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Mega projects to direct foreign investment HE Ombla, Zagreb Airport and Janaf open the government spring investment offensive

Goran Pajnić, Belje Board ard President A five year path from the he brink of bankruptcy to exemplary company

Beware the Senjska bura The Senj 21 association was formed to exploit the bura phenomenon in tourism and culture






PAGE 10 2010

Croatian Business & Finance Weekly Established in 1953 Monday / 24th January / 2011 Year IV / No 0137




pvinternational pv international C R O A T I A N





Decision for finalisation of EU talks scheduled for March Head of EU delegation to Croatia Paul Vandoren marked Croatian accession negotiations as a “significant achievement” Igor Vukić roatia is headed in the right direction as it enters the final phase of pre-accession talks. All 34 chapters are opened, and 28 are temporarily closed. This is a big achievement, said Paul Vandoren, head of the EU


delegation to Croatia last week. Vandoren and the Hungarian ambassador in Croatia, Ivan Gabor, presented the priorities of the six month long Hungarian presidency over the EU Council. Vandoren pointed to the remaining challenges of the Croatian preaccession process, specifically concerning Chapter 23, continuity of the judiciary reform, fighting corruption and organised crime as well as securing basic human rights. Croatia still needs to restructure shipyards according to Chapter 8 in accordance with EU regulations on market competition, opined Vandoren. He ventured that Croatia should have a clearer picture about the possibility of concluding talks by the end of June. The temporary

Zarko Basic/PIXSELL

Temporary report of the European Commission on Chapter 23 due in spring

Ivan Gabor, Hungarian ambassador to Croatia and Paul Vandoren, head of EU delegation to Croatia

report of the European Commission on Chapter 23 is due in spring. Highly motivated The head of the EU delegation also visited the Croatian president, Ivo Josipović. They exchanged opinions on the state of negotiations and issues of present reform implementation for the improvement of the business climate and encouraging foreign investment. Vandoren

pointed out that Croatia is in a crucial moment of pre-accession talks. “We were guaranteed that Croatian authorities were highly motivated on doing everything in their power to conclude these complex and challenging tasks in the future,” said Vandoren. According to the Hungarian delegate, Ivan Gabor, priorities of the Hungarian presidency will be directed towards four areas - economic growth and employment, the strengthening of mutu-

al policies for a stronger Europe and bringing institutions closer to the EU public. They will also continue with the process of expansion and improvement of relations with neighbouring countries. Hungary will suggest measurers for improving fiscal discipline and expansion of economic control. They will also attempt to polish the Treaty of Lisbon with the goal of establishing the European stabilisation mechanism.

2 ::: news

Privredni vjesnik Year IV No 0137


HE Ombla, Zagreb the government spr Germans as the most frequent camp visitors During the first 11 months of 2010 Croatian camp-sites recorded a total of 2.1 million visits and 14.1 million overnight stays, which is at the level of 2009. German visitor’s registered 4.5 million overnight stays, up 1.42%, which is also the highest number compared with all visitors. The Croatian Camping Association (KUH) stated that according to the German Automobile Club (ADAC), Croatian regions upgraded their quality. Furthermore, Dubrovnik can be found on the cover of ADAC’s camping catalogue, additionally contributing to the promotion of Croatian tourism. New orders for NCP after successful delivery The overhaul shipyard in Šibenik NCP has signed a contract for the construction of two new catamarans for the Norwegian Nordic Aqua Boats AS, which marks the beginning of the series production of these vessels in the Šibenik shipyard. During the next five years, NCP plans to build up to 15 ships for Nordic Aqua Boats AS, a brokerage company specialising in the construction, purchase and sale of ships for clients, including fishing clusters from Norway, Scotland and Ireland. Sirela products received kosher certificate The Croatian Jewish community Bet Izrael has issued their kosher certificate to Sirela from Bjelovar, the biggest producer of butter, fresh, semi-hard and hard cheeses in Croatia. According to Sirela, they are the largest Croatian producer of all types of cheeses and butter, whose production corresponds to strict kosher rules and production standards. Furthermore, Sirela was awarded an EU export number in 2010, which enables them to market all their products in EU markets.

