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Interview: Davor Ćuška, Vargon CEO Vargon to expand exports to all continents through 2011

EU Agricultural Subsidies 830 million reasons to be content with the future agricultural situation in the country

Savings Deposit Insurance Fund Savings to meet any future negative developments through the Savings Deposit Insurance Fund






PAGE 7 2010

Croatian Business & Finance Weekly Established in 1953 Monday / 2nd November / 2010 Year III / No 0128




pvinternational pv international C R O A T I A N





MEDITERRANEAN - CROSSROADS OF INTERNATIONAL COMMUNICATION All Mediterranean nations are unique, points out Mounir Mouakhar, ASCAME Vice President Barbara Marjanović ore than 70% of Croatian import and export trade is through ASCAME countries, an assembly of 23 Mediterranean countries and their Chambers of Commerce. This has provided an excellent opportunity for Croatia to host the 21st General Assembly, said the President of the Croatian Chamber of Economy, Nadan Vidošević, at the opening held last week in Opatija. This is the first time Croatia has had the opportunity to welcome ASCAME members. The assembly, organised by the CCE and sponsored by Jadranka Kosor, Croatian Prime Minister, welcomed more than 150 economic association representatives from around 20 Mediterranean countries on the theme of ‘Mediterranean countries in joint efforts against the economic crisis’. “Our goal is to restore the historical role of the Mediterranean, as the central intersection of international communication”, said Vidošević.


Croatia as a Europeanoriented nation “Croatia is leaving the transition period behind as its most important goal is to become a European-oriented country with active free-market competition and good economic relations.

All Mediterranean nations are unique. Therefore, we plan to create a unique Mediterranean brand, a publication containing the laws of each country, and a joint business act” said Mounir Mouakhar, the Vice President of ASCAME and President of Tuni-

sian Chamber of Commerce and Industry. “The increase in consumption and industrial production, export growth and other results, predicting a 1.5 % increase in economic growth for the last quarter of 2010, all provide evidence that

Basic information on ASCAME The Association of the Mediterranean Chambers of Commerce and Industry (ASCAME) was formed in 1982, at the initiative of the Barcelona Chamber of Commerce in co-operation with its counterparts from various Mediterranean countries. Today, ASCAME is one of the most representative and geographically widespread international organisations, with a membership of 200 Chambers of Commerce from 23 Mediterranean countries. ASCAME was created with the primary goal of furthering economic co-operation between the Mediterranean Chambers of Economy as representatives of local companies, serving the common good of all members as a key actor in economic-industrial development of the Mediterranean countries, and, at a global level, ASCAME aims at promoting the Mediterranean itself, as well as all supporting the local economy on the competitive world market.

we are soon to overcome the crisis”, stressed Đuro Popijač, Deputy Prime Minister and Minister of Economy, while addressing the participants. Despite the crisis having affected all countries globally, Popijač concluded that “the Croatian economy was not completely devastated“, putting a special emphasis on the positive results of trade and industry sectors. “We have preserved our macroeconomic stability without any major consequences in the financial sector. In July 2009, the Croatian government had to undertake some complex, yet unpopular measures, such as raising certain taxes. However, these moves have created the prerequisites for

The finalisation of EU negotiations, the implementation of anticorruption measures and economic recovery are government priorities real and severe measures which are to rebuild the economy and society as a whole”, iterated the Croatian Minister of Economy. Popijač emphasised that the finalisation of EU negotiations, the implementation of anti-corruption measures and economic recovery are government priorities.


Privredni vjesnik Year III No 0128



Additional assistance RIJEKA REFUSES TO for business start-ups GIVE UP ITS HEART Many companies have successfully sold their products on the international market with KP assistance

n order to ensure stable growth for Koprivnica entrepreneurs, reduce costs and contribute to an increase in their sales, KP has developed various services, including an entrepreneurial incubator and technology park as the prime business activity. The incubator is intended for all production and service-oriented companies, whilst the technology park welcomes companies, specialising in biotechnology or ICT. KP ensures higher quality working conditions for technological companies, as well as the strong assistance of its project managers, especially during the preparation of financing research and development projects, as well as equipment acquisition for laboratories from both local and foreign funds.


