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IZUDIN AHMETLIĆ, owner, Director of HIFA-OIL Group → Human capital is the most valuable asset PAGES 6-10

SUPPORTED BY THE CROATIAN CHAMBER OF ECONOMY

www.privredni.hr

Attracting Foreign Investment → The government needs to constantly address the issue of political stability PAGES 14-17

Croatian – Slovakian innovation forum → Good ideas could lead to new deals PAGES 20-21

PVinternational C R O A T I A N

B U S I N E S S

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F I N A N C E

M O N T H L Y

July 2017, Year X, No 271

EXCESSIVE DEFICIT PROCEDURE

CROATIA FORMALLY EXITS The general government deficit for 2016 was 0.8% of GDP, significantly exceeding the recommendations from the European Commission by Ilijana Grgić

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round mid-June 2017, during the session of the Economic and Financial Affairs Council of the European Union, Croatia formally exited the Excessive Deficit Procedure. This was due to strenuous efforts linked with fiscal consolidation resulting in a general government deficit in 2016 of 0.8% of GDP, significantly exceeding the recommendations provided by the European Commission, according to whose forecasts the deficit in 2017 will be 1.1%, and to reach 0.9% in 2018. Consequently, the European Commission made a decision to exit Croatia from the Excessive Deficit Procedure. “I am delighted that the European Union finance ministers have confirmed our recommendation on the Croatian exit from the EDP. We are hoping that Croatia will exploit this positive upswing to implement a comprehensive reform programme. We have recommended a broad range of reforms focused both on modernisation of the government and the private sector, whilst the European Commission is prepared to provide professional expertise for their preparation and implementation. Following the reform implementation, Croatia will become far more appealing to investors and can will strengthen the resilience of the economy

to ensure long-term economic growth”, stated Valdis Dombrovskis, Vice President of the European Commission responsible for the Euro and Social Dialogue.

GOVERNMENT DEBT-TO-GDP RATIO DECREASED Regarding those aspects related to the deficit, it is important to note that, according to the latest official data released by the Croatian Bureau of Statistics and the Croatian National Bank, 2016 saw government debt-to-GDP ratio decrease by 2.6%, to 83.7% of GDP (in 2015 it was 86.3% of GDP). This year-on-year debt decrease is the largest drop in the debtto-GDP ratio since statistical records on government debt began. Finance Minister,

Zdravko Marić, thanked the European Commission for their support and the recommendations provided that needed to be implemented for the purpose of fiscal consolidation, whose positive impact on the results achieved exceeded expectations. “The Croatian government will persevere in its commitment to reducing the government debt by at least 10% by the end of 2020”, stressed the Minister Marić. Following Croatian exit from the Excessive Deficit Procedure, Croatia is obligated to comply with the rules of the preventive arm of the Stability and Growth Pact. This means that by 2020 Croatia needs to achieve a general government budget balance (budget surplus) of 0.5% of GDP.


CROATIAN ENTREPRENEURS 2016

GOOD REVENUE, HIGHER NETT PROFITS Compared with 2015, total revenue increased 5.1%, total expenditure increased 3.9% and profits 12.4%. Losses during the period are 13.9% lower. These data resulted in higher consolidated financial results – net profits increased 38.3% over 2015 by Ilijana Grgić grgic@privredni.hr

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ast year there were 11,.483 entrepreneurs – profit tax payers in Croatia (excluding banks, insurance companies and other financial institutions). These entrepreneurs employed 853,979 staff

THE MAJORITY OF THE ENTREPRENEURS IN CROATIA (76,546), SHOWED PROFITS FOR THE PERIOD OF €5.1 BILLION last year, which is a 5.2% increase over 2015. Overall, they generated total revenues of €84.4 billion, with total expenditure of €80.3 billion, with nett profits rising to €4.1 billion. This was a good year for the majority of 2 | PVinternational | July 2017 | No 271

entrepreneurs with 76,546 of them (66.9%) showing profits of €5.1 billion. Losses was registered by 37,937 entrepreneurs (33.1%) of €1.96 billion. It is important to note that the Financial Agency, which drafted the analysis, did not include in the data all companies belonging to the Agrokor Concern since only eight of 35 submitted last year’s financial report for statistical or other needs for 2016. In relation to 2015, total revenues increased 5.1%, total expenditure increased 3.9% and profits over the period increased 12.4%. Losses during the period were, however, 13.9% lower, resulting in a higher consolidated financial result – nett profits increased 38.3% over 2015.

MORE REVENUE FROM EXPORT Of the €84.4 billion of total revenue, €16 billion came from exports, 6.2% up over 2015. A total of 17,306 entrepreneurs sold their products and services to foreign markets, which shows that the number of exporters increased 15.1%. Imports totalled €13.4 billion giving a trade surplus of €2.55 billion. A total of 12.306 entrepreneurs invested in new long-term as-


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CROATIAN ENTREPRENEURS 2016

Financial business results of 114,483 entrepreneurs in Croatia and comparison with 2015 (amounts in HRK millions) Description

2015

2016

Indeks 2016/2015

Number of employed

811.607

853.979

105,2

Total revenues

602.185

633.109

105,1

Total expenditure

579.471

602.064

103,9

Pre-tax profit

40.125

45.702

113,9

Pre-tax loss

17.412

14.657

84,2

5.331

7.010

131,5

Profit of the period

34.417

38.696

112,4

Loss of the period

17.034

14.661

86,1

Consolidated financial result (profit or loss of the period)

17.383

24.035

138,3

Exports

112.454

119.434

106,2

Imports

92.328

100.350

108,7

Trade balance (exports minus imports)

20.126

19.084

94,8

Investment in long-term assets

24.670

25.226

102,3

5.049

5.135

101,7

Profit tax

Average monthly nett salary per employee Data source: Financijska agencija, Registar godišnjih financijskih izvještaja

114.483 entrepreneurs – profit-tax payers in 2016

sets in 2016 to the value of €3.3 billion, 2.3% more in relation 2015. Average monthly calculated nett salary was €685 last year, a nominal 1.7% increase in relation to 2015, although due to decreased consumer prices (-1.1%), the real increase was 2.8%. Concerning the size of enterprises, the highest percentage is of micro-entrepreneurs (89.7%) or 102,764 in 2016, followed by small-sized enterprises (10,045, 8.8% share), medium-sized (1,347, 1.2%) and large-sized (327, 0.3%). All these groups finished last year profitably. Nett profits of micro-entrepreneurs

GOOD YEAR ALSO FOR KONČAR

Pre-tax profit of €25.8 million In 2016, the Končar Group generated consolidated pre-tax profit of H€25.8RK193.6 million, up 14.2% over 2015. Profits earned from product and services sales on the local market exceed €0.19 billion and revenue from product and services exported exceeded €0.19 billion, 7.7% higher in relation to the same period of 2015. The countries in which they generated the highest share of revenue through sales products and services include Sweden, Germany, Slovenia, Bosnia and Herzegovina, Italy, Austria and Finland. From January to December 2016, the companies in the Končar Group contracted new deals totalling over €0.35 billion.

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totalled €40.3 million, small- and mediumsized generated profits of €0.76 billion and the large-sized earned €1.65 billion in profits. By county, the profit of entrepreneurs grew at the highest rate in the County of Slavonski Brod and Posavina (+ 857.7%), followed by the County of Varaždin (+280.5%), the County of Virovitica and Podravina (229.2%) and the County of Lika and Senj (142.6%).

A GOOD YEAR FOR THE MAJORITY Even though FINA’s analysis does not go into detail of the entrepreneurs’ individual business activities, based on published financial results of individual large-sized companies in Croatia, it is obvious that last year was extremely good for some of them. Based on achieved results, last year was also good for INA. Its EBITDA stood at €0.32 billion in 2016 and profits fromy their main activity, non-recurring items excluded, was €112.27 million or 510% up compared with 2015. Capital and other investments reached €0.2 billion. Last year was a success for INA. After a long period in a negative price environment and political turmoil in Syria, the situation was relatively stable during the second half of 2016 which reflected on their financial results – for the first time for several years there were no significant value decreases. However, the first half of 2016 was marked by historically low


oil and gas prices which forced them to optimise their expenditure through an expense optimisation programme, which ensured the strongest balance sheet in the last decade together with business development, said INA CEO, Zoltán Áldott. He highlighted that almost every business index of activities saw growth despite the negative environment and necessary expenditure optimisation.

