Page 1

Mirando Mrsić, MD, PhD, Minister of Labour and Pensions 28% more funding for job creation

A different business view of Croatian companies Many local companies increased their income considerably during this period

Job creation rather than glamour Recession and high excise duties have adversely affected construction and sales of new vessels

INTERVIEW PAGES 2-3

CORPORATE RESULTS PAGES 4-5

ZAGREB BOAT SHOW PAGE 8 2008 2009 2010 2011

Croatian Business & Finance Weekly Established in 1953 Monday / 27th February / 2012 Year V / No 0188 www.privredni.hr

S U P P O R T E D

B Y

T H E

HIGHER GUARANTEES FOR SMALL-SIZED ENTERPRISES

pvinternational pv international C R O A T I A N

C H A M B E R

O F

E C O N O M Y

GREEN LIGHT FOR SUBSIDIES

HAMAG – €0.13 billion more he present governmental measures have assisted the economy by approximately €0.67 billion. The next step is to increase the capital of the Croatian Bank for Reconstruction and Development (HBOR) by €66.67 million as well as the capital of the guarantee fund of the Croatian Agency for SME (HAMAG) by €0.13 billion, according to a statement from the Minister of Entrepreneurship and Crafts, Gordan Maras, at a business lunch of the Croatian Employers’ Association. According to his vision, HAMAG should become a one-stop-shop for entrepreneurs through which they will be able to connect quality projects with local authorities and financial institutions as well as receive subsidies for project finalisation. HBOR should at the same time take on more risk so that entrepreneurs could obtain loans faster and cheaper. Maras arrived at the figure of €0.67 billion by summing up the effects of a decrease in the rate of health insurance contributions by 2%, which leaves the economy with an additional €0.33 billion per year; decreased contributions to forests and water by 50%; a temporary cancellation of the monument annuity (€40 million), and finally the cancellation of the tax on reinvested profit (€0.26 billion). Even though he did not comment on the controversial legal resolutions on the retroactive taxation of nonpaid profit, Maras promised he would support entrepreneurs in making all the necessary corrections in case any ambiguous provisions emerge. He also announced small-sized entrepreneurs would be included in investment projects in the energy sector, worth €1.06 million. (D.Ž.)

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€5.3 million for film industry Attracting foreign film and TV producers as 20% of costs can be covered by subsidies he Croatian Competition Agency has given the green light for the subsidies totalling €5.3 million for the production of audiovisual works, to be provided by the Ministry of Culture through the Croatian Audiovisual Centre. Subsidies for the production of action, documentary, animated and television films or serials will be in the form of grants available from 1st January 2012 to 31st December 2013. Subsidies are provided to attract foreign film producers, in order to make Croatia a suitable location for film and television serial production, with participation from local film workers, equipment and venues. 20% of justifiable production expenditure for individual audiovisual works created in Croatia will be covered by the subsidies, yet must not exceed €0.5 million. In addition, an individual subsidy customer is entitled to obtain further state subsidies for the same justifiable expenditure, provided

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the total amount does not exceed 50% of justifiable expenditure. For the production of complex audiovisual or lowbudget work, the amount of subsidies is restricted to 80%.

Foreign film producers entitled to use subsidies via local partner companies Justifiable expenditure comprises the cost of, for example, archive material or copyright, rent, direction, production, cast, screen writers, stuntmen, cameras, lighting and sound equipment. All entrepreneurs registered for audiovisual production are entitled to subsidies, provided they have not filed for bankruptcy or liquidation and that they are in compliance with all regulations. Foreign film producers are entitled to subsidies through local partner companies. (G.Š.)


