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Prices go up Croatian Government revealed its Economic and Fiscal Policy Guidelines. Water, sugar, oil and baby food to rise

The most innovative factory New screw factory opened in Knin; DIV Group will gradually increase export from €20 million to exceed €130 million

Interview: Leonid Kožara Croatia and Ukraine have a long history of close friendship, says Ukraine Foreign Minister



PAGES 10-11 2008 2009 2010 2011 2012

Croatian Business & Finance Monthly Established in 1953 Monday / 7th October / 2013 Year VI / No 0229




pvinternational pv international C R O A T I A N





Deficit will exceed the prescribed 3% of GDP EDP layout Member countries have six months (or three months if the deficit is extremely high) to propose a method for deficit reduction. The procedure for limiting excessive deficit lasts three years. The European Commission and European Council assess whether the member country took the effective action it promised. The procedure deadline may be extended if the deficit does not decrease, despite the action taken (which happened with Belgium). However, sanctions are possible if the EU establishes that the country breached the agreement. Sanctions could come in the form of a suspension of money from European cohesion funds. Eurozone members could also be sanctioned with providing special deposits (0.2%0.5% of GDP), that will be reimbursed when it returns to the correct budget path. Hungary is the only country to date that was threatened with suspension. The European Commission suggested fund suspension in 2012, but the decision was never implemented, even though Hungary has been in the Excessive Budget Deficit Procedure uninterruptedly since 2004.

Public debt of Croatia could exceed the Maastricht limit of 60% under certain conditions Igor Vukić n 21st October, Eurostat will publish official data on the Croatian budget deficit and public debt. Everyone already agrees: the deficit will be above the prescribed 3% of GDP, and public debt could exceed the Maastricht limit of 60% under certain conditions. Therefore, immediately after EU accession, Croatia will be exposed to the Excessive Deficit Procedure (EDP) that the EU uses to control the finances of its members. Croatia will not be an exception. To date, 25 countries have been under the procedure for decreasing budget deficit as opposed to the current 16 EU members. Until last year, even Germany was included and had to face Eurocrat criticism. Such type of monitoring has so far been avoided only by Sweden and Estonia.


Detailed method of prescribed action The method of action in the Excessive Deficit Procedure is prescribed in detail in Article 126 of the European Union Agreement, and the relating protocol of the 12th Stability and Growth Pact. After Eurostat confirms that

Croatia crossed the Maastricht limit, the European Commission and Croatia will discuss how to reduce it. All relevant economic elements will be taken into consideration when the procedure starts. This will also include objective reasons that caused the deficit to increase, as well as actions of past and present authorities. There is a possibility the procedure will not even start if it is assessed the deficit limit was crossed due to special situations, or is temporary. To those entering the EDP, the EC will give recommendations, mainly relating to the speed of harmonisation, and which are expressed numerically. For exam-

ple, the country should decrease its deficit by 1% of GDP in one year. Sanctions also possible However, the measures that will achieve these tasks fall under the authority of the member countries. Therefore, the EU will become directly the master of the Croatian budget, but it will assess the methods for budgetary reduction proposed by the Croatian government. It was mentioned in the Croatian Finance Ministry that some of these measures would be proposed in the forthcoming budget policy guidelines for the next period and in the state budget plan for 2014.


Privredni vjesnik Year VI No 229

( €25 billion ( €2.9 billion public debt in 2015

Government anticipates from motorway concessions


Water, sugar, oil and b The Government is still unsure whether to lower the present 10% VAT on tourist accommodation services to 8%, eq the lowest rate of 5% to 8% since the system supports only three rates. The highest 25% rate will not change Igor Vukić rom January 1st the VAT rate will increase from 10% to 13%, which means prices for water, sugar, oil and baby food will rise. However, the Government aim is to reduce the high budget deficit, at least partially. This increase would add €79 million a year to state income, said Finance Minister, Slavko Linić, last week when he presented the measures for deficit cuts for the period 2014-2016. The Government adopted these measures together with Economic and Fiscal Policy Guidelines for the same period. Linić revealed the Government is still uncertain whether to lower the present 10% VAT on tourist accommodation services to 8%, equal to Mediterranean competition. . If it opts for the decrease, it will have to raise the lowest rate of 5% to 8%, since the system supports only three rates. The highest 25% rate will not change.


Privatisation income of HPB and Croatia osiguranje will improve state finances The Government plan for next year is to decrease the deficit by €0.25 billion, through higher duties on diesel and petrol, and tobacco and tobacco products. Intensive inspections will put pressure on the black market of renting apartments, with the aim of collecting €39.5 million in taxes. Furthermore, a property tax will now be introduced for first time property owners, but the rate will be decreased from 5% to 4%.

Privatisation infusion The privatisation of HPB and Croatia osiguranje will improve state finances, and the procedure of granting concessions on highways should be finalised by the end of next year. The Government anticipates an income of €2.9 billion from highways. Not even this will be enough to reduce the high level of public debt that will reach €25 billion in 2015, which is why additional expenditure cuts have also been prepared. According to the announcement by Government Vice-President, Milanka Opačić, maintenance, cleaning and accounting services will be removed from ministries and other state institutions to give an opportunity for private entrepre-

neurship. All preferential pensions above €660 will be reduced by 10%, which will not apply to 100% disabled and the children of dead defenders. State and public services workers, who meet the conditions for retirement pension, will have to retire immediately. According to estimates there are 12,000 workers meeting this criteria. The promotion of state officials will be suspended to reduce the growth of their gross salaries. The new rationalisation will also apply to the court network and other legal institutions. The master plan for healthcare institutions should soon be finalised. The number of support staff will be reduced, and monitoring of business activities will intensify.

Hospitals will specialise in certain activities in order to concentrate treatment quality and reduce expenditure. Around €39.5 million could be saved on medicine annually. Reduction of tax exempt liabilities Central payroll accounting will be introduced for all those receiving funds from the budget, and

Government anticipates €2.9 billion from motorway concessions the accounts of numerous state agencies, funds and institutions will merge with the state treasury. Business & Finance Weekly


( around €39.5 million a year could be saved on medicine


baby food to rise

ual to most Mediterranean competitors. If it opts for the decrease, it will have to raise

General government budget deficit 2014. - 2016. (000 HRK)

Execution New plan 2013. 2012.

STATE BUDGET -10.000.689 Total deficit/surplus -3,0 % GDP EXTRABUDGETARY USERS -1.549.170 Total deficit/surplus -0,5 % GDP LOCAL GOVERNMENT (576 local units) 95.976 Total deficit/surplus 0,0 % GDP CONSOLIDATED GENERAL GOVERNMENT -11.453.884 Total deficit/surplus -3,5 % GDP

Outlook 2014.

Outlook 2015.

Outlook 2016.

