. With an investment of $2.5 billion, the Canal will enable the passage of ships twice the size of current ones, and this will additionally affect the price of freight.
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Privred vjesnik Privredni VII No 235 Year V
( 815 companies
adopted the Code of Ethics in Business Activities
CORPORATE SOCIAL RESPONSIBILITY
New ethics goes beyond development
Socially responsible companies are those aiming to conserve the planet and promote the health of people, while creat Corporate Social Responsibility Index award is a joint initiative of the Croatian Chamber of Economy and the Croatian Business Council for Sustainable Development, and its methodology provides a comprehensive insight into socially responsible business practices and their comparison with the results achieved by other companies in Croatia.
Drago Živković orporate Social Responsibility is a broad concept that includes sustainable development and environmental protection, as well as philanthropy and different approaches to human asset management. According to Ivo Josipović, President of Croatia, corporate social responsibility also encompasses new ethics adopted by the entire community as well as the responsible relationships of
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Standards of environmental protection and new employment are not mutually exclusive business activities with the community, as he pointed out during the opening of the Fifth National Conference on Corporate Social Responsibility organised by the Croatian Business Council for Sustainable Development. As stated by Mirjana Matešić, Managing Director of the Croatian Business Council for Sustainable Development, 89 companies participated in the conference and several companies received awards for CSR in accordance with the Corporate Social Responsibility Index. The number of small companies has been rising, yet the number of public companies is currently still insignificant. This year, 8 companies were granted awarded, compared with 13 in 2013. The
JGL: child training and beach clean-up According to the Rijeka-based JGL, which won a Corporate Social Responsibility Index award, the relationship with the community is one of the high priority area of interest in sustainability. 1,000 pupils from the Rijeka and Kvarner region participated in child training on the importance of preservation and protection of the Adriatic seabed provided by JGL. In addition, JGL is also aiming to raise environmental awareness amongst its employees through regular beach clean-up. Against the backdrop of the current recession, JGL has doubled its total revenue, simultaneously expanding its portfolio to almost 100 brands, 540 products and 1,100 variations. The company employs 660 staff, operates in 40 global markets with exports accounting for 77% of its sales. Following the completion of its Pharma Valley facilities near Rijeka, worth €45 million, JGL will double its capacity, and ensure development over the next decade.
People, Profit, Planet The Croatian Chamber of Economy has been participating in the promotion of Corporate Social Responsibility in all its activities and has consequently established the Corporate Social Responsibility Society. The Code of Ethics in Business Activities, adopted by the Assembly of the Croatian Chamber of Economy, has thus far been adopted and signed by 815 companies; Vesna Trnokop Tanta, Vice-President of the Croatian Chamber of Economy, invited all those in compliance with the principles of CSR to join the signatories of the Code. Holland is often cited as an example for other countries to follow, due to its being a country that has raised Corporate Social Responsibility to the level of national policy. Stella Ronner Grubačić, the Dutch Ambassador in Zagreb, emphasised that in her country, CSR has three pillars: people, profit and the planet, which implies that socially responsible companies are those striving to conserve the planet, promote the health of people, as
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( 20 million people
employed in the green economy in the EU
sustainable
EUROCHAMBRES PROPOSAL TO THE EUROPEAN COMMISSION
Economic Chambers system an imperative for strengthening economic diplomacy
ting profit well as generating profit. Standards of environmental protection and new employment are not in opposition to each other, according to Hrvoje Dokoza, Deputy Minister of Environmental and Nature Protection. According to data provided by Dokoza, the green economy and related companies currently employ 20 million staff in the European Union, showing that environmental protection is a vital investment into the future, he reiterated. Corporate Social Responsibility Strategy The government is currently preparing a CSR strategy, as announced by Gordan Maras, Minister of Entrepreneurship and Crafts, who promised that business activities in compliance with the Corporate Social Responsibility Strategy would be encouraged by laws and other regulations. Notwithstanding the fact that only 24% of the general public in Croatia has positively assessed social responsibility in Croatian companies, Maras has expressed his utmost satisfaction with the fact that mainly small businesses have been assessed positively. President Josipović also stressed that the doctrine of Corporate Social Responsibility needs to be encouraged by the government both through the regulatory framework and through a wide range of motivational mechanisms, enabling those who are socially responsible to strengthen their position. In addition to attending the awards ceremony for the most
Corporate Social Responsibility Index award winners • Large companies: Jadran Galenski Laboratory • Medium-sized companies: Hartmann • Small companies: Euro-Unit • Public companies: Flora VTC • The biggest advancement: DM- drogerie markt • Responsible policies and responsible workplace practices: Hauska & Partner • Responsible policies and environmental management practices: Ledo • Responsible community relations: Končar Electrical Engineering Institute socially responsible companies, a large number of conference participants had the opportunity to get acquainted with the experiences of Holland presented by Bernadine Bos, Director of the Department for National Bodies and Sectors at the National Centre for Knowledge and Networking for Corporate Social Responsibility in Holland. Elaine Cohen, from Great Britain, gave a lecture on the interrelatedness between CSR and human asset management. Moreover, she moderated a roundtable discussion on the topic, with Leo Hauska pointing out the adoption of G4 sustainability reporting guidelines issued by the Global Reporting Initiative and currently adopted by over 4,000 organisations in 60 countries globally.
