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Investment up 11% The private sector is expected to have a highly positive impact on GDP growth: those investments will reach 6,6 E billion

Pharmaceutical valley Jadranski galenski laboratorij (JGL) exports to 35 countries and now negotiating with 20 more, inclucing China

Croatian real-estate market Regulation of the waterway on Sava in Zagreb will clear almost 350,000 ha of land for new projects

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Croatian Business & Finance Monthly Established in 1953 Monday / 6th May / 2013 Year VI / No 0225 www.privredni.hr

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GUIDE FOR INVESTORS

Warehousing, logistics and industry Made in Croatia The publication provides information on the local market, incentives and real estate property, gives overview of taxation and detailed instructions on starting up a business Igor Vukić otential foreign investors in Croatia have a new guide at their disposal – the publication “Made in Croatia – investor’s guide to manufacturing and logistics”. It provides comprehensive information on human capital, incentive measures for investment projects, as well as on industrial or logistics real estate market. Moreover, investors are provided a brief

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Investors can select from a highly educated workforce due to high unemployment rates overview of the purchase or leasing of industrial or logistics real estate property, an overview of the taxation system and detailed information on starting up a business in Croatia. The publication, which has recently been presented, is a result of co-operation between the Agency for Investment and Competitiveness, Jones Lang LaSalle, KPMG Croatia and Antal International. It will be distributed at fairs and business forums and is also available on the Agency for Investment and Competitiveness website.

“Similar material are of extreme importance for the enhancement of investment and the promotion of Croatia as a location of interest to foreign entrepreneurs against the backdrop of the long-standing economic slowdown, and due to a large number of investment obstacles previously encountered by foreign investors”, pointed out Tomislav Gregurić, Director of Jones Lang LaSalle. Zdenko Lucić, Director of the Sector for Investment at the Agency for Investment and Competitiveness, stated that the publication is a fundamental tool for targeted investment attraction and in the promotion of Croatia as an attractive investment destination. The Agency for Investment and Competitiveness is currently preparing a further comprehensive

investment guide covering the presentation of principal regulations and procedures concerning investment, as well as an online database of entrepreneurial zones. Variable tax rates “Income tax rate at 20% is competitive, whilst a broad range of tax incentives can significantly reduce this percentage”, emphasised Paul Suchar, partner at KPMG Croatia. According to him, dividends paid out by Croatian companies to foreign companies are subject to income tax at a rate of 12%, yet this can be reduced or eliminated in accordance with the Double Taxation Avoidance Agreement which Croatia has signed with many countries or as a result of the enforcement of EU Directives following Croatian EU

accession. on. “Exemption from VAT payment for imports from third countries, providing the final destination for the imported goods is an EU member country, will greatly enhance the competitive advantage of Croatia”, added Suchar. “The inconsistencies in the land registry books in Croatia are a significant obstacle to investors. Nevertheless, the implementation of e-spatial planning systems and e-permits will positively impact on assisting investment”, according to Marinela Mostić, Director of KPMG Croatia. Investment risk may be substantially reduced by due diligence analysis performed by experts. “Investors may select from a highly educated workforce due to high unemployment rates, primarily in the technology sector”, according to Nina Anđal, Director of Antal International. The great potential of the logistics sector is indicated by the fact that in Zagreb there are currently 806,745 m2 of warehousing and logistics premises, of which 360,000 m2 comply with modern European standards. According to recently conducted research, Zagreb is lagging behind other Central and East European capitals on the size and number of warehousing and logistics facilities.


2 ::: news Wold Bank supporting innovation

Privredni vjesnik Year VI No 225

( €773 million

value of some ten unblocked investment projects

FOREIGN INVESTORS HAVE NOT BEEN GREATLY AFFECTED BY RECENTLY IMPL

The World Bank has allocated Croatia €20 million to support scientific projects and innovation. Funds will be used by prominent scientists, as well as young researchers in scientific institutions. In addition, they will be allocated to small and mediumsized businesses for investment into research and development, as well as to those participating in projects co-financed through EU Cohesion Funds. Centar Banka increase reserves In 2012, Centar Banka made a loss of €10 million, which was due to high costs of holding reserves, rising costs of financing and reduced revenue. Nevertheless, the planned additional recapitalisation will significantly increase its capitalisation and enhance its resilience to increased risk, which will create the background for further growth, as well as provide additional improvements in current products and services.

Profits up at Croatia Insurance During the first quarter of 2013, Croatia Insurance saw a gross profit of €4.82 million, 34.5% up over the same period last year. Consolidated gross profit of the Group, which in addition to Croatia Insurance includes a further 13 companies, stood at €7.49 million, 9.6% up compared with the end of March 2012. During the first quarter of 2013, Croatia Insurance showed total gross written premiums of €118.29 million, down 5.5% over the same period last year, but saw a 12.1% increase in life insurance premiums irrespective of the crisis.

Investment up 11

The private sector is expected to have a highly positive impact on GDP growth. Accordin Igor Vukić rrespective of the fact it has been operating in Slavonski Brod for years, within the Đuro Đaković Free zone, the French company Saint-Jean Industries met several problems during implementation of their investment into production expansion. Nevertheless, it managed to tackle all the hurdles successfully with assistance provided by the working group for private investment set up by the Croatian Government. The Saint-Jean investment also used subsidies provided by the Investment Promotion Act, and the new plant was officially opened on 10th April 2013 in the presence of Branko Grčić, Government Vice-President, and Ivan Vrdoljak, Minister of Economy. The investment has a value of €5 million and created 80 jobs in the production of casing parts for car turbo chargers. Ivan Vrdoljak, Minister of Economy, recently singled out Saint-Jean as an example of a successful investment project implemented with assistance provided by the working group. Three more investment projects have been completed to date in a similar manner, such as the Koprivnički Ivanec-based thermal power plant E-Two Energy project. The total investment value was €152.8 million, employing 770 staff.

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Private sector under the spotlight The working group headed by Vrdoljak has been dealing with 10 more blocked investment projects whose value is €773 million and they are hoping to create around 1,230 jobs. During the first three months of

2013, investment in Croatia has increased by 11% in relation to the same period last year, as stressed by Branko Grčić, Vice-President of the Government. Public sector investment reached €0.18 billion, whilst this year public companies are expected to invest around €1.88 billion.

€5 million investment in Slavonski Brod created 80 jobs The private sector is expected to have a highly positive impact on GDP growth. According to Grčić, private sector investment will reach €6.6 billion, as opposed to €6.38 billion last Foreign investors have not been greatly affected by the recently implemented government measures. Co-operating Chambers of Economy representing foreign companies have recently addressed both the government and the public with the aim of accelerating the issuance of permits and introduce a centralised entity authorised for dealing with investor complaints. These Chambers, headed by AmCham,

proposed the introduction of online management of public procurement through auctions where bidders would be anonymous. In addition, they deem it necessary for tax inspection reports to be legally binding, as diverging opinions of various

Logistics and industry Made in Croatia The publication “Made in Croatia, investor’s guide” has presented an outlook of investment potential in the logistics sector, as well as in other industrial sectors. It has been published as a result of a joint initiative between the Agency for Investment and the company Jones Lang LaSalle, KPMG and Antal International. The publication, which has recently been presented, provides a comprehensive outlook of Croatian tax regulations, labour law, details on procedures for the lease of logistics capacities, and also assists potential foreign investors in understanding local business environments. It will be distributed through fairs and business forums, as well as dispatched to foreign companies; it is also available through the Agency for Investment and Competitiveness website.


