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Davor Bošnjaković, Director, Vupik As a result of investment and organisation, we have doubled yield and profit in two years

Turkey increases investment into Croatia Kentbank wants to be a financing bridge between Turkish and Croatian companies

RBA analysis A downward trend seen in all industrial areas, intermediary and capital products falling most

INTERVIEW PAGE 3

TURKEY PAGES 4-5

INDUSTRY PAGE 7 2008 2009 2010 2011

Croatian Business & Finance Weekly Established in 1953 Monday / 4th June / 2012 Year V / No 0202 www.privredni.hr

S U P P O R T E D

B Y

T H E

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

NEW FINANCING METHODS

€1.05 BILLION POTENTIAL The 20,000 entrepreneurs who disappeared over night could have preserved their companies had they had easier access to finance Boris Odorčić he Programme for Crediting Development and Economy as well as new financing methods of entrepreneurial projects through risk distribution were presented by the Croatian Bank for Reconstruction and Development (HBOR). HBOR Board President, Anton Kovačev, highlighted that the new programme would be implemented in conjunction with the Government, Croatian National Bank and general banks. Loans will be used by trade organisations, crafts and other companies whether small, medium or large, and especially those operating in production and tourism, but under the condition they are at least 25% in private ownership and generate at least 10% of income on the international market. The purpose of these

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new programmes is the settlement of debts operators owe to suppliers, the state and creditors. A maximum of 30% of the loan may be used to settle debts owed to financial institutions. By decreasing the rate of obligatory

Risk distribution

Risk distribution programmes, that is, financing investment projects of SME’s and financing large investment projects as well as production preparation, will be implemented in co-operation with banks through existing HBOR loan programmes. These loan programmes are intended for entrepreneurs, whose new investment contributes to increasing employment and exports, develops competitiveness in agriculture, the processing industry, tourism and renewable energy resources programmes. In the case of small and medium-sized entrepreneurs, HBOR will credit and take on risk of up to 40% of the loan total amount with bills of exchange and debentures as insurance instruments as well as HAMAG Invest’s guarantee of 80% of the capital. The bank will take on the risk of 60% of the loan amount with the usual insurance instruments.

reserves, HNB released around €0.57 billion to banks that place these funds with HBOR. Since the loan is provided by banks and HBOR in a 50:50 ratio, the loan potential is worth around €1.05 billion, explains Kovačev. In addition to investment projects, HBOR will distribute risk to the banks in a 50:50 ratio, with a guarantee from HAMAG Invest and according to the programme intended for preparing production. Kovačev expects banks would become more involved in increasing finance in the economy sector by taking on part of the risk, thus boosting the investment cycle. The Minister of Entrepreneurship and Crafts, Gordan Maras, says the programmes enable access to capital for those with

good projects and ideas, but also entrepreneurs operating under aggravated circumstances. He also stressed it is important to develop lending models for smallsized entrepreneurs that will not

Programmes enable access to capital for those with good projects and ideas contain the usual banking insurance instruments, but only bills of exchange and debentures. The 20,000 entrepreneurs who disappeared virtually overnight, could have preserved their companies had they had easier access to loans, concluded Maras.


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Privredni vjesnik Year V No 0202

Lidija Posavec Jakobović, Environmental Protection Engineering, Excido, Osijek

World Bank Director for CE and Baltic Countries in Zagreb

Infectious waste disposal

EU FUNDS ACCOUNT FOR 1% OF GROWTH

The only company in the county involved in collection, temporary warehousing and processing of infectious waste xcido is located in Osijek-Baranja County, in a newly constructed business zone and it is the sole company in the county involved in the collection, temporary warehousing and processing of hazardous medical waste, as well as the collection, intermediation, transport and transfer of other hazardous and non-hazardous waste for processing. The company has full authorisation for its business, it uses the most innovative technology and has highly qualified staff. “We own a large number of vehicles for waste collection, with the waste selection process being performed on our premises. Vehicle drivers are fully qualified for the transportation of hazardous substances. Hazardous and non-hazardous medical waste which is not potentially infectious, as well as other types of waste, such as that from hairdressers’ and other small businesses waste is managed by qualified personnel. Infectious medical waste is treated using the most modern technologies and any adverse environmental impact is minimised. The processed waste is sterile, dry, ground, and odourless and is disposed through an official landfill site without any negative impacts on people or the environment using the same quality facilities as used within the EU. Waste management in general, as well as medical waste management, has been regulated in Croatia by the Law on Waste Management, Ordinances on