conomic Chambers have a fundamental role in the development of the internationalisation of business acitivities of private companies, which results in accelerated growth for the markets of developing countries, pointed out Eurochambres, the Association of European Economic Chambers Eurochambres proposed to the European Commission “to take a comprehensive and integrated approach in order to include the development of the private sector into the context of strengthening European economic diplomacy”. Eurochambres expects the European Commission to support the creation of a unique pan-European initiative that will network existing structures or associations. European companies are generally partners with Croatian companies, primarily to small and medium-sized companies. They require additional support for the transfer of technology and knowhow, as well as for the construction of new facilities. In addition to an expansion of business activity, local companies will be included in global business chains. According to Eurochambres, such initiatives will result in stimulating the business environment and will substantially strengthen the private sector, consequently leading to long-term sustainable growth. The importance of experience and the capacities of the network of Economic Chambers in fostering such local gatherings, need to be highlighted and included in European initiatives, according to the viewpoint submitted to the European Commission.
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Promotion of entrepreneurship Eurochambres highlights that Economic Chambers currently operate according to specific established models for dealing with activities in global markets. Moreover, the awareness of the European Commission needs to be raised concerning the fact that Economic Chambers provide assistance to small and mediumsized companies in the organisation of their participation at international fairs. In addition, they organise business forums to bring together representatives of a large number of companies from diverse countries. They meet foreign business delegations, advising them of business conditions on local markets. Entrepreneurs are also advised about business prospects and economic initiatives in other countries, through journals and other publications by Economic Chambers. Furthermore, Eurochambres pointed out that Economic Chambers assist in providing information on availability of financial services. Eurochambres has thus invited the European Commission to support their activities. Experts at the Croatian Chamber of Economy participated in the formulation of the proposal. As reiterated several times, the Croatian Chamber of Economy strongly supports the implementation of this attitude at the national level within Croatia, in terms of the creation of a sustainable system of economic diplomacy, fundamental for the encouragement of export and the internationalisation of business activities of local companies. (I.V.)
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Privredni vjesnik Year VII No 235
( €85 billion
invested in 3,980 projects by the Bank since 1991
VEDRANA JELUŠIĆ KAŠIĆ, DIRECTOR OF EBRD, CROATIA
For each Euro invested b invested by other investo
The EBRD has invested over €2.9 billion in Croatia covering 156 diverse projects and they are often able to mobilise n Krešimir Sočković he European Bank for Reconstruction and Development is an international financial institution owned by 64 countries and 2 inter-governmental institutions, and founded in 1991. Its founders aimed to promote market-oriented economies and private entrepreneurship initiatives, and have to date invested €85 billion in 3,980 projects in 34 countries. Privredni vjesnik talked with Vedrana Jelušić Kašić, EBRD Director, Croatia, on the development of the relationship between the Bank and local and international business communities in an area spanning Central Europe to Central Asia.
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Under which conditions does EBRD invest globally? EBRD provides a wide array of financial instruments and has a flexible approach to the structuring of its financial products. Projects are approached on an individual basis, involving a team of experts for project financing, as well as for specific sectoral, legal and environmental issues. The amounts vary significantly, yet the average value stands at €25 million. Minor projects are often financed through credit lines via commercial banks or special programmes for minor direct investment. EBRD investment is normally in accordance with three fundamental principles: a project needs to have a specific positive impact on the transition of the country; it needs to be complementary to the financing of commercial banks and to com-
ply with standard commercial principles of financing. Where standard principles of financing have not been complied with, project success and its positive impact on economy are highly dubious. In addition to the financing of local companies, the
Investment in the private sector accounts for almost 70% of the total EBRD portfolio Bank encourages foreign direct investment, primarily strategic investment, since its impact on economic recovery is substantial and also contributes its strategic expertise. In addition, the Bank often acts as a catalyst, attracting additional funding and expanding access to capital. Normally, for each Euro invested by us, €2.5 are invested by other investors and/or financial institutions. Moreover, we are often in the position to mobilise non-repayable funding for technical support intended for assistance in project implementation. We have mobilised over €30 million of funding for technical support in Croatia thus far. To what extent is EBRD considered to be a bank and to what extent an institution? EBRD is primarily a bank whose principal activity is the financing of sustainable companies and projects, contributing to the development of transition of the
countries in which it operates, and the enhancement of competitiveness of companies and of some aspects of institutional framework. Irrespective of the fact that the Bank operates in accordance with rigid banking principles, operating profit is reinvested in new projects. EBRD is the largest individual investor in Central and Eastern Europe and in Central Asia. Against the backdrop of the crisis, the requirements for financing provided by international financial institutions have risen substantially consequently achieving the
initiative for economic growth in South-Eastern Europe by the international financial institutions IFC and EBRD which made a commitment to invest €4 billion. The progress achieved has been excellent and €2.5 billion was invested by July 2013. How and to what extent has EBRD invested in the Croatian economy thus far? The EBRD has invested over €2.9 billion in 156 diverse projects in Croatia to date. The activities of the Bank cover all economic sectors with a principal
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( some €288 million invested in Croatia by EBRD in 2013
by us, €2.5 are rs on-repayable funding for technical support. Over €30 million of such funding has been mobilised in Croatia thus far financing can include Croatian companies interested in this type of investment. The structure of financing substantially reflects demand and conditions on the market. Investment in efficiency, both operational and financial, is increasingly financed, aiming to foster competitiveness, primarily currently when Croatia is an EU member state and against the backdrop of weak demand.