These are projects for which the necessary documentation is virtually complete with fina Igor Vukić he construction of the underground hydro power plant Ombla and substations near Dubrovnik, the concession for Zagreb Airport, the renovation of Luka Rijeka, water supply projects and the construction of Janaf terminals are some of the biggest projects which mark the government investment offensive in the first quarter. These are projects for which the necessary documentation is virtually complete, and financing partially secured within the framework of investment programmes of public companies. Prime Minister, Jadranka Kosor, who recently presented the investment plan for the first quarter, stated that in addition to big infrastructural activities, a series of smaller proposals have also


Around €0.14 billion would be invested in the renovation of Luka Rijeka, and the government is looking for a large foreign investor for this enterprise been prepared. They should activate entrepreneurs and oppose the growing unemployment trend at both regional and local levels. Big projects Furthermore, the 28 kms long railway Križevci-Koprivnica is scheduled for renovation. This has a value of €27.12 million and the renovation should finish in 2012. Modernisation of the Vrulja quay in the port of Šibenik is also pointed out as one of so far less mentioned projects. Contracts for this €13.70 million work will be signed by the end of March. A

similar procedure is expected for the next phase in the construction of the port in Gruž, worth €11.64 million. However, the most significant economic effects are expected from several megaprojects. One of such projects is the construction of storage facilities for the Janaf complex in Omišalj. New tanks, pipelines and the accompanying equipment will be worth around €0.14 billion. Prime Minister Kosor feels that the construction of the tanks at the Janaf terminal in Sisak should be added to this investment cycle. With two newly built tanks there, this will end the first phase of the storage facility expansion, which is slowly becoming a strategic terminal for the diversification of oil supplies for south-eastern and central Europe, according to Janaf. Here Janaf invested €23.61 million of their own funds, and works were performed by the local Đuro Đaković consortium and Konstruktor from Split. This

increased total storage capacity for oil in the Sisak terminal to 260,000 m3. The construction of three new tanks at the Sisak terminal also started. The work is being performed by Montmontaža with a value of €21.37 million. Janaf and the government use these examples to illustrate the level of assistance it is giving to local privately owned companies in addition to public ones. Similar investment results are expected from projects concerning water supply infrastructure. The value of competing for performing work in this sector could climb to almost €110 million during the first three months of 2011. Foreign investors and concessions HE Ombla is worth roughly €0.14 billion, in addition to a further €68.5 million covering substations near Dubrovnik. The construction of the Ombla hydro power plant has been discussed Business & Finance Weekly


Airpor t and Janaf open ing investment offensive

ancing partially secured within the framework of investment programmes of public companies

since the 1980’s, when the first project for the construction of an underground power plant on the river Ombla started. The power plant, for which the first project was completed in 1983, should have 68 megawatts of power and an annual production of 223 gigawatt hours of electricity. Its construction should secure the power supply to Dubrovnik and its surrounding area. This area is actually prone to frequent disconnections from the power supply system, caused by poor weather and heavy load. Around

€0.14 billion should be spent on finishing the renovation of Luka Rijeka. The government wishes to find a large foreign investor for this business endeavour. Furthermore, fresh investment of €0.21 billion should arrive through the modernisation of Zagreb Airport. The money should be provided by the concession for the airport, which will require changes to the Airport Act. Tenders for concessionaires will be invited in February, according to government announcements. Interest has been shown

from German, American and other investors. Investment in centres for waste management in Istria and Primorje and Gorski Kotar should add up to around €700 million. Documentation for tenders for these centres should also be completed by the end of March.

rangement with the Ministry of Finance and Ministry of Justice, all conditions for initiating rapid bankruptcy procedures have been prepared, and I believe the situation of these companies will become clearer. We will not tolerate financial chaos,” said Jadranka

Funds from savings Investment funding has also been partially created from the savings made by public companies. Ms. Kosor said that state companies last year saved €0.19 billion in business expenditure. They decreased obligations by €0.15 billion. By savings in HEP, we managed to maintain price stability for electricity, the Prime Minister pointed out. The government is aware of the serious problem of illiquidity in the economy, so the president of the government also announced new measures for fighting this problem. According to her, public companies are no longer a source of illiquidity. Almost all of them settle their payments regularly. She reminded that a year ago HEP and Ina owed over €0.41 billion, which they have now settled. However, HEP has many receivables which debtors will need to settle. Hence the reason why the government will turn to 22,000 companies without a single employee, as it these who are generating most of the outstanding debts that reach billions of kuna. “In an ar-

Fresh investment of €0.21 billion should arrive through the modernisation of Zagreb Airport, with tenders being invited in February Kosor. She also announced new models for subsidising the sale of apartments, indirectly admitting that the subsidy model from last year did not yield results. The Prime Minister advisor, Borislav Škegro, suggested recently that the deficit should decrease by selling big state companies. The Prime Minister said HEP will definitely not be sold, whilst the government and the coalition in power are discussing possible large-scale privatisation. However, the government is focused at the moment on implementing the plan for economic recovery and starting a new investment wave, which is worth €14 billion together with projects from the first quarter. This is the “heart and soul of our work”, concluded the Prime Minister.