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( €1.88 billion

anticipated level of investment by public companies in 2013

EMENTED GOVERNMENT MEASURES

% over the first quarter g to Grčić, private sector investment will reach €6.6 billion, as opposed to €6.38 billion last year

stated entities negatively affected settlement and planning tax liabilities. Frustrating property-legal relations The government concluded that the most serious hurdles to in-

vestment projects are the result of excessively complex property-legal relations. There are a large number of legal proceedings between local government and the central state and in several areas, primarily along the coast, owners still need to be

identified following long-lasting administrative procedures. Consequently, this will have a significant impact on the shaping of the Strategic Investment Act that should accelerate administrative procedures. The government is also aware of the unpredictability and ineffectiveness of most procedures (such as, for example, obtaining environmental permits), as well as the fact that detailed spatial plans need to be provided more quickly. Co-ordination for economy and investment will proceed towards the harmonious implementation of the law, announced Grčić. Moreover, Ministers have decided to address the inefficiencies in their own system. Siniša Hajdaš Dončić, Minister of Maritime Affairs, Transport and Infrastructure, stated that there is a large number of public companies in his sector that are not able to provide an efficient business plan. A broad range of projects has been implemented without financial justification and without any development strategy. Many times deadlines have not been met by contractors, which has been tolerated continuously. In addition, there

572 parafiscal taxes In 2009, the state register indicated 245 cases of nontax revenue or parafiscal taxes. Nevertheless, the group in charge of the scrutiny and analysis o f the register revealed that there are al taxes currently 572 such parafiscal in Croatia. “Either the formerr gomvernment attempted to embellish the facts by statingg that there were 245 cases or it had not effectively performed the required nister of analyses”, according to Minister

Economy Ivan Vrdoljak. The working group in charge of taxes will table new measures to decrease such parafiscal taxes. It has also been considering the possibility of lo lowering discount rates in order to est establish a maximum contract int interest rate under a project aime med at enhancing the business climate in Croatia in accordan dance with recommendations pres presented in the research Doing B Business report by the World Bank Bank.

have been no unified price lists for contracted work. There were cases of the purchase of real estate with a building permit at prices exceeding those of construction work. “We will not tolerate such cases in the future. We have set equal standards and regulations for both public and private companies and meeting deadlines has become a sine qua non. Hence, contractors are obliged to incur expenses if a deadline has been missed”, reiterated the Minister. The government has been working on the regulation concerning the value

The government has been developing regulation concerning the value of real estate property when purchased by the state of real estate when purchased by the state. Prices need to be harmonised in accordance with the scope in the spatial plan, categorisation, future use and market value. Increasing number of contracts Co-ordination of the economy and investment is also under the working group for EU funding. Its President Jakša Puljiz, Deputy to Minister Grčić, stated that in 2013 they anticipate signing contracts worth around €212 million, which will account for the largest annual amount of contracted and absorbed EU funding thus far. Contracting has soared by 28% compared with 2012 and the absorbed funding will exceed the 2012amount by 90%.


4 ::: news Awards for co-operation with Canada During a visit by a Croatian business delegation to Canada, awards were given for the outstanding contribution to co-operation between the two countries. The award winners were Pliva, Podravka and Kraš which have been exporting to Canada for over 20 years. Axium, Caristrap, Molson Coors, Dr. Škobić, Importanne and Hidro-Watt, the most important Canadian investors in Croatia, were also awarded. The awards were presented by Gordan Maras, Minister of Entrepreneurship and Crafts, and Vesna Trnokop-Tanta, Vice-President of the Croatian Chamber of Economy. Businessmen visit Kazakhstan

The Croatian Chamber of Economy and The Ministry of Foreign and European Affairs organised a visit by a Croatian business delegation to Kazakhstan. The Croatian business delegation comprised some 10 Croatian companies in shipbuilding, pharmaceuticals, production and distribution of medical products and equipment, food processing industry and production of equipment for restaurants, hotels and construction. Joško Klisović, Deputy Minister of Foreign and European Affairs, pointed out the high level of economic potential of Croatian construction companies that could be involved in the construction of announced infrastructure projects. Gredelj delivers engines Gredelj, The Zagreb-based Railway Vehicles Factory, has recently delivered two rebuilt diesel engines to the American company NREC. They will operate on the Moroccan rail network. In accordance with the contract with NREC, Gredelj will rebuild 20 engines for heavy freight trains on non-electrified railways for Morocco. The rebuilding of locomotives means an expansion of their operations.

Privredni vjesnik Year VI No 225

( 35 countries globally exports of JGL its products

Pharmaceutical valley in Rijeka

Using Croatian money fo

They export to 35 countries and are currently negotiating with 20 more, including China Eastern Europe and the former Soviet Union, especially Russia, Ukraine and Kazakhstan Drago Živković hen Jadranski galenski laboratorij (JGL) entered the pharmaceutical market 22 years ago, hardly anyone was impressed. Board President, Ivo Usmian, remembers they started with a regular mixer for cakes in which they produced baby cream. They managed to earn €0.2 million. Last year, however, their revenue was €105 million. During the last two decades, the company, now called JGL, doubled every four years. It outgrew its present location (in the suburbs of Rijeka), so the time has come to expand. They bought 78,000 m2 of land, where they have started to build a new industrial complex, which Usmiani is sure will change the panorama. The project, named ‘Pharma Valley’, includes the construction of 14,500 m2 of production area and warehouses, which will help JGL double its capacity of ‘ster-

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After EU accession, JGL will focus more on personal brands ile forms’ (eye and nose drops). New automated warehouses will solve a huge logistic problem, since now four trucks have to transport goods to several locations in Rijeka. Insurance claim JGL’s investment could be considered fully Croatian. In addition to personal funds (one third), the company also obtained a favourable loan from the Croatian Bank for Reconstruction and Development (HBOR) worth €32.6 million, with a repayment term of 12 years and grace period of three years. Therefore, total val-

JGL in numbers Total income 2012: Income growth: Profit: Profit growth: Export share in sales: Export share in 2012: Total investment 2002-2012: Number of employees: Average age of employees: Percentage of female workers: Average nett salary:

€105.2 million 19% €9.18 million 8.58% 75.05% 25% €49.6 million 602 38 73% €1,240

ue of the investment is €46 million, which JGL will use to build new production areas, warehouses, dispatch facility, laboratories, water purifiers and a production area for producing clean steam as well as a new administrative building. HBOR has approved a total of €59 million of loans to date, of which €47.7 million is intended for investment, €9.6 million for financing exports and €6.6 million for craft funds. JGL has also insured its short-term claims in HBOR, a total of €15.7 million, which makes it one of the most significant of HBOR policy holders. Four foreign customers from Russia are insured now, and only one compensation claim (€0.1 million) has been paid - in 2010 as a default pay-

ment to a Russian customer. Negotiations with China As well as HBOR, Rijeka itself also helped in the project creation, by changing the general town plan and issuing a construction license in only two months. As a result, the work on new production areas, which will employ around 100 new workers, could start in October. The products produced will be exported to at least the 35 countries they are currently supplying, and possibly even more, considering they are negotiating with another 20 countries, including China. The most important of JGL markets are the countries of South Eastern Europe and the former Soviet Union, especially


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( €46 million

ECOLOGICAL NETWORK COVERING MOST OF THE COUNTRY

value of new investment

Natura 2000 – not eligible for bidding

r global success

a. The most important of its markets are countries in South n, where they employ 250 of their 600 employees.