Entrepreneurial incubator and technology park available Recently, Koprivnica granted KP a new building of around 1,000 m2. Many of the premises are still unused but available to all innovative businesspersons. KP management is aware that obtaining the premises at subsidised prices and with additional services is no longer enough to operate a business and that it takes a lot more effort for new companies to ensure their position on the market. Therefore it aims to assist new companies in obtaining their first clients as well as expansion into new markets and in their business IMPRESSUM: Privredni vjesnik Kačićeva 9 10000 Zagreb +385 1 5600020 subscription

The importance of shipbuilding is shown in the economic balance of counties with shipyards as they depend on the number of delivered ships Barbara Marjanović

organisation. In addition, KP has achieved excellent results by representing companies on foreign markets where many have successfully sold their products. In addition, KP provides services for various economic sectors. For example, and Wood. hr were founded with the aim of enhancing business opportunities for ICT and wood industry companies. Also, was created as an efficient international promotion and sales channel for Croatian entrepreneurs, craftsmen and artists. KP has developed a new service, intended for any company that would like to have their products and services financed from EU funds. KP has a number of plans: in the instance to upgrade its services to a higher level, with special attention being paid to foreign market development, aiming to provide quality preparation to companies prior to EU accession and to ensure a stable source of income. There are also some new projects, such as online foreign language courses that are completely free and continuously available.

FOR PUBLISHER Nikola Baučić +385 1 4846661

IMC MANAGER Dea Olup +385 1 5600028

EDITOR IN CHIEF Darko Buković +385 1 5600003


EXECUTIVE EDITORS Andrea Marić Vesna Antonić


ijeka is to grant guarantees to 3. Maj Shipyard supporting the deal for building tankers with a value of $24 million, as well as every initiative for the further development of the shipbuilding industry in the country as the sector represents an important aspect of the Croatian economy. The 3. Maj Shipyard has sufficient assets to construct the respective ships and therefore does not require guarantees in order to obtain further lending. “The only aspect in question is the procedure for strengthening the existing contract, a counterguarantee for an advance payment to the ship owners,” said Rijeka mayor, Vojko Obersnel, at the recent meeting on the topic ‘Shipbuilding-Life-belt for saving the Croatian Economy’, organised by the Initiative to save Croatian Shipbuilding Industry. Participants concluded that the shipbuilding industry in Croatia has been neglected due to government ownership and style of management which had created an image of societal disability.


Ships - a most significant Croatian product The shipbuilders proposed their own programme for saving the industry, pointing out that the lack of a strategic industry will be the country’s downfall. “Currently ships are a most significant Croatian product, as seen in all relevant data on the success of counties having shipyards as they depend on the number of delivered ships. Furthermore, this changes the overall Croatian im-

port/export balance. Shipbuilding is an industry with a high level of intellectual capital. We are being deceived by the costs, while at the same time multiplier effects are not taken into account. 3. Maj indeed manages 3,000 employees. However, 1,500 additional subcontractors also conduct business with the shipyard. It is these people who contribute to both pension and health care funds. So far, there have been no significant analyses to confront state subsidies with the profit generated through personal taxation, VAT and other payments”, stressed Obersnel, adding that current government efforts to convince the public that shipbuilding generates costs are absurd. Problem-Solving Concept Independent economic expert, Slavko Kulić, concluded that it was impossible to solve any problems without government guarantees. “Croatia received €41 billion from selling banks, yet money is provided by foreign banks. The total sum includes €21.9 billion on deposit. Therefore we do not lack money but a conceptual framework for solving problems. I believe that shipbuilding should stop being a function of Croatian politics and EU accession”, he said. “If our international colleagues work with an interest rate of less than 2%, then we should have the same option“, said Edi Kučan. “In the first 9 months this year, our business was positive, yet burdened with interest rates which are higher than income tax”, pointed out Kučan, adding that the 3.Maj future is currently guaranteed.