Risk capital funds with €0.27 billion

Milošević will co-ordinate state secretaries

The government empowered the Croatian Bank for Reconstruction and Development to act as a qualified investor in funds for economic co-operation. Last year, five similar funds were established, worth €0.14 billion. According to the programme for economic recovery, the government is obliged to invest the same amount as that of public money. Therefore, the Minister of Economy, Đuro Popijač, invited entrepreneurs to access these funds and highlight their projects. The €0.27 billion will be invested in high-tech products, innovative production and ideas, whish often do not manage to obtain money from classical banks.

The government is trying to eliminate obstacles for local and foreign private investors as quickly as possible. It has been arranged that in each Ministry there will be one state secretary in charge of providing information and solving investment problems. The work of state secretaries will be co-ordinated by Domagoj Ivan Milošević, new vice president for investment, said the Prime Minister. The new Minister of Construction, Branko Bačić, drew up a new regulation, which provides easier adjustment of 1,070 plans to investor needs.


Privredni vjesnik Year IV No 0137


Changes in higher education system essential

urrently, both in Europe and in Croatia, new forms of economic development require low-carbon development, quantitative economics, ICT and nanotechnology. A recent Oxford University study anticipates about 80 million jobs in Europe between 2010 and 2020, with only 7 million new and 73 million replacements. Eventually, the number of jobs in 2020 will be smaller than in 2008. Currently, the total number of unemployed in the EU27 stands at about 23 million. Even more discouraging information is that between 10% and 40% of those unemployed in the EU27 are under 25. Higher education changes, deeply implemented in most European countries, have become a prerequisite as a result of the tremendously rapid changes in the labour market. The Bologna programme introduced into higher education institutions started in Croatia five years ago. Most public colleges transformed their four year study programmes into a system of 3+2, 4+1 and 5+0. The existing curricula in fact added several subjects from the


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recent master’s curricula (which were hastily abolished) and a new curriculum created. New curricula spontaneously appeared in the process, probably out of fear of insufficient teacher coverage but also due to the ever-present scholarship payment, which remains higher education institutions’ own revenue. This relates primarily to social studies’ and humanics in public colleges, which have seen an increase of 150% in the number of students in the last 10 years, particularly those studying for their personal needs and extracurricular students (there are about 80,000 currently). We are faced with a complex and difficult issue of how realistic and justified it is for public colleges to treat scholarships as their own revenue, bearing in mind state investment into staff salaries, overheads, investment into course facilities’ maintenance and classroom equipment. As a result, there are some 1,300 curricula, which appears bizarre considering the number of students (150,000), whilst Denmark for example, has 800 curricula. As a result, staff competencies and study results lack market recognition and the downgrade in the quality of study has become obvious. Currently, we see passing grades in the normal study system amounting to a meagre 30%, with some 60% total passing grades. This indicates serious shortfall in the system, both personal and public. Significant higher education system transformation is a prerequisite to finally enable the production of what the market can and will accept.

FOR PUBLISHER Nikola Baučić +385 1 4846661

IMC MANAGER Dea Olup +385 1 5600028

EDITOR IN CHIEF Darko Buković +385 1 5600003

TRANSLATION Lučana Banek Mirjana Cibulka

EXECUTIVE EDITORS Andrea Marić Vesna Antonić



Diplomatic bankers looking for settlement partners Only 3% of litigation in Croatia is settled through conciliation Drago Živković mple promotion campaigns that have been organised by various organisations and state institutions for years have not had much impact on the promoted “conciliation rather than litigation” concept breakthrough. Croatia still has between 750,000 and 800,000 old cases in all courts with new cases accumulating within commercial courts. Thus, any initiative in conciliation promotion is praiseworthy, irrespective of its origin within the specialised Banking Conciliation Centre, founded by the Croatian Employers’ Association (HUP) and the Croatian Banking Association (HUB), which does not promise spectacular results.


Judiciary with a human face Conciliation in banking has been possible so far, as in any other field of activity, yet it has been seldom resorted to. Some of the reasons for it can be found in the HUB Director, Zoran Bohaček’s, answer to the question as to what could be the possible issues on which the bank and its client could resort to reconciliation. These certainly cannot comprise contractual obligations such as interest rates, meaning it only includes the terms not implied by the contract and in the case of banks, these are practically nonexistent. According to Bohaček’s examples, one could try conciliation on the issue of calculating particular compensation or on the issue of contractual obligations’ interpretation. Banks are interested in conciliation, irrespective of limited room