Russia, Ukraine and Kazakhstan where they employ 250 of their 600 employees. Although they are best known for producing eye and nose drops (where they want to become global leaders), they also produce drugs for the cardiovascular system, blood and blood forming organs as well as drugs for the digestive system, and substance exchange. Registration in the U.S.A. Their product, Aqua Maris, which holds 5% of the global market for nasal decongestants, was included amongst the top

50 most recognisable brands. Their present corporate portfolio consists of over 100 brands - 540 products and 1,100 variations. As the third biggest and fastest growing pharmaceutical company in Croatia, they rank 140 amongst the top 200 largest global generic drug companies, ranking 89 in terms of profitability. Usmiani is anticipating 18% growth in 2013. His mid-term goal is to reach revenue of €0.18 billion. EU accession represents an opportunity for JGL, rather than a hazard, even despite exiting CEFTA. Usmiani is not afraid of European competition, since all the big players have already arrived and reduced the share of local producers on the Croatian pharmaceutical market from 60% to 22%. Among other products, JGL is already producing generic drugs for other companies under their brands, and after EU accession, they will focus more on personal brands. As he says, Usmiani likes to attack big markets, and as a result JGL has recently registered its first generic drug in the U.S.A.

Pharma Valley in numbers Value of the first phase of the investment: Total space: Facilities: Environment: Infrastructure:

€46 million 78,000 m2 14,500 m2 19,730 m2 11,700 m2

Investment projects that will be included by the Natura 2000 ecological network in Croatia will be possible if the required procedures are completed. Mihael Zmajlović, Minister of Environmental and Nature Protection, says that currently he does not see a single project that should enter the third phase of the process - establishing a predominant public interest. This is a phase in which the Government gives a green light to those Natura 2000 projects that failed to meet the first two phases – screening and main assessment. The second

phase establishes whether there is an alternative to the suggested project, or, for example, measures for alleviating its impact on the environment. Therefore, if the assessment shows a certain project is more important than environmental protection, it will be implemented, pointed out Mihael Zmajlović during the presentation Natura 2000, organised by the Ministry of Environmental and Nature Protection. Ecological networks cover 18% of the EU territory, and the Croatian network will cover 36.92% of Croatia and 16.6% of the sea area. Some experts think this is too much and that by declaring Natura 2000 over such areas, economic activities will be limited. Zmajlović highlights the borders of this network are not eligible for bidding since they were established on the basis of extensive scientific research. (B.O.)

COAST PROJECT

Green Dalmatian entrepreneurs The revitalisation of two forgotten wine varieties of the island of Vis (Kurteloška and Viški Crljenac), the construction of oil and cheese factories, shellfish farming and jam production based on traditional recipes are just a few of the activities which have been greatly enhanced by the Coast project. Coast is a project sponsored by the United Nations Development Programme (UNDP), which has been implemented since 2007 in four Dalmatian counties. Financial support, advice and technical assistance were provided for 97 entrepreneurs engaged in organic farming and heritage preservation. The total value of investment made by entrepreneurs is now €22.5 million, with UNDP providing assistance through deeds of donation in the sum of €0.75 million. The Ministry of Environmental and Nature Protection also provided assistance, as well as small farms, with in-

vestment values ranging from a few thousand to several million kuna. It is important to stress that UNDP encouraged the involvement and co-operation of local banks (Splitska and Jadranska bank), which tailored their programmes to meet the needs of small businesses. Regional development agencies provided guarantees for loans up to €0.54 million. “We have created a network of partners who are promoting the importance of the green economy and its sustainability”, pointed out Louisa Vinton, UNDP Resident Representative in Croatia during the closing ceremony of the Coast Project. Moreover, a vast selection of brochures and guidelines for ecological entrepreneurship and green banking have been published, to provide assistance to businesses throughout Croatia, emphasised Gojko Berlengi, Head of Coast Project. (I.V.)


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Privredni vjesnik Year VI No 225

A new way of thinking

INTERVIEW: THOMAS HEINZ PANDŽIĆ, ALLES

From trade to production Alles is involved in electrical installation materials, technical lights and light bulbs. Alles is currently launching tourism a provide tourism services and food production, as well as rea

One more “solar sunflower” Each “solar sunflower” will generate a specific amount of energy and will also be a tool for pupils to deepen their understanding of the advantages of renewable energy Jozo Vrdoljak n elementary school in Oštrog is the fifth of ten schools to have been selected to install and launch a solar tracker, a device that follows the sun through the day thus emulating sunflowers. The project is worth €53,300 and has been financed by Telekom and implemented by the United Nations Development Programme (UNDP). Each “solar sunflower” will generate a specific amount of energy and will also be a tool used by pupils to deepen their understanding of the advantages of renewable energy. Similar devices have been installed and are operational in elementary schools in Zadar, Ivanić-Grad, Omišalj, Pula and Hvar and are to be similarly implemented in schools in Dubrovnik, Križevci, Vukovar and Zagreb in the near term. In addition to UNDP, student training on renewable energy sources will be provided by the Society for Sustainable Development Design, and the Eko Kvarner Association will also be involved in promotional activities. “The Stone Age did not end for the lack of stone and thus the time has come for us to step out of the Age of Fossil Fuel and enter the Renewable Energy Age. It

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starts with human assets, education and training and the provision of information. This project indicates the crucial importance of raising awareness from an early age and provides immense opportunities for the creation of a green economy, new jobs and a substantially cleaner environment”, highlighted Zoran Kordić from UNDP. Potential profit The recently installed photovoltaic programmes will ensure slightly lower electricity bills for schools over the next 25 years. Pupils will be given information on the amount of generated electricity through an internet operating system that will show the amount of electricity generated by each solar sunflower in an hour, day, month or year and compare them with solar sunflowers installed in other schools. Moreover, they will have the opportunity to monitor reductions in CO2 emissions. Over 1,000 pupils annually will be educated on solar energy following the installation of all systems. These systems will also provide an opportunity for schools to request permission to incorporate the electricity produced into the network and consequently generate a level of profit from the sale of generated electricity.