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Privredni vjesnik Year V No 0188

Tomislav Šerić, Director, Business Incubator BIOS, Osijek INTERVIEW: MIRANDO MRSIĆ, MD, PHD, M

Business incubators – for or against? hat are business incubators and what is the purpose of their existence? Do they function? How can their success be evaluated? These are the most common questions that arise in attempting to decide on the justification for business incubators. Business incubators facilitate entrepreneurial operations during the initial years of their activity through subsidised rent of premises and a range of other services. Their most important role is in the professional mentoring of entrepreneurs. Their success can be evaluated according to several basic criteria, such as the percentage of entrepreneurs surviving through their first, second or fifth year. Another criterion is the number of new jobs or businesses created by the incubator. Whilst assessing the impact of the incubator, it is also necessary to assess whether the survival percentage of businesses actually exceeds the average.

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If managed effectively, business incubators are a powerful tool One of the crucial purposes for their existence is the fact that they enhance an entrepreneurial culture, which is of particular importance when considering the discouraging results from research conducted by the Global Entrepreneurship Monitor, according to which Croatia has always ranked at the bottom regarding the motivation criterion for the start up of entrepreneurial activity. There will be an increasing number of financing IMPRESSUM: Privredni vjesnik Kačićeva 9 10000 Zagreb +385 1 5600020 uprava@privredni.hr www.privredni-vjesnik.hr/ subscription

28% more fu

The issue of women who are not entitled to unem on the Law on unemployment benefits Jasminka Filipas rivredni vjesnik recently talked with Mirando Mrsić, Minister of Labour and Pensions, about amendments to the Labour law and pension insurance as well as employment measures in 2012

P sources for business incubators following Croatian EU accession. Consequently, there is a danger that local communities might not consider whether there is a real need for a business incubator, merely aiming to obtain EU funding, which is absurd. Luckily, EU funds are only granted to projects having potential. Hence, the crucial question is whether a business incubator functions in a satisfactory way and how can its potential be exploited to the maximum extent. There is no satisfactory answer thus far regarding the most adequate and the most effective incubator model. Will it be owned by local communities (as in Croatia), or private incubators (as in the US) or the model where incubators in public private partnership have been managed by a private entity where the achievement of particular goals is the prerequisite for their operation (New Zealand and Israel)? Nevertheless, if the incubator is effectively managed, it is a powerful economic development tool.

FOR PUBLISHER Nikola Baučić +385 1 4846661 uprava@privredni.hr

IMC MANAGER Dea Olup +385 1 5600028 olup@privredni.hr

EDITOR IN CHIEF Darko Buković +385 1 5600003 bukovic@privredni.hr

TRANSLATION Lučana Banek lucanab@gmail.com Mirjana Cibulka mirjana.cibulka@gmail.com

EXECUTIVE EDITORS Andrea Marić maric@privredni.hr Vesna Antonić antonic@privredni.hr

INTERNATIONAL OPERATIONS Ray Fletcher fletcher@privredni.hr

What amendments will be implemented to the Labour law and why? We have said on several occasions that there will be no alterations in the Labour law, except in the area of collective agreement; more precisely regarding article 262, which has been identified as unsustainable by all concerned. Our current priority is the issue of overly-long collective agreement period. So amendments are not due to credit rating agency pressures? No, the amendments were definitely not as a result of credit rating agency pressure. The provision regarding the extended collective agreement period needs to be reconsidered, since collective agreements cannot be cancelled or changed during the extended

The disability pension issue in Croatia needs to seriously considered as many people are able to perform a different job rather than seek disability retirement period, until a consensus on the issue has been reached. All other Labour law provisions will remain unaltered. We are simultaneously going to enact a Law on the representing of trade unions and employers during negotiations. Both issues will be the cornerstones of our forthcoming discussions and negotiations.

What is your stance on employer requests for additional flexibility in labour legislation where their liabilities to the state exceed €6.7 billion and where €2.7 billion relates to mandatory contributions? How will this debt be serviced and do workers themselves have to take legal action regarding mandatory contributions? I believe that the Labour law is currently flexible and not in need of amendments in that respect. Legal provisions need to be complied with, particularly regarding payment of salaries and mandatory contributions and focus on implementation of the Labour law. We are planning to enforce the provision on obligation of payment of salaries and mandatory contributions, which implies that payment of salaries will not be possible without payment of mandatory contributions and vice versa. Secondly, in the near-term future the Croatian Pension Insurance Institute will implement a system where every worker will be able to check on the payment of their mandatory contributions, in a similar manner as is currently possible within the second pension pillar.