for manoeuvre, claims HUP Conciliation centre Director, Milka Kosanović. Their interest becomes more understandable bearing in mind Bohaček’s openly expressed hope that in 2012 the state will settle private individuals’ conciliation costs from the budget, as is the case in, for example, the Netherlands. Until then banking conciliation centre services will be free for private individuals, with companies paying a tariff depending on the litigation value. Specifically, if the litigation value is €13,700, according to Milka Kosanović, conciliation costs will amount to €380. In addition to being lower cost than court proceedings, conciliation is much faster, as most settlement is reached after only two or three hearings, or in maximum of 60 days. A big advantage to conciliation is business relationship preservation, thus it is often called “judiciary with a human face”. However, in Croatia the principle of “I will sue all of you” is, unfortunately, more often applied which results in a meagre 3% of litigation completion in conciliation settlement. The Americans, on the other hand, are more compromise prone with about 80% conciliation settlement. Besides Zagreb, conciliation is possible in HUP regional centres (Osijek, Rijeka and Split) and wherever interest arises or wherever it appears necessary. About twenty people have been specifically trained for conciliation hearings by the Banking Conciliation Centre and among the conciliators there are attorneys, judges, businessmen and bankers. Business & Finance Weekly


( 800,000-900,000 litres annual production of Feravino

From investing to exiting the crisis

The same applies in recession - no risk, no gain Whilst the wine market in Croatia dramatically reduced last year, in terms of bottled wine Feravino achieved 100% growth and expect even better results in 2011 Drago Živković nvestment during recession is not the first option for most entrepreneurs. They mainly turn to saving, cutting expenses and business optimisation. However, investment in such times definitely pays off according to the example of Feravino from Feričanci. During the first year of the recession, Feravino invested €1.17 million in the construction of a cellar for the controlled fermentation of red wine. Last year they invested €0.82 million into the renovation of an old cellar with a tasting room and wine house at Goveđa glava. Investment does not stop here. During the next few years, Feravino plans to open a new restaurant in conjunction with the famous Old cellar and


a completely new barrique cellar covering 1000 m2. During the past 15 years, Feravino invested €5.48 million in vineyards, facilities and technology. The last strong investment cycle, which is continuing, started three years ago. Since then they have invested a total of €2.33 million. In order to contribute to the development of viniculture in Feričanci, Feravino and Hrvatske šume (Croatian forests) built six kilometres of wine roads. That investment was worth €0.15 million. Four times more bottles Millions worth of investment in quality has not passed unnoticed on the market. Whilst the wine market in Croatia dramatically reduced last year, bottled wine from Feravino achieved 100%

growth and they expect even better results in 2011. It is basing its ambitious estimates on an excellent last quarter of 2010, when they sold four times more bottles compared with the same period

During two years of recession, Feravino investment reached €2 million of 2009. With 120 employees, Feravino is the leading economic organisation in Feričanci. They are currently cultivating vines on 170 hectares. Dominant wine types include graševina and frankovka, with an even more dominant white pinot, rhine riesling, zweigelt and syrah. An-

nual production ranges between 800,000 and 900,000 litres, and company gross income is roughly €2.60 million. Feravino aims at becoming the leading continental wine company and producer of superb white wines, which they have already achieved to a large extent with their champion Dika graševina. They expect even more from their new line of wine, which will be sold under the name of Miraz. The first wine in the line is the supreme graševina (2009 harvest), produced from top quality raw materials at Goveđa glava and nurtured under the close eye of oenologist, Ivana Nemet. Miraz graševina will arrive on the market at the beginning of this year and the line will be expanded with other varieties.

New project:

Factories finally open for local fashion designers Established local designers will design new collections and create new brands for each factory in Croatia was created with the goal of placing quality, affordable and high-styled textile material on the market. It is a project connecting prominent local designers and selected textile factories, leather, footwear and watches. Croatian designers can add value to new products, improving their quality. Prices will be lower, which will make them more competitive and available in the local, regional and soon West European markets, said Vinko Filipić, director of the project The already-established local designers, Zoran


Mrvoš, Ivica Klarić, Igor Galaš, Robert Sever, Juraj Zigman and Anamaria Ricov will design new collections, and create new brands for each factory - Riječka industrija odjeće, Fashion house Arena from Pula, San Peter from Ludbreg, Bambi from Varaždin

and Marli from Zagreb. New products from these local designers will be manufactured in series and will arrive in stores of the mentioned companies between August and September of this year. The Croatian Chamber of Economy (CCE) is

sponsoring the project, and its vice president, Vesna TrnkopTanta pointed out that both the CCE and manufacturers have been fighting for many years for the survival of the textile industry. She ventured that in 2000, trade in this economic branch was more export-oriented, but products were competitive at that time. However, the industry has stagnated since then, as the production of textile materials significantly diminished. During the past several years 4,200 people lost work and currently employs 21,000 workers, concluded Vesna Trnokop-Tanta. (S.P.)