-10.246.926 -3,0

-17.403.741 -5,0

-16.252.894 -4,5

-15.457.069 -4,1

-1.335.239 -0,4

-1.788.958 -0,5

-2.303.043 -0,6

-1.519.376 -0,4

-97.868 0,0

-66.207 0,0

51.433 0,0

80.924 0,0

-11.680.032 -3,5

-19.258.906 -5,5

-18.504.504 -5,1

-16.895.521 -4,5

Source: Ministry of Finance

Macroeconomic outlook GDP real growth (%) Household spending State spending Gross investment in fixed capital Goods and services export Goods and services import GDP contribution to growth (percentage points) Household spending State spending Gross investment in fixed capital Goods and services export Goods and services import

2012. -2,0 -2,9 -0,8 -4,6 0,4 -2,1

Outlook 2013. 0,2 -0,3 0,3 3,3 -0,5 0,6

Outlook 2014. 1,3 0,2 -1,5 7,6 2,3 2,5

Outlook 2015. 2,2 1,5 -0,4 7,5 3,4 4,3

Outlook 2016. 2,5 2,2 0,6 5,9 4,2 5,0

-1,8 -0,2 -0,9 0,2 0,9

-0,2 0,1 0,6 -0,2 -0,3

0,1 -0,3 1,4 1,0 -1,0

0,9 -0,1 1,5 1,5 -1,8

1,3 0,1 1,2 1,8 -2,2

GDP growth rate to increase next year According to the report, the guidelines on economic policy have been set out at a crucial moment when, after a four-year recession, a turnaround in the trend of economic growth is anticipated. Therefore, after slight growth in 2013, it is anticipated it will pick up in 2014 and increase by 1.3%. In 2015, GDP will grow by 2.2% and by 2.6% in 2016. At the same time, inflation will remain around 2% a year, according to Government economists. Positive effects of Croatia joining the EU will show in 2015 with higher level of financial inflow from cohesion funds. Until then, growth will be based on local, public and private investment.

Maastricht limit achieved with cuts Without the need for any additional reforms, the deficit could grow to 5.5% of GDP in 2014, mainly due to higher interest costs (€0.3 billion) and budgetary liabilities towards the European Union (€0.6 billion). With expenditure cuts and income growth, the Government anticipates the state deficit to equal €2 billion or 4.4% of GDP by the end of 2014. In 2015, the cuts could lower the deficit to €1.62 billion (3% of GDP), so meeting the Maastricht limit in 2016. It would total 2.8%, which would include the liabilities from all levels of the state.

Source: Ministry of Finance

Milanović: Deficit is the millstone around our neck

This will add to the state budget since these funds and agencies earn more than they spend, despite their overspending, Minister Linić commented. With the intention to reduce tax exempt liabilities for entrepreneurs, the Government has decided to include an element of water compensation in the price of water. Payment of compensations will no longer be socialised. Those using more water will pay more, Linić highlighted. The state

The state budget deficit and high public debt, which continuously increase interest rates, are millstones around Croatia’s neck, pointed out Prime Minister Zoran Milanović. Even though there are more developed countries in Europe with relatively high debt, Croatia’s 60% debt in relation to GDP is hardly sustainable if economic growth does not pick up rapidly

thus waived around €9.9 million a year. Regional organisations will also face cuts. Each state administration office will be responsible for each of the five regions (Slavonia, Dalmatia, Northern Croatia, Zagreb and central Croatia as well as Istria - Primorje – Lika). State administration branch offices will be kept only in larger cities; this will also reorganise most public companies and some relief for less developed areas will be eliminated. Dubrovnik still en-

joys the special care status under timeworn laws, even though this is one of the richer cities, Government Vice-President, Branko Grčić, said. Economic and Fiscal Policy Guidelines were in fact prepared this summer, but they were not revealed until all liabilities and debts were determined. While waiting for EU recommendations for reducing deficit, the Government prepared additional measures for balancing public finances.

4 ::: news IPARD funding increase In September, the Payment Agency for Agriculture, Fisheries and Rural Development allocated €1.99 million for completed IPARD projects. Following 18 tenders invited during the past three and a half years for six IPARD measures, the Agency has thus far concluded 330 projects with a total investment value of €0.16 billion and support of €89.38 million. Milk production down In July, the total amount of collected cow milk was 17.5% down in relation to the same month in 2012, whilst milk consumption plunged by 35.9%, according to data released by the Croatian Bureau of Statistics. In July, Croatia collected 41,626 tonnes of milk, 8,808 tonnes down compared with July 2012. The monthly average of 50,180 tonnes of collected milk in 2012 dropped by 17% in July 2013. Moslavina allocated €0.28 million from IPARD funding The Payment Agency for Agriculture, Fisheries and Rural Development allocated €0.28 million to Podravska Moslavina municipality based on Measure 301 “Enhancement and Development of Rural Infrastructure” under the IPARD Programme. 10,400 metres of roads were constructed under the project. Maritime school project The maritime school Bakar has successfully completed a European project for the implementation of innovative and extra-

curricular programmes striving to boost competitiveness and relevance of its pupils, the future generations of seafarers, in the labour market. The project entitled “From Education to Employment” through curriculum modernisation of maritime vocational schools is worth €211,000 and was financed by the European Union through a multi-year operational programme.

Privredni vjesnik Year VI No 229

( €35 million ( 400 investment value

new jobs created

The most innovative factory in the region

New screw factory opened in Knin Factory is primarily export-oriented, pointed out by Tomislav Debeljak, owner of DIV Group during the opening of the Knin-based factory, adding that the value of exports will gradually increase from €20 million to exceed €130 million Jozo Vrdoljak he opening ceremony of the new screw factory in Knin marked the start of operations of one of the most innovative factories in this sector globally. The investment value of the Samobor-based DIV Group was €35 million and it will create 400 new jobs. It is anticipated around 350 new jobs will be indirectly created in other logistics and service activities outside the company. The construction of the


The ratio of direct exports to total sales in our screw factory was 65% last year

their own funds retained from profits. The remaining €10 million was through a loan granted by the Croatian Bank for Reconstruction and Development and through the Croatian Postal Bank.

factory began in 2010, following highly difficult administrative problems. Investors primarily focused on process optimisation and energy use to achieve competitiveness. In addition to large production capacities, the factory comprises two additional DIV Group businesses, a high bay warehouse and a completely new energy system with a 14 megawatt substation and a switching unit. €25 million of investment was mainly implemented via

Cutting-edge facility The complete production cycle of standard screws from preparation to final processing will be performed in a 22,000 m2 production area. 23 production lines for initial processing, 14 for thread rolling, and 2 for surface protection by galvanic zinc coating with a capacity of 5 tonnes per hour have been installed. Additionally, there is a new semiautomatic packaging department for end products and road and rail

Creation of over 3,300 new jobs planned DIV Group, which currently also includes Brodosplit shipbuilding company, is one of the leading screw factories in Europe, operating in 8 locations in six countries and employing over 1,000 staff. Following the completion of the first phase of restructuring Brodosplit and reaching full capacity in the new factory, DIV Group will be employing over 3,300 staff.