ATLANTIC GROUP FOCUSED ON RESTRUCTURING Last year, the Atlantic Group generated sales revenues of €0.7 billion and nett profits of €21.8 million. During 2016 the Atlantic Group, implementing their internationalisation strategy, established distribution companies in Germany and Austria for the purpose of placing specific products together with the biggest international potential on these markets. Besides implementing the business internationalisation strategy, they continued with the successful restructuring of sports and active nutrition ranges by simplifying recipes and the production portfolio, and by eliminating products with lower than required profitability. In

BY COUNTY, PROFIT OF ENTREPRENEURS INCREASED AT THE HIGHEST RATE IN THE COUNTY OF SLAVONSKI BROD AND POSAVINA – 857.7% the second half of the year they implemented the refinancing of long-term debt and reissued a corporate bond ensuring an extension of financial obligation maturity and a significantly lower interest rate exposure. Contracts with new principles extended their distribution activities on regional markets which enabled an active development of brands. As a result, four of their brands (Cedevita, Cocta, Smoki and Argeta) and one principal brand (Orbit) are listed in the top ten strongest brands on five of the largest regional markets. In 2017, they will continue with investment into the German and Austrian markets, at the same time focusing on growth in regional markets with equally intensive attention at maintaining liquidity, financial obligations and risk management, CEO of the

Atlantic Group Emil Tedeschi commented after the publication of the business report for 2016.

STABLE MARKET SHARE FOR HEP Last year was also very good for the HEP Group whose business results showed profits of €1.92 million in 2016. Investment totalled €0.35 billion financed from company funds without any need for additional long-term loans, as HEP commented after the publication of the revised financial reports for last year. Last year the production of their thermal plants and hydroelectric plants grew and the market supply of electric energy increased. For the third successive business year the HEP Group achieved an extremely good result. Based on the revised financial reports last year they achieved consolidated nett profit of €0.27 billion. In 2016, HEP increased the sale of electric energy in Croatia, but with decreased revenue and with a fall in the total level of unit prices of electric energy for all categories of customers (households and entrepreneurs), both users of the public supply and supply under market conditions. Sales revenues from electric energy outside Croatia increased significantly in relation to 2015 due to the higher export of electricity surplus in HEP’s power plants and higher sales to regional customers. HEP also added that their market share stabilised last year regarding the supply to local customers.

€84.4 billion total revenue of entrepreneurs – profit tax payers

€80.28 billion total expenditure

€3.2 2 billion nett profits generated

July 2017 | No 271 | PVinternational | 5


INTERVIEW IZUDIN AHMETLIĆ, OWNER, DIRECTOR OF HIFA-OIL GROUP

HUMAN CAPITAL IS THE MOST VALUABLE ASSET What is important is the company and its brand. Both our employees and secure and satisfied customers are fundamental. Not to mention the significance of environmental development and conservation. Social empathy for those in need or in trouble, without judging them on any grounds are the issues that matter. It is crucial that we all live in an economically strong and stable Bosnia and Herzegovina, as well as the entire region interviewer Darko Buković

Food production should be a strategic segment both at country level and at individual level. We will be moving to ensure stability in this area and improve the opportunities for the purchase and distribution of primary agricultural production, whilst focusing on local varieties.

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he HIFA-Oil company trading in oil and oil derivatives, has recently acquired a German company with a long tradition in PVC profile production - LB. Profile. This clearly shows the direction HIFA will take in the future. The company was founded in 1995 and is currently well-known throughout the region and beyond, through the wide range of its strategic activities. It was the most attractive employer in Bosnia and Herzegovina in 2016, and during the past three years three the Group has ranked amongst the top 100 companies in Bosnia and Herzegovina. The company is also a supplier to NATO, amongst others. Izudin Ahmetlić, owner and Director of HIFA Group, spoke with Privredni vjesnik about business results, plans and investment decisions of the HIFA Group.

„ You rank amongst the leading wholesalers in oil and oil derivatives in Bosnia and Herzegovina. Could you give an overview of the HIFA-Oil Group? What sort of activities are you involved in, what is your annual turnover, how many employees you have, how many countries do you operate in? During the past 15 years, HIFA-Oil Group has developed into wide-ranging group of companies operating in various business areas, such as the distribution of oil, oil derivatives

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and energy products, as well as the distribution and production of metal and PVC products and the purchase and distribution of agricultural products. We are the market leader in oil and oil derivatives trading in Bosnia and Herzegovina, with a share of 20% of the local market of light crude oil derivatives, in addi-

WE ARE THE MARKET LEADER IN OIL AND OIL DERIVATIVES TRADING IN BOSNIA AND HERZEGOVINA AND WE RANK FIRST IN THE DISTRIBUTION OF HEAVY OIL DERIVATIVES BOTH LOCALLY AND REGIONALLY tion to ranking first in the distribution of heavy oil derivatives both locally and regionally as well as of asphalt paving in Austria, Slovenia,


For success it does not matter whether you are a big or a small fish. What matters is whether you are a fast or a slow fish. Since small fish are faster and stands less chance of being eaten.

July 2017 | No 271 | PVinternational | 7


INTERVIEW

Increasing the level of competitiveness is crucial and can be achieved through the acquisition of new knowledge and skills in order to raise the level of quality of products and services. I believe HIFAOil Group is pursuing the right path in this respect.

Croatia and other countries in the region. If our subsidiaries Euro-Roal, Euro-Metali, EuroStil, Euro-Power, Petrobit, Bitrol Slovenia and the German LB.Profile, are included, the total turnover of our companies already reaches around BAM500 million, whilst profits generated are double-digit millions. Nevertheless, in addition, our business activities are performed based on other factors. HIFA-Oil Group employs a total of 257 employees. I would like to point out the fact that 42% of those employed in our parent company are higher degree holders and the average age ranges between 26 and 35 years old. In other companies these figures are substantially superior, which gives me an additional motive to promote and develop all the companies in the Group, primarily considering the most important asset– human assets.

„ Euro-Roal, a subsidiary of HIFA-Oil Group, has recently acquired the German company LB. Profile with a long tradition of producing PVC profiles for windows and doors. This is the first foreign acquisition by HIFA-Oil. Could you tell us more about it? Certainly. The news soon spread through the region. It is important to highlight the fact that due to our first foreign acquisition, in addition to strengthening the position of Euro-Roal on the local market, as the leader in Bosnia and Herzegovina in the distribution of aluminium, stainless steel (inox) and now also PVC profiles, this company will have the opportunity to make a more vigorous appearance both on regional and EU markets. This is our seventh subsidiary and it ranks first in Germany. It has

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been developing systems for doors and windows for over 50 years, and is highly competitive, using top quality technology and a pool of expertise. We are focused on local, regional and European markets, with a strong HIFA-Oil parent company and our technologically superior subsidiaries. Hence, negotiations with our regional partners are currently underway, within which we have been finalising agreements concerning our entry into neighbouring markets.

„ You have also recently won the SBF Bridge award at the Sarajevo Business Forum and announced new acquisitions both locally and internationally, as well as strengthening your position in distribution and retail. What are your plans for 2017? It is important to point out that we are delighted that such an important panel of experts recognised us and awarded us the Business of the Year Award. This is significant recognition of our long-term efforts exerted both by all our employees and management. Our brand has become synonymous with success and quality, not only on the local market, but also on regional and EU markets, from Austria to Bulgaria, from Albania to Slovenia. Further growth and development is the objective of all our new acquisitions both locally and internationally, as well as strengthening our position in distribution and retail, whilst moving to achieve more favourable market positions. We cannot currently reveal all our plans, but I can say we will remain within the scope of development of our existing businesses.