Krešimir Sočković usiness activities are often adversely affected by bank lending, although there have been businesses in Croatia launching new investment initiatives without such funding. Thomas and Vlasta Pandžić founded their company Alles in 1994. The company initially owned some 20 m2 of office space and now has a 3,000 m2 store and a 1,500 m2 warehouse. Over 20 years the company has acquired a deserved reputation amongst local and global producers, importers and foreign company representatives and has extended its activity to importing. It has also recently launched a tourism project, due to a lack of accommodation capacity in Požega- Slavonia County. It is planning to construct a farm consisting of accommodation facilities with some sixty beds, catering facilities and a business area comprising cattle breeding facilities and mechanisation facilities, as well as an area for crops and grazing land. The area called Zlatni lug (Golden forest) extends to over 100 hectares and it will be used for rearing local animal breeds, as well as the production of processed food. Visitors will be provided with sport and recreation facilities such as tennis, fishing, football, walking and cycling tours, amongst others. Privredni vjesnik spoke with Thomas Heinz Pandžić about the details of the project and current business conditions in Slavonia.

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How easy is it to start a business in Croatia and reach a state of not being indebted? Our company has been operating for some 19 years and we are probably not fully aware of

the difficulties currently faced by start-ups. We have been primarily relying on our own resources and we currently employ nearly 70 staff. It is my utmost pleasure to highlight the fact that we are one of the few Croatian companies that has settled all bank liabilities. Entrepreneurs are currently met with a vast array of challenges against the backdrop of the crisis, whilst obtaining various permits even in cases where they are property owners and can rely on their own financial resources. What is your company’s principal activity? Alles is involved in the wholesale and retail of electrical installation materials, white and brown technology and acoustics. Wholesale accounts for 65% of our revenue. We are the largest importer of


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o tourism and organic

and acoustic products and is the largest importer of Grundig brands in Croatia and the principal importer of Osram nd production programme without bank lending. It is anticipated that the Zlatni lug (Golden forest) farm project will ring local animal breeds local animal breeds and growing crops based on traditional organic farming methods. However, we needed to provide many more programmes in order to attract the desired number of visitors, such as sport programmes, teambuilding and fishing until the completion of the new hotel construction and the ethnographic village. We are currently waiting

We plan to open one more farm and a typical Slavonian village with 8 houses and some 70 beds

Grundig products in Croatia and the principal importer of Osram lighting and light bulbs. In addition, we represent a large number of other brands, as well as local producers who are unfortunately not so numerous. I believe our producers lack initiative, as the products provided by local producers are good quality and hence the need for considerably more similar products and companies providing them to Croatian shelves. Production is vital for growth. As we became aware of the fact that we needed to engage in other activities in addition to sales and trading, we started implementing an idea I conceived long ago. We are originally from a small place near Po탑ega, where I grew up spending most of the time outdoors and hence I decided to use the opportunity and purchase an area of land. It is where we are currently working on our

project of Zlatni lug (Golden forest) farm where we provide tourism services. Initially we owned only five or six hectares, only to reach the current 100 hectares where almost 70 hectares are connected. Nevertheless, although the idea behind the entire project is still at its inception phase, we currently provide a broad range of programmes to attract both local and foreign tourists. Will Zlatni lug farm be only a tourist destination or are you also planning food production? We are striving to create an ecological and ethnological farm to provide products we have started offering. We are engaged in rearing

for alterations in general urban planning, as well as to be granted permits by local government. One of the fundamental problems that we have not managed to tackle thus far concerns the lake. There is no legal process for us to construct an artificial lake to provide additional programmes for our visitors during the summer. Nevertheless, we will aim to implement this. Moreover, we have been waiting for over 2 years to be granted a road construction permit, which is essential and a

prerequisite to obtaining other building permits we require. And what of the future? In addition to our current accommodation capacity of some thirty beds and the restaurant with a seating capacity of 300, we are planning to greatly expand our accommodation level. We have only been involved in basic preparation for the construction work thus far. We purchased a house at the farm and are planning to construct a rest stop with some 15 parking areas. It will be the fourth rest area of this type in Croatia and I believe we will not encounter any significant problems. We are hoping to partly finance our projects through EU funding. In addition, we are planning to open one more farm and a typical Slavonian village with 8 houses and some 70 beds. I believe that completing these ideas over the next ten years will result in our accommodation capacity reaching around 130 beds, of having two restaurants and seeing a significant increase in the number of visitors throughout the year. We currently have a desirable number of visitors only in winter, yet we have launched hunting tourism programmes that have resulted in visitor numbers soaring at weekends. Nevertheless, we need to move in this direction with utmost commitment since it is imperative for good results. Our children are grown up and are beginning to be involved in the business. I hope that I will be able to thoroughly enjoy my retirement and my life achievements once the children have completely taken.


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Privredni vjesnik Year VI No 225

FIRST PRE-BANKRUPTCY SETTLEMENT PROCEEDINGS COMPLETED

( up to HRK60 for 1 kg price of blackberries in a season

BLACKBERRY GROWING

Blackberry wine: na Erdut vineyards meet main targets Svetozar Sarkanjac he Financial Operations and Pre-Bankruptcy Settlement Act came into force on 1st October 2012 and was greeted with substantial scepticism, as many claimed it was merely another Act which would not be implemented. Some six months later, the number of Croatian businesses about to complete this exhausting process is rapidly increasing. Erdut vineyards is one of the first companies to have met the principal targets, as emphasised by

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Some €10 million recently invested by the company in the revitalisation of 400 hectares of vineyards Boris Lalovac, Deputy Minister of Finance, at the recently-held ProInvest in Osijek. According to Goran Dumančić, Supervisory Board President of Erdut vineyards, the company was amongst the first to have started the PreBankruptcy Settlement Proceedings, striving to use the opportunity provided by the state, mainly concerning payment term extensions and debt-offsetting. “We did not propose to our suppliers to reduce their invoices, as it would negatively impact on

their businesses. I believe that the principal goal of Pre-Bankruptcy Settlements is to save businesses. Consequently, we proposed deferred full settlement of our liabilities. In addition, we requested interest write-off. Our proposal was accepted and our settlement proposal received 95.8% support. We aimed for realistic goals and focused on achieving winwin agreements for all parties involved. As a result, I waived a considerable amount of our invoices”, stated Dumančić. Company debt dropped to one third of the previous amount and was granted a one year grace period and a five-year extended payment period with several more years’ granted by the bank. Following the completion of the PreBankruptcy Agreement, Erdut vineyards will continue co-operating with a new strong strategic partner. “Our strategic partner is the Institute for Economics, Development Design and Programming which is substantially investing in the completion of the investment which led to Pre-Bankruptcy Settlement proceedings. It was some €10 million worth of investment and related to the revitalisation of 400 hectares of vineyards”, explained Dumančić. The company opted not to sell Erdut vineyards, as they believe production and producers will be highly appreciated again in the near term.