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IMPRESSUM: Privredni vjesnik Kačićeva 9 10000 Zagreb +385 1 5600020 uprava@privredni.hr www.privredni-vjesnik.hr/ subscription

Waste Types and Waste Management and Guidelines on Medical Waste Treatment and has consequently been provided with a solid legislative framework. The largest medical waste producers are hospitals, health facilities, doctor’s offices, institutes for emergency medical services, medical laboratories, veterinary facilities and similar. Medical waste is also produced during home medical care, in pedicure and cosmetic parlours, in piercing and tattoo studios, as well as in wide variety of other institutions. Improper disposal of medical waste, as well as its inappropriate management, poses a serious threat of infectious disease. As a result, it is necessary to highlight the fundamental importance of proper waste management and of the high quality training provided for staff involved in its collection and management.

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

Croatia is still in deep recession and therefore tackling a large number of investment hurdles is an imperative he decline in industrial production in Croatia during the first quarter came as no surprise to the World Bank although its 9.4% rate of decrease exceeded expectations. According to Peter Harrold, the World Bank Director for CE and Baltic Countries, the current downturn ˝has three main causes. The first was an extremely harsh winter in February, the second being the weakening of foreign demand due to the crisis in the Eurozone, and the third was the change of government which has slowed the process of public procurement. Hence, Harrold expects a significant recovery in industrial production through the second quarter. He pointed out the dangers of reaching long-term conclusions about the whole of 2012. Croatia is currently still deep in recession and consequently tackling a vast number of investment hurdles is of fundamental importance. Pri-

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marily, Croatia needs to prepare for withdrawing money from EU funds, which is certainly not a trivial issue, emphasised Harrold. According to World Bank estimates, Central Europe will see around 1.5% growth in 2012, where at least one half is a direct consequence of the use of EU funds. According to Harrold, such funds will account for up to 1.5% growth in Croatian GDP, whilst changes in the ratio between labour tax and property tax, as well as labour market liberalisation would boost growth. Harrold explained that the World Bank endeavours to ensure Croatian workers earn higher salaries by boosting production. According to him, the current government has acceptable intentions and plans and needs to implement many of the strict and more radical measures in the immediate future, and specifically during the first year of its term of office. (D.Ž.)

CCPIT representatives at the Croatian Chamber of Economy (HGK)

A century of cooperation with China strategic partnership between Croatia and China could create the framework for co-operation, which would bear fruit throughout the century, pointed out Nadan Vidošević, President at the Croatian Chamber of Economy (HGK) at the recently held meeting with representatives of the China Council for the Promotion of International Trade (CCPIT). Croatia, as both a Mediterranean and a continental country is the entrepôt and logistical focus for Chinese exports into the heart of Europe. Dogg Songgen, CCPIT Vice President pointed out the importance of Croatia for Central and Eastern Europe and highlighted long-term friendly

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relations between the countries. “Our principal objective is the enhancement of economic cooperation between the Chambers of Economy of our countries”, stated Songgen adding that there is significant potential for an increase in volumes of mutual trade, currently standing at $1.6 billion. “Croatia is of huge geographical importance, she has valuable water resources and forests and the development of tourism particularly attracts Chinese investors. It is of fundamental importance to strengthen co-operation between small and medium-sized companies and encourage mutual investment”, stressed Songgen. (I.V.)


www.privredni.hr Business & Finance Weekly

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( €65 million ( 7,000 hectares invested in production

of cultivated land owned by Vupik

INTERVIEW: DAVOR BOŠNJAKOVIĆ, CHIEF DIRECTOR OF VUPIK

Vupik – a strong base of raw material for Agrokor companies As a result of high investment and good organisation in all business areas, Vupik has doubled their yield and profit in two years Svetozar Sarkanjac fter the vagaries of the past decade or so, Vupik (Agricultural - Industrial Collective), once the crown jewel of the agricultural and food industry in eastern Croatia, has been in the ownership of the Agrokor Consortium since January 2010. Then an extensive investment cycle started with the goal of increasing production and market competitiveness. Privredni vjesnik spoke with Vupik Director, Davor Bošnjaković, about the changes over the past two years.