„ Many people are unaware of the fact that you rank first in the distribution of heavy oil derivatives both locally and regionally, as well as in asphalt paving in Austria, Slovenia, Croatia and other countries in the region. The company is the market leader in heavy oil derivatives in Bosnia and Herzegovina, whereas on the regional markets we are known as the most serious and highest quality distributor, which is also evident in our co-operation

as the best supplier for NATO forces in Bosnia and Herzegovina. Through the Aviation Fuel Supply Agreement signed with airlines concerning the supply of JET A1 fuels, our company contributed to raising the level of competitiveness of Sarajevo International Airport. Consequently, we are already supplying Turkish Airlines and Wizz Air and negotiating with other airlines that operate from Sarajevo Airport.

BEING THE COMPANY WITH THE LARGEST PRIVATE TERMINALS IN THE COUNTRY, HIFAOIL IS IN A POSITION TO PROMOTE THE DEVELOPMENT OF ROAD AND RAIL TRANSPORT

„ You do not like being ranked (according to Forbes) amongst the richest entrepreneurs in Bosnia and Herzegovina. Why do you believe that is not important? What is more important in the life of an entrepreneur? What is important is the company and its brand. Our employees and secure and satisfied customers are fundamental. Not to mention the significance of environmental development and conservation. Social empathy for those in need or in trouble, without judging them or classifying them are the issues that matter. It is crucial that we all live in an economically strong and stable Bosnia and Herzegovina, as well as in the entire region. Only then will I be fulfilled both as a man and as an entrepreneur.

with the largest companies involved in asphalt paving in Austria, Slovenia, Croatia and other countries regionally. At the end of last year, we achieved the result of a total quantity of around 300,000 tonnes of differing derivatives in nine countries in the region. Moreover, we underwent recertification according to the ISO 9001 standard. HIFA-Oil has yet again been selected

„ In addition to oil, one of the business areas in which you are involved is agricultural production and you have also taken over the Bosanka Doboj food industry. Are you returning to your original field of interest, as you have a Bachelor’s degree in Agronomy? Food production should be one of the strategic areas both at country level and at

In our tradition, the hand that gives is more valuable than the hand that receives. Yet, it is precisely for that reason that the hand that gives has greater responsibility and so also a higher level of duty. I believe that living in a community without that type of empathy is inhumane.

Winning mentality is the best trait of local people Your company was launched in Tešanj. What is the X factor of that area? There are many, as you say, “X factors”, but I believe the most important factor is people and that is the fundamental startpoint. A winning mentality is the best trait of local people. We do not accept defeat. We act independently and take our destiny in our own hands. Luckily, the way of thinking, living and working typical of ‘socialist realism’ has not done us much harm. We are fast and agile, capable of launching our own initiatives, thoughtfully and responsibly. Moreover, continuity of implementation of local policies is fundamental for

stability and development. We have the potential to select the best representatives and give them the mandate, as well as the responsibility. Nevertheless, we are heading for a large number of challenges and I believe that in that respect in the future Tešanj, as a centre of development, as well as the entire country, concerning its attitude towards advanced communities and regions, will have to address a broad range of issues concerning development, not only economic development, but also the development of public utilities, infrastructure, education, culture, social and many other segments of modern living.

July 2017 | No 271 | PVinternational | 9


INTERVIEW

acquisition of new knowledge and skills in order to raise the level of quality of products and services. I believe HIFA-Oil Group is pursuing the right path in this aspect. On the other hand, I feel that Europe is currently searching for new winners and those of us who originate from small markets and small countries normally arouse specific fondness. A long time ago, almost 15 years ago, following the launch of our business, I stated that for success it does not matter whether you are a big or a small fish. What matters is whether you are a fast or a slow fish. Since small fish are faster it may well not get eaten.

individual level. We will be pushing to ensure stability in this area and improve the opportunities for the purchase and distribution of primary agricultural production, whilst focusing on local varieties due to which we have always been highly respected on the market. Bosnia and Hercegovina has immense potential concerning this aspect. Nevertheless, this area of the economy requires a higher level of strategic presence by the state. I believe, and I think I share the opinion of most agronomists throughout Bosnia and Herzegovina –of the people making their own living, that we require a Ministry of Agriculture at state level in order to be able to meet the requirements and respond to the challenges arising. Fragmentation of responsibilities has considerable adverse effects and slows both investors and the agronomists. We have recently opened a broiler poultry farm in Jelah through HIFA-Tank, worth BAM1.5 million, with an initial capacity of 60,000 broiler chickens per shift.

„ You have also purchased terminals in Zenica. What are their capacities and your plans for the future? The capacity of the Zenica-based above-ground and underground reservoirs for liquid fuel terminals is 12,840 m3. Following the purchase of the terminals, HIFA-Oil has become the company for trading in and distribution of oil with the largest private terminals in Bosnia and Herzegovina, which has significantly improved its market position. In addition to strengthening its competitive advantage, it also resulted in increased long10 | PVinternational | July 2017 | No 271

FURTHER GROWTH AND DEVELOPMENT IS THE OBJECTIVE OF OUR NEW INVESTMENT BOTH LOCALLY AND INTERNATIONALLY, AS WELL AS THE STRENGTHENING IN DISTRIBUTION AND RETAIL term security of supply. Being the company with the largest private terminals in the country, HIFA-Oil is in the position to promote the development of both road and rail transport. Furthermore, HIFAOil is greatly contributing to the industrial development of both Zenica and the whole of Bosnia and Herzegovina.

„ You have claimed: “Export is life”. Exporting is imperative, it is life-saving. Our market is small and we cannot plan our overall growth and development exclusively locally. Concerning the geo-strategic position and the vicinity of an extremely powerful and financially strong EU market, I believe we have huge potential for profiling in several business areas as an important export destination. Increasing the level of competitiveness is crucial and it can be achieved through

„ Where is Croatia in your plans? It is totally logical that the neighbours of Bosnia and Herzegovina – as well as municipalities and our company – are of vital importance concerning the issue of regional co-operation. It would be wholly unnatural to focus on some far-off markets, without first having laid solid foundations for co-operation in the region in which one can achieve excellent results through joint action. In our opinion, HIFA-Oil is one of the crucial distributors of oil derivatives, including our subsidiaries involved in the metal and aluminium industries and that has been recognised by all companies co-operating with us. In addition to providing high quality business support, we also provide a longterm approach to business relations with our partners. We are delighted with the level of quality of co-operation established with companies in Croatia and I am convinced this level can certainly be increased. „ I know that both you at a personal level and as a company or group of companies frequently provide assistance and are widely respected due to your corporate social responsibility. What does this mean for you? It is a special satisfaction. In our tradition, the hand that gives is better and more valuable than the hand that receives. Yet it is precisely for that reason that the hand that gives also has greater responsibility and hence also a higher level of responsibility. I believe that living in a community without that type of empathy is inhumane. I do not frequently address this issue, since I believe actions speak louder than words.


FORUM AIC

HEADED BY MIRJANA ČAGALJ

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irjana Čagalj, Vice President for Construction, Transport and Connections at the Croatian Chamber of Economy, and Acting President of Split County Chamber, has been elected as President of the Forum of the Adriatic and Ionian Chambers of Commerce for the forthcoming two-year mandate. “I can say that we are still on the right path of co-operation, dialogue and mutual respect, primarily moving to promote economic growth throughout our region. During the forthcoming period, I believe the Forum will assume the role of an important partner in the implementation of EU Strategy for

the Adriatic and Ionian region, as well as in strengthening ties with the Adriatic Ionian Forum of Cities and Towns and the Adriatic-Ionian network of universities. Our common objective is the prosperity of the area that we all share and which connects us all. We will also provide support to members of the Forum located eastwards of the Adriatic, Montenegro and Bosnia and Herzegovina, which are candidates or potential candidates for EU membership”, stressed Mirjana Čagalj, adding that the inclusion of the private sector, transparency in administration and infrastructure connections are fundamental for laying solid foundations of this region. (J.V.)