Privredni vjesnik Year IV No 0137

( €0.20 billion ( €20 million invested by Agrokor over five years

to be invested into new slaughterhouse


A five year long path from th exemplary company The Agrokor acquisition of Belje in 2005 marked a turning point. Currently, after considerable invest meat factory (Baranjka) and the livestock feed factory amongst others, Belje has become a successf Svetozar Sarkanjac elje was close to bankruptcy not so long ago, only to become a respectable company. Privredni vjesnik spoke with Goran Pajnić, Belje Board President, about the arduous path the company has followed and plans for the future.


It will soon be six years since Belje became an integral part of the Agrokor Group. What was Belje like then, and what is it like today? Anyone acquainted with Belje in 2005 was aware that it was to be declared bankrupt. However, after the acquisition by Agrokor, comprehensive restructuring was undertaken, covering human resources, finance and all other company functions in need of restructuring. Modernisation of all Belje production started, although certain production was terminated. Kokingrad, with its poultry production, was abandoned, as well as fish farms, slaughterhouses and meat processing, were terminated. There was no outlook for

development in these areas at the time. Concurrently, core work reconstruction, such as farming and cattle-raising started with the majority of funds being invested there. Specifically, the 260 kms of the farm canal network were revitalised, new mechanisation was procured, old farms were revitalised and new built. After that, industrial production modernisation was initiated, dairy produce company, the mill, smoke-dried meat factory (Baranjka) and livestock feed factory. How much has Agrokor invested into Belje? Agrokor has invested €58.22 million over five years by signing a contract with the Croatian Privatization Fund. However, over €0.21 billion has been invested over this period. How much have government measures and various support mechanisms helped you? All the criteria for support payments for Belje were identical to all other Croatian producers. Belje did not have a privileged position as is sometimes implied.

Belje received support in compliance with Croatian legislation and with regard to its production. If our production share is considered within the overall Croatian farming arena, interesting information can be gained from last year. Specifically, with regard to the financial aspect, our share of overall Croatian production amounted to some 12%, whilst total support received amounted to 6%. The agricultural incentive system was adjusted to European Union criteria in Croatia last year. Yes, the state has solved this problem. Nevertheless, the problem is what has been happening with support over the last fifteen years. All the state investment into agriculture, both direct support and capital investment, regrettably has not increased agricultural production in Croatia. Many people from Baranja claim that Belje was reinvigorated after the Agrokor acquisition. You directly employ some 2,000 staff. How many people

Harvest 2011 in new winery There is considerable investment in wine growing and wine production. What are the plans? A new winery facility construction is in full progress. The harvest for 2011 is planned for the new winery. Considerable investment has been made here and the winery is in the final stage of all of these activities. Specifically, after bankruptcy in 2006 the winery was returned into the Belje system and at the time of the acquisition by Agrokor it was not part of our system. We then first invested into new plantations and wine quality. The completion of these objectives can

best be shown by the recognition and awards that Belje wines have been winning in recent years, the zenith being the golden Decanter for our Merlot last year. Secondly, in the narrative, there are tourism sector activities. We have built seven kilometres of wine road through our vineyards, thoroughly reconstructed the old wine cellar in Kneževi Vinogradi, reconstructed a villa and opened a modern wine tasting room. Thus, winery construction is the finale and the investment of €15 million made into it will provide us with a capacity of eight million litres of wine annually.

indirectly earn a living not only in Baranja but also in other parts of Croatia? Most of our business activities are in Baranja, but Belje extends its business activities widely. In addition to the approximately 2,000 staff with full-time contracts, we continuously engage about 200 employees in wine production. Additionally, Belje has co-operation connections with about 500 family agriculture farms. In addition to this direct connection with Belje, currently a whole range of construction companies from the Baranja area are co-operating on work within Belje and that is also a method of local employment development. Overall, and in my opinion there is at least the same Business & Finance Weekly