transport communication. “Due to a continuous increase in orders and rising requirements for our products in Europe, DIV Group decided to invest in capacity expansion and the construction of the new factory, since its current capacity does not meet requirements. Last year the ratio of direct exports to total sales was 65% and in terms of production, direct exports accounted for over 85%. The new factory is exclusively export-oriented, which implies a significant boost to exports”, explained Tomislav Debeljak, owner of DIV Group during the opening ceremony of the new factory, adding that the value of exports is expected to gradually increase from €20 million to over €130 million. The biggest buyers of DIV products in Croatia are Same Deutz Fahr, Croatian Railways, Dalekovod-Production, Đuro Đaković – Special vehicles, and globally Reyer, HP Import, Vipa, FM, BMG World, NSS and Bossard, amongst others. Business & Finance Weekly


( from 34% to 4%

a slump in the global share of European footwear output

New footwear industry: Paul Green in Prelog, Međimurje

Prelog footwear goes to the world The Salzburg-based company opted for Međimurje, which is not illogical, as it has been co-operating for years with footwear producers Meiso from Goričan and Ivančica from Ivanec Drago Živković he global footwear industry has seen immense changes during the last 25 years. In 1985, global footwear output exceeded 8.8 billion units, whilst in 2012 it exceeded 21 million, according to data provided by the Croatian Society of Leather and Footwear Manufacturers. Simultaneously, the global share of Chinese output leapt from 17% to over 60%, whilst the share of European output crashed from 34% to a meagre 4%. Between 2010 and 2012, annual footwear purchase in China soared by 21%, in India by 11%, whilst in the US it dropped by 4.2% and in Europe by 13.4%. Irrespective of the notable shift of the global footwear industry towards developing


countries, the Austrian producer Paul Green, one of the leading brands of women’s footwear, has decided to construct a new factory in Prelog, a small town in Međimurje. According to Gerald Huber, the Director, the investment is worth around €5 million, although there have been rumours quoting €10 million. The decision to construct the factory might have appeared surprising in the context of the global market, yet it is not illogical, as the company has been co-operating for 20 years with the footwear producers Meiso and Ivančica. “We are extremely satisfied with our activities in the region and a long tradition in footwear production is fundamental”, pointed out Huber. Paul Green initially created 50 jobs in Prelog, and is planning to em-

ploy at least 100 more by the end of 2013 and around 400 over the next two years, including staff

Paul Green has created 50 jobs in Prelog and is planning to create 400 new jobs over the next two years

in the new logistics and distribution centre. These announcements have caused some concern in Austria, where the company employs around 150 staff, yet Huber explained for local media that the employment plans for Croatia would not impact on employment in the Austrian factory. Total output in Paul Green factories stands at 10,000 units and the Prelog-based factory began its operations with a daily output of 1,000 and is expected to reach 2,000 in the near future. The production is expected to continue in Meiso and Ivančica, as well as in three facilities in Bosnia and Herzegovina. Annual footwear sales revenue for Paul Green currently stands at around €100 million, primarily due to exports to Western European markets and to the US and Japan.


HRK 500 million into new facilities The two existing factories and a microbiological laboratory, irrespective of being the most modern in this part of Europe, do not meet the requirements of operations covering 16 pharmaceutical markets The Koprivnica-based company Belupo is preparing a new investment cycle worth €66.2 million. A new pharmaceutical factory, the fourth factory, will be constructed, since the two existing modern factories and a microbiological laboratory, do not meet the requirements of operations covering 16 pharmaceutical markets. The investment still needs approval from the Supervisory Board, but according to unofficial information, the new facility is expected to start operations in 2016. The factory will produce solid and semi-solid medications (creams and oint-

Last year the company showed revenue of €83.71 million, four times higher in relation to 2011 and profit was €10.7 million. In 2012 the gross margin was 63.6%, up from the 2011

Investment expected to increase production capacity by one third ments) and the investment is anticipated to increase the production capacity by one third, whilst the production of semisolid medicines will rise two and a half times.

figure of 62.6%. The company employs 1,250 staff and 27% of those employed hold a degree. Belupo is planning to focus fully on the synergy of research, technological improvement and the

development of new products. New products, which have been launched during the last five years, account for 30% of company sales. Moreover, the company has focused on generic drugs, food supplements and special purpose cosmetics. In addition to its expansion locally, the company is planning global market expansion, primarily to East and South-East European markets, as well as exports of OTC drugs. Belupo is holds product quality certification, which enables the performance of clinical trials on new medications in the European Union. (I.V.)

6 ::: news Public sector savings

Privredni vjesnik Year VI No 229

( 8.5% rise

in tourism income for first 7 months of this year




Between 2010 and the end of 2012, the programme aimed at encouraging energy efficiency in the public sector generated savings exceeding €14.97 million, or 6.4% year-on-year, as stated during the closing meeting for the eight year project. Savings by September 2013 stood at almost €19.88 million, generated by an insignificant number of building reconstructions. The additional savings potential is anticipated to range between 30% and 50% for the implementation of comprehensive reconstruction projects. New Mlinar facility Milling and baking industry company, Mlinar, has recently opened its facility in Zagreb, a green field investment worth €40 million. It covers an area of 20,000 m2 and it is equipped to the latest standards, with an annual production capacity of over 95 million product items. Over the past four years, during the construction of the new facility, Mlinar has developed a retail network with over 170 sales outlets throughout Croatia, Slovenia and Hungary. Reduced water consumption

Karlovac Brewery (Karlovačka pivovara) has presented its fourth sustainability report, according to which in 2012 the company reduced its energy consumption by 2.6%, specific thermal energy consumption by 5%, whilst the CO2 emissions were lowered by 2%. The new facility opened last year and is expected to significantly reduce water consumption, since its consumption is 15% to 20% lower over the old filling facility.

Prognosis is goo a prolonged seas

This year, €0.3 million was invested in tourism, 124% up over 2014, and 23 Jozo Vrdoljak rivredni vjesnik spoke with Tourism Minister, Darko Lorencin, about the state of Croatian tourism and plans for next year


Can you assess this year’s tourist season? I am satisfied with the results of the season’s high season, where August showed 10.1% more arrivals and 4.5% more overnight stays. The results for the first eight months of the year are: 5.4% more arrivals and 3.3% more overnight stays compared with 2012. Even better news is that the pre-season is positive, and the prognosis for September and October is also very good. Therefore, we can already say the season will be longer. Of course, this has impacted on the income for the first seven months, which is currently 8.5% higher compared with the same period of 2012.