KONČAR

THE BEST REGIONAL BUSINESS PARTNER

D

arinko Bago, President of the Management Board of Končar received the Regional Business Partner 2017 award during the recently held ceremony at the Crowne Plaza Hotel in Belgrade. The Belgrade-based Mass Media International launched this award 23 years ago, to provide recognition both to companies and organisations that have showed excellence, ethics and responsibility through their business activities. The award is granted annually to one company from the region. In clarifying the award, it was stated that the selected award winners are business partners of “the best companies and institutions which have achieved enviable levels of quality, whilst accepting and implementing the slogan: “Partners are most important both in business and private life”. “Over the years, Končar has exported its products to over 100 countries on all continents, primarily to

Europe. It is important to point out that a high proportion of electrical energy equipment, installed both in energy and a large number of industrial facilities in the Republic of Serbia was produced by Končar. Also, we delivered generators, power transformers and other equipment for hydroelectric power plants and transformer substations, as well as completed and modernised locomotives, noted Bago, adding that during the past decade, the value of products delivered to Serbia was €65 million, including both instrument and distribution transformers, electric motors and household appliances. On the other hand, Končar imports raw materials and components from Serbia in order to meet the requirements of equipment manufacturing both for the Croatian and the global market. “As a result of our long market presence it is logical that we are interested in the continuation and expansion of our activities on the Serbian mar-

Darinko Bago

ket. We are hoping that this co-operation will extend to include construction, revitalisation and modernisation of hydroelectric power plants and transformer substations, as well as trains and trams. This award is yet another indicator of the fact that Serbian companies have identified Končar as an excellent business partner”, he concluded. (V.A.) July 2017 | No 271 | PVinternational | 11


THIRD ITERATION OF CROATIA AS WE NEED IT

CROATIA NEEDS TO Our current economy relies too much on tourism, yet we highlight tourism in our branding. We need to focus on exports and other factors, not so much on volatile sectors. Therefore, we need to work on economic strengthening in general, Kolinda Grabar Kitarović pointed out by Miro Soldić in the Euro Atlantic arena. I want more stress put on public and economic diplomacy. There is a lot of work ahead of us, but I believe we can do a lot, the President concluded.

CROATIA COULD BE AN EXTREMELY VALUABLE BRAND

T I want more stress put on the public and economic diplomacy. There is a lot of work ahead of us, but I believe we can do a lot Kolinda Grabar Kitarović, President of Croatia

he recently held third conference Croatia as we need it was dedicated to the challenges of branding Croatia, institutional representation of the country globally, the power of creative industries and the promotion of local culture. Even though Croatia have established itself over the past few years as a tourist destination and we are becoming more recognisable worldwide in that sense, there is still ample room to turn our cultural and natural heritage into concrete economic advantages. This is the message President Kolinda Grabar Kitarović iterated. In her presentation, she asked whether Croatia wishes to be known only for tourism or for much more. A national reputation cannot be constructed, merely hard earned. Our present economy relies too much on tourism, yet we highlight tourism in our branding. We need to focus on exports and other aspects, not so much on volatile sectors. Therefore, we need to work on economic strengthening in general, the President explained, highlighting the importance of the Three Seas Initiative and the Russian market. We need to rebrand ourselves into a strong player

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Speaker of the Croatian Parliament, Gordan Jandroković, said there had been a change in Croatia’s international perception – from a war hit area to a tourist destination. He also highlighted the need to make additional efforts regarding the strengthening of our identity. “We’ve come a long and difficult way, and the task of politics is to ensure stability and define economic goals as well as areas which make us different from others and which are our comparative advantage, since Croatia could

DUE TO EASILY ACCESSIBLE MEDIA, BRANDING DOES IS NOT EXPENSIVE, ONLY A CLEVER IDEA, SKOKO BELIEVES be an extremely valuable brand”, Jandroković stressed. Professor Božo Skoko from the Faculty of Political Sciences, explained in more detail how Croatia could be branded. He referred to leading world countries, known on the international scene as strong brands, assessing these could be role models. He also said that due to easily accessible media, branding is not expensive, only a clever idea. Today, one is helpless on the international market if you are not a brand, since image influences the inflow


BE BRANDED of tourists and foreign investment. We are primarily seen as a tourist destination, and this is fine, but we should regret the fact we have not promoted our culture and heritage more, Skoko highlighted. He also pointed out that Cro-

IT IS TIME TO TELL THE WORLD OUR REAL STORY, PETEŠIĆ HIGHLIGHTS atia has been burdened by the non-existent national consensus on identity. Our knowledge of the country’s values is poor; we do not have strategic communication with the world, so we are a victim of external branding, and therefore, an object instead of a subject. The focus on tourist promotion is excessive. Other aspects are neglected, and the institutions do not co-operate as much as they should. Better branding would bring us a climate in which innovation would be awarded and practised, we would attract visitors and investment more successfully, and in the end, we would develop a stronger “made in” concept which would help our economy, Skoko said. He also sent a message that we could brand ourselves by forming work groups in which all parts of society would work together.

IMPORTANT ROLE FOR PUBLIC DIPLOMACY Zvonimir Frka Petešić, Croatian Ambassador in Morocco highlighted that public diplomacy plays an important role in presenting the country at a global level. He stressed the importance of positive associations which neutralise the negatives, which is evident from the American example. He also warned that we should brand our identity or others will do it for us. Passive countries are exposed to stereotypes or they become irrelevant. It is important for us to offer more content on Croatia in foreign languages; we should define ourselves in the geographical sense and present this clearly to the world. As a Mediterranean door to Central Europe we could simply present ourselves in the sense of culture, economy and tourism, but it is important to be consistent, Petešić pointed

out. He also stressed the need for establishing a unique institution which would link our resources and communicate with foreign countries more efficiently. Themed brochures in more foreign languages, stronger activities on social networks – all this would provide easily available and interesting information to foreigners, from media to tourists. We should be present wherever this is possible. We should offer quality and interesting activities and connect resources, and all this would make us more attractive. It is time to tell the world our real story, Petešić concluded.

LUKA BURILOVIĆ, CCE PRESIDENT

Brand Croatia as a country of quality We are branding Croatia as a country of quality. Croatia is known as a beautiful country, but now we also want it to be a quality country. The CCE followed this with the project Visual marking of quality Croatian products. Today, there are 215 products and services carrying the CCE quality label, said CCE President Luka Burilović who also added that the country should include all institutions, with one central point working on country branding. We implemented the BeCROative project which created an opportunity for presenting Croatia as the country of inventors who changed the world. The project Vina Croatia united our supreme wine offer and increased our competitiveness, Burilović said. He also added that almost 70% of trade happens with the EU, which means we have quality. However, we should also take care about the products of poor quality entering our country.

July 2017 | No 271 | PVinternational | 13


ATTRACTING FOREIGN INVESTMENT

STABILITY IS FUND The message to the government is to also focus on those who have invested into Croatia to date, and have been operating here for years, creating a large number of jobs for local people, rather than being solely committed to new investment attraction. Moreover, the government needs to constantly address the issue of political stability, pointed out Mladen Fogec by Ilijana Grgić

Previous governments frequently resorted to stop-and-go policies that have adversely affected the investment climate. Nevertheless, concerning FDI per capita Croatia ranks fourth amongst transitional countries. Martina Dalić, Vice President of the Croatian government g ernment gov

A

ccording to research studies conducted, foreign investors usually prefer low risk countries with high GDP per capita and a stable business environment. One country that is frequently used as a role model in Croatia concerning foreign direct investment is the Czech Republic, in which foreign direct investment from 1993 to 2015 reached €107.1 billion, or Poland where FDI was €173.6 billion. Foreign companies have been pointing out several major problems in relation to investment into Croatia for many years, such as the issues of stability, legal uncertainty, continuous amendments to regulations, without any evaluation of their impact or potential consequences. During the International Conference on Foreign Direct Investment entitled Best Practices in Foreign Direct Investment Attraction in Central and South-Eastern Europe recently held in Zagreb, Mladen Fogec, President of the Foreign Investors Council and President of the Management Board of Siemens in Croatia, emphasised that countries such as Poland and the Czech Republic, as well as Hungary, Romania and Slovakia, are those that we can use as a benchmark whilst evaluating Croatian success in foreign direct investment attraction and the countries that Croatia needs to strive to keep maintain parity with. Moreover, he stated he was delighted that the Croatian government has finally implemented a tax reform, following a period of many years during which the Foreign Investors Council has been repeatedly recommending it. “Our message to the government is to also focus on those who have invested into Croatia to date and have been operating here for years, creating a large number of jobs for local people, rather than being solely committed to new investment attraction. Moreover, the government needs to continuously address the issue of political stability, pointed out Fogec