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In what state did Agrokor find Vupik? Vupik was a company in a poor state, which despite the potential of the fertile Vukovar area, Wine production restored

Investment plan calling for €57.3 million over five years has already been exceeded failed to ensure on-going growth and development. The intense procedure of reconstruction was difficult and complex. However we managed to apply new management systems and work organisation with large investment, setting the foundation for a very successful agricultural company. What did Agrokor bring to Vupik? Firstly, Agrokor introduced new organisation, know-how and technology, that had already been applied in PIK Vinkovci and Belje with excellent results. Since the

Vupik was known for wine production. What is the current state? Vupik has 160 hectares of vineyards. Our large investment has already been made with some still in progress. By increasing the winery capacity, modernising the wine filling unit and ensuring better technological conditions for production, the groundwork will have been laid for the repositioning of Vupik as a known wine producer. start, investment has been directed to all areas of production, from farming and cattle breeding to new agricultural machinery, the reconstruction of the vineyard, cattle farms and silos in the port as well as construction of the vineyard house - Goldschmidt. The investment plan totalled €57.3 million over five years. However, it has already been exceeded with €65.3 million having been invested in all production. What is the present state of Vupik? As a result of the large investment projects and good

organisation in all business areas, Vupik has managed to double its yield and profit in two years. Despite the crisis, Vupik continues to maintain successful business, and anticipating the financial state of the company will improve even more in the future. Today we employ around 700 workers, of which 545 are permanently employed. Vupik renovation managed to preserve old jobs and create new ones. Today, Vupik has over 7,000 hectares of cultivated land, which due to its quality and position presents considerable potential in the

production of plants, grains and vegetables. The whole farming production has been completely reconstructed, and so far €3.3 million has been invested in agricultural machinery alone. Besides farming, visible improvements have been made in cattle breeding – old pig and cow farms have been renovated and new ones built. Over €22 million has been invested in the construction of pig farms so far. The Ovčara Farm was renovated, and two new pig farms have been built. Vupik also owns three cow farms intended for the production of milk and beef. Over €7 million has been invested in the construction of old barns, separators for barn manure, a silage pit as well as a silo for storing fodder. Due to new technology, know-how and organisation, milk production has doubled. Vegetable farming is one of Vupik new areas of production. Vegetable production has huge potential in Vupik business development. For now, we produce onions, carrots, peas, potatoes and sweet corn. This is intensive production in terms of work which solves the problem of employing Vupik old and new workers, at the same time securing profit and long-term success, which is why it is crucial for Vupik. The fertile Vukovar land and irrigation potential are ideal conditions for vegetable production. The company also plans to build new warehouses with a packaging unit, creating opportunities for further employment, which is important not only for Vupik, but also for Vukovar.


4 ::: news

Moody’s lowers rating outlook for Croatia to negative Moody’s Investors’ Service has lowered the outlook for Croatia from stable to negative. “The principal trigger for the decision on lowering the rating outlook is the risk threatening economic recovery and growth over the median term. The financial crisis has highlighted the weaknesses of Croatia’s historically long economic model dependent on foreign loans, of private consumption and the construction industry”, stated the report. Industrial employment decreasing The total number of employed in companies decreased by 0.4% over March last year, and employment in industry contracted by 2.9%, according to the Croatian Bureau for Statistics. Employment in the processing industry has been showing negative annual rates since January 2009, with employment falling by 13.6% during the same period. Adris Group sees revenue increase

Ante Vlahović, Board President of Adris Group, recently pointed out at the General Assembly that in 2011 total revenue generated by Adris Group was €0.43 billion, 3.2% up compared with 2010. Revenue totalled €0.38 billion, an increase of 1%. Revenue from sales of goods and services totalled €0.37 billion. The company earned €0.2 billion on the local market and €0.17 billion in exports, the same as in 2010. Pretax profit was €85.9 million, and nett profit €66.4 million.