www.privredni.hr Business & Finance Weekly

3

MINISTER OF LABOUR AND PENSIONS

unding for job creation ployment benefits whilst waiting for retirement will be addressed by implementing amendments Re-training, public works, enhancement of youth employment

28% more funds or €48.7 million has been allocated for active employment measures in 2012, which will be used for additional training and re-training of those unemployed, public works, enhancement of youth employment and similar. “We are planning to introduce additional measures particularly regarding the unemployed: they will be re-trained for jobs which are needed on the market and they will not be removed from the unemployment register until they have found a job”, reiterated Mršić. They will be monitored throughout the year through an assessment processes. “We are also planning to provide public works which will make social integration possible for the longterm unemployed, by making contacts and slowly return to the world of work. In addition, there are concrete plans for payment of mandatory contributions for young people as they volunteer and acquire the mandatory work experience for professional examinations. Simultaneously, we are certainly going to make sure young people do not become a ‘cheap’ workforce which can be easily replaced year-on-year”, pointed out the Minister. What about the issue of outstanding mandatory contributions? Are there mechanisms in place to service this? Outstanding mandatory contributions are a serious problem. It is only at retirement that workers get an insight into their outstanding mandatory contributions due to employer failure to settle liabilities and are consequently informed that their retirement allowance will be lower. This situation is unacceptable and it is not clear why the state has been tolerating it thus far. It is a question to be posed to the former government. It will probably be very difficult to service this debt in companies whose assets have been blocked or which have filed for bankruptcy and impossible in companies which have been liquidated. Nevertheless, we are obliged to talk about these issues. Hence, we are planning to implement a system - a safety mechanism - which will prevent similar problems in the future. Outstanding payments to the second pillar are an issue of serious concern, since these funds are workers’ savings. Has inspection of the Croatian Pension Insurance Institute been completed?

We have not received reports from those authorised thus far and consequently I am not in position to speak about this issue. It is well known that many employees at the Institute continued their work irrespective of their having been eligible for retirement for a longer period of time.

but to transfer the second-instance commission from the Croatian pension Insurance Institute to the Ministry of Labour and Pensions. Consequently, we will implement uniform criteria to assess work capability, conditions for disability retirement, as well as in auditing of contentious cases.

Will there be a disability retirement audit? In developed countries there is work capability assessment, whilst, I believe that in Croatia, there are 14 different commissions assessing disability, due to which we have been witnessing considerable system abuse thus far. One of the major goals of the restructuring of the Croatian Pension Insurance Institute and disability pension system is to adopt a different approach on treating workers whose disability has been caused at work and co-ordinating appropriate return-to-work plans for disabled workers. The latter is of particular importance, since there is currently an excessive number of working age disability pensioners in Croatia, with many of them being able to continue working at a different job, appropriate to their condition. We will not audit all disability pensions,

One of the major issues of Croatian pension system, in addition to a huge number of pensioners compared with the number of employees, is the fact that contributions for the second pension pillar have not increased. The issue of workers who have been saving in the second pension pillar for a short period has not been duly addressed. They are currently entitled to opt for the desired pension pillar, yet experts do not believe this to be the most adequate solution. What are you planning to amend? A quality solution needs to be provided for the workers who have been saving in the second pension pillar for a short period and we will co-operate with the pension funds and the Ministry of Finance. In addition, we are planning to increase contributions to the second pension pillar to 7%

next year, provided that the economic situation allows. This year we focused on reducing the burden on the economy by decreasing employee health insurance contributions. Increased contributions to the second pension pillar will not affect nett salaries which implies that the tax burden on salaries will have to be redistributed. In addition to the second pension pillar, we will promote annuity savings in the third pension pillar. It is our duty to inform the public of the need to plan their savings since their first employment in order to obtain a satisfactory retirement allowance. Are there any other planned amendments for 2012? The issue of women who were not entitled to unemployment benefits whilst waiting for retirement will be addressed by implementing amendments within the Law on unemployment benefits. These unemployed women (over 2,300) will be entitled to receive unemployment benefit until they are eligible for retirement. In addition, we will subsidise relocation and work-related travel expenses. Unemployment benefits, as well as the rights of the unemployed, will not be altered.