focus on infrastructure, corporate, financial and energy sectors. The structure of the current bank portfolio according to sectors is diverse, including investment in infrastructure (33%), corporate sector (25%), financial sector (33%) and investment in energy and resources (10%), where investment in the private sector accounts for almost 70% of the total portfolio. In 2013, we invested around €288 million in Croatia, supporting 19 individual investments. 2013 saw five regional equity funds amongst the approved project proposals whose
Which economic sectors in Croatia is EBRD interested to invest in, in the near future? There is huge potential, and hence the Bank will proceed with investment in several sectors. The three year strategy of the Bank for Croatia, approved in June 2013, anticipates three principal areas of bank activity: the financing of sustainable development in the corporate sector, whether directly or through commercial banks, co-financing of projects along with EU funding, and we also aim to provide support to the further restructuring of public companies aiming to increase competitiveness.
Transport, tourism and energy sectors are attracting investors as a result of the competitive advantages of Croatia, primarily due to her geographical position. The Croatian food industry has developed brands that require strengthening and support for their regional expansion, and in the new member states of the EU that are acquainted with our market and have confidence in the quality of our products. The Bank supports the development of renewable energy sources, and is striving to implement an integrated approach to this sector. Consequently, one of our specific objectives is the provision of support to the sustainable energy sector according to requirements, through investment in industrial effectiveness and insurance of financial resources for projects in renewable energy sources. Are business activities in this region changing, and in what way? Business activities are definitely being modernised and the level of transition is most commonly
Croatia as a trade hub Croatia is a new member state of the European Union, a link between north and south, as well as between east and west, and a centre for cross-border trade in all directions. Her geographical position and EU membership, as well as her understanding of the countries in the Western Balkans are the fundamentals of an economic platform that requires further development in order to attract new investment and encourage a vigorous trade in goods and services. Croatia is currently witnessing an increase of interest from investors that I hope will be recognised and exploited to the fullest extent. Investors are showing interest in a large number of sectors including energy, infrastructure development and tourism. Moreover, there is a special interest in the development of seaports and inland waterways.
linked with economic development. We can express our utmost satisfaction with the corporate governance of the Atlantic Group, which has this year introduced a report on socially responsible corporate governance. We hope other companies will follow suit. Focus on sustainable development, primarily on supply chains, is one of the fundamental guidelines of the UK Corporate Governance Code. In what way can Croatian and regional companies be compared with companies in the west? The comparison would involve a vast array of companies. The fact that companies had to grow and develop over a short period of time is specific to the region. Their growth and development normally included mergers and acquisitions, resulting in excessively complex and undefined organisational structures, as well as governance models that were often inadequate within the severe crisis. There is immense potential for advancement primarily in the improvement of standards of corporate governance, risk management and cost-effectiveness. Two issues are of vital importance for the countries in the region aiming to tackle the current transitional hiatus: firstly, the achievement of a political consensus according to which economic interests will assume primary importance; secondly, addressing resistance to foreign investment, since foreign investment is currently an imperative and crucial for economic recovery.
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Privredni vjesnik Year VII No 235
( 95 projects
in different completion phases
( 12,500 new jobs available if the projects are completed
REGIONAL BIZNIS PLUS
Preparation of €6.27 billion of projects A large-sized company cannot create a small-sized one and apply for EU funds since all employees and all income of the related companies are considered Drago Živković he Agency for Investment and Competitiveness is currently monitoring 95 projects in different completion phases with total value of around €6.27 billion, and if all projects are completed, 12,500 new jobs will be available, revealed Melida Ivković from the Agency during the recently held Biznis plus club in Zagreb. A further 36 projects could be added for which the Agency is searching for stra-
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through HAMAG Invest and the
Zlatko Canjuga sees great business potential in the recycling industry tegic partners. Their total value is €0.9 billion, with anticipated employment of 700 workers. A total of 15 projects were nominated for the strategic investment status, 10 private and 5 public. This entire list of investment projects should be updated with investments monitored separately
Centre for Monitoring Business Activities in the Energy Sector and Investment. Melida Ivković pointed out the Agency sees no difference between foreign and local investors, although they do rely more on the foreign ones. These investors include Hamburger Recycling Ens (paper industry), whose Managing Director, Zlatko Canjuga, wishes for slightly greater tax relief for the industry in order to stimulate new investment. Mr. Canjuga sees
great business potential in the recycling industry and regards excessive interest rates and bank reluctance to share the risk with the entrepreneurs as the biggest obstacles. Each company counts The last obstacle could be overcome with help from EU funds, which could provide around €1 billion for Croatian SME’s, according to Ružica Gelo, Director of the Centre for EU with the Croatian Chamber of Economy. Around one third of this money
could be allocated directly to entrepreneurs. However, the size criteria of companies, which also include owner related companies, should be kept in mind, warns Ružica Gelo. Therefore, a large-sized company cannot create a small-sized one and apply for funds, since all employees and all income from the related companies are considered. The Director of the Central Finance and Contracting Agency, Nataša Mikuš Žigman, advises entrepreneurs to seek helps from consultants, not by handing them the entire documentation and leaving the entire project in their hands, but by being constantly included in the preparation of the projects, otherwise they will have great problems during their implementation. Concerning the implementation of the projects, Chief Executive of Plavi partner Marija Tufekčić warns the monitoring procedure of EU funds use last four, five or even seven years after the signing of the contract. Therefore, spending should be wise.