INTERVIEW 3 Interview: Davor Ćuška, Vargon CEO

Vargon to expand exports to all continents in 2011

In 2009 Vargon sold 40% of its production to foreign markets, and this year the percentage has further increased. Vargon’s pipes are successfully sold in all countries in the region with company sales to external markets like Chile, Georgia and Yemen, also recording a significant increase Jasminka Filipas argon from Rijeka, developed from a small family enterprise owned by Stjepan Brašnić, founded in 1973. Until 1992, the company operated mainly as a metal processing workshop. It gradually developed into a major manufacturer of plastic pipes for supply and drainage of water. Since May, 2003, it has operated from the industrial zone near Rijeka. An area of 57,000 m2 serves for the production of pipes for house sewerage and water systems, as well as street supply and drainage of water. Over the past several years, Vargon has won 12 different awards for its excellent business results, among which are ‘The first Croatian Kuna’, ‘Golden Kuna’, ‘the Gazelle’, the ‘Most successful mid-size exporter’ and ‘Investor of the year’, whilst Goran Barišić has been awarded as manager of the year. In his interview with Privredni Vjesnik, Vargon CEO, Davor Ćuška, revealed how the economic crisis reflected on its business activities.


You stated two years ago that state capital investment made it difficult for local companies such as Vargon to close deals. Has the situation changed? To date, the situation has not changed significantly. There are certain initiatives but without any major results. Considering that the economic crisis in Croatia continues, and is present at all levels, including state capital investment, we cannot expect significant improvements, when compared with the beginning of the crisis. The way in which the anti-corruption offensive is being enforced will most certainly additionally postpone any reaching of the most complex decisions, as

well as investment activity. In order to boost the economy, Croatia should definitely introduce a policy similar to the legendary ‘New Deal’.

further increased. This trend is the result of our attendance at international fairs such as MCE in Milan, IFAT in Munich, ISH in Frankfurt and The Big 5 in Dubai, where we

Which are the most significant problems you have confronted? In the first instance, there is the remaining presence of underhand competition. The tendency to import products without valid certification allows and encourages the import of low quality products which compete with local producers in a way that dumping weakens local production. Furthermore, there is the issue of postponed payments that generates the problem of illiquidity.

Due to the economic crisis, companies can survive only by expansion and risk in new markets

How would you describe the current situation in foreign markets? Last year, Vargon sold 40% of its production to foreign markets, and this year the percentage has

presented our entire product portfolio. The highest percentage of exports is achieved in the markets of former Yugoslavia, that is, in Bosnia and Herzegovina, Serbia, Montenegro and Kosovo. However our products are to be found in the EU as well as other international markets. Exports to Albania are increasing year by year with a great deal of effort being invested for entering the EU market. During 2008, our products were sold

in Slovenia, Italy, Germany, the Netherlands and Bulgaria, but also to more distant markets, for example Chile, Georgia and Yemen. In fact, one of our goals for 2011 is to expand exports to all continents. It is important to mention that we have developed excellent business co-operation with the German company Rehau GmbH, our agent for selling Vargon products on the markets of Western, Middle and Southeastern Europe. What is your opinion on the payment practices in the former Yugoslavian and surrounding countries? Are there any significant differences? In my opinion, in terms of the global economic crisis, companies can survive only through expansion and risk into new markets. Therefore the majority of our business decisions are oriented in this direction.