The pre-season is positive, and the prognosis for September and October also very good The structure of foreign visitors changed slightly this year, even though German tourists are still at the top of the list of foreign visitors. I would especially like to highlight the increased num-

ber of tourists from Great Britain, Poland and Scandinavia. What are your anticipations for the end of the year? I anticipate the growth trend of all indicators to continue to the end of the year, with the same physical turnover results as last year and 2%-3% growth in total tourism income. Could you comment on the fact that the trend of raising quality is not going according to plan, despite the efforts of people responsible for tourism? How can the negative structure of accommodation in Croatia be changed? This year, the Croatian Parliament adopted the Tourism Development Strategy of Croatia 2020 with transparent goals, guidelines and information on tourism development we will promote. It is clearly stated we will especially promote investment into hotel accommodation (high category hotels), raising the quality of camps and family accommoda-

tion. With the Croatian Bank for Reconstruction and Development (HBOR), this year we arranged a credit line for tourism, which for the first time includes subsidies for SME’s in tourism. We invited tenders for non-repayable funding worth over €4.62 million. We expect a lot in terms of funding from EU funds for public tourism infrastructure, training in tourism and the SME sector. The tender for non-repayable funds for financing project documentation is currently in progress. This year, €0.3 million was invested in the tourism sector, 124% more in relation to up on 2012, and 234% more in relation to 2011. Most investment projects relate to highcategory hotels. Is the construction of conference centres in Croatian cities realistic? Business tourism is one of ten priority products mentioned in the Strategy. The main obstacle for product growth is the lack of conference infrastructure and an uncompetitive management Business & Finance Weekly

in 10


( â‚Ź1.98 million

ity products relate to business tourism

non-repayable funding to underdeveloped tourism areas

d and we anticipate son 4% more in relation to 2011 with most investment projects relating to high-category hotels New reasons for arrival What can entrepreneurs in tourism expect from ministries in terms of new projects? We are working on the new subsidies package for next year. We will continue to promote entrepreneurial activities with HBOR, HAMAG Invest and other ministries. Our tenders for non-repayable funding will be formed to promote the achievement of strategic goals: increasing accommodation capacity in hotels, raising the quality of camps and family accommodation, innovation, the development of tourism on presenting currently underdeveloped areas and the development of priority products for creating new programmes to attract tourists. and product commercialisation system. With these obstacles removed, more room for quality development regionally and some niche markets could be created. An action plan for this

I anticipate a positive trend and 2%-3% growth of total tourism income to continue until the end of the year particular segment of tourism development will be drafted, and our aim for 2014 is to build a larger multifunctional conference/showroom centre with 3,000 seats, several smaller multifunctional conference centres with 1,000 seats, and to increase the accommodation capacity in Zagreb, Dubrovnik, Split, Pula, Rijeka, Opatija and Osijek. The nonexistent Tourist Land Act has long been mentioned as an obstacle to investment in Croatian tourism. Has this act

been brought back to life and have the problems with the camps been solved? Due to problems with the implementation and vagueness of certain provisions of this Act, which entered into force on August 1 2010, the Ministry of Tourism was not able to complete the procedure of granting concessions for land for camps in the manner in which the Act prescribes. However, according to the same Act, invoices for temporary concession fees will be issued until the concession is granted. The amendments to the Act on tourist and other construction land, which was not assessed in the transformation and privatisation procedure, are regarded as a priority for the Ministry of Tourism, since this Act is an obstacle to future investment, particularly in camps. After the Croatian Parliament adopts the proposal for the new Act, the procedure of

granting concessions and concluding contracts on concessions will continue on the bases of company requests. We are convinced the amendment will boost a new investment cycle, especially in the camping segment, which will increase total quality and competitiveness of the Croatian tourism and prolong the season. Do you expect any significant tourist development in the continental part of Croatia? The fact is that Croatian continental

tourism, the city of Zagreb excluded, accounts for only 3% of total tourism turnover. Our goal is to develop tourism in Croatia, which is why we and the Croatian Tourist Board implement tenders for non-repayable funding only for underdeveloped tourist areas for which we secured â‚Ź1.98 million. In these areas, tourism should be developed through the deep culture and additional aspects, such as health, sports, wine and gastronomic tourism, as well as all other special tourist areas. Private or family accommodation and small camps are common in this area. Our goal is to promote investment in hotel capacity, the networking of family accommodation and its standardisation, as well as raising the quality of camps. Continental tourism is not irrelevant and has its market.


Privredni vjesnik Year VI No 229

I started a conversation with an engineer at reception who was extremely proud of the ships constructed in Brodosplit, calling them “our ships”. He gave me the impression of an extremely professional individual... Consequently, we decided to opt for Brodosplit.

Michael Kahn, Board President of Jumbo

Heavy lift vessel, the largest and the most sofisticated of the kind, launch in Brodosplit

Very good job a result of a conversation at reception A Jozo Vrdoljak/ Sanja Plješa

t the end of September Brodosplit saw the launching ceremony of Novogradnja 473 constructed for the Dutch company ‘Jumbo’. “The launching of a ship that has never been constructed in Croatian shipyards clearly shows that Brodosplit has the potential to construct the most technically demanding ships”, highlighted Tomislav Debeljak, Board President of DIV Group, during the launching ceremony held on 24th September in Split. As empha-

Brodosplit is planning the construction of five additional vessels for their own use sised by Michael Kahn, Board President of Jumbo, the ship is unique due to its being the largest of this type and having the most sophisticated equipment. “During the decision-making period

when we were going to select for the construction of heavy lift vessels, we went to Brodosplit and I started a conversation with an engineer at reception who was extremely proud of the ships constructed in Brodosplit, calling them “our ships”. He gave me the impression of an extremely professional individual showing deep commitment and devotion to his work. Consequently, we decided to opt for Brodosplit”,

explained Kahn. This type of vessel is primarily used for lifting extremely heavy and expensive equipment for underwater oil rigs or the transportation of heavy loads. It has been constructed to Lloyd’s Register, Class 1A Super notation and it does not need an ice breaker for up to one metre thick ice. During the same week, Brodosplit saw the launching ceremony of Novogradnja 522, a

vessel for nautical tourism, 45.59 metres long and 9 metres wide, constructed for Providnost, a small business owned by Mario Ercegović from Krila Jesenice. Brodosplit constructed a steel hull and superstructure. “Our request was met perfectly; we are extremely satisfied with the quality of the vessel and I am convinced our co-operation will continue”, stressed Ercegović during the ceremony. Following the delivery of the motor ship ‘Futura’ in December 2012, the first of nautical tourism ships, and the motor ship ‘Amalia’ in February 2013, naval architects constructed the steel hull and superstructure for Novogradnja 523, whose construction was also ordered by a local customer. Moreover, following the cruise ships for the US market between 2006 and 2008 and a luxury yacht ‘Caspian Star’ delivered last summer, Brodosplit has been constructing a new 60-metre long luxury yacht. The company is planning the construction of five sailing vessels for its own use.