14 | PVinternational | July 2017 | No271

A RISE IN FDI INFLOW LAST YEAR According to data released by the Croatian National bank, total foreign direct investment into Croatia in 2016 was €1.7 billion. Following a significant drop in FDI on an annualised level recorded in 2015 (by almost 77%), foreign direct investment last year exceeded €1.5 billion and it may be concluded that Croatia has witnessed a slight recovery. When the FDI statistics are analysed by country for 2016, the highest value of foreign direct investment (almost €1.9 billion), was from Italy, followed by Holland (€539 million) and Luxembourg (€275 million). Similarly, more significant nett outflows in 2016 were seen by Austria, (€1.4 billion). During the period from 1993 to end 2016, Croatia saw almost €30.8 billion of foreign direct investment. If one excludes the circular flow of investment (round-tripping), i.e. investment intended to increase foreign direct investment both inflows and outflows, into Croatia and abroad, the total value was slightly less at €28.4 billion. During the previous 23-year period, the highest value of FDI inflow were recorded in financial intermediation sector, (+ €9.4 billion) and the wholesale sector, with the exception of trade in motor vehicles and motorcycles, (+ €2.7 billion). The property sector was third, with FDI inflows (+€2.1 billion), and the telecommunications sector FDI (€1.9 billion) was fourth.

CONTINUITY FUNDAMENTAL FOR INVESTMENT ATTRACTION Concerning the issue of legal uncertainty in business operations in Croatia, foreign companies have been emphasising for years the fact that the regulations which the government has been continuously amending, are not evaluated in advance, and their impact is not evaluated and consequences not considered. Furthermore, foreign investors have long


DAMENTAL

been reiterating that areas for improvement in the investment climate were identified long ago - tax reduction, tax relief for investment into research and development, as well as the extremely important proactive government policy in foreign direct investment attraction, in addition to overall stability both in business and politics. Vice President of the government and Minister of Economy, Entrepreneurship and Crafts, Martina Dalić, believes that continuity of policies focused on the interests of business community is crucial for investment attraction. “That has frequently not been the case, since previous governments frequently resorted to stop-and-go policies that adversely affected the investment climate. Nevertheless, concerning FDI per capita Croatia ranks fourth amongst transitional countries”, stressed Martina Dalić, announcing the launch of online services, starting from autumn, through which business people would be given the opportunity to report both on administrative and bureaucratic hurdles encountered. “I anticipate these online services to be available by September. They are intended to enable investors

to identify and report on and point out both administrative and bureaucratic hurdles encountered in a structured way. Furthermore, we are also launching the process of new measurement or the expansion of identification of administrative barriers to business areas that have not been included in the existing action plan, moving to permanently enable public administration to consider all costs imposed on the economy during the enactment of regulations”, pointed out Martina Dalić. Marko Jurčić, Economic Affairs Adviser to the President of the Republic of Croatia, believes that foreign direct investment flows during the past 24 years have not been that insignificant, yet after a comprehensive analysis, it is clear why we cannot be satisfied with such levels. “They show all the malaises of the Croatian economy, ranging from investment structure, the industries invested into, where the focus is primarily on the local market, as well as the absence of investment into production of goods and services. It all indicates an inferiority in the Croatian economy, its insufficient development and a reduced resilience to any

As a group that operates in a large number of countries, we are highly optimistic concerning Croatia’s future and we are moving to provide an example of business success achieved by foreign companies operating here. Burak Baykan, Regional Director of Doğuş Holding

July 2017 | No 271 | PVinternational | 15


ATTRACTING FOREIGN INVESTMENT Foreign Direct Investment, liabilities in €millions Equity investment Year

DEBT INST

into direct investment enterprise

into direct investor (reverse investment)

between horizontally integrated companies

101.0 92.8 79.1

0.0 0.0 0.0

0.0 0.0 0.0

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 TOTAL

RETAINED EARNINGS

n/a n/a n/a

into direct investment enterprise, n/a n/a n/a

382.1

0.0

0.0

n/a

n/a

327.4 581.1 1,209.0 749.1 911.1 718.3 762.4 320.3 800.6 1,574.5 2,188.1 1,882.8 455.9 261.9 1,840.6 780.1 659.4 2,222.9 1,958.1 569.8 21,428.5

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 0.0 0.0 3.9 0.0 9.8

35.9 63.9 43.4 86.8 187.9 160.9 587.9 291.7 570.4 703.7 483.3 508.5 287.4 530.5 276.9 255.3 -297.5 -187.8 -790.6 1,152.3 4,950.9

147.8 196.8 85.6 241.3 30.2 138.6 238.8 428.4 65.2 319.0 719.7 333.8 1,212.2 -160.9 -907.2 -216.7 113.6 102.7 -10.4 53.8 3,132.3

Source: HNB

1.7 billion

foreign direct investment into Croatia

30.8

€ billion

foreign direct investment into Croatia from 1993 to end 2016

shocks and crises we may be faced with in the future”, noted Jurčić, stressing that, in addition to improvements in investment conditions, the Croatian demeanour towards investors also needs substantial improvement. “We are currently not investing sufficiently into proactive investment attraction and investment targeting programmes. A new investment wave is about to roll throughout Europe, and Croatia still cannot be found on the map of the most competitive and most attractive investors”, stated Jurčić.

STABLE BUSINESS ENVIRONMENT TO BOOST INVESTMENT Foreign-owned companies in Croatia have a significant share of the economy, in terms of capital, revenue, the share of exports, employment or investment. Their capital accounts for one third of the total capital employed in Croatia, whilst their share of exports stands at almost 40% and they employ every fourth person in Croatia. One of the major investors in Croatia over the last several years has been the Doğuş

16 | PVinternational | July 2017 | No271

Group, which has to date invested over €250 million into Croatia and created around 350 new jobs locally. Currently its major project is the construction of the first five-star hotel in the centre of Zadar, which will be operating under the name of Hyatt Regency Zadar Maraska. This will be in conjunction with both residential and commercial projects. Following


TOP 10 foreign direct investment, liabilities by country – €millions Country

RUMENTS into direct investor (reverse investment) n/a n/a n/a

2013.

2014.

2015.

2016.

TOTAL 1993-2016

Između horizontalno povezanih poduzeća

TOTAL

n/a n/a n/a

101.0 92.8 79.1

n/a

n/a

382.1

0.0 0.0 0.0 47.0 -29.8 1.1 3.8 3.6 -2.5 11.4 19.8 0.8 41.3 180.8 -179.9 -13.5 -14.9 95.7 -19.9 77.7 222.6

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9.7 -2.2 929.3 267.9 253.8 -13.0 340.2 276.4 58.5 -948.9 -148.0 1,023.6

511.1 841.7 1,338.0 1,124.2 1,100.3 1,019.1 1,592.9 1,044.0 1,433.7 2,618.4 3,408.8 3,655.2 2,264.8 1,066.1 1,017.4 1,150.4 737.1 2,292.0 192.3 1,705.6 30,767.8

HOLLAND AUSTRIA ITALY GERMANY LUXEMBOURG HUNGARY FRANCE SLOVENIA GREAT BRITAIN DUTCH ANTILLES

198.0 87.2 44.0 130.7 48.1 -170.6 26.3 55.5 41.6 0.0

2,408.1 -206.3 14.4 -812.2 21.5 -89.9 37.4 26.9 25.1 0.0

108.3 -863.0 7.9 196.7 286.1 -109.0 19.4 91.2 579.0 0.0

538.8 -1,380.7 1,897.9 168.8 274.7 49.4 66.1 73.7 59.2 0.0

6,551.8 3,545.0 3,313.6 2,878.8 2,286.7 2,110.0 1,459.3 1,373.9 1,124.6 854.4

TOP 10 foreign direct investment, liabilities according to activity – €millions Activity Financial services Wholesale Property Telecommunications Retail Equity investment in property Manufacture of coke and refined petroleum products Manufacture of basic pharmaceutical products Building construction Accommodation