Privredni vjesnik Year III No 0128

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::: news €20 million for Drniš and Knin The construction of water supply and sewerage networks for the Šibenik-Knin county, financed through the IPA, officially started last week with the signing the contract with a value of €20 million. The project, co-financed under the IPA III.b Programme of Regional Development-Environment, was signed between local officials and the Ministry of Regional Development, Forestry and Water Management and Hrvatske vode (Croatian Water Association-Croatian Waters). The IPA Programme covers €12.87 million with the remainder being financed through the state budget..

hectares for bio-fuel

production for new power plant

Slovenian company Organica building biogas power plants in Croatia

Green energy captured from barn waste to be implemented in the near future

Croz among fastest growing Central European tech companies

The first biogas power plant will be built near Ivanić Grad, to be followed by new projects planned for locations in eastern Slavonia Svetozar Sarkanjac Croz is the only Croatian company on Deloitte’s “Fast 50” list this year, dedicated to the fastest growing Central European technology companies. Polish internet company Netmedia heads the list with impressive 15,000% overall growth in the last five years. Last year the list featured three Croatian companies but this year Croz was the only Croatian on the list and rose 10 places from 17th to 7th place. On average, companies on the list registered five-year growth of 967%. Mercator opens new megastore in Bulgaria Last week, the Slovenian Mercator organisation opened a new mega-store in Sofia, Bulgaria, and an additional 2 stores are to be opened in Varna and Stara Zagora. “By the end of the year, we will have invested more than €10 million. However, we plan to continue with our investment level and our goal is to achieve a 3% market share in Bulgaria by the end of 2012”, announced Mercator Bulgaria CEO Branko Micič.

igning the contract on building the first biogas power plant in Croatia was undoubtedly one of the major events at the 16th Agrozemlja Fair in Bizovac near Osijek. The Slovenian company, Keter Organica, has signed the first contract covering a biogas power plant construction with the Croatian company Eko-El from Virovitica as the investor. The first power plant will be built near Ivanić Grad. “Organica already owns several 1 megawatt power plants, and now we have decided to act as both equipment suppliers and investors for the new plant in Croatia. We have recently met several Croatian mayors to discuss the potential these power plants have to offer”, stated Zoran Alavanja, Keter Organica Sales Manager for Croatia. Among the advantages Alavanja emphasises electricity generation from waste like grass, corn or sorghum silage, as well as slaughterhouse and barn waste. This is especially important when considering the Croatian obligation to imple-


ment the Nitrates Directive after EU accession, as this provision forbids inadequate farm manure discharge. Furthermore, a biogas power plant represents a stable longterm source of income for small farms. It also ensures a strong connection between agricultural and livestock production and energy production. Additional advantages of biogas power plants

Biogas power plants represent a stable longterm source of income for small farms for farming include guaranteed green electricity sales, as well as thermal energy supplies for at least five farms. Turnkey System Organica offers a complete service and technology application to its future business partners. “All stages of our work, including financing, project development and full investment are based on a ‘turnkey system’. Our tar-

get business partners are local governments, municipalities and cities, although we would also be happy to co-operate with agricultural co-operatives and large farmers. In other words, all those facing waste problems are treated as potential clients’’, Alavanja noted. After finishing the construction of the first plant new projects are planned for locations in Osiječko-Baranjska and Vukovarsko-Srijemska counties. The contract covering the biogas power plant construction was signed by Marijan Kolar, coowner of Keter Organica, and Darko Golubić, owner of EkoEl. Petar Čobanković, Minister of Agriculture, also attended the event. The project is financed from banks and through equity. Biogas is to be obtained from barn waste and silage ensured from 125 hectares. Due to the increasing interest of small farmers in the use of animal by-products and biomass for generating electricity, Keter Organica has developed special small biogas 50 kW power plants, where biomass is obtained from mid-sized and small livestock farm waste. Business & Finance Weekly