4 ::: news

Privredni vjesnik Year IV No 0188

( €3.32 million profit ( €5.33 m earned by the Kraš Group last year (28.3% up)

achieved by Zvijezd

A different business view of Croatian companies

Every eighth loan is irrecoverable From a total of €38.9 billion of loans in Croatia at the end of last year, 12.4% or €4.83 billion are bad loans, according to data provided by the Croatian National Bank. In relation to the end of 2010, the share of partly recoverable and completely irrecoverable loans increased by 1.2%. The level of bad loans has increased considerably since the end of 2008, when it stood at 4.94%. A year later it climbed to 7.8%, reaching 11.23% by the end of 2010. HNB sold a further €132 million On Thursday, the Croatian National Bank intervened on the foreign currency market by selling €132 million at average exchange rate of HRK7.579264/€1, drawing from the banks a total of €132.4 million. This is the third HNB intervention this year aimed at alleviating the strong euro exchange rate. In two previous interventions, HNB sold a total of €327 million to the banks, drawing €0.33 billion from the financial system. Decreased Vipnet income In 2011, Vipnet achieved a total of €420.7 million in income, which is 6.9% down over 2010. As a result of the takeover of B.net in the third quarter of 2011, the income from the fixed line segment totalled €19.5 million, mainly broadband and television services. Operating profit decreased by 18% in relation to 2010, totalling €67.9 million. Last year, Vipnet invested €50.5 million in new technologies and coverage, and another €93 million for the acquisition of B.net. At the end of 2011, they had 2.018 million users, a slight decrease of 0.5% in relation to the end of 2010. The number of subscribers went up by 8.5%, whilst prepaid services decreased by 5.3%. Average income per user is €12.9.

Who increased income in bad ti

During the past two years, many companies tried to improve their results with internal rationalisa dismissals, says economist Ljubo Jurčić. These measures are now exhausted and the year will be However, the fact remains that many local companies increased their income considerably durin Igor Vukić ector movements, expenditure cuts and business diversity are elements of success of few Croatian companies whose results have lately been above the grey Croatian average. After suffering losses for the past two years, Kutinska Petrokemija made a €14.38 million profit in 2011. This profit exceeded their plans, and total income rose by 30%, to €0.40 billion. Ina achieved profits of €0.24 billion in 2011, an increase of €113.87

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Podravka Group earned a total of €16.1 million nett profit (+44%), and sales rose 3% million or 89%. Đuro Đaković Co. registered income of €106.67 million and profit of €1.27 million. In 2012, they anticipate income to increase to €0.16 billion and profits of €3.3 million. The optimism, Board President Zdravko Stipetić expressed at the recent anniversary of the company, is based on business in different areas: announcements of new orders for Croatian Rail-

ways (Hrvatske željeznice), in the defence segment (combat vehicles in co-operation with Patrija) and deals on foreign markets. Podravka Group achieved a total of €16.13 million in nett profit (+44%), and sales were up by 3%. In 2011, Kraš Group made a profit of €3.32 million, which is an increase of 28.3%. Agrokor companies Ledo, Zvijezda and Jamnica also achieved good results; Ledo with a profit of €16.89 million (24.5% increase), Zvijezda €5.33 million, (87.5% up); Jamnica with profits of €13.39 million, remained at a similar level as for the past two years (profit decreased by 1.7%), with income growth of 10%, to €0.16 billion. Crisis in the telecommunications sector However, the other side of the ledger is occupied by companies with a difficult year behind them: Hrvatski telekom reduced its profits by 1.1% (to €0.24 billion), with income decreasing by 3.6%. Last year, Vipnet earned a total of €420.7 million in income, which is 6.9% less in relation to 2010. It has never before been registered that all mobile operators published their results showing decreased income and a lower number of active users in any business quarter, commented Mladen Pejković, the Vipnet Board President. These worrying trends point once again to a serious problem regarding the treatment of mobile com-