Atlantic Group

Investment value of €16 million Atlantic Group has started the investment programme into a new facility for the production of energy bars as a sport and active food product range by signing a pre-contract agreement in the Nova Gradiška Industrial Park. The investment project is worth €16 million. During the first year of production, the project is expected to create 50 new jobs and eventually, following anticipated operational growth, 160. The start of construction is planned for April 2014 and the first products

are expected to appear during the first quarter of 2015. Most sport and active food products made by Atlantic Group are produced in

its own facilities near Hamburg and in Rogaška Slatina, whilst energy bars have thus far been produced by a third party in compliance with the contract. “New facilities have been designed in compliance with the highest standards in food production. We have seen a high level co-operation and appreciation from the local community in Nova Gradiška and it is to our utmost satisfaction that we can contribute to the development of this business zone through the development of our own business

activities”, pointed out Emil Tedeschi, Board President of Atlantic Group. Željko Bigović, Mayor of Nova Gradiška, has expressed his satisfaction at the decision by Atlantic Group to opt for Nova Gradiška Industrial Park, as the highest quality business zone of 93 business zones analysed. “Atlantic Group as an investor can count on comprehensive professional support provided by the City and the Industrial Park throughout all phases of project implementation”, he highlighted. (D.Ž.) Business & Finance Weekly


( up to 1.5% of the state budget allocated by EU member states for employment measures


New jobs required now and more labour force in the near future these measures. Nevertheless, it needs to implement effective employment programmes. A

Sanja Plješa mployment issues are at the centre of attention of the government and nongovernmental organisations, employers, a large number of institutions, as well as all economic entities. During the past several years, active employment measures were not adequately considered and unemployment benefits were at the focus of attention, stated Mirando Mrsić, Minister of Labour and Pension System, at the recently held consultation Stimulative Employment Measures for Employers organised by the Croatian Employers’ Association and the Ministry of Labour and Pension System. He added that the situation has changed during the past four or five years due to the allocation of substantial funds for these measures. “Initially, €37 million was invested in active employment policy measures, whilst currently around €79.5 million is being invested. Up to 1.5% of the state


Over 43,000 people engaged in seeking active employment during the first nine months of 2013

budget is allocated by the EU member states for employment measures; Croatia allocates only 0.5% to 0.6% of her state budget”, emphasised Mrsić. Croatia is facing a disequilibrium, as the number of jobs lost exceeds the number of jobs created. We will see a significant decline in unemployment only when strong economic growth and the gross national product exceed 2%, stressed Mrsić.

Future paradoxes Mrsić pointed out that over 43,000 people were engaged in measures of active employment during the first nine months of 2013, a record number for Croatia. Commencing from July 1st, these measures have mainly been focused on youth employment. By 2020, the EU will invest over €8 billion in youth employment measures and Croatia also plans to implement

new package of measures for social and economic empowerment of women and vulnerable groups, primarily socially vulnerable, will be implemented commencing from January 1st 2014 and the state will co-finance some contributions and expenditure from the collective agreement. According to Mrsić, the labour market in 30, 40 and 50 years will see a paradox. It is anticipated around 370,000 jobs will be created, yet there will be demand for youth labour. In addition, the number of employed is expected to reach 2 million by 2020.

Croatia will have to turn to importing workers

Immigrants will not be coming from Europe Due to demographic trends, Croatia will face a lack of work force in some twenty years and will have to turn to immigrants, stated Mirando Mrsić, Minister of Labour and Pension System, during the “Demographic policy and the labour market” roundtable discussion at the Croatian Academy of Sciences and Arts. Mrsić proposed to members of the Academy to consider preparing a conference on immigration, to avoid a culture shock, picking up the recently held discussion

on immigration initiated by Nadan Vidošević, President of the Croatian Chamber of Economy (HGK). Population ageing will have a positive impact concerning later retirement at 67. Nevertheless, pensions will be received for a longer period, due to a longer lifespan. Alica Wertheimer-Baletić, a member of the Academy, explained that the demographic factor currently exacerbates unemployment, due to a more stable inflow of young people into the labour market. She agrees that

Croatia will need to consider importing work force, since she has witnessed “selective emigration” following accession to the Euro-

pean Union as the most prominent professionals and experts have been leaving the country. Immigrants to Croatia will not come from the EU; they will not even be from Europe. According to Daniel Nestić from the Institute of Economics, similar demographic trends are present in Europe. As was pointed out, France and Sweden achieved significant results as a result of comprehensive and long-term pro-birth policies, yet the principal trends of demographic decline have not been tackled successfully. (I.V.)


Privredni vjesnik Year VI No 229


Croatia and Ukraine have a long close friendship and soon a com

We respect the fact Zagreb supports Ukrainian euro-integration, and is willing to share its experienc to intensively strengthening trade and economic co-operation Igor Vukić rivredni vjesnik spoke with the Ukrainian Foreign Minister and current OESS Chairman on the reasons for his official visit to Croatia. On September 9, Minister Kožara met with Croatian entrepreneurs in the Croatian Chamber of Economy, where a Business Council for economic co-operation with Ukraine has been founded.


Dear Leonid Oleksandrovič, this is your first visit to Croatia. What is your opinion of the present level of co-operation between Ukraine and Croatia? Political relations between Ukraine and Croatia have always been excellent. We have never had conflicts, and our positions and ratings have been the same in most bilateral and multilateral issues. Such a solid foundation for political partnership is due to our ethnic relations, linguistic and cultural similarity as well as a common wish to build a future in a united Europe. We respect the fact Zagreb supports Ukrainian euro-integration, and is willing to share with us its experience of joining the EU. Concerning trade and economic co-operation, it is clear its current level does not correspond to the political partnership level or the real potential of economic relations between Ukraine and Croatia. That is why we must pay special attention to intensively strengthening trade and economic co-operation. It is very important for us to focus on the demands and achievements of concrete mutually beneficial projects, where the chambers of our two countries play an important role.

In which economic areas is it possible to speed up the cooperation? I will highlight some of the most prospective: the metallurgical industry, shipbuilding, traffic and chemical industry, the energy sector, construction, pharmaceutical industry and agriculture. Without any exaggeration, the energy sector is strategically significant. This sector has a good prospective for co-operation between the Croatian and Ukrainian state oil and gas companies and their affiliates, concerning the reconstruction of old and the construction of new oil and gas pipelines, LNG terminals, as well as the development and exploitation of oil and gas fields in Croatia and Ukraine. We have good preconditions for successful co-operation in developing alternative and renewable energy sources, such as bioenergetics, solar energy, environmental thermal energy, development of wind turbines, the use of the hydro-potential of Croatian and Ukrainian small rivers. Of course, it is impossible to neglect tourism in the case of Croatia. Due to the fact that the Croatian Government has had to suspend visas for Ukrainians for

After signing the agreement in Vilnius, Ukraine will become part of a common EU market the past four summer seasons, the number of our tourists increased from 33,000 in 2009 to over 70,000 in 2012. I hope the new visa regime, reintroduced as a result of your country joining the EU, will not have significant impact to this growth trend.