Full grape yield next year Erdut vineyards is expecting a full grape yield on its 463 hectares in 2014. Annual wine production will range between 3.5 and 4 million litres at average yields and quality. The first consignment of wine has recently been shipped to Poland and the company is expecting positive feedback and concluding new export contracts. In addition to Poland, the company is planning to export to Bosnia and Herzegovina, Ukraine and Sweden.

The demand for blackberry wine is growing in the European venture in this business, Rastovčan says Krešimir Sočković lackberry wine has been long known as a healthy drink, and this opinion is also shared by pharmacology. It is extremely rich in various vitamins and minerals, and recommended for anaemia, exhaustion, malnourishment, digestion, blood pressure and circulation. It is consumed as a food product by people, even children, convalescing persons and people with weak immunity. It increases appetite, improves secretion of bile and urine, contributing to dissolving of mucus, as well as quicker and healthier exchange of substances in the organism. Dario Rastovčan is one of the first bigger producers of blackberry wine in Croatia, who planted blackberries on his land in Carevdar near Križevci ten years ago. In those times there were only a few blackberry producers on the market, which I recognised as an opportunity since Za-

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greb is a big market. Immediately after the first yield in 2006, I entered Phoenix Farmacija, a good share of chemist shops in Croatia, and later on Vrutak and Kartik veleprodaja, as well as many smaller stores and wine stores, Rastovčan says. However, despite the initial success, this was not his first con-

PROTECTED AGRICULTURAL PRODUCTION IN THE VIROVITICA AREA

PGI for fresh produce o Goran Gazdek aprika from the Virovitica area will be sold with the Protected Geographical Indication label – Virovitica paprika, from this year. The longterm dream of local vegetable growers has finally been realised as their paprika have been recognised as top quality products. Three varieties of paprika hold the label: tomato paprika, bell paprika and the elongated bell paprika. The Protection project was launched by the Association of Vegetable Growers in Virovitica-Podravina County seven

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( 1500-3000 litres a year produced by Dario Rastovčan, blackberry grower

tural medicine even children can drink Union. However, local producers seem to lack larger quantities since there is not enough financial strength to

tract. The wholesale price of blackberry in large quantities for the producers was around HRK30 plus taxes. During the past couple of years the crisis lowered this price to HRK27 for 0.75 litre. He tried to establish cooperation with Lidl, but the weak demand resulted in a price of HRK20 per bottle for 1800

bottles, which he could not accept. After two good years, the crisis arrived at the end of 2009, and the sales have plummeted by almost two thirds since then, and almost 80% with my main distributer Farmacija. Therefore, when I cover all of my expenses, I am left with little from this contract. Furthermore, due to poor Croatian laws I, and many others, have been a victim of two frauds, where the buyer took the wine with an uncovered debenture. I lost HRK150,000 worth of goods, which is the company’s year and a half worth turnover. In the end I also had to pay value added tax. And this is where my ambitions came to an end, Rastovčan highlighted. The competition also increased with years. Most blackberry wines appear only in shows, but not in free sale. The competition is not that big, but the demand is relatively small. This producer evaluates the majority of wine

is bought on the black market where the prices are half lower. Difficult to find buyers It is not easy to finds buyers

After two good years of selling, the crisis arrived at the end of 2009, and the sales have plummeted by almost two thirds since then, the producer says interested in blackberry wine, Rastovčan warns. The wine is not a consumable, and it is commonly used as a medicine. We do not have a culture of drinking fruit wines. Wine stores do not wish to sell it since it is relatively expensive, and the sales are low. The demand is much bigger in the EU, but the local producers do not produce sufficient quantities and there is not enough financial strength to venture in this

business, Rastovčan says. The producers are expected to ship around 10,000 bottles, and in order to meet this quantity, the producers should join forces. I presently produce 1500-3000 bottles a year, but I used to produce up to 5000 bottles during better times, Rastovčan says. The family farm OPG Rastovčan is considering new products. The price of blackberries can reach up to HRK60 a kilogram in a season. We produced as sample of 100% natural juice from pressed blackberries, sugar free, and a mixture of natural blackberry and apple juice. This has been proved as good move since he found it easy to find buyers for such healthy products intended for children. I plan to head in this direction, even though the last two draughts prevented me, and I barely had enough blackberries to meet the required quantity of wine for the market. I even had to buy some, Rastovčan pointed out.

of three species of paprika years ago. “We first carried out a survey amongst producers, then conducted market research

The protection project was launched by the Association of Vegetable Growers in ViroviticaPodravina County seven years ago and finally gathered historical data on the geographical origin of our paprika. We completed a study in co-operation with the

Marketing Department of the University of Zagreb-based Faculty of Agriculture and attended the approval by the Ministry of Agriculture, Fisheries and Rural Development”, stated Miroslav Filipović, President of the Association. Intensive paprika production in the Virovitica area began in 1960 and the 1980’s saw a boom in paprika production, accounting for 20% of total production of former Yugoslavia. At the end of the decade, tomato paprika grown in the Virovitica area was selected and in 1993 it was included in the paprika list of Croatia.

Currently paprika in the Virovitica-Podravina County is produced over an area of 1,800 hectares. A favourable agricultural climate and soil conditions together with product identification at both the local and global market, primarily in Bosnia and Herzegovina, Slovenia, Austria and Germany, account for its extraordinary success. High demand Due to the high demand for fresh Virovitica paprika and especially as the basis for canning and processing into ajvar (a type of dish popular in Eastern Europe made

principally from red bell paprika, aubergine and garlic), distributors from many areas used to sell paprika grown in other areas under the Virovitica paprika label. “From now, consumers will be provided with security, quality, reliability and product standardisation, as well as information on the origin and quality of the product. On the other hand, producers can expect to achieve higher prices for their products if consumers recognise the quality”, explained Marija Cerjak from the Marketing Department of the Zagreb-based Faculty of Agriculture.


10

Privred vjesnik Privredni VI No 225 Year V

( €3 billion

investment into water supply and drainage until 2018

9th International conference on Croatian real-estate market arket

A good combination of priva

Regulation of the waterway for hydro-power plants within the scope of the project Zagreb on Sava will clear almost 3 could be developed. HEP is developing a similar project on the Drava near Osijek. k. Drago Živković roatian EU accession will not introduce large changes in the real-estate market, at least not during the first few months after accession, since the EU is experiencing serious financial difficulties, mainly caused by the real-estate market. However, at the 9th International conference on the Croatian real-estate market, organised by Filipović savjetovanja, a consulting company – where the main topic was EU accession – changes that could have a positive effect on the development of the local real-estate market were mentioned. For example, more investment from EU funds is expected in infrastructural projects. Therefore, until 2018 Hrvatske vode (Croatian Water) will invest a total of €3 billion in the water supply and drainage of all towns with a population over 15,000, which equates to 47 projects. Up to 2023, all towns with over 2,000 people will also have water supply and drainage, which includes another 250 projects worth €1.5 billion, two-thirds of which will

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be obtained via EU funds, and one-third from local sources, says Director General of Hrvatske vode, Ivica Plišić. The bulk of investment will go through utility companies. A to-