( €11 million

invested into livestock feed factory

( 30 farms

currently in the Belje portfolio

e brink of bankruptcy to an

ment and industrial production modernisation of the dairy produce factory, the mill, the smoke-dried ul exporter and in some segments a regional leader. Danube as a tourist link Tourist capacity development plans have been announced. Continental tourism, particularly in Baranja, has lately seen a significant breakthrough. Where do you see Belje in this context? The narrative on tourism is not only a Belje story. It is a broader Agrokor story with the intention of connecting the destinations of Ilok, Vukovar and Baranja. The River Danube is the waterway and the link in the tourism sense. A significant fact should be pointed out that we are not only developing tourism in the companies within the Agrokor system, but also have on-going co-operation with Baranja tourism employees and caterers. We already have several significant projects upgrading the quality of the tourism programme throughout the region. number of people linked with all Belje business aspects. According to some data, most funding has been invested into cattle-raising, particularly pig breeding. Croatia, however, is still importing a relatively high quantity of pork. In your opinion, what needs to be done for Croatia to, firstly, satisfy its own production needs and, secondly, become an exporter? Currently, there are some 30 farms in our portfolio, of which 16 are involved in pig breeding and next year we are planning to achieve in the region of 400,000 fattened animals within Agrokor. This will make us an assured leader in pork production

in Croatia, not only through our farms but also through about 20 cooperation-farms which Belje has throughout Croatia. With respect to Croatian pig breeding, it is no secret that only state-of-theart facilities, new technology and new genetics will make Croatia self-sufficient in this area of production. Unfortunately, currently we are far from that. At what stage is the new slaughterhouse and what will be its features? Currently, we are in the phase of completing obtaining a building permit and I hope it will start operating by the end of this year. It is an investment worth in the region of €20 million in con-

struction and equipment, and its capacity will be 600,000 fattened animals annually. In addition to Belje in Slavonija and Baranja, within the Agrokor Group there are also the Ilok vineyards as well as those within VUPIK. Are there any plans for synergy, at least with regard to wine sales to foreign markets? Agrokor has partly accomplished this. Specifically, business distribution and marketing have been taken on by the company within our group, Agrokor wines, working on export strategy of all Agrokor cellars including Belje. Overall there are about 20 million litres of wine production

annually. That is a considerable amount and Agrokor has made a significant step forward and our first wine sales to the US were made at the end of last year. In the varied Belje product range there are also industrial plants. What has been happening and what are your plans? We are more oriented towards existing plant modernisation and increasing capacity. Thus, our dairy plant in Beli Manastir is utilising 100% of its capacity. Specifically, its current capacity is almost three times higher than it was five years ago. Similar has been achieved in the Baranjka factory, where kulen production (a type of flavoured sausage made of minced pork traditionally produced in Croatia), sausages and bacon have been significantly modernised. Consequently, Baranjka and the dairy plant currently have an EU export number. This means that we have the possibility to export into the EU which is extremely difficult in the food production industry. The Darda livestock feed factory is an innovation in this industrialised segment. It could be the biggest single investment we have made and is worth €11 million. There are two separate livestock feed production lines with the cattle and pig breeding programmes at the heart of stock-rearing. Together with our recently acquired factory, Agroprerada from Ivanić Grad, we aim to achieve an annual capacity of 200,000 tonnes of livestock feed production which will make us a regional leader in production.


Privredni vjesnik Year IV No 0137


Boundless opportunities for all

Alternative financing increasingly popular

Innovation in payment methods as members will be able to use Maestro card or even e-banking

Croatia Factoring provides services to any company wishing to defer liability payments

f someone calls their business project Grupnjak (group sex) and then invites a large number of people to join, they cannot avoid arising interest and causing reaction. Although Croatia is mainly considered to be a conservative country, reactions to starting a new


Shopaholic portal differs primarily by its range group shopping portal called have been positive, claims Irena Vugrinec, Director, 50% d.o.o., who is launching the portal. Certainly, group shopping web portals, irrespective of their name, are not an epochal novelty. They have existed abroad for years and even in Croatia there are several established group shopping web portals. So why launch one more? And how is it different, apart from its provocative name? Firstly, through its range, opined Irina Vugrinec. They will not be greatly oriented towards cosmetics and fitness, both of which have a disproportionately large share in current portals’ offer, but have a broad range of technical equipment, sporting equipment, gastronomy and travel. Their first offer was a gift voucher to purchase technical equipment with a value of €28 for a price of €10. Loyalty rewards Other features will cover the possibility to search video clips, for example a hotel tour. In addition to the usual discounts, buyers through the portal will receive rewards for the amount they spend, as well as loyalty and recommendation points. Thus, for every new purchaser introduced, you will receive €1 and for every €140 spent, a €10 reward is given.