What can Croatian entrepreneurs expect from the Ukrainian market? We are creating the optimal legal conditions for entrepreneurial development, improving the entrepreneurial climate, attracting foreign capital and investment. The legal regulations have been simplified; the procedure for starting and liquidating businesses, state supervision and technical regulation has been optimised. The tax reform envisages reducing the tax burden on business, decreasing the tax rate on profits made, exemption from income tax for a period of 10 years for companies in shipbuilding, airline and light industry, hotel industry, electric energy (the pro-

duction of energy from RES), mechanical engineering and agriculture. The implementation of intensive reforms gave us an opportunity to face successfully the impact of the global financial recession, which hit Ukraine hard between 2008 and 2009. Between 2010 and 2013, our GDP increased almost 10%, mainly due to steady development of the real economic sector (industry and agriculture). The situation in the area of state finances is stable: the state budget deficit level decreased 2.2 times; in 2011, for the first time in four years, the negative trend in public debt increase halted. During all these years of independence, inflation remained at a record low lev- Business & Finance Weekly


history of mmon EU market

ce of joining the EU. We must pay special attention investment and developing competitiveness of Ukrainian products on the global market.

el (0.1% for January-July 2013). The future accession agreement with the EU and the creation of a free trade zone will become a strong means for speeding up internal reforms, strengthening

Has Croatian EU accession caused significant changes in business co-operation of the Ukrainian and Croatian companies? What is better and what is worse after July 1? I would like to point out that not only do we feel the economic cooperation with Croatia will deteriorate after July 1, but we are certain our trade and economic relations and the investment sphere will actually improve. The reason for this will be the Ukraine-EU Association Agreement we plan to conclude this year in Vilnius during the Eastern Partnership Summit. Several hundred pages of this Agreement (almost 90%), relate to creating a more elaborate and comprehensive free trade zone between the EU and Ukraine. Furthermore, its provisions will be applied in practice even before EU member countries ratify the document. This means that after signing the agreement, Ukraine will be part of a common EU market. This will be another powerful incentive for intensifying economic relations between Croatia and Ukraine.

Combat aircraft for Croatia What experience do Ukrainian exporters have of the Croatian market? What type of problems do they face? Ukrainian export to Croatia consists of 85% black metal and related products. This is certainly a flaw that must be corrected. We could supply the Croatian market with products from the energy sector, mechanical engineering and agriculture. Concerning our positive co-operation, it is worth mentioning we have recently won a tender, and signed a contract for the reconstruction of seven combat aircraft (MiG-21) for the Croatian Armed Forces, which will be executed in Ukraine. We sold a further five MiGs and will reconstruct six Mi-8 helicopters. Considering the potential of the Ukrainian military/economic complex, I hope this is only the beginning of successful and mutually beneficial co-operation.

Drugs, the first Croatian export product Ukrainian – Croatian trade In 2012, trade between Ukraine and Croatia stood at $94 million, of which $54 million related to exports from Croatia. During the first seven months of this year, exports to Ukraine stood at $12.7 million, and imports $22.9 million. The largest area of Croatian exports is drugs ($28.9 million in 2012). The remainder covers shaving products ($5.8 million), metal plates and moulds for foundries ($4.6 million), followed by epoxy colours, resin and other materials. This year, the export of flour products and non-processed tobacco increased. Imports from Ukraine include products from rolled steel and iron ($7 million this year). A total of $9.4 million worth of ships, including one fire-fighting ship, were exported last year. The import of mineral fertilisers was valued at some $2 million, and sunflower oil at $3.3 million.

A trading record between Croatia and the Ukraine was achieved in 2007 and 2008 ($167 million and $192 million). According to experts from the Croatian Chamber of Economy, there is room for increasing co-operation in the pharmaceutical industry, equipment exports, construction, fur-

niture production, agriculture and food industry, energy and tourism.

Tourism: back to visas for Ukrainians due to EU regulations

In 2012, 70,584 Ukrainian tourists visited Croatia, 25% more in relation to the same period of

2011. A total of 489,706 or 26% more overnight stays were recorded. However, during the first six months of this year, Croatia was visited by 13,013 tourists, some 25.9% less in relation to the same period of last year. A total of 71,233 overnight stays (22.7% less) was recorded, since Croatia lost the right to temporary visa suspension for Ukrainians upon joining the EU.

Deep and Comprehensive Free Trade Area The Ukraine and EU will attend the Eastern Partnership Summit in November, when they are supposed to sign an accession agreement defining all aspects of the relation, including political accession and economic integration. One aspect entitled ‘Deep and Comprehensive Free Trade

Area’ envisages the progressive cancelling of duties and quotas as well as the harmonisation of laws, norms and regulations in numerous areas of free trade. Economic co-operation between the EU and Ukraine totals around €40 billion, and the estimation is it will increase further.


Privredni vjesnik Year VI No 229

( 2.5% of GDP ( 0.8% GDP growth funding from EU funds

outlook for Croatia from the World Bank Chief Economist

Macroeconomic Outlook

RECESSION IS SUBSIDING, BUT RECOVERY WILL BE SLOW The relative optimism of Hrvoje Stojić is based on export growth especially to Germany as exporters will invest to maintain competitiveness a recovery in the Eurozone and the majority of our main trade partners. This is why she thinks Croatia can finally say this double dip recession is slowly subsiding. Croatian and Eurozone economic cycles have usually overlapped, with a gap in growth rates, which is the result of differences in competitiveness.

Drago Živković conomics is not an exact science. This has been confirmed once again by Hrvoje Stojić and Sanja Madžarević who presented their prognosis for this year and the next two years at Hypo Bank’s Macroeconomic Outlook. While the Director of Economic Research anticipates a mild fall in GDP (0.7%) for next year, the World Bank Chief Economist for Croatia predicts mild growth (0.8%). A closer look at their statements shows the difference is more likely down to the difference in opinions, rather than exact figures. Hrvoje Stojić is regarded as a pessimist amongst analysts, a reputation he deserves most of the time. However, in this case it is not justifiable since he believes the recession is subsiding, and anticipates a gradual economic recovery for the next two years, mainly through investment. The weakening of the recession is primarily through one-off effects of fiscalisation, consumer optimism and investment surrounding local elections as well as the intensive production of electric-


It can finally be said the double dip recession is subsiding ity. Hence the reason why Stojić improved his prognosis to -1.3% GDP from -1.5% for 2013. Stojić bases his optimism on export growth, especially to Germany, since exporters will invest to maintain competitiveness. Thus,

the import of capital goods has been growing for the past several months, which is a good indicator of investment dynamics. Live from annuity The negative effects that could decrease GDP, Stojić sees in exiting Cefta, which negatively influenced the export of goods, the strengthening of import pressures after EU accession, weaker lending and the uncertain outcome of pre-bankruptcy settlements. He is convinced the Government recently published Fiscal Policy Guidelines will need amending, to avoid entering the EU Excessive Deficit Procedure, if nothing else. He is not especially surprised with the planned budget

deficit growth since everything that was saved in the state budget by decreasing subsidies, was lost to growth in interest payments. The Government aversion to sharper cuts, Stojić sees in the assessment according to which Croatia can live a long time on its annuity, which is a motive for implementing these reforms gradually, and not by shock therapy. This is why we still have buyers of new bonds, since creditors take into consideration this annuity that helped Croatia survive the fifth year of recession without any major blows. World Bank Chief Economist, Sanja Madžarević Šujster, bases her slightly higher level of optimism on external factors, mainly

