INTERVIEW: Ariana Vela → EU funding requires hard work, effort and co-ordination
Tourism investment → €800 million in investment this year and next
Exporting services and solutions → Croatian software on five continents
SUPPORTED BY THE CROATIAN CHAMBER OF ECONOMY
PVinternational C R O A T I A N
B U S I N E S S
F I N A N C E
M O N T H L Y
September 2017, Year X, No 272
ECONOMIC AND FISCAL POLICY GUIDELINES FOR 2018-2020
SOLID BUDGET YEARS ANTICIPATED Public debt reduction expected to drop to 81.1% of GDP the year and down to 78.3% of GDP next year
by the end of by Ilijana Grgić
t the end of July, the government adopted the economic and ﬁscal policy guidelines for the period 2018-2020 as a framework for the planning of government budget revenue for next year of €17.3 billion, as opposed to expenditure of €17.9 billion. The general government deﬁcit is expected to reach 0.8% of GDP and a 2.8% economic growth rate. In 2019, budget revenue is expected to increase by 3.6% to €17.9 billion, and €18.5 billion in 2020 at an inter-annual growth of 3.1%. The projected tax revenue for 2018 is €10.1 billion, and this ﬁgure is expected to increase in subsequent years and by 2019 tax revenue is expected to be €10.4 billion, and €10.7 billion in 2020. Anticipated income tax revenue for 2018 is €1.2 billion, based on positive ﬁnancial results recorded this year, as well as on the impact of amendments to the income tax system, mainly the abolition of relief on reinvested proﬁt. Revenue from VAT in 2018 have been planned at €6.5 billion, keeping in mind amendments in the VAT system, with an expected increase in disposable household income and personal consumption. Excise duties in 2018 are expected to reach €2.1 billion, and in 2019, €2.2 billion. Revenue from contributions is the second most important budget revenue
source, and for the forthcoming medium-term period it has been estimated in accordance with the anticipated labour market developments so that in 2018 it is expected to reach €3.25 billion and an increase to €3.37 billion thereafter. Revenue from assistance provided by the European Union directly linked with projects ﬁnanced through EU funds and direct payments to agriculture are expected to show a signiﬁcant increase. Hence, total planned revenue from such assistance in 2018 is expected to reach €1.9 billion, and to €2.04 billion and an additional increase in 2020 to €2.17 billion.
The government has also highlighted in the guidelines that budget expenditure is determined by a further strengthening of ﬁscal sustainability and consolidation. Consequently, 2018 is expected to see total budget expenditure of €17.95 billion, and €18.3 billion in 2019. In light of such projections and considering also extra-budgetary users and local governments, 2018 will see a general government deﬁcit of 0.8% of GDP. Consequently, public debt is expected to continue decreasing and by the end of the year it is expected to fall to 81.1% of GDP and down to 78.3% of GDP in 2019.
PRSTEN ASSOCIATION OF BOSNIAN CROATS BUSINESS FORUM
CROATIA AND BOSNIA AND HERZEGOVINA A UNIQUE ECONOMIC AREA The economic situation and co-operation are inextricably linked with the future and the position of the Croatian people in Bosnia and Herzegovina, stressed Martina Dalić, Vice-President of the Croatian government by Krešimir Sočković
he Prsten Association of Bosnian Croats Business Forum co-organised by the Croatian Chamber of Economy addressed the issue of identifying key features for the promotion of, and encouragement for the entrepreneurial environment, with a special emphasis on Croatia and Bosnia and Herzegovina, whilst simultaneously highlighting the weaknesses of legislative solutions and their consequences on business. During the Forum, which has brought together over two hundred entrepreneurs, many of which have been doing business in both countries, one of the objectives was to provide guidelines for system improvement, pointing out the potential development of business ties between Croatia and Bosnia and Herzegovina and presenting new solutions and requirements concerning both economic and other policies. “We are working to transform this Forum into a traditional method of bringing businessmen together and considering the opportunities for economic development”, emphasised Mijo Marić, President of Prsten, adding that the Association is intended as a bridge between Croatia and Bosnia and Herzegovina. Croatia and Bosnia and Herzegovina are a unique economic area, and the CCE focuses on growth and development, and co-operation between businesses from both countries and the creation of opportunities for investment, added Luka Burilović, President of CCE. “Over 200 Croatian companies representing Croatian interests are currently registered, whilst over 500,000 Croatian citizens originate from Bosnia and Herzegovina. Croatian companies are not merely involved in classical export and import to 2 | PVinternational | September 2017 | No 272
UNTIL LAST YEAR THE VALUE OF CROATIAN INVESTMENT INTO BOSNIA AND HERZEGOVINA EXCEEDED €1.1 BILLION Bosnia and Herzegovina, they are also investors. Until last year the value of Croatian investment into Bosnia and Herzegovina exceeded €1.1 billion. We need to focus on increasing investor conﬁdence”, pointed out Burilović, adding that by the end of this year the CCE will open its representative office in Sarajevo, moving to boost economic co-operation. The economic situation and co-operation are inextricably linked with the future and position of the Croatian people in Bosnia and Herzegovina, stressed Martina Dalić, Vice-President of the Croatian government.