Investment in Plomin opens up a possibility for a fish farm that would use heated sea water from the power plant tal of €15.79 million is invested every year in new banks and canals, but Plišić says this amount will increase during the next seven to eight years to at least €0.39 billion. Currently, 18,000 ha of land is irrigated, an investment of €85.5 million, and the plan is to increase this area to 65,000 ha by 2020. Hrvatske vode have financed 39 projects through the IPA fund to date, and another 16 projects have started. Plišić says it takes three years to prepare a project, and its finalisation requires another two to three years. Investment projects of Hrvatska elektroprivreda are closely related to investment

projects of Hrvatske vode, particularly six hydro-power plants on waterways. Hydro-power plants are not only plants for producing electricity, Board President of HEP Zlatko Kovačević highlights. They are also an efficient tool against flooding, which was proved to be true in the recent cases of Varaždin and Čakovec. More hydro-power plants Regulation of the waterway for the needs of hydro-power plants as part of the project Zagreb on Sava will free 350,000 ha of land on which new real-estate projects could be realised. HEP is developing a similar project on the river Drava near Osijek, where the regulation will enable irrigation of around 40,000 ha of agricultural land. Another 3,500 ha could be added to this surface, and they will be irrigated by two hydro-power plants Molve 1 and Molve 2 - also on the Drava. Currently, Croatia has only three hydro-power plants on its waterways, whilst Slovenia has eight and Austria eleven, Koračević says. The hydro-power plant “Ombla” is not an issue for him. This power-plant has

passed all expert assessments, and Koračević is convinced it will triple the supply of drinking water to local residents, as in the case of hydro-power plants in Senj and Zakučac near Omiš. Koračević also thinks investment in the new thermal-power plant unit “Plomin” will open up new possibilities for private investment, for example a fish farm that would use heated sea water from the power plant. The project at Plomin is currently in the

YES TO TAX, BUT NOT NOW

The connection between tax and emplo Tax on real-estate could be a justifiable move since with a simultaneous decrease of tax on labour contributes to employment growth. However, there are important preconditions that the present proposal does not meet, according to the Director of the Economic Institute Zagreb, Sandra

Švaljek, and tax expert, Hrvoje Zgombić. Sandra Švaljek supports tax introduction since, as she claims, many reports have shown that countries with a share of tax on real-estate higher than tax on labour have higher GDP growth rates than countries with a higher tax on labour.

Since the Croatian employment rate is extremely low, it is necessary to unburden labour to a maximum, and compensate the difference with tax on real-estate. However, the preconditions are a reliable ownership register and developed methodology for assessing their value. Croatia does not meet these preconditions at


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( €0.38 billion

invested into water management last year

TELEVISION AND MEDIA EXPERTS GATHER FOR A REGIONAL MEETING

NEM in Dubrovnik

ate and public

350,000 ha of land on which new real-estate projects sector, which is of crucial importance for this sector. New hydropower plants are also important for increasing renewable energy resources since the accumulated water provides security during periods when wind and sun cannot produce energy.

phase of selecting strategic partners who will be known by the end of the year so that construction work could start in 2014. There is no dilemma between coal and gas for Koračević, since international analyses show that thermal-power plants running on gas lost €11.2 per MV last year. Those running on coal achieved a profit of €14.2 per MV. The construction project of the power plant will hire 8,500 people, mainly from the construction

Natura is a threat However, all these projects could be postponed due to the Natura 2000 ecological network, whose proposal envisages the protection of 37% of Croatia. Nobody disputes the protection of nature, but all six hydro-power plants fall under the territory of the network, and the verification of the proposal by the European Commission could take up to several years. Hence why Koračević appeals for a compromise between the protection of nature and the needs of promoting investment, so that the planned hydro-power plants are excluded from Natura 2000, which would reduce the scope of the network by only 1%. Without this compromise, the planned investment of Hrvatske vode, regarding the defence against flooding will also be jeopardised.

oyment present, so to introduce tax on real-estate would be far from perfect, she concludes. Notwithstanding, Zgombić is not convinced that tax on real-estate would increase employment, since it would increase employer expenditure, which would slow down economic activity and in effect, cause employment to fall.

The present concept of tax on real-estate cannot be implemented since it is totally unclear how the Tax Administration intends to assess real-estate value. Zgombić warns that entrepreneurs will simply calculate tax as a business expense, which consumers will pay in the end through increased prices. (D.Ž.)

One of the largest media gatherings in this part of Europe – New Europe Market (NEM) will be held from 8th May 2013 to 11th May 2013 in Dubrovnik. The event will bring together professionals from television, production, marketing agencies, cable distribution, as well as media experts. NEM will also cover a vast array of panel discussions featuring 77 panellists and moderators from throughout the world. “NEM is a meeting point and a venue for the exchange of ideas amongst media professionals who simultaneously engage in knowledge exchange and gain valuable experiences”, stated Sanja Božić Ljubičić, Director of NEM and

Mediavision, the organiser of NEM. She added that Dubrovnik was a logical choice, as, according to her, it is the only Croatian city sufficiently well-known globally. Representatives from Eutelsat will also participate. “Eutelsat has been well received in Croatia and we believe in the immense potential of this market. The audio-visual market is fundamental for our activity that has been clearly indicated by our 30-year long presence on the market. Croatia was a shareholder in Eutelsat during the period when it was and inter-state company and it currently still holds a small stake”, stressed Apolos Triantafyllou, Eutelsat representative. (S.P.)

PRODUCT DESIGN EXHIBITION

Solid Acts – Design from Croatia The Centre for Design at the Croatian Chamber of Economy is opening an exhibition of Croatian product design entitled Solid Acts – Design from Croatia that was presented at Milan Design Week 2013 in Italy last month. According to Luka Mjeda from the Centre for Design, during the transition of the Croatian economy from a centrally-planned to a market-oriented economy, design appeared as an appropriate and a fundamental tool for the creation of new products in global economy. “New Design Study provided high profile and highly educated market-oriented designers, free spirited, high quality and, we believe, rightfully acclaimed by the global design community. In 2013, the

year of Croatian EU accession, Croatian designers proved the EU to be our natural environment during the Milan Design Week 2013. The appearance of Croatian designers, as well as the individual work by Croatian designers, have attracted significant interest within the design community, by media and a large number of visitors to the Contemporary Museum for New Design”, emphasised Mjeda. (K.S.)