Racing for EU funds The World Bank prognosis of 0.8% growth during the next year looks good these days, but Sanja Madžarević Šujster warns that other, newer EU members, will grow at average rate of 2%. She regards the inevitable entry into Excessive Budget Procedure as good news, since this could improve the state of public debt. Public expenditure could be rationalised in a series of different areas, like subsidies, salaries and through more efficient public procurement. Unlike Stojić, she is more optimistic and feels Croatia could use a larger share of the proposed funding (2.5% of GDP), which Croatia could draw down from EU funds during the next couple of years. There is a catch however: in order to draw down this 2.5%, Croatia must invest 1.5% of its own GDP into EU membership, preliminary financing and co-financing of EU funding projects. If this investment is to be financed from the budget, it will lead to a further expansion of debt. According to Sanja Madžarević Šujster, banks will play an important role, since they could contribute to real economic growth through preliminary financing and co-financing of EU funded projects. Business & Finance Weekly

( €711


average monthly nett salary in Croatia

( 123% higher salaries for senior management

Research conducted by the internet service provider MojaPlać

Private businesses in foreign ownership the most generous An M.A. degree or Ph.D increase a salary by 98% on average over a secondary school qualification Boris Odorčić uring the third quarter, the average monthly nett salary in Croatia was €711, which is almost identical when compared with the previous quarter, of €709. Nevertheless, if one adds bonuses and a 13th month salary paid at Christmas, the average salary reaches €719. In addition to senior management, where salaries are 123% higher in relation to the average salary, the best paid professions


Lowest salaries in private companies in local ownership are in technology and development (75% above average) and in telecommunications (46%). The lowest salaries are still those of employees performing assistant-level jobs (39% below aver-

age), and in the textile and leather industry (46%). Gender pay inequalities stand at 8%, according to research conducted by the internet service provider MojaPlać The level of education still significantly impacts on salary. Bachelor’s degree holder salaries are 49% higher compared with those with secondary school qualifications. A Master’s degree or Ph.D increases the salary on average by 98% over secondary school qualifications. Salaries of individuals with secondary school qualifications are

18% lower than the average salary, whilst Bachelor degree holder salaries are 22% higher than the average. Postgraduate degree holder salaries are the highest, at 62% above average. The lowest salaries in Slavonia Salaries are also significantly affected by the ownership structure of the company and hence salaries in private companies under foreign ownership are 15% higher than average, followed by salaries in state-owned companies, which are 6% above average.

The lowest salaries are in private companies under mainly local ownership, at €660, or 7% below average. Salaries of employees in public and local administration are 3% below average. Salaries in large companies are 8% above average, whilst those in companies with fewer than 8 employees are 13% below average. At the beginning of a career, the salaries of those questioned were 15% below average. After one or two years of work experience, their salaries were 6% above average, whilst after 6 to 10 years it was 7% above average. According to counties, the lowest salaries during the third quarter were recorded in Međimurje and in Požega-Slavonija Counties, standing at 20% or 18% below average. In accordance with expectations, highest salaries were seen in the City of Zagreb (12% above average), followed by Dubrovnik-Neretva and Zagreb Counties with salaries around the average.


More ATMs, fewer cards The number of debit and credit cards in Croatia slightly exceeded 8.5 million at the end of June, some 6% down compared with the same period last year, with chip cards (which significantly increase the security of card transactions) accounting for 92.2%. According to data provided by the Croatian Chamber of Economy (HGK), the number of ATMs in Croatia was 4,096, which was 1.1% up over the same period last year.

According to Mirjana Kovačić, Director of the Sector for Banking and Other Financial Institutions at the Croatian Chamber of Economy, regulations on the con-

The number of cards has increased by a factor of 3.5, the number of ATMs by five and EFTPOS terminals by 10 since the end of 2000

ditions for the organisation of Single Euro Payments Area - SEPA - has been applied following Croatian EU accession. The principal objective of EU institutions, as pointed out during Smart Card 2013, the 14th International Conference in Opatija, is to create an integrated market for payment services. Vanja Dominović, Deputy Director of the Sector for Banking and Other Financial Institutions at the

Croatian Chamber of Economy emphasised that debit and credit cards account for an 88.2% share of the number of total bank cards (issued by 27 banks), whereas 11.8% credit cards are issued by two credit card companies. The total value of credit card transactions at the end of June stood at €7.39 billion, 0.5% up over the same period of 2012.


Privredni vjesnik Year VI No 229

( €3 billion anticipated


from the sale of concession on motorways

Wood New strategy for transport development processing companies on sale

Some twenty businesses in the Croatian wood processing industry are looking for strategic investors and, unless they manage to find them, they will have to close down due to globalisation, loss of market position and lack of raw materials, as stated at a meeting of the Croatian Wood Cluster. Currently, large wood processing companies, which were once successful, such as the Slatina-based Gaj, (with 10 to 15 hectares of industrial land), are being sold for several million Euros, stated Marijan Kavran, Director of the Croatian Wood Cluster.

NEVA 2013

Shipbuilders in Russia

The NEVA 2013 Shipbuilding Exhibition was held in St. Petersburg from 24th to 27th September during which a Croatian Day was held in the Croatian Chamber of Economy exhibition area. Croatian shipbuilding has an extremely good reputation in Russia, as a result of its fifty-year presence on the Russian market. Uljanik, Brodosplit, Brodotrogir, Viktor Lenac, Radež, Montmontaža Greben, as well as ship equipment manufacturers KončarGim, ACM-JEK and Inelteh participated at the NEVA fair on the national stand.

Rail transport rather than motorways are now top targets Croatia has too many airports, suggests the Minister of Transport; smaller ones will need to specialise: Dubrovnik in air passengers and Osijek in freight

Drago Živković y February next year the transport development strategy will have been created, defining totally new priorities, as announced by the Minister of Transport, Siniša Hajdaš Dončić, during a recently held meeting at the Exporter’s Club and organised by the business weekly magazine Lider. The rail systems are gaining in importance, with priority being given to Rijeka traffic direction, including the specialisation of Rijeka Port for container transport and the construction of the new rail link Rijeka-Botovo. The first section under construction (Skradnik-Botovo) is not likely to begin before 2016. Nevertheless, the construction of the Dugo Selo-Križevci link (worth €220 million) will start in 2014. Construction will be financed primarily through EU funding and local funding is expected to be collected from a token fee of €0.07 fee per litre of fuel on Croatian motorways (to be used by Railway Infrastructure), according to current plans. Croatia has constructed too many motorways in the past and consequently new investment is not anticipated. However, there are plans concerning the reconstruction and construction of state roads using funding from the aforementioned fee.