830 million reasons to be content with the current situation After Croatian accession to the EU, Croatian farmers can expect reduced production support. However, the EU will provide additional incentives for rural development. Annual direct payments are expected to reach €373 million with an additional €458 million allocated for rural development projects Krešimir Sočković egotiations with the EU concerning chapter 11 - Agriculture and Rural Development are expected to be concluded by the end of the year or the beginning of 2011 at the latest, advises the Croatian negotiating team. For Croatian farmers, this chapter is especially important as it primarily covers agricultural subsidies. There are still some open questions left, the majority of which concern the transition period, with the financial issue remaining the most interesting. Year-on-year direct payments to Croatian farmers are expected to reach €373 million. The Croatian negotiating team requests the full subsidy sum to be allocated to Croatian farmers in the first year of Croatian EU membership. However, the European Commission proposes the solution applied during the last enlargement circle and according to which farmers would receive 25% of the relevant sum from the EU budget during the first year, 30% in the second, 35% in the third and 40% in the fourth year of membership. Thereafter, the percentage would increase by 10% annually, until the sum is paid in full. In addition, according to the EC proposal, Croatian farmers should receive 30% of the sum from the national budget.


Croatia Needs Additional Funds The Croatian negotiating group expects additional funds intended for minefield clearance to be included in the total sum as these areas are to be converted into agricultural land after de-mining. Furthermore, additional funds are also expected for winemaking. However, the exact amounts for additional funding are yet to be agreed upon. Through the second level of support intended for Croatian rural development, the EC proposes €201.6 million to be ringfenced from the EU budget in 2012, €281.5 million in 2013, and at the end of the three-year transition period €352 million per year. The Croatian national budget is also to be included in the rural development financing programme, in the range of 20% to 50%, depending on both the measures and rural areas covered by these measures. The total sum of incentives for rural development is estimated to reach €458 million on a year-on-year level. In addition, the Croatian team is currently negotiating over milk and sugar production quotas. According to supply figures, an annual quota would amount to 750,000 tonnes of milk, of which 673,000 tonnes are intended for repurchase and 77,000 tonnes for direct sales. Due to restructuring and an increase predicted in the

last Common EU Agricultural Policy, Croatia has requested the EU to raise the quotas. Wine Regulations to be Modified Regarding sugar, Croatia requests a production quota of 217,429 tonnes; however the EC aims to define the quota according to the reference period. Ružica Gelo, Croatian negotiator in charge of the respective area says that Croatia is obliged to prepare modifications to its negotiating position to contain an overview of all Croatian demands. The majority of modifications will address the wine sector, as the EU has changed the relevant regulations. “The EU plans to reduce direct support to Croatian farmers and to provide the majority of

the sum for rural development. In Croatia, rural policy has for many years been considered as part of the ‘folklore’; however, this is definitely not the case’’, she pointed out. Croatian farmers can expect the amount obtained in the period 2011/2012 to be considered as the reference point as future subsidies are to be provided in fixed sums to individual farms. “Thus far, the majority of small producers and farms are not able to develop projects, and thus apply for second level funding – money intended for rural development. This fact presents a problem; it demands huge effort to ensure careful use of funds provided for Croatian villages and their better positioning on the European market’’, concludes Gelo.

Meeting benchmarks In October 2009, at the beginning of negotiations on the chapter Agriculture and Rural Development, it was determined that Croatia should meet three important criteria before the closure of the chapter. Croatia has developed a plan for the establishment of an Agricultural Financial Agency and The Integrated Administration and Control System. (IACS) and introduced measures for common market organisation. The EU delegates were to evaluate Croatian progress in the enforcement of these standards. As the delegation findings have been positive, the decision to close the chapter on the basis of meeting the required standards is expected to be reached within a month. Currently both IACS and the Agency do not need to function fully; however, when Croatia joins the EU, this becomes an imperative since the two institutions represent the key factor in the withdrawal of the funds from the EU budget.




Privredni vjesnik Year III No 0128


Ecology and Nanotechnology Saša Cvetojević, one of the owners and a director of Manako points out that most of their contracts relate to vehicle cleaning

Delicious healthy foods Many agents are interested in introducing Kumino selo home-made jams to the international market s this year’s fruit output is already in the jam-making process, 2009 figures are worth considering. Last year, Tovarnik, a part of the Kumino Selo Agricultural Co-operative, processed 16 tonnes of fruit into 8 tonnes of home-made plum, apricot, strawberry and blackberry jams. As the market is eager for organic products, these sugar and preservative free delicacies, made in the old-fashioned way with 80% fruit content in jams, have been given a warm welcome by customers.