AGROKOR EMPLOYS YOUNG PEOPLE
265 workers employed New employees will receive salaries and have all other related rights as other employees in Agrokor The Agrokor conglomerate has recently employed a further group of young people who will now acquire initial work experience. After the successful selection procedure, Agrokor employed the first group of 265 people in March, selecting them from a total of 16,500 applicants. The employment procedure will continue under the same conditions in April and May, with the possibility of concluding work contracts
after a three-month trial period in Agrokor companies Konzum, Jamnica, Ledo, Zvijezda, PIK Vrbovec and PIK Vinkovci. The new employees will receive salaries and have all other related rights as other employees of the Agrokor Consortium. In the first employment cycle, conducted three years ago, the concept generated great interest, attracting over 15,000 candidates. A total of 1,000 people were employed for a period of three months, after
which 400 obtained permanent positions. In addition to regular and continuous employment, the Agrokor conglomerate also promotes additional activities related to work and work experience of young people of various educational backgrounds. Agrokor highlight they will invest around €0.2 billion in financing various development projects during 2014. Considering the ambitious development vision and business ambitions of this consortium, the
employment process will continue during the forthcoming period. (S.P.)
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1111
( 0.7% drop in GDP
in 2014 anticipated by Hypo Alpe-Adria-Bank
( 0.5%
anticipated inflation ratee
Macroeconomic Outlook 2014-2015
::: news
Stojić: Another year of recession Poor Croatian exports partly due to the absence of foreign investment in those areas providing products which are easily exported, pointed out the Director of Economic Research Department at Hypo Bank Igor Vukić roatia will see another year of recession with a 0.7% drop in GDP, according to Hrvoje Stojić, Director of Economic Research Department at Hypo Bank. During his presentation of the publication Macroeconomic Outlook 2014-2015, Stojić emphasised that pressures exerted by the recession will be the result of fiscal consolidation in the European Union, a hollowing-out of the private sector and increasing unemployment. “Personal con-
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Stojić expects another budget revision in mid2014 sumption will be affected by the rationalisation of specific social rights, corporate restructuring followed by redundancies and hardship to the general public”, stated Stojić. Limited lending Bank lending will be limited as a result of a large number of PreBankruptcy Settlement Agreements. More expensive loans may be due to a reduced credit rating, and hence Stojić does not anticipate any imminent recovery in investment. Public investment will decrease as a result of aiming to meet European requirements. Nevertheless, recovery in public investment will result in an increase in imports, since many components of investment projects originate outside Croatia. According to Hypo Bank analysts, 2014 will see a slight recovery in exports over 2013, as a result of demand recovery in the Eurozone and in those countries with whom Croatian
companies primarily co-operate. Vigorous structural reforms are vital for any recovery, according to Stojić. Croatia lags behind other similar countries; labour costs are still unchanged at high levels, and thus the Croatian market remains uncompetitive. Regrettably, the plan to replace health insurance contributions with a property tax was abandoned. A comprehensive reform of public administration is fundamental, as well as the speeding-up of PreBankruptcy Settlement Agreements and a reform to labour legislation. Moreover, an internal devaluation or a slowdown in wage growth in order to harmonise labour costs with competitiveness is crucial. According to Stojić, the annual inflation rate will stand on the brink of deflation by autumn, only to gradually increase reaching 2% by the end of the year. Year-on-year inflation is expected to hover around 0.5%. Exports have also been weakened, because a large number of companies have relocated to countries to the east to overcome Croatian CEFTA exit. Exports and industrial production are currently still greatly affected by privatisation in the shipbuilding sector. “Poor Croatian exports are partly due to a lack of foreign investment in those sectors providing products which are easily exported”, pointed out Stojić.