12

Privredni vjesnik Year Ye Y eaarr VI No 225

( 83,714 artisan microbusinesses in Croatia at the end of 2012

SITUATION FOR ARTISANS AND MICROBUSINESSES

Deservedly regaining imp

The drafting of the new Crafts Act aims to assist in the preservation and development of craft businesses so that arti Entrepreneurship and Crafts. Nevertheless, craftspeople believe the draft is packed with inconsistencies and are plan Sanja Plješa rtisan businesses have recently been deservedly regaining importance in the economy. In February 2013, the Ministry of Entrepreneurship and Crafts began a discussion on the new Crafts Act, which is to be considered at a forthcoming government session. Nevertheless, craftspeople believe that the Crafts Act is packed with inconsistencies and are consequently planning to apply for a prolongation of its adoption until their recommendations and proposals have been considered. The Croatian Chamber of Trades and Crafts, as a professional organisation comprising over 83,000 craftspeople, is also participating in the discussion on the principal articles of the draft of the Crafts Act. Considering the considerable importance of this Act on all artisans in Croatia, the Croatian Chamber of Trades and Crafts has taken the stance that all the

A

articles of the Crafts Act need to be comprehensively reconsidered. Why has the need for amendments to Crafts Act arisen? It has been pointed out by the Ministry of Entrepreneurship and Crafts that the former Crafts Act

Craftspeople believe they are entitled to decide on the amount of contribution paid to the Chamber (dating back to 1993) has been amended several times since, and hence a new Act needs to be drafted. “We are striving to help preserve and develop artisan businesses in order for artisans to be on par with other entrepreneurs in Croatia, pointed out Stjepan Koraj, Assistant Minister at the Ministry of Entrepreneurship. According to Koraj,

the most important article concerns the liability of artisans, implying their liability will extend to only part of their property. According to the draft of the new Act, their liability will not extend to their residential and/

or commercial property. According to the Croatian Chamber of Trades and Crafts, the latter is one of the few effective and significant amendments to the Act. The idea behind this amendment came from the

CRUCIAL CURRENT ISSUES FOR ARTISAN-TRADE BUSINESSES

Attracting customers Trader – artisans have been the most severely impacted by the crisis. They meet a broad range of challenges in their business activity, which has resulted in the drop in retail turnover for the sixth consecutive year. Attracting customers is fundamental to success with flexibility and a straightforward relationship with clients being essential for small retailers, as stated at the 5th International Gathering on Trade held at the Zagreb Fair, organised by the

magazine “Suvremena trgovina” (Contemporary trade), Suvremena.hr portal and the Croatian Chamber of Trades and Crafts – Trade guild. According to data released by the Croatian Bureau of Statistics, in January 2013 retail trade turnover was 5.3% down over January 2012. In addition, Croatia saw a drop of 8.2% in the number of entrepreneurs in business compared with 2009. “Negative trends in retail trade are also a reality in other tran-

sitional countries and even in some European countries. The decrease in the number of entrepreneurs in business has accounted for a drop in the share of trade in the economy and is a direct consequence of the shrinking number of jobs. Consequently, in 2008 Croatia saw 17,403 registered traders, whilst in 2013 the figure had plunged by 25% to stand at 12,930”, stated Ivan Damir Anić from the Zagreb-based Institute of Economics.

Small traders and large retail chains Retail trade is negatively affected by shrinking private consumption and a decrease in real gross salaries, rising unemployment and consumer prices, as well as weak demand and increasing producer prices. Over the past several years, only 2011 saw a rise in retail trade turnover, primarily due to tourist consumption. Trader - artisans have been reducing gross salaries for the past several years and, according to


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( over 83,000 artisans ( 29,062 under the Croatian Chamber of Crafts umbrella

artisanal businesses

portance

sans may be on par with other entrepreneurs, so opined Stjepan Koraj, the Assistant Minister at the Ministry of nning to apply for a prolongation of its adoption until their recommendations and proposals have been considered ruptcy, as stated at the Croatian Chamber of Trades and Crafts.

French law on limited liability of natural persons in entrepreneurship dating back to 2010, aiming to protect artisans (who are commonly the most vulnerable party in debtor-creditor relationships) from family bank-

data provided by the Croatian Bureau of Statistics, in 2012 retail trade saw gross salaries plummet by 30% compared with other business activities. “Entrepreneurs have been reducing salaries in order to cut costs, yet low salaries have a negative impact on productivity and the attraction of a professional workforce”, stated Anić. He added that the appearance of large retail chains in Croatia has adversely affected small traders, as they have not been competitive. Trader - artisans are the least competitive amongst all Croatian traders.

Wide-ranging complaints on the new Act Nevertheless, the new Act does not envisage the obligation of legal persons to employ professionally qualified staff, which artisans believe will lead to the devastation of their profession and jeopardises consumer protection. This implies that legal persons engaged in crafts such as car mechanics, electricians or hairdressers are not obligated to employ professionally qualified staff as opposed to other craftspeople. “This severely and negatively impacts on artisanal professions and significantly underestimates professional qualifications and expertise, jeopardising the quality of services provided as well as consumer protection”, pointed out Violeta Jelić, General Secretary of the Croatian Chamber of Trades and Crafts. In addition, according to her, the new Act

encourages anti-competitive behaviour, since entities for whom craft activities create additional income and handicraft businesses

The liability of artisans will extend to only part of their property are considered on par with crafts. The draft of the new Act considers handicraft businesses and secondary occupations on par with crafts. Craftspeople are also opposed to any interference in the independence of their Chamber, which results in a privileged

position of the Minister of Crafts in decision-making concerning the Statute and enactments. At the end of 2012, there were 83,714 handicraft businesses out of 200,264 businesses in Croatia, some 41.8% of all active business entities. According to data provided by the Croatian Bureau of Statistics, Zagreb saw the largest number of registered crafts – 14,082, followed by Split-Dalmatia County with 10,044 and Primorje-Gorski Kotar County with 8,319. At the end of December 2012 there were 85,722 craft owners/partners, a drop in relation to September when there were 87,580.

Men are primarily artisan business owners Of 83,714 active artisan businesses in Croatia, 29,062 are engaged in service, with 14,411 in hospitality, catering and tourism. 13,241 are trade oriented, and 9,229 are production oriented. Of 85,772 registered craft owners or partners, the majority – 58,404 – are men. Active handicraft businesses in December 2012 showed 93,623 plants with 292,402 artisan activities, according to data provided by the Register of members at the Chamber of Trades and Crafts.

artisans are imperative in order to halt the negative trends in business. In addition, they need to adopt individual approach to customers and keep abreast of trends followed by large retail chains.

Trader - artisans account for 18% market share Trader - artisans account for 18% of the market, whilst large retail chains account for the remainder. “Favourable location, consumer

habits and appropriate prices are prerequisites for successful business activity; the average consumer bill in such a store is €7.5”, stressed Anić. He emphasised that associations of trader -

Anić anticipates positive movements in retail trade in 2014 against the backdrop of positive turns in the macroeconomic environment. “Croatian EU accession is anticipated to be a positive turning point in the medium term, which is likely to boost expectations and spur new investment”, he concluded. (S.P.)