There are new payment possibilities; in addition to credit cards, Grupnjak members will be allowed to use the Maestro card and even pay via e-banking. For business partners joining Grupnjak the added value could be investing in marketing by press, internet, radio and television advertising, which increases the visibility of both the advertiser and their products. The situation is win-win situation, for both buyers and sellers, as is usually expressed by managers. Buyers get exclusive offers at exclusive prices and sellers get the marketing mix to attract new buyers. The sales mechanism will not differ from those already existing as it has already been a tested model for online sale, explains Irina Vugrinec. The portal promoters believe that in the first one hundred days, Grupnjak will be joined by sufficient shopaholics for the portal to reach the leading position among the numerous currently established competitors.

specific form of shortterm financing based on the sale of short-term, mostly uninsured assets of a company to a specialised financial organisation is called factoring and more and more companies in Croatia are engaged in it. Clients are offered alternative financing on preferential conditions and with extension of payment period possibility. One of the companies engaged in granting factoring services is a Croatian company, Croatia Factoring, founded in 2006 and currently employing 16 staff. Croatia Factoring grants factoring services to small companies and craftspeople delivering their merchandise and services to large companies and state institutions as well as mid-sized and large companies wishing to defer liability payment. However, Croatia Factoring has been faced with problems during the recession, such as illiquidity and debtors’ unwillingness to accept cessions, explained Mile Mihaljević, Croatia Factoring Director.


Valuable experience “It should be pointed out that our employees have valuable experience in the finance industry and factoring gained both in Croatia and abroad. Moreover, some of them are either the founders or have participated in the foundation of the first factoring and banking houses in South-Eastern Europe”, Mihaljević pointed out.

Although the company headquarters are in Zagreb, it operates throughout Croatia via its local representatives or directly from the headquarters and regional expansion has been included within its development plan. Financial institutions are companies’ key partners both in Croatia and abroad. These are primarily banking groups, various ministries, state administration and international and other financial and business institutions. Croatia Factoring is connected with international factoring associations via its partners, its primary products are the so called banovec - when the debtor draws a bill on the creditor and the latter discounts it for the factor or the company engaged in factoring; or “Pag assignee” (paški asignat) – when a debtor draws a bill on the factor and then the factor pays the debtor’s liability with regard to the attached invoice. Croatia Factoring employees are aware of the fact that the culture of factoring services’ in Croatia has not yet reached its full potential and have therefore been focusing on awareness promotion as one of their main objectives for the future. “Moreover, we have been focusing on client network expansion both in Croatia and in the neighbouring countries. We have also been introducing strict procedures and risk management with continuous service improvement”, concluded Mihaljević. (S.P.) Business & Finance Weekly




Kuna exchange mid-rate



5,390626 5,478971 6,589130 5,662037 8,686095 5,458731 7,388392 WEEK JANUARY 22, 2011



















7.380 17.1.



5.35 17.1.





5.64 17.1.






Bank growth

Growth continues

Deposits reach €29.63 billion

During 11 months of 2010 work productivity increased by 6.1% in industry tion and the employment index in industry from the beginning of the year until the end of November, continued to fall. During the first 11 months of 2010, work productivity in industry increased by 6.1% over 2009. Even though productivity growth rates are not as high as at the beginning of the year, mainly due to the basis effect, they remain relatively high. This is primarily the result of a heavier fall in industrial employment, explain RBA analysts. In terms of the national qualification of activities, the processing industry is the main contributor to the entire growth in productivity, considering it comprises 90%

Industry employed 239,800 workers in November egative movements on the labour market intensified in November 2010. On the level of the entire economy, employment reduced in November by 0.7% in relation to October, and slightly less in industry (0.1%). Industry employed a total of 239,800 workers in November. The intensified fall in employment in the industry has continued, its rate of decline now standing at 6% yearon-year. Even though this fall is notably lower than in 2009 (when employment in the industry decreased by 10.8% on average), fall rates remain relatively high.


During the first 11 months of the past year, the number of employees in industry decreased by 7.3% over 2009. In terms of national qualification of activities, during this period the highest fall in employment was registered in the processing sector (7.8% per year), of which the deepest fall rates were registered in the production of basic pharmaceutical products and preparations (25.9% per year). Relatively high Work productivity in industry, calculated as the ratio of the physical volume of industrial produc-

of total industry. During the first 11 months, work productivity increased by 6.1% year-on year with the highest growth rates in this sector being registered in the production of basic pharmaceutical products and preparations (77.6% per year), which is also a category with the largest employment fall. In addition to high growth in the processing industry, work productivity in industry also increased in the sector of electricity, gas, steam and air conditioning supply (7.5%). Productivity dropped by 3% only in the sector of mining and excavation. (V.A.)

In November 2010, total bank deposits continued to grow at a moderate rate. According to data provided by the Croatian National Bank, total deposits in November 2010, (savings and term kuna and foreign deposits), amounted to €29.63 billion or 0.3% higher than the month before. Year-on-year they have increased by 4.5%. Kuna deposits continue to fall year-on-year. RBA analysts point out that the annual rate of kuna deposit reduction (the amount of which did not change at all in November €4.85 billion), remains in doubledigit figures (12.4% in November). With a continuous fall over the last 25 months, such deposits were cut by a third. However, foreign deposits (€20.21 billion in November) are growing proportionally as a result of high annual rates (8.6% in November). During the past two years they have seen an increased of 30%. The growth in deposits was contributed to by both enterprises and the general public. At the end of November 2010, corporate

deposits totalled €4.15 billion, a 0.7% increase year-on-year, with deposits from private individuals reaching €19.12 billion or 8.3% higher in relation to November 2009. (V.A.)