Public debt – exceeding 80% of GDP It is anticipated that the kuna will see a slight weakening by the end of the year, yet within the restrictions set by the Croatian National Bank, since the Croatian National Bank is provided with tools allowing it to regulate any monetary pressure. Notwithstanding the considerable liquidity in the system, it is anticipated 2014 will see merely a slight rise in corporate lending due to weak demand. Company’s lack assets they can use as collateral for loan repayment. Moreover, demand for retail lending is also weak and it is anticipated the retail sector will not see any significant growth. Stojić believes mid-2014 will see another revision of the state budget. He assessed the monitoring by the EU over public finances as positive. At the end of the year, the budget deficit is likely to reach 6% of GDP, due to currently unreported expenditure of the reconstruction of the railways. Consequently, it is anticipated that public debt (with state guarantees and debt from the Croatian Bank for Reconstruction and Development (HBOR) will exceed 80% of GDP. Irrespective of the slight slow-down in its growth, external debt is expected to stand at 107.6% of GDP. Vigorous reform is the prerequisite against a dire scenario, concluded Stojić.
Rationalisation of expense and savings accounts A year ago, Zagrebačka bank provided its clients, users of ezaba, with a financial planner – an internet service aimed at assisting clients with personal financial management. Over 40% of Zaba clients who have opted for this service were provided with various types of savings accounts in order to meet their requirements for long-term stable personal financial management. Consequently, 2013 saw a continuous increase in term deposit savings via e-zaba, and the value of such term deposits was 31% up over 2012. GRAWE Croatia – a surge in profits The insurance company GRAWE Croatia has announced its results for the fiscal year ended 31st December 2013. Profit before tax stood at €6.6 million, which was almost 25% up in relation to 2012. The total gross written premiums for 2013 stood at €51.5 million, 0.5% up, with total earned premiums in 2013 being €45.7 million. Croatian Postal Bank (HPB) launches short-term tourism loans
In March 2014, the Croatian Postal Bank launched short-term loans intended for entrepreneurs as preparation for the peak tourist season – for companies, artisans and other legal persons engaged in a registered tourism-related activity. The loans are in local currency with or without a currency clause, and Euro loans up to €0.13 million at an interest rate of 6.99%. The funding may be used for the purchase of goods and services during the pre-season preparatory stage.
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Privredni vjesnik Year VII No 235
( 100 years
lifespan of Era furniture
NEW CROATIAN FURNITURE BRAND
New Era begins Solid wood furniture has a long lifespan, and is recyclable panels. The use of hazardous substances is avoided in the production of eco-furniture; almost every piece of wood is used and recyclable processed material is utilised.
Sanja Plješa he production of wood furniture is becoming a popular trend in the global furniture industry. Croatia is abundant in wood resources, so a group of Croatian furniture producers decided to launch a pioneer venture and create the first Croatian brand of eco-furniture – Era. It is characterised by high quality, eco-design and a long warranty period. What does that actually mean? The term ecodesign has penetrated all life spheres, becoming increasingly common in the products we use. It is therefore only logical that furniture should be the next step. With its appearance related to natural materials and production system, Era furniture introduces new values in all areas, Tatjana Kos from Era Group said. So far, furniture producers DI Novoselec, Drvostil, Efektiv, Finvest, Lapibus, Lumimaks, Ravna and Slavonija DI have joined the Era Project, and ten other Croatian producers of fur-
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niture and related equipment are interested in joining the project. Besides oak, ash and hornbeam will be used in the production of eco-furniture as well as other types of wood. Nature friendly furniture Even though it sounds slightly absurd, solid wood furniture is eco-friendly. The explanation is simple – such furniture is longlasting; it is made of wood obtained from planned forest cutting in order to make room for growing new trees, and most importantly, it is recyclable in case we become bored with it, Tatjana Kos highlighted. The first showroom where one can see and buy eco-design furniture has been recently opened in Altos studio in Solidum Centre in Zagreb. Some forty pieces have been made so far. After Zagreb, more showrooms will open in Rijeka, Split and Dubrovnik. The concept of eco-design was developed in 2010 when the company Hrvatski interijeri invited students from the School of Design
with the Faculty of Architecture to co-operate with certain furniture producers in order to design wood furniture in a unique and innovative way. The furniture industry uses various types of material, from wood panels, plastic and metal, when in fact solid wood is used
The concept of ecodesign was developed in 2010 in co-operation with design students and furniture producers rarely. High-gloss furniture had been popular until recently, and it is made of refined chipboard and multiple coated materials. However, varnish and glue are hazardous to the environment and health. It is a little known fact that the most common polluter released from furniture is formaldehyde – a colourless gas released by glue used for binding plywood, chipboard and
Vegetable oil instead of varnish Unfortunately, an eco-friendly varnish for coating wood furniture does not exist. Instead, it is coated with vegetable oil in compliance with ecological standards. The materials used in the production of eco-furniture guarantee durability, and the ultimate goal is that their repair and restoration is cost-effective, Tatjana Kos highlighted. However, the question is whether Croatian customers will be interested in eco-furniture. Tatjana Kos says politics in Europe defines the path of furniture production. Eco-furniture has been produced in European countries for 20 years, and its price is not that high any more. Furthermore, the furniture is labelled with ecolabels guaranteeing compliance with the related standards and norms. Romina Radović from the Croatian Designers Society explains that not every piece of wood furniture is ecological. The lifespan of the product is monitored from production to sales only in the production of eco-furniture. Era furniture is guarantee to last 100 years, designed never to go out of style, Tatjana Kos pointed out. Young eco-furniture designers and the creator of Era’s name and logo, Mario Dobrečević, added that each piece of furniture will carry the name of its designer, guaranteeing the product is not a copy.