Privredni vjesnik Year V No 202

TURKEY INCREASES INVESTMENT INTO CROATIA

Kentbank wants to b between Turkish and

Some 50 Turkish companies operate in Croatia, and Turkish investment into Croatia stan Groupe that purchased Banka Brod. As Board President, Mehmet Murat Sabaz, points o new Kentbank aims at becoming one of the top 10 Croatian banks Darko Buković urkey, a country with a population of 75 million, is now one of the most forceful and fastest growing global economies. According to data provided by the local institute of statistics, last year GDP increased by 8.5%, of which 5.2% was seen in the last quarter. In 2010, the Turkish economy grew by 8.9%. GDP growth rate in 2011 is probably the second highest in the world, after China, as Turkish Minister of Science, Industry and Technology, Nihat Ergun, recently stated. However, the Turkish Government anticipates GDP growth to slow to 4% in 2012, mainly as a result of the Eurozone crisis, after which it will pick up. These estimates are confirmed by data on the last year increase in Turkish exports by a record-breaking 18.2% or almost $140 million. Half of that amount relates to European countries.

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Learning from Turkey During last December, Turkish exports increased by 4.5% in relation to the same month of the previous year ($12.1 billion). This country, currently ranked as the 16th global economy and sixth

The most successful Croatian companies in Turkey are Podravka and the Agricultural Institute, Osijek largest European economy, wishes to join the company of the 10 largest global economies by 2023. To achieve this goal, they must triple their present exports to almost $500 billion, says Omer Basbug,

member of the Board of Directors of TUSKON (Turkish Confederation of Businessmen and Industrialists). Basbug is a member of the Board of Directors of the family company established in 1974. It produces spare parts for Ford, Mercedes, VW, Opel, Peugeot, Citroën, exporting into 40 countries worldwide. The textile industry is one of the most important Turkish industrial branches; however, the automobile industry as well as electronics are becoming equally important. Tourism generates an income in excess of $20 billion, where Germans, Russians and British record the highest number of visitors. Turkish airports saw a record number of passengers last year. Around 118 million passengers were transported from airports in Istanbul and Ankara, a 14.4% increase in relation to 2010. Croatia is a strategic market for Turkish Airlines, with plans to increase its operations. Last year, 62,600 passengers were transported via the Istanbul-Zagreb route, highlights President and CEO of Turkish Airlines, Temel Kotil. He stresses the company transported a total of 33 million passengers last year, a 12.1% increase, with

the number of international passengers increasing by 15.4%. At the same time, cargo transport reached 387,000 tonnes, 23.7% more compared with the year before. Turkish Airlines employs 15,700 people, and are in mixed ownership: the state holds a 49% share, and the remainder is owned by private investors. Croatian-Turkish economic relations Even though foreign trade has grown over the past several years, the total volume of around €550 million dropped to €420 million last year, when imports from Turkey decreased from $444 million to 244 million. At the same time, Croatian exports doubled, increasing from $85 million to $173 million. All this reflects the capacity and complementarities of the two countries since in terms of imports and exports Turkey ranks around 18th in Croatian foreign trade partners. For several years, Croatia has exported mainly petroleum oils and oils obtained from bituminous minerals to Turkey comprising a third of total Croatian export to this country. In terms of volumes of exports, they are followed by nitrogenous fertilisers, steel and iron waste


www.privredni.hr Business & Finance Weekly

5 ::: news

e a financing bridge Croatian companies

nds at $18.2 million. Turkish investors in Croatia have recently been joined by Süzer ut, a new period for the bank is coming - by transferring its central office to Zagreb, the doors to Turkish capital. The Bank has nine subsidiaries and 88 employees, ranking as the 27th bank in Croatia. Kentbank in Croatia A year after the purchase of Banka Brod, they will transfer the Central Office to Zagreb, renaming it Kentbank d. d. This should