TOTAL

2015

2016

-643.7 78.2 -5.2 -2.8 73.4 168.6

719.9 90.4 342.6 60.8 121.2 150.8

9,438.9 2,715.4 2,101.4 1,882.9 1,740.1 1,341.8

-74.7

-18.9

1,284.6

-236.6 14.8 34.0

-105.0 96.3 33.2

1,087.2 1,078.8 973.1

1993-2016

Source: HNB

CONTINUITY OF POLICIES FOCUSED ON INTERESTS OF BUSINESS COMMUNITY IS CRUCIAL FOR INVESTMENT ATTRACTION, STRESSED MARTINA DALIĆ

The future look of the hotel Hyatt Regency Zadar Maraska

completion in spring 2019, the total value of investment implemented by them in Croatia will reach €350 million. The Regional Director of Doğuş Holding, Burak Baykan, believes that in Croatia investment into state portfolio facilities needs to be encouraged. “As a group that operates in a large number of countries, we are highly op-

timistic concerning Croatian future and we are moving to provide an example of business success achieved by foreign companies operating here”, noted Baykan. It should be noted that Doğuş Group is mentioned every time the issue of ACI privatisation has been publicly addressed, since the Group currently owns 10.87% of its shares. Finally, from the aspect of FDI, the main advantages of Croatia are still qualified and productive labour, EU membership and solid infrastructure, with the main shortcomings being a high tax burden, the tax system, public administration, corruption and unpredictability of economic policy. Solutions to these problems are generally known; what matters is the need for the will and expertise required to implement them.

9.4

over € billion

invested in financial intermediation sector over a 23-year period

July 2017 | No 271 | PVinternational | 17


INVESTING IN TOURISM

The largest tourist investment this year is complete Valamar Riviera prepared and finalised the project in only 18 months. Over 130 construction companies and suppliers, mainly from Croatia, participated in its completion by Jozo Vrdoljak

T

wo summer resorts of Valamar Riviera have been opened in Rabac: Family Life Bellevue Resort (four-star category) and Valamar Girandella Resort (four- and five-star category). This is also the largest investment into Croatian tourism this year. The total value of the investment will be €74.9 million. This project is the most significant part of this year’s investment by Valamar. Its overall value is now €116.4 million and is proof of the long-term direction with which we will enhance our tourist offer to a new level and create the foundation for sustainable development of this important economic area. In addition to Rabac, we continued with our investments in quality and camping offers. As a result, €13 million was invested in Camping Resort ‘Lanterna’ and €9 million into camps at Zablaće and Ježevac on the Island of Krk. During our investment cycle, which ends in 2020, we plan to invest a total of €0.3 billion in the development of quality 18 | PVinternational | July 2017 | No271

and attracting visitors of higher standard. Valamar Riviera is today the biggest Croatian tourist company based on its capacity, number of destinations, income and operating earnings as well as the number

TOTAL VALUE OF THE VALAMAR INVESTMENT IN RABAC WILL BE €74.9 MILLION of visitors and employees. We operate in five destinations, with 56,000 beds and 12% of categorised accommodation in 30 hotels and summer resorts as well as 15 camping summer resorts, the CEO of Valamar Riviera, Željko Kukurin, highlighted.

STRATEGIC PARTNERSHIPS Valamar Riviera prepared and finalised the project in only 18 months. Over 130

construction companies and suppliers, mainly from Croatia, participated in the project, and construction lasted seven months. During the project development Valamar Riviera established two strategic partnerships with tour-operators TUI and the Rewe Group, which will bring to Rabac over 100,000 visitors across the next three years. This will significantly improve the Istrian tourist promotion, increase the number of fly-in visitors and create the preconditions necessary for prolonging the season. TUI’s plan is that the Family Life Bellevue Resort becomes one of the best family resorts on the Mediterranean. The contract is signed for a period of three years on the principle of full for empty. The strategic partnership with TUI recognises around 76,000 flyin visitors from the Scandinavian and British markets during the nextthree years, said Kukurin, adding that Valamar Riviera anticipates a very good tourist season.


INVESTMENT BY TTO THERMOTECHNIK

A NEW FACILITY FOR FURTHER UPLIFT The investment will additionally strengthen the company’s position on the EU market, as 90% of products will go for export by Boris Odorčić

T

he facility, intended for the production of distribution cabinets for heating systems was constructed by the company TTO Thermotechnik using financial assistance from the European Regional Development Fund, has recently been commissioned. “We have been expanding both our production capacity and operations over several years and in addition to the new production area, we have purchased new machinery, which will certainly boost the competitiveness of Thermotechnik on the EU market, expand our production and create at least 26 new jobs. The distribution cabinet programme has an important role within the products distributed by TTO, and is considered as our most important product. We have opted for this investment in order to provide our clients with more advanced product types through new production processes and modernised equipment, moving towards an acceleration in the installation of heating equipment, whilst simultaneously saving our customers’ money. Furthermore, we aim to reduce prices of products through increased productivity and subsequent lower production costs. This will boost our competitiveness and increase capacity”, noted Director of TTO Thermotechnik, Radisav Drljević.

VITAL AND HIGH-QUALITY COMPANY The total value of investment was €2.86 million, with non-repayable funds via the Operational Programme Competitiveness and Cohesion from the European Structural and Investment Funds of 35.9% whilst the remaining funding was provided by the loan programme of the Croatian Bank for Reconstruction and Development (HBOR). “Public administration firstly needs to address the issue of providing the conditions for a competitive economy that leads to the creation of new jobs and sustainable development, so improving the quality of life for all. I am particularly delighted that this com-

pany is involved in production and that it is export-oriented and, in addition, it is vital and top quality, employing a large number of local people”, pointed out Zlatko Komadina, Prefect of Primorje-Gorski Kotar County. The new facility will provide additional impetus for a company that has been successfully operating for 28 years, ranking amongst the leading European companies in OEM production of distribution frames and accompanying equipment for hot water heating systems and it will also provide the opportunity for unhindered growth and an increase in production. Moreover, the investment will also strengthen the company’s position on the EU market, as around 90% of its products are intended for export. Since over 50% of the 106 employees live locally, this investment will have a positive effect on the local economy where TTO Thermotechnik is a growth generator, as well as the wider Croatian economy. It is important to note that the company saw the end of 2016 with revenue of €75.1 million, and profits up 13.53% compared with the previous year.

IN ADDITION, NEW MACHINERY HAS BEEN PURCHASED VIA EU FUNDING TO BOOST COMPETITIVENESS

July 2017 | No 271 | PVinternational | 19


CROATIAN – SLOVAKIAN INNOVATION FORUM

GOOD IDEAS COULD LEAD TO NEW DEALS The Three Seas Initiative is the motivation for our development and all we desire, which is to construct more dynamic, productive and resistant economic systems, President Kolinda Grabar Kitarović highlighted by Krešimir Sočković

N

ot only do Croatia and Slovakia have good relations and economic co-operation, they are also very perceptive in terms of developing this co-operation in multiple areas and levels, said the President Croatia, Kolinda Grabar Kitarović, at the Croatian-Slovakian innovation forum held in the Croatian Chamber of Economy in Zagreb.