www.privredni.hr Business & Finance Weekly
( 75 staff
13
employed in machine processing
( 12 ships
under construction for nautical tourism m
BRODOSPLIT INVOLVED IN OTHER DIVERSE ACTIVITIES
Many new and different jobs guaranteeing employment The company has created a large number of narrowly specialised companies operating within the group by the provision of services at competitive prices (machine processing) and Stroj (machine) who can be transferred into other departments of the shipyard depending on current requirements. Similarly, Brodosplit – Strojna obrada also uses staff from other companies within the group to meet its current requirements. “We were able to provide design engineering services, high quality machine processing, painting and various types of testing under extreme circumstances for the Lagena company. We have acquired invaluable experience during the implementation of these projects, and anticipate many new orders
Jozo Vrdoljak gainst the backdrop of severe crisis in the shipbuilding sector and following the example of German shipyards, Brodosplit Management Board decided to explore its full potential and start involvement in other diverse activities and additionally involve its design engineers. The first project was implemented in co-operation with Tromont for the construction of wind power plants for the company Acciona. Consequently, a large number of projects followed, presenting a challenge for both design engineers and other staff. Subsequently, the company created a “fleet” of narrowly specialised companies operating within the group, by the provision of services at competitive prices. A sub-sea pipeline jack has recently been delivered to the Brač-based company Lagena, which, according to Darko Pappa, Board President of Brodosplit, is a breakthrough for the company towards offshore markets and projects involving production of underwater exploration equipment. Moreover, eight silos have been delivered for cement factories in a joint project between Brodosplit and Zagreb MontažaVikom, for a German client. In addition, three hot-gas generators (gas tanks) were delivered to the Austrian company Atec Greco. Brodosplit is currently working on the corrugation of sheet metal and providing diverse services for floating cranes and the assembly of gantry cranes, to name a few recent activities.
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Involvement in new activities Several Brodosplit activities need to be highlighted: the construction of 12 ships for nautical tourism, the production of hulls and superstructures for local clients, the construction of the world’s largest vertical hot gas generator using coal and the start of construction of a port rotating gantry crane of the Kranich 3000 type. All in all, it may be said that Brodosplit is currently focusing primarily on other diverse activities. Furthermore, it is planning the construction of two heavy lifts, each equipped with two cranes whose individual loadbearing capacity is a maximum 1,300 tonnes. In addition, the company has received orders for five three-masted sailing ships and is currently constructing a luxury motor yacht, the largest in Croatia, as well as a river cruiser and two container ships. Additionally, the company is working on a project to produce an anchor windlass 6.5 metres in diameter used in oil
industry in co-operation with the Adria Vinch company. Employee satisfaction increasing Mirzad Talić, Director of the recently founded company Brodosplit – Strojna obrada, believes the experience of construction of submarine pipeline jacks is significantly more valuable in relation to its financial impact as “Brodosplit has ventured into a previously unexplored area of business”. Talić emphasised the fact that employee satisfaction is also increasing significantly, as they are currently fully involved in diverse activities, whilst they were virtually unemployed until recently, irrespective of the fact that salaries were satisfactory even prior to current involvement. “They are full of hope for the future, which is fundamental”, he added. Brodosplit – Strojna obrada (machine processing) employs 75 staff allocated in two companies – Strojna obrada
Shipbuilding operations will not hamper the development of other activities will follow due to our involvement in these projects”, stressed Talić. Fear for the future The currently contracted work of Brodosplit implies full capacity throughout 2014 and several months of 2015. Nevertheless, fear and uncertainty are still present. There are hopes for the construction of large ships and rumours of forthcoming contracts for the construction of ships that Brodosplit once built, as well as the highly plausible construction of a passenger ship. Nevertheless, according to Darko Pappa, shipbuilding operations will not hamper the development of other activities.
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Privredni vjesnik Year VII No 235
NEW ENTREPRENEURIAL LOANS
The EIB has granted a €800 million loan to the Croatian Bank for Reconstruction and Development
New affordable loans will be available to Croatian small and medium-sized businesses in the near future. The European Investment Bank has recently granted a €800 million loan to the Croatian Bank for Reconstruction and Development (HBOR). Moreover, a contract on the first tranche of €400 million has recently been signed, of which €250 million will be used for the financing of SME’s and €150 million will be allocated to loans for projects of both public and private medium-sized com-
panies, primarily concerning investment in infrastructure, in projects based on know-how and environmental protection. Loan facilities will be combined with funding under Energy Efficiency Finance Facility that the European Commission intended for the upgrading of energy efficiency. “We provide loans for the projects of SME’s through the Croatian Bank for Reconstruction and Development (HBOR) under favourable conditions”, highlighted Dario Scannapieco, Vice-President of EIB. In 2013, the EIB provided €75.1 billion to boost the economy, an increase of 37% over 2012. The EIB financed projects worth around €633 million in Croatia in 2013. “The funding will be used to foster new investment and primarily the launch of new products and technologies. Such investment is imperative, whilst striving to increase the competitiveness of the Croatian economy and to boost exports”, stressed Anton Kovačev, Board President of HBOR.