Süzer Group has 4,700 employees and $450 million capital Süzer Group operations Süzer Group was founded in 1952. As Group President, Mustafa Süzer, says, today they are one of the largest in Turkey, with 4,700 employees and a capital of $450 million, achieving profits of $150 million. They operate within five sectors – real-estate and construction, finance, energy, food and beverages, and tourism. There is also a vast housing project in Turkey, Bahcesehir Satellite City Project, consisting of 2,400 villas and 13,850 apartments on almost 5 million m2. The value of the project is $3.7 billion. Süzer Group is the majority owner (63%) of Bagdas, the first private company for gas distribution, which distributes 21 million m3 of gas to almost 12,000 users. In the energy sector, they work on power plants, three gas- and one coal-fired thermal plant, a project worth $1.3 billion. The Group also includes the Ritz Carlton, fast-food restaurants (KFC and Pizza Hut) and several shopping centres. material and scrap. The two countries signed a free trade agreement in 2003, and also established cooperation at a level of chambers of economy with Istanbul, Izmir and Isparta, and since recently with Torbali, a town near Izmir. The most successful Croatian companies in Turkey are Podravka and the Agricultural Institute Osijek. Turkish investment in Croatia totalled $18.2 million. Some 50 Turkish companies operate in Croatia. In addition to Dubrovnik, where Turkish companies invested (Rixos in Hotel Libertas and Uzel turizam in Pucić Palace), Turkish investors have ventured into the Šibenik

area, where Dogus Group and NCP began an investment project into marinas and hotels. As Board President of Dogus Group Husnu Akhan has recently stated during the forum Invest in Croatia, held in Zagreb, the decision to invest was motivated by Croatian EU accession as well as positive indicators of the future of the nautical sector in Europe and globally. Turkish investors in Croatia have recently been joined by the Süzer Groupe that purchased Banka Brod through Eksen Holding. In addition to the domination of Italian, Austrian and French capital, the Croatian Banking system through this has also opened the

be confirmed by the General Assembly to be held on June 26th, after which, as Board President, Mehmet Murat Sabaz, points out, a new period of the Bank will begin, which will include an expansion of activities to international money transfers and factoring with recourse or without. By 2014, the Bank intends to triple the number of subsidiaries (to 30) and expand services into leasing and factoring. Their plan is also to position the Bank not only in Croatia, but also at a regional level. They aim to become a financing bridge between Turkish and Croatian companies. The Bank’s senior executive also highlights their intention of positioning Kentbank amongst the top largest banks in Croatia. When asked how they would achieve this, since Banka Brod ranks 27 currently, and would they take over any other smaller banks additionally, he pointed out they are aiming for organic growth. As an example, he mentioned a Romanian bank, belonging to the Turkish holding company. That bank also ranked 27 or 28, and now is one of top 10 banks in Romania. This bank has been led for the past several years by Sabaz.

Demand rising for earthquake insurance According to reports from Allianz and Croatia insurance, demand for earthquake insurance both from the general public and businessmen has increased, following the Japanese earthquake last year, and the recent earthquakes in Italy which were felt in Istria and central Croatia. Croatia insurance has seen earthquake insurance soaring by 24.53% in the first quarter. DuoProtekt savings Since October 2011, Zagrebačka bank clients have committed €0.13 in DuoProtekt savings, according to a recent report by the bank. DuoProtekt combines term savings and Allianz accident insurance. Term deposits are used to pay insurance premiums and consequently clients do not have to worry about such payments. In addition, they are insured against accident until the time duration on the term deposit expires, including coverage of hospital fees. Over €0.4 billion in loans

State institutions, public companies, local and regional government were granted loans worth over €0.4 billion during 2011. Due to the late publishing of results, over 30% of bidders remains unknown. Petrokemija takeover of Šibenik Port Petrokemija has purchased 6,030 shares from the bankrupt Rijekabased company Transadria and has become the majority owner of Šibenik Port. Petrokemija previously owned 29.52% of Šibenik Port which it uses for imports of raw materials and exports of its own products. New investment into Šibenik Port was announced during takeover discussions, primarily regarding the reconstruction of the terminal.