Co-operative members have already implemented EU regulations by introducing the HACCP System “Our basic idea was to buy both plum jam and brandy, as well as cured meat products and needlework from local producers and sell them in gift-baskets, thus promoting traditional Slavonian products. Fortunately, we had previously consulted the sanitary inspection team and received information that such products did not comply with sanitary regulations. Hence, we decided to start our own production business”, says Spomenka Beljo, Kumino Selo Agricultural Co-operative Manager. She points out that they have neither planned the production of such large amounts of jam, nor expected to encounter the huge interest from consum-

ers. However, they are able to produce significantly more. Winter is Time to Plan for Development As production stops during the winter, co-operative employees develop their business plans, search for a guaranteed market and larger buyers. Kumino Selo products are predominantly sold at specialised trade fairs. At the Eko-Etno Fair in Zagreb, their products were not only been awarded the Fair Award, but a large commercial chain showed a significant interest in their sale. In addition, many agents are interested in placing Kumino selo home-made jams on the international market, as co-operative members have already implemented EU regulations by introducing the HACCP System. Their products are currently available for purchase in all larger shops in the region, delicacy shops in Zagreb, as well as in certain hotels and restaurants. In order to expand their business, a jam tasting room for travellers/tourists has been developed. The fact that Tovarnik is the birthplace of the Croatian writer Antun Gustav Matoš, with his memorial house being located in the town, will most certainly ensure a more significant consumer response. Management plans to hold presentations on jam production in the open fire steam boilers and gather local culture and art societies in order to serve home-made juices, “tačke” (dough sweets) and pancakes filled with jam. (E.D.)

he Manako Company, founded in Zagreb 2 years ago, provides internal and external and dry cleaning services for vehicle, mobile retail kiosks and stands. Saša Cvetojević, one of the Manako owners and a director, points out that most of their contracts relate to vehicle cleaning. “Our mobile team arrives at the client premises at a previously arranged time. The client employees have their vehicles cleaned during normal business activities, thus preventing both air pollution and time loss.” Manoko uses Ekoval cleaning materials, imported from Great Britain and the US, being the result of their latest technological achievements in the area of nanotechnology in that only a small amount of dissolved liquid material removes dirt. In addition, the cleaning process includes the use of waxes that protect and nourish the car body, as well as special microfibre cloths. Furthermore, attention is paid to the special vehicle polishing technique, Cvetojević points out. In addition, Manako provides cleaning services for companies managing large office buildings or shopping centres, thus offering vehicle cleaning as an extra service to their customers. Clients include rent-a-car and leasing companies that often clean vehicles in the parking areas.


The only condition for co-operation is that the client business activities are legal. Manako Director says the main problem is finding a reliable workforce, especially in larger cities. “This relates mainly to young men, who often lack the motivation to work as well as a

Manako provides cleaning services for vehicles, vessels, mobile retail kiosks and stands

nonchalant attitude towards the work”, he says. Moreover, the salary tax is very high. “Companies working legally have strong competition in the grey economy. Illegal businesses do not pay VAT, salary tax and employee contributions, which enables them to offer up to 50% lower prices, as they do not issue invoices. Therefore, we are oriented towards clients with legal businesses that regularly issue invoices”, stresses Cvetojević. Currently, the company management plans to expand the business within the region, and is therefore involved in contacting and negotiating with several companies interested in the franchise in Bosnia and Herzegovina and Serbia. (B.O.) Business & Finance Weekly