CROATIA IS THE MOST FAVOURED TOURIST DESTINATION OF SLOVAKIANS We both participate in the European Union and NATO, but we also want to strengthen our central European co-operation through the Three Seas Initiative. The Three Seas Initiative is the motivation for our development and all we desire, which is to construct more dynamic, productive and resistant economic systems, President Kolinda Grabar Kitarović highlighted. She also added that the two countries shared a similar history during the 1990’s and both went through a transition after communism to a market economy. Great progress has been achieved, and Slovakia yielded better results. This is the 20 | PVinternational | July 2017 | No 271

reason why Croatia is seeing a high trade deficit, while investments of Slovakian companies in Croatia are five times higher than Croatian investments in Slovakia. Our task is not only to improve our relations and increase figures, but also to position our societies on the level of the most developed countries in the European Union and to do this, we must stop relying on the help of others, the President evaluated. The Forum, whose goal was to strengthen the existing bilateral relations and create room for future business co-operation, was attended by 21 Slovakian and 40 Croatian companies. They discussed innovation, the digital economy, intelligent solutions, smart cities, venture capital funds, business angels, e-trade, e-mobility and e-financing. The Forum also presented national innovation systems and opportunities for concrete business co-operation between the two countries, and participants had the opportunity to discuss their business projects and establish co-operation. Last year, trade between Croatia and Slovakia was valued at €0.5 billion, of which €179 million related to Croatian exports and imported €324 million of goods, said CCE President Luka Burilović. The deficit was covered by tourism services since around 400,000

WE NEED TO DO EVERYTHING TO LINK ENTREPRENEURS OF THE TWO COUNTRIES TO CREATE NEW BUSINESS OPPORTUNITIES, KISKA POINTS OUT


CROATIA AND SLOVAKIA

Multiple possibilities for developing co-operation Slovakia is a country of similar size to Croatia. It has a population of 5.4 million, and for the past few years it has seen annual GDP growth rates in the range of 1.5% to 3.4%, which was seen in 2016. Their unemployment rate decreased last year to 9.5%, and the majority of their trade is with Germany and the Czech Republic. Total trade between Croatia and Slovenia stood at €499.1 million in 2016. In relation to 2015, exports decreased insignificantly, while imports plummeted 7.16%. During the first three months of this year exports from Croatia increased to slightly below 5%, while imports from Slovakia grew by almost 20%. Croatia imported from Slovakia mainly telephone equipment, moni-

tors and personal vehicles, of which car seats related to one third of Croatian exports. The export of monitors, projectors, medicine, leather goods and aluminium products was significantly higher. During the past 25 years Slovakian companies have invested €114.2 million in Croatia, whilst local companies invested only

LAST YEAR, TRADE BETWEEN CROATIA AND SLOVAKIA WAS VALUED AT €0.5 BILLION, OF WHICH €179 MILLION RELATES TO CROATIAN EXPORTS

€23.4 million. According to estimates, the brightest opportunity for strengthening co-operation lies in the areas of energy, infrastructure, automobile industry, machine engineering, tram production, road building, chemical industry, tourism, environmental protection, electrical industry, traffic and the development of free zones.

from our gas, and we can do the same with the oil they can store in Croatia, Burilović points out. He also added that many Croatian entrepreneurs already have ideas on how to develop this co-operation, especially regarding high-technology and innovative solutions, and they have the CCE’s support in making their agreements. It is in our interest to strengthen the economic relations with Slovakia through the Three Seas Initiative, which is important for the whole of Central Europe, mainly linking and strengthening the economies of the Visegrad Group and Croatia, Burilović stressed.

SLOVAKIA ALSO DOES NOT HAVE A SUFFICIENT WORKFORCE

Slovakians accounted for 2.5 million overnight stays in Croatia last year. Our coast is the favourite destination for Slovakians, and this fact proves there is potential for developing the countries’ co-operation and industries. Croatian companies need to invest more intensively into Slovakia, but Croatian suppliers of automobile parts should and could be larger suppliers to the Slovakian automobile industry. In the same way, the Slovakians can profit

President of Slovakia, Andrej Kiska, pointed out that Croatia is the favourite tourist destination of Slovakians. Even his son and his family will choose Croatia this year for their summer holidays. Slovakia has another acute problem – it has foreign investors, but not enough people, that is, not enough quality workforce, Kiska highlighted. He also added that the two countries are offered with a large market of 500 million buyers. We all know that the one who wants to be successful has to be capable enough to use this market potential. The most important thing is to do everything to link entrepreneurs of the two countries in order to create new business opportunities. You can teach us about being more successful in tourism, and we can teach you about attracting foreign capital, Kiska concluded.

It is in our interest to strengthen economic relations with Slovakia through the Three Seas Initiative, which is important for the whole of Central Europe, mainly linking and strengthening the economies of the Visegrad Group and Croatia. Luka Burilović, CCE President

July 2017 | No 271 | PVinternational | 21


CONFERENCE THE PRESIDENTS OF POLAND AND CROATIA SHARE BREAK

GREAT POSSIBILITIES FOR BUSINESS CO-OPERATION WITH POLAND Energy, electrical engineering, shipbuilding, tourism, environmental protection – we see great potential in all these sectors, and EU funds could finance them to a great extent, CCE President Luka Burilović highlighted by Miro Soldić

O

n the occasion of an official visit of the Polish President, Andrzej Duda, to Croatia, the Croatian Chamber of Economy (CCE) in co-operation with the Polish Embassy and the Polish Chamber of Economy, organised breakfast with the Presidents with the aim of strengthening the existing bilateral relations and creating opportunities for future business cooperation.

CROATIAN AND POLAND TRADE EXCHANGE IS CONSTANTLY GROWING, TOTALLING €767.6 MILLION IN 2016 CCE – THE MOST IMPORTANT ECONOMIC INSTITUTION IN CROATIA The meeting started with opening words from CCE President, Luka Burilović, who said he 22 | PVinternational | July 2017 | No 271

was delighted that the Chamber had the opportunity to host a visit of great importance for the relations of the two countries. We like to say the CCE is the most important economic institution in Croatia. This year we are celebrating our 165th anniversary and all these years we have been promoting the interests of the local business community and our companies here and abroad, Burilović said. Poland is an important market for Croatia. We are now members of the same European family and business activities are performed more easily and more effectively. The total exchange of goods has been growing constantly, and totalled €767.6 million in 2016, Burilović highlighted. He also pointed out the importance of the Three Seas Initiative (the Adriatic, the Baltic and Black Sea), especially in the area of energy safety. Energy, electrical engineering, shipbuilding, tourism, environmental protection – we see great potential in all these sectors, and EU funds could finance them to a great extent. Our wish is to motivate further co-operation and I hope that concrete deals will be sealed today, Burilović concluded. Croatian President, Kolinda Grabar Kitarović, also highlighted the Three Seas Initiative as extremely important for creating closer connections between Croatia and Poland, but also other member countries. She described the Initiative as an informal platform directed at concrete projects for increasing competitiveness and cohesion. In a political sense, it does not represent a counter-balance to anyone. It is not directed against Russia nor is it a Trojan Horse of the USA. We simply want to use all opportunities of EU funds and other financing sources. Our goal is to connect the Baltic, the Adriatic and the Black Sea, linking this geographic space of Central Europe in a


FAST WITH ENTREPRENEURS

common economic area. Croatia’s and Poland’s bilateral relations are excellent in the political sense, and I hope for a brighter future

750,000 TOURISTS VISIT CROATIA EVERY YEAR AND SPEND AROUND €25 MILLION, DUDA HIGHLIGHTED in the area of economics, she pointed out. She also added that energy independence is crucial since it leads to economic prosperity through reduced prices for households and industry and is also important for the country’s competitiveness and political stability.

POSITIVE ECONOMIC CO-OPERATION Overall economic co-operation has been seen a positive trend over the past several years, but mutual investments are modest. This especially regards Polish investments in Croatia are slightly below €80 million for the past 13 years. Croatia, however, invested €165 million in Poland. Croatian exports to Poland dropped 6%

last year, and imports increased around 15%, and the President told entrepreneurs this situation needs to change. She sees great potential for export growth in the food industry, trade, agriculture, technology, traffic and energy. Polish President, Andrzej Duda, said that 750,000 tourists come to Croatia every year and spend around €25 million. He hopes entrepreneurs will follow the same direction. He highlighted that Poland is working on importing gas from the Norwegian shelf, diversifying energy sources and becoming a stable supplier for other markets. Entrepreneurs shared their business experiences with Polish companies. Our experiences show a clearly entrepreneurial mentality, which is visible through rapid legal procedures and legal safety they provide. We have been sincerely welcomed from day one by the entire business community, highlighted Josip Roglić of the Orbico Group which has been present on the Polish market for many years. HŽ Cargo is also in the process of creating valuable business co-operation. We signed an agreement two years ago, which could also be called a letter of understanding and interest of PK Cargo to co-operate with HŽ Cargo. We expect direct and open conversation during July. Our wish is to include the ports of Rijeka and Ploče in the Corridor, said Željko Pokrovac of HŽ Cargo.