ADDRESSING THE ISSUE OF ECONOMIC DIPLOMACY Entrepreneurs operating in both countries participated at the Forum. Marko Pipunić from Žito stated that he wished to create more favourable opportunities for both life and work in Slavonija through business. “We will proceed in
this direction and continue with growth, yet it has to be noted that we not provided with state assistance; on the contrary, the state provided obstacles for us”, stated Pipunić. Marko Jurčić, Advisor to the Croatian President, stressed the need to tackle the issue of economic diplomacy, make ofﬁcial visits and send quality delegations abroad. Svjetlan Stanić, owner of Stanić Beverages, stated that “it is difficult to draw parallels between the market in Bosnia and Herzegovina and Croatia, yet my advice to all entrepreneurs is to persevere and never give up”. Ante Mandić, President of the Management Board of IN2, noted that the market they operate in is complex, since within their Group there are 13 companies from the region, amongst which there is also one from Bosnia and Herzegovina. “Our industry does not pay sufficient attention to strengthening commercial ties and we are aiming to change that”, concluded Mandić.
FORUM CROATIAN-IRANIAN ECONOMIC FORUM
ALI RABIEI: CROATIA IS OF GREAT IMPORTANCE TO IRAN Being an EU member state, Croatia is considered as an excellent entry and exit point for Iran, as well as an investment destination, opening a market of in excess of 500 million by Boris Odorčić
epresentatives from Iranian companies and institutions involved in the petrochemical, railway and metal industries, as well as agriculture, pharmaceuticals, electrical engineering and maritime transport, have recently visited Croatia. The strong Iranian delegation was led by the Minister of Co-operatives, Labour and Social Welfare of the Islamic Republic of Iran, Ali Rabiei. At that meeting, the Croatian Chamber of Economy organised a Croatian-Iranian Economic Forum during which individual discussions were held with over 60 representatives of Croatian and Iranian companies. Luka Burilović, President of the CCE, emphasised that this was a clear indicator that co-operation between the two countries needs to be further encouraged. Over a year has passed since the Croatian President made an official visit to Iran, he added. Since then, the CCE has organised several meetings, keeping in mind the importance of strengthening of economic relations. “There is certainly
potential for co-operation, starting from traditional sectors such as energy and railway industry to oil and gas, shipbuilding, metal industry and ICT, in addition to pharmaceuticals, the food industry, chemical and automotive industry, tourism and knowledge transfer. Moreover, Croatia can provide an excellent geostrategic position, as an entry point to the European market of over 500 million consumers”, emphasised Burilović. Marko Pavić, Minister of Labour and Pension System, believes that the Forum marks the continuation of work and effort exerted on the strengthening of cooperation between Iran and Croatia and so this Forum also provided space for cooperation with SME’s. Multiple objectives were deﬁned during the meeting between the Vice-President of the Croatian government, Martina Dalić and Ali Rabi. “Amongst others we addressed the issue of establishing a payment transfer system between the two countries, aimed at helping business operations for Croatian businesses”, stressed Pavić.
THE ESTABLISHMENT OF A PAYMENT TRANSFER SYSTEM BETWEEN THE TWO COUNTRIES IS INTENDED TO ASSIST BUSINESS OPERATIONS FOR CROATIAN BUSINESSES, NOTED PAVIC
Mario Antonić, State Secretary of the Ministry of Economy, Entrepreneurship and Crafts, noted that being an EU member state, Croatia is considered as an excellent entry and exit for Iran, as well as an investment destination, opening to a market of in excess of 500 million consumers.
IRAN OPENING UP Ali Rabiei highlighted the signiﬁcance of Croatia for Iran. “Iran provided support to Croatia during independence and during the EU accession process”, noted Rabiei, emphasising that there is still room for improvement in co-operation between the two countries. Vedran Kelek, Director of Sales and Marketing at Podravka Gulf, stated that negotiations were in place concerning entry to the Iranian market of 80 million people. “The Iranian food industry is very strong. They have high quality local producers in virtually all product categories and very high entry barriers”, he stated. Vitomir Klasić, Director of Ivanićplast, noted that negotiations with potential Iranian buyers were held, yet contracts have not yet been signed. “The payment system is the major issue, since we cannot operate directly with Iran, as third countries need to be involved”, pointed out Klasić. “Iranians have used the decades-long blockade for the development of their own manufacturing sector. Nevertheless, there is certainly potential and Iran has been opening up”, he concluded. September 2017 | No 272 | PVinternational | 3
DIASPORA A CONNECTION BETWEEN ECONOMY AND CULTURE The Croatian government is focusing on the creation of the underlying requirements for a facilitated return of Croatian emigrants and for investment into the Croatian economy. The signing of Co-operation Agreements between the Croatian Chamber of Economy and the mixed Australian-Croatian Chambers of Commerce is intended to facilitate cooperation across entrepreneurs by Krešimir Sočković comprises around 250,000 individuals. The President also met a large number of Croatian community representatives who have shown signiﬁcant commitment to the development of economic relations between the two countries.