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WE PRESENT

KOGUTEX, KONJŠČINA

Privredni vjesnik Year V No 0202

SVESA NATURA, ZAGREB

From groceries to mlinci

Dough kneading machine Mlinci is a symbol of homemade cuisine in the Croatian Zagorje and ours is traditional ogutex started in the grocery trade and in 2003 it started producing mlinci (an egg-based crisp flat bread eaten similarly to a dumpling). The company began in 1991 by Stjepan Gorički and currently employs 43 staff.

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Kogutex mlinci can be purchased in their own shops and most chain stores As mentioned by Tomislav Gorički, Director of Operations, Kogutex has six stores operating together with a production plant. All stores are well designed and customer-oriented, stocking a wide range of products at competitive prices and sold by dedicated staff. They also accept customer specific orders that are a significant advantage in a highly competitive market and a valuable survival

tool against the power of large chain stores. Fresh ingredients purchased The company is located in the eastern part of Krapinsko-Zagorska County and its operations are mainly focused on the Zagreb and Varaždin areas. Kogutex is well known for its capable purchasing, primarily fresh fruit and vegetables, various food specialties and a wide range of groceries, due to good road connections via the Zagreb-Varaždin motorway. “Mlinci is a symbol of homemade cuisine, primarily in the Croatian Zagorje and ours is traditional”, explained Tomislav Gorički, who noted that mlinci is produced according to a traditional recipe, without additives, artificial colouring or flavouring, which customers prefer. He added that the company has adopted the HACCP system and quality is regularly controlled by the Analytical Chemistry Laboratory. Kogutex mlinci is sold both through their own outlets and major chain stores. It is often exhibited and presented at regional fairs in cooperation with the County Chamber of Economy. In addition, the company has made large investments into the neighbouring Slovenian market. (J.F.)

Let’s Pizza is a vending machine providing customers with freshly-baked pizza within 2.5 minutes resh local ingredients are fundamental to a healthy diet and are also necessary for the preparation of quality pizza dough and toppings. Thus the vending machine (a coin-operated machine where customers are provided with a choice of ingredients) from Let’s Pizza uses solely fresh, carefully selected quality ingredients. Let’s Pizza is a vending machine, which kneads the dough, adds selected ingredients, bakes and provides customers with a freshly-baked pizza within 2.5 minutes. The first Let’s Pizza machines are being installed in Dubrovnik, in Zrće, on Split beaches and several other locations on the Adriatic coast; they will be installed throughout Croatian towns after the summer. Adding ingredients as well as regular cleaning are extremely simple and require minimal time. The quantity of flour, tomato sauce and water is held for some 100 pizza servings, whilst ingredients are preserved in 4 special boxes in a refrigerator containing 50 different ingredients at a temperature of 4oC.

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Regional expansion Let’s Pizza machinery has recently been shown in Zagreb by the company Svesa Natura, founded 2 years ago primarily

to set up a Let’s Pizza Croatian franchise with plans for regional expansion. “We are planning to expand the scope of our core activities and our product range to provide healthy and controlled food products. In addition, we are currently preparing for

We are preparing for the launch of the first vending shop in Croatia the opening of the first Croatian vending shop, where clients may be served 2,000 different products 24 hours a day”, stated Sven Opravić, Director of Svesa Natura. He added that financing of the project has been the most serious problem the company has encountered thus far. In February 2011, the company invested around €40,000 of its own capital, yet faced a lack of support from Croatian banks. Nevertheless, the Let’s Pizza project was completed and implemented at the end of April 2011 with support from Volksbank. Opravić added that problems with financial support are the most serious issue and the largest obstacle for franchise partnership expansion throughout Croatian towns. (S.P.)


www.privredni.hr Business & Finance Weekly

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CROATIAN FOREIGN CURRENCY MARKET Currency

Kuna exchange mid-rate

AUD CAD JPY CHF GBP USD EUR Source: HNB

EUR

7.574

5,931644 5,916349 7,868381 6,307158 9,408229 6,147392 7,571743 WEEK JUNE 2, 2012

USD

6.20

29.5.