munications. If various institutions continue to put pressure on the industry, instead of taking a European viewpoint of telecommunications as an infrastructure that generates economic growth, this will have destructive consequences on telecommunications in Croatia, added Pejković. The crisis in the telecommunications sector and reduced capital investment also had an impact on the results of Ericsson Nikola Tesla. They achieved a nett profit of €3.73 million, but sales on the local market plummeted by 21% (€35.2 million). Similar happened in Russia and surrounding countries (€58.8 million income). However, on other markets, Ericsson registered a 7% increase (€61.47 million income). The company thus benefited from the fact it is owned by a large multinational company. According to ENT President Gordana Kovačević, the following year will remain dramatic with pressures on prices and in search of sustainable business models. Rafael Rybkovski, new Finance Director at ENT, says the company has hit the rock bottom of the recession, so results will rise in 2012. Food sector is always steady The results of many companies depend on the sectors in which they operate, explains economist Ljubo Jurčić, who spent last year acting as the President of Podravka Supervisory Board.


www.privredni.hr Business & Finance Weekly

5 GREATER RECOGNITION FOR CROATIAN DESIGN

million profit

Atelier Propadalo an extraordinary success in Frankfurt

da (87.5% up)

he Steklarna Rogaška stand at the Ambienta Messe Frankfurt show one of the best known and largest world shows for consumer goods, was designed by the Zagreb-based Atelier Propadalo. The exhibition stand was a totally Croatian product by Ivica Propadalo as the designer, and Feđa Vukić as expert partner. The Steklarna Rogaška film was directed by Manuel Šumberac and Zdenko Bašić, with DJ Dus writing the music. In addition, the well-known Croatian companies of Sliško and Eldra were contractors. As pointed out by

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mes?

ations, cuts to expenditure and very challenging, according to him. g this period Take a look at the solid results achieved by companies in the agricultural sector. Despite the crisis, people still spend on ba-

Part of the Agrokor Consortium, Ledo earned a profit of €16.89 million, an increase of 24.5% sic food products, even more so than in “normal” circumstances. However, there are differences within the sector. Vegeta’s sales will always be good. However, the sales of bottled water, or other relatively luxury and premium products will drop, says Jurčić. According to Jurčić, over the past two years many companies tried to improve their results with internal rationalisations, cuts in expenditure and dismissals. These

measures are now exhausted and the year will be very challenging. He does not expect much from the announced state investment cycle. We require investment in end products. The problem of our investment lies in the structure: infrastructural investment creates large debts that are difficult to repay since there are no competitive products, says Jurčić. Therefore, he expects economic stagnation to continue this year as well as GDP to decrease by 1% year-on-year. In the publication Gospodarska kretanja (Economic Movements), analysts of the Croatian Chamber of Economy notice most groupings registered production falls in 2011. Intermediary products decreased by 4.6%, durable products for mass consumption decreased by 5.3%, and energy by 8.6%. The negative trends are still alleviated by the increased production of non-durable products for mass consumption (0.8%) and capital products (11.4%). The upward trend of 2.9% points to labour productivity due to the decreased number of the employed (down 3.9%), according to CCE.

Atlantic grows on four markets Atlantic Group published excellent results: income of €0.63 billion and nett profit of €7.32 million. In addition to Croatia, Atlantic spread its business to all ex Yugoslavian countries, as well as Germany, Great Britain and Russia. According to Emil Tedeschi, this level of diversity creates synergy effects which compensate for the unfavourable conditions in the macroeconomic surrounding. After the acquisition of Droga Kolinska and its system integration, Atlantic continues to develop its own brands that now comprise 71.6% of sales.