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( from €4.59 billion to €2.53 billion the reduction in overall value of work over four years

CONSTRUCTION

Solution to the crisis lies with EU The construction sector continues to show negative trends. During the past four years, the reduction in overall value of work has plummeted 45%, sinking to the level of 2002 he negative trends in construction continue and grow. There are no signs of slow-down, in an area in which 48,000 people lost their jobs between 2008 and 2012. The recovery will not happen in the near future since the number of issued construction permits is low, and the highest reduction in registered permits has been seen to date, specifically in highrise construction. In 2008, work value totalled €4.59 billon. Last year it plummeted to €2.53 billion, a downturn of 45%. Construction also considerably from illiquidity, where one quarter of all default payments relate to this sector. Director of the Croatian Chamber of Economy - Construction and Utilities Services Department - Vedran Vilović says construction has now sunk to the level of 2002. There is a general sense of

T

apathy, and most think about how to survive and bring back the old times, but this will not possible. It is necessary to consider more efficient organisation and approach to larger markets, Vilović says. New regulation An expert assembly (How to do business in the EU) was held during the Day of Construction En-

gineers, as part of the 37th International Fair of Construction and Equipping, held at the Zagreb Fair. Deputy to the Minister of Construction and Physical Planning, Željko Uhlir, highlighted the crisis as an opportunity since it is time when business activities are rational and new business conditions are considered. The Ministry of Construction amended a series of legislative

acts covering this area. The new construction act, physical planning act and inspection act are in the process of being drafted. The adoption of new regulations will be harmonised with the EU acquis. All economic operators from the EU will have the right to act as investors and contractors; therefore it will be necessary to find a way to put local construction companies at the same level as those that will arrive to Croatia, Uhlir points out. Marija Šćulac Domac, Head of the Service for Energy Efficiency of the Environmental Protection and Energy Efficiency Fund, talked about energy efficiency and renewable energy resources in construction, while Lidija Švaljek, Director of CCE’s Business Information Centre, focused on the changes in activities of the construction sector after EU accession. (K.S.)

EUROPEAN PARLIAMENT DELEGATION IN BRODOSPLIT

Hökmark: Shipbuilding is an extremely important industry to Croatia Jozo Vrdoljak Gunnar Hökmark, Chairman of the Delegation to the EUCroatia Joint Parliamentary Committee, and his colleagues, Paul Vandoren, Head of EU Delegation to Croatia and Andrej Plenković, President of the Croatian Parliament Delegation to the Joint Parliamentary Committee, have recently held a working meeting with the Croatian Parliamentary Representatives and Brodosplit Management Board. “Shipbuilding is fundamental for Croatia. We are hoping that restructuring will be success-

fully completed and that the new owner will be able to revive this industry”, stressed Hökmark. Darko Pappo, Board President of Brodosplit, presented several recent projects and emphasised current co-operation with the Dutch company Jumbo. In addition, he announced a large number of new projects in shipbuilding and energy production. Brodosplit representatives highlighted their plans to finance projects through EU funding in the near term, to encourage investment in production and the creation of new jobs. “Irrespective of the fact that the current number of staff in Brodosplit is now 1,000, we are

anticipating 2015 will see over 4,000 staff, according to business plans and proposed work, pointed out Tomislav Debeljak, majority-owner of Brodosplit. The Delegation to the EU-Croatia Joint Parliamentary Committee was provided with comprehensive information on company production capacity, as well as on the current phase of restructuring and the future plans for Brodosplit’s successful positioning on the global market. A meeting was held with Brodosplit staff in order to provide information on the current situation on shipways and the current construction phase of two heavy cargo ves-

sels. The Delegation expressed its utmost satisfaction with the results and extended their strong support to the successful privatisation of Brodosplit.


16 ::: news Zlatna penkala grand prix winners The Zlatna penkala 2012 (golden fountain pen) grand prix winners awarded by the Croatian National Tourist Board to foreign journalists for the most significant contribution to the promotion of Croatian tourism globally are: Marie Claire Digby, The Irish Times Magazine reporter and Verica Marušič, the Slovenian TV channel Food File reporter. Marie Claire Digby often writes on wine and gastronomy and she also has her own weekly column entitled Food File. She was awarded the Zlatna penkala grand prix for her text published in The Irish Times Magazine where she described the gastronomy of Istria. Co-operation between ACI and Lega Navale Italiana Bruno Bonifačić, President of ACI Management Board and Franco Paolo, President of the Italian Nautical Association Lega Navale Italiana, have recently signed a document of strategic co-operation between the two large nautical systems. Consequently, members of ACI Club and Lega Navale Italiana will be entitled to specific privileges in 107 marinas with over 14,000 berths on both sides of the Adriatic coast. Bjelovar-based Loreko Fair

Privredni vjesnik Year VI No 225

( 42 countries ( 2 million participated in the research

SMILING REPORT

What smile? Leave your money and go... At 96% Spain leads on the ‘smile scale’ and Pakistan is last. Croatia is also in the lower part of the scale with 72% ranking 30 of 42 countries ased on statistics, Croatians are a pretty grumpy nation. Mystery shopper providers in Asia, Europe, North and South America and the Heraklea Agency in Croatia participated in the Smiling Report 2012 that included data on service quality from a spectrum of

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People mainly smile in the beauty industry, and the least in government organisations (39%)

The Loreko Fair, a Fair of Hunting, Fishing, Ecology and Rural Tourism will be held in Bjelovar on 25th and 26th May 2013. The Fair covers a vast array of attractive programmes concerning hunting, fishing, outdoor pursuits, ecology and tourism. During the Fair, there will be a large number of exhibitions and competitions, such as exhibition of live wild animals and horses and horse equipment.

responses to questions

industries. The results are based on over 2 million responses, covering three basic elements of service quality - Smile, Greeting and Add-on sale - in over 40 countries. The results showed that 78% customers receive a smile; 84% were greeted, and only 56% were offered additional products. According to the results from the beginning of research, it is visible that the world average of smiling between 2008 and 2012 is 10% lower than during the period 2004 and 2007. At 96%, Spain

has the best results on the smile scale, while Pakistan is bottom at 40%. Croatia is in the lower part of the scale, ranking 30 of 42 countries with 72%, which is below the world average (78%). For comparison, this result was a mere 54% in 2010. Add-on sale is worst in Cyprus The beauty industry has the best smiling results at 92%. Government organisations are at the bottom of the list on 39%. Service activities have the best greeting results (93%), while government organisations are again the worst when it comes to greeting (64%). Although the category of addon sale shows the worst results, progress is noticeable. After an extremely low result in 2011 (45%), results improved during 2012 (56%). 50% of add-on sale is still lacking, which in the end influences both private and state sectors. Spain has the best results in this category (94%), followed by Poland at 78%. Recording 17%, Cyprus yet again shows the worst results. Croatia is again towards the bottom of the scale (41%) and is also below

the world average (56%) in this category. Service activities are those offering the most additional products and services (66%). The worst results were shown in the transport industry (39%). According to data provided by Heraklea, the 2012 results show a growing positive trend in service quality. Room to smile When comparing the results, it is visible Croatia keeps up with global trends since the results are better in all categories, even though it is still far away from the world averages. A shining example is Spain, which despite the crisis it is again facing, managed to score the best results in all three categories. On the other hand, government organisations did not excel in 2012. In all countries that participated in the research, such organisations scored the worst results in the category of Smiling and Greeting. Considering the three categories constitute the basic elements of service quality as well as personal and professional etiquette, there is still ample room for improvement in Croatia and globally.


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