30.5.

31.5.

6.308

7.571

6.15

6.305

7.568

6.10

6.302

7.565

6.05

6.299

7.562

6.00

6.296

7.559 28.5.

CHF

1.6.

5.95 28.5.

29.5.

30.5.

RBA ANALYSIS

31.5.

1.6.

6.293 28.5. 29.5. 30.5. 31.5. 1.6.

CROATIA OFFICIALLY IN RECESSION

GDP down 1.3%

Industrial production down 9.4% A downward trend recorded in all industrial areas, with intermediary and capital products falling the most (-12.7% and -10.9% respectively) ndustrial production in April saw negative trends for the fourth consecutive month. According to calendar adjusted data provided by the Croatian Bureau of Statistics, industrial production in April fell 9.4% year-on-year, exceeding expectations. This was the highest since November 2009. Irrespective of the fact that industrial production saw relatively strong growth rates during the first quarter of 2012, data for the period between January and April

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The highest rate of decrease recorded since November 2009 2012 indicated a decrease in industrial production of 7.1% over the same period last year, mainly as a consequence of weak domestic demand and the adverse

economic situation in the EU, as well as a slowdown in foreign demand. According to the Main Industrial Groupings (MIG’s), a decrease was recorded in all industrial sectors during the first quarter of 2012 compared with the same period last year, with the largest falls seen in intermediary products (-12.7%) and capital products (-10.9%). On the other hand, according to the National Classification of Economic Activities, during the first quarter, the Mining and Extraction Industry fell by 14.7% year-on-year, with the Extraction of Crude Oil and Natural Gas going falling by 14.4%. The processing industry saw a 7.6% decrease in production year-on-year during the same period. The production of coke and refined petroleum products has seen negative results for 11 consecutive months and has consequently seen a plunge

of 24.2% over the same period in 2011. A substantial decrease in production in this category could adversely affect domestic exports, since this is one of the basic industrial areas. Production of other vehicles (primarily shipbuilding), another significant area of industry, saw a 19.9% decrease in April. However, due to reasonable growth rates during previous months, it showed a 10.9% growth year-on-year during the first quarter. “A significant decrease in industrial production during the first quarter indicates negative GDP results. The economic slowdown in the European Union and a high number of structural issues within domestic industry in the light of weak domestic demand, have had a negative impact on industrial production, and substantial improvement in trends is not anticipated in the immediate future”, point out RBA analysts.

According to preliminary estimates provided by the Croatian Bureau of Statistics, Croatian GDP contracted by 1.3% during the first quarter. This is the second consecutive quarter to have seen shrinkage and therefore Croatia has officially entered a recession, albeit milder than that forecast by economic analysts who estimated a GDP contraction of between 1.5% and 3%. A further decrease in GDP is anticipated in the second quarter, although in the second half of 2012 there may be a mild recovery. Capital investment has been reducing for 13 consecutive quarters. Analysts anticipate the annual trade deficit and personal consumption to similarly as a consequence of increased VAT rates introduced on 1st March, as well as gas and electricity prices rising from 1st May. GDP contraction is a result of a 9.4% slump in industrial production and of an extremely precarious economic environment. The sovereign debt crisis has been felt throughout the Eurozone, whilst economic growth is either weak or non-existent as in the case of Croatia, resulting in reduced demand for imported products, which will certainly have a negative impact on Croatian exports. Most analysts anticipate GDP in 2012 to drop slightly below 1%, which will occur if the entire investment programme announced by the government has been made and if Croatia has seen a successful tourism season. Otherwise, GDP will plunge further. (J.F.)