Atelier Propadalo, the vision of the stand was based on the slogan: “A glass slows the passage of time” and many visitors and other exhibitors were delighted. “We are extremely pleased to have provided this widely acknowledged fair with a unique conceptual solution. The praise from many colleagues and visitors is a tremendous acknowledgement, proving that our vision has been recognised. It also shows that both in Europe and globally that Croatian design has been duly appreciated”, as stated by Atelier Propadalo. (S.P.)

CENTRAL BUREAU FOR STATISTICS

Slight increase in prices n January, consumer prices showed a mild increase yearon-year as a result of weak local demand and the effect of energy price rises. According to data provided by the Central Bureau for Statistics, consumer prices went up by 1.2% yearon-year. On a monthly level, consumer prices fell by 0.4%. Price rises on a year-on-year level is mainly due to food and energy prices. When energy prices are excluded from the total index, the increase was 0.8%, and with energy and food prices excluded, CPI was only 0.2%. Furthermore, it is interesting to see that without energy, food, drinks and tobacco, consumer

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prices fell by 0.3% year-on-year. Food prices rose by 2% yearover-year, with the highest increase shown for oil and grease (+6.7%), fish (+5.7%), bread and cereals (+4.8%), as well as milk, cheese and eggs (+4%). Regarding housing, water, energy, gas and petrol, which comprise 15.7% of the index, prices increased by 3% year-on-year, with the highest increase seen by liquid petrol (+22.8%). On the other hand, clothing and footwear prices continued falling, by 4.6% year-on-year. Due to January sales, clothing prices on a monthly level contributed the most to a total decrease in consumer prices (-10.7%). (V.A.)


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WE PRESENT

ZDRAVE STVARI, ZAGREB

Privredni vjesnik Year V No 0188

WINERY AND STANCIJA MENEGHETTI, ISTRIA

Write and create Zdravopedija The portal is a family project on which all family members participate

The joy of living in harmony with nature Meneghetti Stancija is also known for olive oil and is included in the world guide to olive oil L’extravergine in 2007 n addition to aromatic and cosmetic products, teas, food additives, grains, honey and other organic products, visitors to the Zdrave stvari portal are also offered Zdravopedija (Healthypedia). Dražen Patekar Bahun, owner of sales and information services Zdrave stvari, says Zdravopedija is envisaged as an online base of articles on healthy life-styles, also created by portal users. Furthermore, Zdravopedija’s additional advantage is linking articles to products so visitors can learn more about the products they may wish to buy, Bahun explains. The idea came spontaneously, as many things in life do. The beginning was connected to the subject-matter of my thesis, and the passion for programming rounded the entire project which led to establishing the portal. The bottom line is our love of nature and everything connected to health and a healthy life, points out Patekar Bahun.

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Online workshops At the beginning we encountered the usual problems with Croatian bureaucracy which is slow and complex, says Patekar Bahun. Young companies lack quality support at state level that would help them learn about the regulations in force in order to be able to perform their proper activities, Bahun highlights. The por-

tal is a family project on which all family members participated, and for now it does not have any employees. Employment is definitely a plan, and personal capital was invested in the entire project, Bahun adds.

Zdrave stvari portal already has around 1,000 registered users Currently, Zdrave stvari has around 1,000 registered users throughout Croatia. The founders see EU membership as a great opportunity for the Croatian economy and they hope it will help them distribute their product on an international level. Furthermore, they are constantly looking for new products to broaden their product line and are open for co-operation with any and all producers of local natural products. We keep up with technological trends and we are presently developing our own. We are working with Aromara, a Zagreb company, on a project of creating an online workshop for preparing natural cosmetics and medicinal preparations. We hope this way we will manage to inform people about the importance of using natural products which are better and healthier compared with the more industrial ones, concludes Patekar Bahun. (B.O.)

ituated on the Istrian peninsula opposite the Brijuni islands, the Meneghetti winery and stancija continues the tradition of producing wine and olive oil, present in Istria since the Roman era. Wine has been produced in the stancija since 1853. However, a new page in its history was turned in 2001 when it was taken over and remodelled by Romana and Miroslav Plišo. During that period they planted their first olives and the vineyard. Stancija is an authentic Istrian rural house, completely renovated and equipped with luxurious furniture, covering 120,000m2. Two years ago their team was joined by the well-known Croatian economist, Goran Hanžek, whilst Walter