DUKAT AND THE LACTEL LABEL
New product for distant markets
( €5 to €6.5 million
normal annual turnover for EUROModul
THE STORY OF THE BUSINESS SUCCESS OF THE B
In the midst of th was the best eve
After having waited nine years to obtain a construction licen two new large companies in Serbia within record deadlines Marin Rončević UROmodul is the leading producer of containers and urban equipment in Southeast Europe. The company was founded in Rijeka in 1900, where production was situated at the time in a 100m² factory. Their path to success was marked by many obstacles, but today the company represents a rare and positive example of a successful company that knew how to meet the demands of the market. At the start, we manufactured kiosks for selling baked goods, newspapers and tobacco as well as stands and bus shelters. With a successfully developed production programme and an innovative approach, together with the CEO, Dragutin
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Production in Croatia has not stopped with successful sales of goods to the East The Zagreb-based company Dukat presented its product range exported to 17 distant countries, following an investment of HRK6.6 million into production of its new long-life dairy desserts. Dukat yoghurts and dairy desserts are exported under the brand name of Lactel, a trademark of the Lactalis Group, owner of Dukat. The secret of its new product range was not revealed by Dukat, although Alen Fontana, its Managing Director, pointed out the fact that the new products do not contain additives. Nevertheless, the export of the new product range to more distant markets is primarily due to their long-life.
The new product range is produced exclusively to meet the requirements of distant markets and will not be sold locally. “We are currently focused primarily on meeting the requirements of clients in distant markets”, emphasised Goran Nidogon, Factory Manager of Dukat. He added that he anticipated Dukat exports of the new dairy desserts to such markets would range between 1,500 and 2,000 tonnes by the end of 2014. Dukat will also proceed on focusing on the development of new recipes and penetration to new markets in South America, China, the Middle East and countries in Asia and Africa. (S.P.)
Babić, we also developed custommade projects in addition to our standard production programme. The production line has remained the same over the years, although updated with new product designs, Igor Babić said, one of the representatives of the three generations of co-owners and a Board Member. Goal: Eastern market The market was the first problem. It was difficult to place the products due to the war in Croatia, but it was evident from the very beginning that EUROmodul would become a market leader through
its dedication and hard work. With their development and approach to new markets, EUROmodul made their first greenfield investment in 2006. They built a factory near Beograd with the goal of selling their products to Russia, Kazakhstan, Belarus, Ukraine and other more eastern countries. The greatest benefit of working between Serbia and Russia was the duty free treatment, which made products more competitive than those of other producers. After having achieved good business results and sales at a global level in 2013, EUROmodul invested in a further factory with 200m long production areas covering over 13 hectares. Today, EUROmodul operates with one factory in Croatia and two in Serbia, with 140 employees in total, Karlo Babić added, a third generation leader of this
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15
( 90% of total income from exports
BABIĆ FAMILY AND THEIR COMPANY EUROMODUL FROM RIJEKA
e crisis, our business year 2013 er with €13.1 million earned
nse to expand our factory we simply gave up, becoming too tired with bureaucracy. What did we do? We founded 30 workers in ten months after having purchased the land. Serbia is a country that supports production, offering various types of relief to the producer-entrepreneur since it recognises its own interest – the foundation of a healthy society. What are the advantages and what is different between the production in Croatia and Serbia? Actually, it is sufficient to mention that products produced in Serbia are more competitive on foreign markets since labour costs are lower, contributions and salaries are lower and fiscal duties do not exist. Furthermore, the product quality is the same, which our references and projects confirm, Babić explains.
successful family company. The company managed to sustain the crisis with a proactive business model and exports. Moreover, during the peak of the crisis in Croatia, EUROmodul achieved its best results; annual turnover ranged between €5.2 million and €6.5 million. During the global crisis, EUROmodul had a record 2013, with some €13.1 million in income. This result is mainly due to our project in Moscow for which EUROmodul in Serbia produced 200 units of prefabricated independent public sanitary facilities, with a vacuum system, and tanks for drinking and waste water. The negotiations for additional products for the same project in Moscow are in progress. Still in Croatia Production in Croatia did not cease with the successful ex-
ports to the East. The opening of eastern market stimulated EUROmodul Croatia to orientate itself towards Western European markets and the production of high-quality goods for the most demanding customers. The new system of prefabricated facilities, named Premium, a high-efficiency energy modular facility with a high thermo-insulation level, are becoming more popular in Switzerland, and we are extremely satisfied with our sales. This was our first major Premium project of modular construction in Switzerland, and by the end of 2013, we constructed the Premium modules and transported them to Zürich, where we assembled them for the needs of a nursing home. The project was worth €0.2 million, Igor Babić says. Notwithstanding, their story cannot be that much different
from the stories and problems of others. Bureaucracy is an old problem of the Croatian economy and society, and we are no exception. We are fighting bureaucracy just as many other companies do. After having waited nine years for a construction licence to expand our plant and create new jobs, we simply gave up and became too tired. What did we do? We founded two new large factories in Serbia within record deadlines and no bureaucratic obstacles. We also employed 70-80 new workers, and the number is rising, depending on the project, Igor Babić notes. It is a known fact production is the foundation of every successful society. I will mention some examples: in Nova Pazova we managed to build and commission a factory as well as employ
Quality and design for success Foreign markets, especially Germany and Switzerland, do not tolerate poor and unskilfully made products. We are proud to say the present level of exports of EUROmodul factories totals 90% of all income. Our quality and design has been recognised by world designers and architects in a panel that in the categories for Reddot 2010 Awards and iF Product Design Awards 2011 awarded the founder of the EUROmodul design studio Karlo Babić, Igor Babić added. Concerning operations on the Croatian market, the Babić family finds high entrepreneurial levies as one of the biggest problems, in addition to complex and slow bureaucracy. If we did not have our factories in Serbia, we would never be competitive, nor would we be able to sell our products in some European and eastern countries, the Babić concluded.