10 ::: news

Superplatz award to Croatian camps Each year the German Automobile Club ADAC gives awards and recognition for best European camps. At a ceremony during the tourist fair CMT in Stuttgart the Superplatz award went to Croatian camps Lanterna from Poreč and Zaton Holiday Village Nin. The Croatian camps were amongst 79 awarded camps and 5,500 European competitors. For their excellent service and hospitality, the camp Zaton Holiday Village received a special award from the Danish Automobile Club FDM. HUP welcomes decision to revoke regulation The Croatian Employers’ Association welcomed the decision of the Minister of Construction Branko Bačić to revoke the recent Regulation on Spatial Plans, which might complicate business for investors. The decision is a good signal to all those who are considering investing or their projects are already in some phase of realisation or obtaining a licence, according to the statement of the Croatian Employers’ Association. New regulations should be adopted upon consulting with experts and the public and should be based on experiences in developed countries. Croatia presented in Berlin At the agricultural fair Green Week in Berlin, held recently, Croatia presented its agricultural proposals. The Croatian Chamber of Economy (CCE) organised an exhibition with products carrying the labels of Croatian Quality and Croatian Creation. The Croatian Tourist Association also participated at the fair. The government vice president, Petar Čobanković, took part at the Global Forum, one of the largest assemblies of agricultural ministers in Europe. The fair lasted ten days and received over 400,000 visitors.

Privredni vjesn vjesnik Year 0137 Ye Y ar IV No 013

The bura as a brand

Beware the Senjska bura In order to exploit the bura phenomenon in tourism and culture, the Senj 21 association was formed last year to brand the wind Sanja Plješa t is known that the quality of dried meat and prosciutto depends on the bura (northeasterly wind), as this dries the meat, giving it its specific flavour which is becoming a true Croatian gastronomic brand. The Bura in Senj blows ferociously, with the highest recorded speed being 173 km/h. Senj held this record for decades, but Maslenica took over “first place” in 1998 with a recorded speed of 248 km/h. Despite the fact Senj is known as the town of bura, there are no significant facilities for drying meat, other than couple of private units. In order to exploit the bura phenomenon in tourism and culture, the Senj 21 association was formed last year in or-


We concluded that the Tower of Lipica, within the city walls, was the ideal place. Since Lipica was bombarded during the Second World War, last year we invested €110,000 in its renovation. Funds

Bura in Senj blows ferociously with the highest recorded wind speed in the town being 173 km/h der to brand the wind. After brief consideration, members of the Association decided to use the climatic features of Senj and turn any negative aspects into positives by building a museum dedicated to the bura. After the Association had submitted the project to tender for funds allocated by the Ministry of Tourism and preaccession EU funds, members of the Association held a workshop covering the bura phenomenon and drew up a brochure on the Senjska bura in both Croatian and English versions. “When we recognised the significance of this project, we joined in its realisation and decided to look for a location for the future museum.

for reconstruction were provided by the town of Senj and the Ministry of Culture,” said the mayor of Senj, Darko Nekić. Wind-driven organs In order to develop this project as far as possible, members of Senj 21 consulted meteorologists from the Central Institute for Hydro-meteorological Services. Even though the renovation of Lipica should have been finished in November 2010, it was not but Nekić believes the tower will be completely renewed by the end of January. Thereafter, they will draw up project documentation for the creation of the museum. Irrespective of who draws up the

project for the interior design, its original authors wish the museum to have a multimedia concept with video and audio records of past bura. The opening of the museum is scheduled for 2012. When Privredni vjesnik asked mayor Nekić who would manage the museum, he said that the Town Museum and Tourist Association of Senj are partners in this project, so it is assumed that the Town Museum would take over the management of the museum which will spread over three floors, and assumed that around €0.27 million will be invested in its construction and the exhibition. “This year we expect to provide all the necessary documentation for its construction, so that we could allocate certain funding from the town budget for 2012 for the interior design,” opined Nekić. When the interior design is finished, they will apply for financial aid through the Ministry of Culture and Tourism. It remains unknown how the process of branding the bura will continue, but members of Senj 21 have ample ideas, including winddriven organs and an information stand in the centre of the town, which would offer all important information regarding bura, particularly its speed and strength.

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