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The most frequent visitors are Russians, Americans and Scandinavians Filiputti, oenology professor at Udine University, took over the Meneghetti wines. Meneghetti is a synonym of our philosophy, which is the quality of life in harmony with nature it surrounds and protects. The tradition has been brought to life as a link between the knowledge of different generations, said Hanžek. Wine production started in 2002 with 2,000 bottles, intended only for

visitors to the stancija. However, since the wine was well accepted by visitors, the market demanded more, and the Plišo family with their partners began to deal more intensively with the vineyard and winemaking. The quality of their wine, nature and gastronomic range attracts visitors from Russia, America and Scandinavia. Meneghetti wines in the USA Regarding their plans, Hanžek pointed out they launched a ‘red label’ wine in 2011, which is a more “serious” line of red wines, whilst the white label refers to their young wines. Their wish is to cover the entire market and they predict they will have a sufficient amount of wine to sell to the Croatian market this year. “We also presented the Meneghetti wines in the USA, and during the next two to three years we plan to export to Austria, Germany, the Czech Republic and Slovakia. The Meneghetti white and Meneghetti red wine will be our two main wines”, says Hanžek. Furthermore, they also produce Malvasia and Meneghetti sparkling wine using a base of chardonnay and a white pinot addition. It is an interesting fact their sparkling wine is produced using the classic method. Meneghetti Stancija is also known for olive oil which was included in the world guide to olive oil L’extravergine in 2007.


www.privredni.hr Business & Finance Weekly

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CROATIAN FOREIGN CURRENCY MARKET Currency

AUD CAD JPY CHF GBP USD EUR Source: HNB

Kuna exchange mid-rate

EUR

7.584

6,082669 5,681564 7,03083 6,293722 8,947424 5,664162 7,582047 WEEK FEBRUARY 25, 2012

USD

5.74

21.2.

22.2.

23.2.

6.30

7.582

5.72

6.29

7.580

5.70

6.28

7.578

5.68

6.27

7.586

5.66

6.26

7.584 20.2.

CHF

24.2.

5.64 XX.1.

XX.1.

XX.1.

XX.1.

MERGERS

XX.1

6.25 XX.1.

XX.1.

XX.1.

XX.1.

XX.1

UNEMPLOYMENT RISING

5,000 more unemployed

PBZ TAKES OVER MEĐIMURSKA BANKA Međimurska banka operates in northern Croatia with a network of 16 branches and is the most profitable regional medium-sized bank in the country fter a long and successful business co-operation and attachment with the PBZ Group, Međimurska banka and Privredna banka Zagreb joined forces and began the process of merging. The merger is scheduled for completion on November 30, 2012. Međimurska banka operates in the north of Croatia (County of Međimurje and County of Varaždin), and with a network of 16 branches, it is the most profitable regional medium-sized bank in the country. It generated pre-tax profits of €4.3 million in 2011. At the end of the year, assets totalled €0.38 billion, with a capital adequacy rate of 20.10%. Even though Međimurska banka, as a long-time member of the

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PBZ Group, is a very successful regional bank with an identifiable local brand, according to PBZ they managed to predict the market need for further mod-

We believe this move would additionally strengthen the position and significance of PBZ Group ernisation of its business which is increasingly surpassing the regional level. An intensified need for technological and regulatory balancing had been noticed, which presupposes considerable additional investment. PBZ has

100% share of the basic capital of Međimurska banka, member of the PBZ Group since 2000, and this would be the final step towards its complete integration into the PBZ system. We would like to additionally strengthen the position and significance of the PBZ Group in the area and enable further investment into new banking products and services to become more efficient, competitive and better in providing services to our clients. We are convinced the merger with a bigger and stronger bank with a vast spectrum of products and services, would have a positive effect on working with clients as well as the broader local community in which we operate, PBZ point out. (V.A.)