Large global investment funds are interested in the monetisation of Croatian motorways Business monetisation Hajdaš Dončić strongly supports the monetisation of motorways not only due to the €3 billion in fresh funding which the government is planning to receive. According to him, large global investment funds are interested in monetisation, and their arrival would imply immense secondary benefits in terms of an improvement in the business climate. The port of Ploče will specialise in solid cargo and transportation onwards towards Bosnia and Herzegovina, the Zadar port of

Gaženica will invite tenders for the construction the infrastructure, including buildings and river ports; Vukovar and Slavonski Brod will have to be connected. There are plans concerning the wider Zagreb area, according to which it will be transformed into an international intermodal logistics centre. Croatia has too many airports, according to the Minister of Transport, and hence smaller ones will have to specialise: Dubrovnik for air passengers and Osijek for freight. Hajdaš Dončić believes the forecasts concerning a fall in GDP are not realistic, as he is convinced that only three large investment projects which are about to be implemented – Ikea, Zagreb Airport and Dugo Selo-Križevci rail link - are sufficient to turn the currentlynegative GDP trend to positive. Business & Finance Weekly


15 campsites

from Slovenia

( 153 campsites from Croatia


THE LANTERNA CAMPSITE AWARDED FIRST PLACE FOR LARGE ISTRIAN CAMPSITES Irrespective of severe competition from a large number of campsites from Slovenia and Croatia, two Valamar campsites received awards: the multiple award winning Poreč-based campsites Lanterna and Solaris, popular with naturists Jozo Vrdoljak “

est Camp Adria 2013” awards have been awarded at the recently held international fair Bonaca – a large fair for nauticalia, caravanning and camping and green energy. Irrespective of severe competition from a large number of campsites from Slovenia (53) and Croatia (153), divided into nine categories, two Valamar campsites received awards: the multiple award winning Porečbased campsite Lanterna in the large Istrian campsites and Solaris, winning third place award for naturist and “mixed” Croatian campsites. 47,316 campers, a record number, from Slovenia, Croatia, the Czech Republic, Austria and Italy, participated in the campsite evaluation lasting from 20th May


to 16th September. The evaluation was organised for the third consecutive time by the camping portal and the camping magazine Avtodom, as well as the tourism portal Dobro jutro Slovenija. is the leading Internet portal for camping in Slovenia, providing information on over 400 campsites in Slovenia, Croatia, Serbia, Montenegro and

Bosnia and Herzegovina and is visited by over 1 million campers annually. It is extremely popular amongst its users due to its range of useful and up-to-date information, as well as the possibility of evaluation of each campsite. “This is an important recognition for Camping on Adriatic campsites and we would like to express our utmost satisfaction with the fact that two of our sites

have won awards irrespective of the severe competition. Valamar campsites, united under a single brand ‘Camping on the Adriatic’, have been constantly investing in the development of programmes and quality and awards are highly motivating”, pointed out Josipa Cvelić Bonifačić, Director of Sales, Marketing and Revenue Management and Camping Development Management for Valamar. Valamar manages a total of 10 camping sites, from Istria to Dubrovnik, and all are at least three-star sites. The Poreč-based Lanterna ranks amongst 144 best camping sites in Europe, according to the reputable German association ADAC and is also a member of Leading Camps of Europe – a prestigious European association comprising of 32 best camping sites in Europe.

Ernest Tolj Gold Pentaward winner in Barcelona

The best bottle design for premium quality Dingač wine Saints Hills Ernest Tolj Dingač limited edition wine has recently won the Gold Pentaward medal, at the leading international competition in packaging design. The Pentaward competition was held in September in Barcelona, gathering together a vast array of global design companies in six categories. Ernest Tolj won gold in the luxury product category The design solution was provided by Lewis Moberly, the London-

based design consultancy, whose main features are simplicity and focus on detail. This limited edition wine was produced from selected Dingač grapes. The idea behind the packaging design was the detail of a window in an old winery in the Dingač region. Mary Lewis, Director of Lewis Moberly, photographed a bar on the window, that has become the principal bottle-neck ornament. “Good clients are imperative for good

design. Ivana and Ernest Tolj are extremely proud of both good design and good wine”, she pointed out. “This wine is an exclusive product requiring a carefully presented identity. Our principal aim was to create a package whose features are luxury and simplicity simultaneously”, she explained. The wine is the sixth brand in the Saint Hills portfolio, which comprises Nevina, Mala Nevina, St. Heels, Sv. Roko and Dingač. All the de-

sign solutions have been provided by Lewis Moberly, one of the leading design companies both in Europe and globally. (J.V.)

16 6

Privredni vjesnik Year VI No 229

( 42% of visitors ( 26% of visitors come for business reasons

arrive for short holidays


A city with a soul made ugly by neglected façades Low museum attendance is worrying, standing at just 8% of visitors who primarily visit the Museum of Broken Relationships Sanja Plješa uring the last few years, Zagreb has become an increasingly popular tourist destination both for local and foreign visitors. Its visitors have been increasingly comparing it with successful European destinations. Nevertheless, in order to further develop tourism and strengthen its position in the competitive market of urban tourism, Zagreb needs to provide a wide range of experiences and exceed visitor expectations, by giving them value for money, as has been concluded in the study conducted by the Zagreb-based Institute for Tourism, based on the research Tomas Zagreb through the participation of 1,832 visitors (of whom 1,175 were accommodated in hotels).


Average age of visitors is 40 According to the research, the rising trend of hotel accommodation has been shown in Zagreb in relation to the previous period. “The number of overnight stays in hotels is constantly rising, which is not surprising as hotels are the pillars of tourism. In ad-

dition, we have seen a continuous increase in demand for hotel accommodation during the summer months, from 12% to 20% for overnight stays in Zagreb tourism facilities”, stated Zrinka Marušić from the Institute for Tourism. During the period from May to October slightly less than two thirds of overnight stays were in Zagreb hotels, as opposed to Split with 78% during the same period and Rijeka with 67% overnight stays in hotels. Zrinka Marušić highlighted that the average age of visitors to Zagreb is 40 and those accommodated in hotels is 42. The Croatian capital is primarily visited

by tourists between 26 and 45. Since Zagreb is also a conference centre visited by business people, 62% of visitors have two-year post-secondary school qualifications or are university degree holders. Tourism trends are in flux and thus Zagreb is attracting new visitor segments. More information on the Internet The motivational spread of tourist arrivals is very wide and hence 42% of visitors come to Zagreb on business, 30% to gain new experiences and in search of adventure and 26% for a short holiday. 15 years ago two

Zagreb in the international environment According to the analysis provided by European Cities Marketing Benchmark Report, Zagreb ranked 65th amongst 113 European cities based on the total number of overnight stays in commercial accommodation. It ranked 45th according to the number of overnight stays of foreign visitors in commercial accommodation. In the competitive arena of 25 European cities, Zagreb ranked 13th according to overnight stays of foreign visitors in commercial accommodation and 16th concerning the average annual increase in overnight stays during the period 2008 to 2012. .

thirds of visitors arrived in Zagreb mainly for business. “Visitor composition is changing and the number of “real tourists” is surging. Since 2003, the Internet has been the main source of information on Zagreb for visitors. Whilst in 1998 the Internet ranked seventh as a source of information, used by just 7% of hotel visitors, currently information provided by the internet is used by 66% of visitors. Consequently, the Internet has assumed a fundamental rôle in the provision of information”, stressed Zrinka Marušić. Nevertheless, low museum attendance is highly worrying, at just 8% of visitors and primarily visiting the Museum of Broken Relationships. This is due to a lack of time, according to visitor feedback. They stated that Zagreb has a soul, is full of curiosities and has a pleasant atmosphere, open and cordial people, unique charm and intimate atmosphere. However, it is also full of neglected façades, buildings ruined by graffiti, huge traffic jams, weak gastronomy, poor nightlife and an insufficiency of quality tourist souvenirs.


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


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