Kuna exchange mid-rate

5,15326 5,190066 6,57582 5,374394 8,44371 5,311386 7,339273

Erste Bank nett profit of €62.34 million Erste Bank achieved an increase in nett profit for the first nine months from its business activities, not including an allowance for loss provisions. Gross profit rose to €129.82 million, although nett profit decreased by 3.6% and stood at €62.34 million. The income/expenditure ratio also recorded significant improvement, as well as return on assets and capital at 1.2% and 10.6% respectively. Vaba Bank nett profit at €0.44 million Varaždin Vaba Bank recorded a nett profit of €0.44 million in the first nine months, with total assets totalling €0.19 billion, over the same period last year. Nett interest income totalled €4.62 million when compared with the same period in 2009. Revenue from fees and compensation totalled €0.40 million. Due to the financial crisis other types of bank revenue such as foreign exchange trade and trading revenues recorded a decrease. Adris Group total income down 5.2% The Adris Group recorded total income of €0.33 billion in the first nine months of 2010, down 5.2% over the same period last year. Company total sales income fell to €0.29 billion, or 5.5%. Adris Group operating profit totalled €59.7 million and before EBIT stood at €76.57 million, down 23%, when compared with the first nine months of 2009. Group reduced revenues are the result of an increase in cigarette tax, a decrease in overnight stays and the restructuring of Cromaris. In September the Group continued the construction of the new Lona Hotel in Rovinj and investing €20 million into Cromaris.

















7.324 25.10. 26.10. 27.10. 28.10. 29.10


::: news


5.16 25.10. 26.10. 27.10. 28.10. 29.10

5.32 25.10. 26.10. 27.10. 28.10. 29.10


Savings to meet future negative developments Even in a deteriorating situation Croatian banks should have no problems in meeting capital requirements, asserts Zoran Bohaček, Croatian Banking Association (HUB) Director Boris Odorčić he EU and Group of Twenty (G20) are soon to introduce new financial regulations to be implemented in Croatian banks as soon as Croatia becomes a full member of the EU. Among 18 chapters, currently analysed at a global level, two are of special long-term interest to the Croatian Government. More specifically ‘Meeting Capital Requirements’ and ‘Savings Insurance System Reform’. In its latest analysis HUB stated that meeting new capital requirements will in all probability not present a problem. Capital requirements, as bank minimum capital in relation to its riskweighted assets, is to be introduced gradually between 2013 and 2019.


Croatian banks deposited more than €0.55 billion into the Savings Deposit Insurance Fund between 2002 and 2009

At the association’s Annual Assembly, Zoran Bohaček, HUB Director, noted that discussions on the new financial regulation proposals were still open. “However, our analysis has shown that, even in a deteriorating situation,

Croatian banks should have no problems in meeting capital requirements”, he averred. Contribution to Stability Fund Among the new European financial regulation proposals it should be highlighted that insured savings figure and deposit coverage are to be increased to €100.000 (the current total insured savings figure in Croatia is €54,800). It is proposed to reduce the period for savings payment to seven days from the occurrence of the insured event, as well as to introduce contributions to stability funds aimed at ensuring substantial assets for any future crisis situations thus relieving

taxpayers from covering bank recovery expenses. “The existing Savings Deposit Insurance Fund is well capitalised, having sufficient available assets for any kind of scenario”, opines Velimir Šonje, founder and Director of Arhivanalitika. “However, due to EU harmonisation processes, we will have to adjust to this policy within the next two years”, the economic analyst points out. It should be emphasised that between 2002 and 2009, Croatian banks deposited more than €0.55 billion into the Savings Deposit Insurance Fund, which would at an annual capitalisation rate of 5%, provide available assets of around €0.68 billion, or more than 3% of total personal deposits.


Privredni vjesnik Year II No 0128


How to Conduct Business with Sweden Total trade between Croatia and Sweden has continually increased over the last decade ment and the Croatian Chamber of Economy also presented their foreign trade services. In the last decade, trade between Croatia and Sweden has been continually increasing, with Swedish products recording a slight increase in 2010. However, the value of Croatian exports fluctuates due to the occasional export of ships. In the period from 2006 to 2009 Croatia recorded continual export growth which was interrupted by the global financial crisis. Data for the first two quarters of 2010

he Croatian Chamber of Economy recently organised a seminar ‘How to Conduct Business with Sweden’, in co-operation with the Croatian-Swedish Chamber of Commerce, the Croatian Embassy in Sweden and the Embassy of the Kingdom of Sweden in Croatia. Representatives from the Swedish