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Privredni vjesnik Year VII No 235
( over €1 million
to be invested in Janković Chancery renovation
HUGE POTENTIAL FOR TOURISM DEVELOPMENT AND CREATION OF NEW JOBS
A country of dilapidated castles With the exception of castles of Trakošćan, Veliki Tabor and Bežanec, most of the 1,300 Croatian castles and chanceries have been devastated, but many will be renovated through EU funding Sanja Plješa roatia is known as a country of 1,000 islands, but it is also a country of over 1,300 castles and chanceries, most of which are dilapidated, with the exception of the castles at Trakošćan, Veliki Tabor and Bežanec.
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There are a dozen dilapidated castles and chanceries in ViroviticaPodravina County The castles and chanceries are located mainly in the continental part of Croatia and there are a dozen dilapidated castles and chanceries in Virovitica-Podravina County alone. Nevertheless, some of them will be renovated through EU funding. In 2011, Virovitica-Podravina County decided to renovate Janković Chancery located in Kapela Dvor. “We encountered many obstacles whilst addressing property rights. Nevertheless, we succeeded in transferring four fifths of the ownership of the Chancery to the county, and purchased the remaining one fifth for €10,500. As a result, we are currently exclusive owners of the Janković Chancery. At the beginning of 2012, we obtained building permission and submitted our project application for the reconstruction of the Chancery under pre-Accession Funding IPA-CBC Programme of Cross-Border Co-operation with Hungary. The project ranked as the best and we were allocated €2.18 million for reconstruction; of this, we were allocated €1.8 million, and the Hungarian town
Castles – a Competence centre and a hospice Virovitica- Podravina County owns two further castles – the Suhopoljebased Janković Castle, protected as a cultural monument, covering an area of 3,300 m2 with 7.5 hectares of protected parkland. It was purchased for €0.2 million in 2012 and a further €0.2 million has been invested in project documentation. The County obtained a building permit in order to adapt the Castle into a Competence centre for selective forms of tourism, valued at €8 million, whose project application has been submitted for structural funding and included in the Tourism Development Strategy as the only Competence centre in Slavonia. The second castle is Janković Castle in Cabuna, which is also protected as a cultural monument, covering 2,800 m2 and has been owned by the Virovitica-Podravina County since 2010. Project documentation is currently being prepared and the preparations for its transformation into a hospice are underway. It is expected the building permit will be obtained by the end of 2014. Szent Lorinc, our partner in the project, was granted €1 million”, stated Tomislav Tolušić, Prefect of Virovitica-Podravina County. Chancery transformed into a tourism and education centre The reconstruction of the Chancery began at the end of autumn 2013 and it is anticipated it will be completed by the end of September 2014. Janković Chancery, covering 1,200 m2, is undergoing
comprehensive reconstruction and retaining only its former configuration. Concrete ceiling slabs are currently being completed, all the walls have been exposed to the brickwork, the building is being consolidated and it is anticipated a new roof will be completed during April, which will be followed by interior design. Tolušić stated that Virovitica Podravina County will remain the owner of the Chancery following reconstruction. Neverthe-
less, it will be managed by Terra Slavonica that currently also manages the Virovitica-based student restaurant. The Chancery will be a tourism and education centre focused on development of cyclo-touring in the wider area including neighbouring Hungary. Nevertheless, the facility will accommodate all tourists. The Chancery will comprise of 20 rooms, a restaurant in the basement, a conference hall, a wine shop and other accompanying aspects required for the provision of accommodation services. The Prefect is aiming to achieve a three or four-star hotel categorisation for Janković Chancery. The gastronomy of Janković Chancery will be based on local Slavonian and Podravina cuisine. Since there are a large number of farms in the neighbourhood, the ingredients required for the preparation of local dishes will be purchased directly from them. Visitors to the Chancery will be able to visit a neighbouring farm and help in farm work”, emphasised Tolušić. The Chancery will employ eight staff.