The Three Seas Initiative is extremely important for creating closer connections between Croatia and Poland, but also other member countries. Our goal is to connect the Baltic, the Adriatic and the Black Sea, linking this geographic space of Central Europe into a common economic area Kolinda Grabar Kitarović, President of Croatia

July 2017 | No 271 | PVinternational | 23


BRODOSPLIT LAUNCHES NEW VESSELS

A NEW NICHE: passenger and military vessels We have become a self-sustaining company and rank among the top 10% of most successful companies in Croatia, according to last year’s indicators, emphasised Debeljak by Jozo Vrdoljak

T

wo vessel-launching ceremonies were held in Brodosplit, one for a patrol vessel for the Croatian Navy, and the largest square-rigged vessel in the world; these are an introduction to the contracting of new vessels, according to President of the Management Board of Brodosplit, Tomislav Debeljak. He added that, following the construction of tankers and bulk-carriers, the company has focused on the niches of passenger and military vessels. “We have become a self-sustaining company and now rank among the top 10% of most successful companies in Croatia, according to last year’s indicators. All liabilities have been settled and we are now waiting for the completion of the restructuring process”, emphasised Debeljak.

PATROL VESSEL “Newbuild 540” is the prototype of an inshore patrol vessel for the Coast Guard service of Croatia, 43.5m long which can achieve a speed of 28 knots. 80% of the equipment installed has been made in Croatia and it is entirely the result of committed work of Brodosplit experts and employees. “The launch of this type of patrol vessel is considered, by those employed at the Ministry of Defence, as a part of the process that is expected to be completed at its outfitting. We are expecting the vessel to be outfitted and prepared for sea trials within three months, as promised. Following the full completion of this prototype and its testing, we will start serial construction for four more similar vessels. The total value of the project is €53.3 million”, stated Zdravko Jakop, State Secretary at the Ministry of Defence. 24 | PVinternational | July 2017 | No271

“We were concerned whether the vessel would meet all technical and tactical requirements and consulted widely with all the experts in order to succeed. The vessel we have constructed currently

STAR CLIPPERS WILL BE SAILING ACROSS THE WORLD, FROM THE ARCTIC TO ANTARCTICA ranks as the optimal and most effective vessel in its class”, added Debeljak.

SQUARE-RIGGED YACHT The construction of the largest squarerigged yacht suggests that Brodosplit has been identified as one of the few shi-

pyards globally with the potential to construct such a unique vessel. Star Clipper was launched on 10th June and delivery is expected in 2018. The vessel is 162 meters long and 18.5 meters wide, with a deadweight of 2,000 tonnes; she has five masts and sails covering a total area of 6,347 m2. She has five decks and will accommodate 450 people of whom 300 will be passengers, in 150 luxury cabins. She will be sailing across the world, from the Arctic to Antarctica and she is being constructed to meet ice-impact requirements. “We were aware that this project was a huge challenge for us, as we constructed the yacht using the general arrangement plan that had been used on a 100-yearold sailing vessel. Her five masts and 36 sails are specific and unique to this vessel, which is an innovation for Brodosplit. Moreover, passengers will be given the chance to navigate the vessel if they wish to do so”, pointed out Radovan Načinović, Construction Project Director.


CONTINENTAL TOURISM IN CROATIA

POTENTIAL ENORMOUS – RESULTS POOR From the overall total number of tourist overnight stays in Croatia, only 4.5% are continental and Zagreb accounts for 2.5% of these by Svetozar Sarkanjac

O

ut of last year’s 11 million overnight stays, Slovenia achieved 8 million nonmaritime visitors which includes urban, mountain and thermal tourism. Austria achieved 135 million overnight stays. At the same time, from the overall total number of tourist overnight stays in Croatia, only 4.5% continental, and Zagreb accounted for 2.5% of these. This was the position outlined at the conference Contemporary trends in continental tourism, held during the Days of Slovenia in Slavonia. In concrete terms, out of a total 78.5 million last year’s overnight stays, 74 million were seen on the Adriatic, and only 4.5 million in all other Croatian continental counties plus Zagreb.

SLOVENIAN EXPERIENCE Participants from Slovenia presented some of the successful tourist projects, and one of the themes was the method of financing such projects through EU funds. In addition, the President of the Slovenian Tourist Board and District Council Chairman of Podčetrtek, Peter Misja, referred to this issue. Last year, Slovenia was visited by around 2.5 million visi-

tors, which totalled around 11 million of overnight stays. Some 40% of these were registered by continental and/or thermal tourism. In fact, Slovenia is known for four types of tourism: maritime, urban, mountain and thermal. In actual numbers, Slovenian tourism achieved last year slightly over €2.5 billion, which means that thermal tourism alone brought in around €1 billion.

NO RESULTS WITHOUT SYNERGY When asked about what advice he would give to entrepreneurs in Slavonia who wish to work in tourism, Misja highlighted: Based on our experience, synergy is the most important thing. There should be a local community and the state on one side and tourist workers on the other. Actually, there is a lot of work to be done here, but it cannot be done by one side only. All these factors need to be in harmony so that the desired goal may be achieved. This synergy could achieve the desired goal. This conference was actually organised by the Slovenian Embassy in Croatia and the Croatian Chamber of Economy – County Chamber of Osijek. Participants were welcomed with the opening words of Snježana Brzica, Depu-

ty Minister of Tourism. She stressed that the County of Osijek and Baranja, as well as the whole region of Slavonia and Baranja, has the potential to achieve better re-

LAST YEAR, SLOVENIAN TOURISM ACHIEVED SLIGHTLY OVER €2.5 BILLION, OF WHICH SOME €1 BILLION REPRESENTED THERMAL TOURISM sults from tourism. Although, according to her, the number of overnight stays rises year by year, the results are still less than satisfactory. Considering the support shown by local and state authorities, as well as the interest of the people of Slavonia to work in tourism, all the preconditions for achieving the same success as the Slovenians, have been met. July 2017 | No 271 | PVinternational | 25


PODRAVKA

18 SUPERIOR TASTE AWARDS Again this year Podravka achieved eved ngreat success at the international Superior Taste Awards, win’s ning 18 medals. Of all Podravka’s products, every one won a medst al. This is Podravka’s greatest gsuccess to date at this prestigious competition. This is a significant achieve-g ment for Podravka considering the extremely strong competition ffrom international brands. Innovation and knowledge of the market and consumer taste is the foundation on which we develop our new products. This year’s competition has shown we are doing this successfully. Also, these awards are a motivation for us to develop new products and tastes which will surely meet the needs of our customers globally, highlighted Ivana Kozbur from the Culinary Development Department of Podravka.

Croatia has been participating at the Superior Taste Awards since 2008, winning more and more medals each year for quality, taste and design of its prod-

ucts. Between 2008 and 2017, their products have been awarded with 91 Superior Taste Awards. (I.G.)

ANNECY INTERNATIONAL ANIMATED FILM FESTIVAL

ANOTHER AWARD FOR HEDGEHOG’S HOME

At the international animated film festival held in Annecy, France, the short film made by Eva Cvijanović won the Young Audience Award, a category which includes films for children. This award is given by a jury consisting of 26 | PVinternational | July 2017 | No 271

eight members (four representatives of the Annecy animation studio for children and four guests from a world organisation – this year they were the representatives of the Swiss Animatou Festival.

Overr 2,800 films from 95 countries applied for this year’s competition. In addition to the Hedgehog’s Home, three other Croatian co-productions were officially selected for the competition: Manival, directed by Chintis Lundgren, Airport, directed by Michaele Müller and the Night Bird (original title: Noćna ptica), directed by Špela Čadež. The Hedgehog’s Home was premiered at this year’s Berlinale where it won a special award in the category Generation Kplus. In Zagreb, this short film won the Audience Award and Special Jury Award. The film was co-financed by the Croatian Audio-Visual Centre. The festival in Annecy is one of the oldest and most important festivals of animated film which covers thousands of professionals from the world of animation. This year’s 41st edition was held from 12 June – 17 June. (K.S.)

Pvi0271  

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

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