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Privredni vjesnik Year V No 0202

( 39 companies with certified Halal products

( 44 countries

recognise Halal certification

Croatian exports of Halal products up by 18%

Halal tourists are high spenders Zagreb hotels (Westin, Aristos and Holiday) are in the process of issuing Halal certificates, in addition to Hotel Spačva near Vinkovci Igor Vukić ourists from Islamic countries spend over $90 billion annually worldwide. They spend an average of $1,700 during summer holidays or $500 more than Europeans. However, special preparations are required for attracting such valuable clients. One of the prerequisites is

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Some 2,800 specific products are Halal certified Halal certification for hotels. For now, only two tourism companies in Croatia (Hotel Baška and Hotel Turist from Varaždin) have such certification. For this reason, the Croatian Chamber of Economy, in co-operation with the Centre for Halal Quality Certification of the Islamic Community, organised a seminar on adjusting to Muslim tourists last week. Hotel Baška and Hotel Turist have already benefited from Halal cer-

tification. According to Doctor Aziz Hasanović, director of the Centre for Halal Quality Certification, harmonisation consists of two components - one relates to ensuring conditions for performing religious ceremonies, and the other to the hotel restaurant menu. Roadmap for Mecca In addition to a clearly visible Halal label at reception, each room should have a sign pointing to Mecca so that the Muslims may pray. There should also be an exact time schedule for the five obligatory prayers, prayer rugs, and the mini-bar should contain no alcohol. Trained staff can quickly prepare all this upon request. The Centre’s associates will train staff at interested hotels to acquire the simple rules of serving Halal visitors in a relatively short period. All it takes is a little enthusiasm and results will soon be achieved, said Aziz Hasanović. The restaurant should serve food prepared according to Halal practice. It is an advantage that there are already 39 food companies in

Croatia that produce such products, making it easy to provide visitors with all they need. Halal food can be offered on the restaurant menu or be separately labelled on a buffet, depending on the number of visitors. The experience of the Hotel Baška showed other visitors had no problem that some products on the buffet carried a Halal label. Halal is also a sign for high quality Tourists from non-Islamic religions are also starting to demand these products. Halal products meet HACCP norms. More specifically, such food must not

contain GM organisms or feeding of animal origin; customers are thus reassured the food is healthy. Zagreb hotels (Westin, Aristos and Holiday) are in the process of acquiring Halal certification, in addition to Hotel Spačva near Vinkovci as well as other hotels. Their names will be listed at www.Halal.hr, visited by tourists before they arrive. A total of 2,800 specific products in Croatia are Halal certified. This label is recognised in 44 countries. Dr. Hasanović believes this is the reason that exports of Halal products from Croatia increased by 18% during the first three months of this year.

Fifth stage of “Our Beautiful Sava” project

An incentive for continental ecotourism development The Sava riverside is dotted with traditional villages, fertile land, lakes, tributaries, riverside forests with a rich cultural heritage he River Sava Day on 1st June was marked with the launch of the fifth stage of “Our Beautiful Sava” project, which will bring together over 45 state or local partners including the Ministry of Agriculture, the Ministry of Tourism, the Croatian National Tourist Board, the Institute for Tourism and the State Institute for Nature Protection. This socially responsible business community project has been initiated by the Ministry of Regional Development, Forestry

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and Water Management, International Sava River Basin Commission and Coca-Cola HBC Croatia. The project will encourage understanding of the crucial role of water and of the necessity

for water protection and focus on the fundamental importance of the protection of the river basin and its biodiversity, as well as act as an incentive for the development of continental ecotourism. This year’s programme will begin with a meeting of the Youth Parliament, bringing together young people from four countries of the Sava River Basin in order to promote understanding and awareness of the importance of water protection, as well as the protection of the aquatic ecosys-

tem and foster cross-border cooperation. “The Sava riverside is dotted with traditional villages, fertile land, lakes, tributaries, riverside forests and has a rich cultural heritage; consequently these rural areas have considerable potential for the implementation of future projects supported by European Agricultural Funds for Rural Development in the nearterm”, pointed out Luka Čuljak, Assistant Minister in charge of Rural Development at the Ministry of Agriculture. (A.Š.)


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