According to the latest data provided by the Central Bureau for Statistics, the registered unemployment rate in Croatia climbed to 19.8% in January, up 1.1% more in relation to December. Besides the usual seasonal trends, according to which the unemployment rate increases in autumn and winter months, the labour market additionally reflects the prolonged recession, or rather the lack of recovery in the real economy. In addition to negative trends in the real sector during the past three years, resulting in higher unemployment, the increase was also affected by reduced activity of the ablebodied public work force. Considering the anticipated decrease in economic activity and the announced decrease in the numbers employed in the public sector, the number of the unemployed and unemployment rate is expected to continue to increase, where it is likely the average unemployment rate could rise to 18.5% (18% in 2011). Considering that the number of registered unemployed continued increasing in February (5,000 more compared with January according to the latest data), the unemployment rate may well exceed 20% in February.


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Privredni vjesnik Year V No 0188

Zagreb Boat Show 2012

Job creation rather than glamour According to employer estimates there are around 30,000 foreign vessels in Croatia on which tax has not been paid in any EU country but owners will have to leave Croatia or pay VAT after Croatian EU accession Krešimir Sočković local and foreign exhibitors from 27 countries participated at the 21st Zagreb Boat Show which has recently been held at the Zagreb Fair. In addition, there were presentations of most local small shipbuilders. The nautical sector has been one of the most propulsive sectors in Croatia until the end of 2008. According to estimates provided by the Nautical Sector Association at the Croatian Employers Association, marina and vessel charter services, vessel construction and sales, maintenance services and vessel insurance in 2007 generated €850 million in revenue. Nevertheless, the nautical sector has been stagnating since the second half of 2008, as pointed out by Romano Pičuljan, President of the Association and a member of the Pičuljan Board. “Construction standstill as well as high taxes and other charges levied on vessels are hindrances to the development of the nautical business in Croatia”, added Pičuljan. Construction of marinas and berths has been faced with excessive regulations, whilst charges levied on vessels are currently overly high,

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pointed out Roko Vuletić, Corporate Strategy and Development Director with NCP Group, one of the largest yacht charter companies in Croatia. “New berths are currently hardly being constructed

This year regulations will not be altered and charges levied on vessels will not be increased in Croatia, whilst just six marinas have been constructed during the last six years with around 1,000 berths, where three marinas have not obtained all the necessary documentation thus far. On the other hand, in neighbouring countries, such as Italy or Montenegro, there is ample construction work in place”, added Vuletić. Growth irrespective of recession According to the nautical tourism development strategy adopted three years ago, there are plans for the construction of 15,000 berths during a ten year period. Nevertheless, the construction has been stagnating due to excessive taxes. Consequently, VAT

per berth is currently 23%, whilst from 1st March it will be raised to 25%, as opposed to a 10% rate in the tourism sector, whilst simultaneously concession fees are overly excessive. “Recession and high excise duties have adversely affected construction and sales of new vessels, as well as the announced property tax which will be levied on small vessels and yachts”, pointed out Vuletić. According to employer estimates there are around 30,000 foreign vessels in Croatia for which tax has not been paid in any EU country. Their owners will have to leave Croatia or pay VAT following Croatian EU accession. Since VAT in Croatia is higher than in other countries, it can be expected they will leave Croatia. Hence, a 10% VAT rate has been proposed, as it will generate €150 million revenue. Neven Čolić, Director of Navigo Sistem, pointed out that the nautical sector is often considered glamorous. “500,000 people depend on the nautical sector and consequently it can be considered as job creation, without glamour and currently, unfortunately even without vessel sales and lacking the necessary funds for their con-

struction”, emphasised Čolić. Nikola Mendrila, Assistant Minister at the Ministry of Maritime Affairs, Transport and Infrastructure, stressed the growth of nautical tourism irrespective of recession, indicating greater stability and the ample potential. “This year regulations will not be altered and charges levied on vessels will not be increased”, stated Mendrila.

PV International 0188  

PV International - The first weekly newsletter covering the Croatian economy as well as that of the wider region, in English

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