Federation of Trade, Open Trade Gate and the Stockholm Chamber of Commerce held lectures on the prospects of trade with Sweden, regulatory standards, distribution channels, business customs and rules, as well as market organisation. In addition, the aim of the seminar was to introduce successful Croatian commission agents in Sweden. The Croatian Bank for Reconstruction and Develop-

::: news



Podravka Group reports net profit growth In the first nine months of 2010, Podravka net profit increased to €11.27 million, an increase of 95% over last year. The increase is the result of a significant decrease in Podravka’s operating costs in the first nine months by €15.79 million. The dispute between Podravka and OTP Bank which holds 10.64% of Podravka shares could have a negative impact on annual results since Podravka refuses to buy the shares at the agreed price of €62.74 as the current stock market price is under €41. Tehnix closes new deals in Romania Tehnix from Donji Kraljevac is the leading company in the region for the design, production and maintenance of machinery and equipment used for environmental protection. Last week, the company closed new deals in Romania valued at €2 million. Tehnix already has a daughter company in Romania – S.C.TEHNIX s.r.l. In addition, it commenced construction on a new manufacturing plant in Bacau, worth €1.5 million. In two weeks, the company will be host to an economic delegation from Bucharest with the aim of contracting new investment for the following year valued at €5 million. Tehnix previous deals relate to sorting and communal waste processing plants. Romania presents a market with huge potential for developing industrial technology in the field of water protection and waste management.

indicate that exports to Sweden increased by 8.4% when compared with the same period last year, with imports from Sweden decreasing by 28.4%, when compared with the same period. The most important and promising sectors which should strengthen economic co-operation between the two countries include power supply, shipbuilding, military industry, environmental protection, tourism (especially health tourism), food industry (organic products) and wood processing.

Programme for County Competitiveness Paul Vandoren considers geographic position, a well trained workforce and modern transport systems to be major Croatian advantages he Ministry of Economy, Labour and Entrepreneurship and the EU Delegation in Croatia have recently presented an IPA project for ‘The Development of Investment’, aimed at improving the knowledge and skills of the Croatian workforce to attract foreign direct investment, as well as to strengthen the investment climate and raise Croatian economic competitiveness. A total of 20 Croatian counties are to participate in the €2.5 million project, financed by the EU via the IIIC component of the IPA Programme. After project completion, counties will be certified for attracting foreign direct investment. The regional certification represents a guarantee that county teams have adopted specific knowledge and skills to attract such investment. Through the IPA Programme, the EU covers 75% of expenses and Croatia will cover the remaining 25%, announced Minister of Economy, Labour and Entrepreneurship, Đuro Popijač. “This programme is in accordance with the government economic recovery programme which prioritises foreign direct investment. We have al-


ready established the Commission with the goal of identifying investment into Croatia. In addition, we have issued the government catalogue of 30 public sector investment projects with a value of €13 billion”, says Popijač. Furthermore the government considers the private sectors of industry, transport and tourism, as having investment potential, as it is especially important to attract investment which will introduce modern technology and innovation, according to Popijač. Paul Vandoren, Head of Delegation of the European Commission to the Republic of Croatia, considers geographic position, a well-trained workforce and modern transport systems connecting north and south Croatia, to be major Croatian advantages

to attracting foreign investment. “However, based on my own experience, I would suggest that few companies would invest in a corruption-burdened country with a weak judicial system. The government must convince EU members that its efforts in strengthening legal security and suppressing corruption will generate results”, Vandoren stressed. In his opinion, Croatian counties should standardise information intended for foreign investors, as their differences in that area are considerable. Furthermore, access to information relevant to investors should also be improved. The project is run by a team of international experts with longterm experience in project enforcement, in close co-operation with Croatian experts. (K.S.)

PV International 0128  

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