CROATIAN COMMUNITY HIGHLY RESPECTED IN AUSTRALIA
olinda Grabar Kitarović, President of Croatia, recently visited Australia and New Zealand where she met political leaders, as well as led an economic delegation that presented co-operation opportunities between Croatian entrepreneurs and entrepreneurs from those countries many of whom have Croatian origins. According to data provided by the local Foreign Affairs Ministry, around 150,000 Croats currently live in Australia, whilst the Croatian community
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“The Croatian government is focusing on the creation of underlying requirements for a facilitated return of Croatian emigrants and for investment into the Croatian economy. It is important to note the commitment of Croatian diaspora to the preservation of tradition and the Croatian language. The Croatian community is highly respected in Australia and I believe that it was one of the main reasons for this ofﬁcial state visit at this time, which also shows the on-going improvement of the international rating of Croatia”, pointed out Kolinda Grabar Kitarović. “Croatia is striving to help the Croatian community in Australia in preservation of the Croatian culture and language. Their commitment in preserving their national identity and strengthening the ties between the two nations is an extremely signiﬁcant contribution in strengthening the overall Croatian-Australian relationship. The Croatian diaspora has repeatedly proved to be an important participant in the building of a stable society against the backdrop of a dynamic and demanding process of our democratic and economic development. This decisiveness and preparedness
Signing of Co-operation Agreements between the CCE and mixed Australian-Croatian Chambers of Commerce Luka Burilović, President of the Croatian Chamber of Economy, who visited Australia as part of the official state visit paid by the Croatian President to that country, signed several Co-operation Agreements between the Croatian Chamber of Economy and mixed Australian-Croatian
Chambers of Commerce. Co-operation Agreements have been signed with Australian - Croatian Chamber of Commerce & Industry, Australian-Croatian Chamber of Commerce, Victorian-Croatian Chamber of Commerce and Western AustralianCroatian Chamber of Commerce.
to help has been repeatedly shown and must always be remembered, and we are extremely grateful to you for that”, she stressed. The President attended the signing of Cooperation Agreements between the Croatian Chamber of Economy and a mixed AustralianCroatian Chambers of Commerce and on this occasion, she invited Australian businessmen to a knowledge and experience exchange in order to contribute to Croatian development. “Croatia has an interesting strategic position in Central Europe and huge potential for investment into projects concerning the Three Seas Initiative”, she stressed. During the meeting between The President and the Australian Prime, Minister Malcolm Turnbull, the Croatian delegation presented over 150 Croatian projects prepared for investors. Amongst others they presented the LNG terminal project on the island of Krk, which has immense potential against the backdrop of the increasing Australian share in the export of LNG globally. “I hope that after the meeting we will be a step closer to potential new investment from Australia into Croatia, as well as from Croatia into Australia”, noted the President after the meeting held in Canberra. The two top state ofﬁcials also addressed the issue of co-operation in the shipbuilding sector, as well as maritime and port connections and tourism, in addition to the issue of contract signing and double taxation avoidance.
STRENGTHENING COMMERCIAL TIES WITH CROATIA “We are looking forward to further discussions about how to additionally promote our common values on a global level and future investment between Australia and Croatia. Australia is hoping to strengthen the commercial ties with Croatia and to provide support concerning the negotiations on the Free Trade Agree-
ment with the EU which are scheduled to start this year”, stated Turnbull. The Croatian President gave her support for Australia entering into this Agreement and pointed out that Croatia will continue advocating the strengthening of relations between Australia and the EU. “You have a close friend and ally both in the EU and NATO”, she noted. The issue of a large Croatian community in Australia was also addressed during the meeting. The Croatian President emphasised her delight with Croatians living in Australia who say they are proud Australians and yet also preserve their Croatian heritage and maintain close relations with Croatia. “Croatia and Australia are two friendly countries that share common values of Western democracies, work to implement the rule of law, respect fundamental human rights and freedoms and focus on the creation of a sustainable economy, whilst simultaneously caring for the environment and combating climate change. The two countries ﬁght side by side in Afghanistan and they both work to defend their own country, as well as global peace and security. This year is of particular importance for both countries, as it marks a quarter of a century since the establishment of diplomatic relations that have been continuously strengthened which is an incentive for further development and improvement of Croatian-Australian relations. Croatian EU membership has additionally contributed to the development of relations between the two countries and the strengthening of co-operation, resulting in further development and cooperation”, pointed out Kolinda Grabar Kitarović. The Croatian President also met Stephen Parry, President of the Senate, Tony Smith, Speaker of the House of Representatives and Bill Shorten, Leader of the Opposition. In addition, she held a lecture on Croatian foreign policy at the Australian Institute of International Affairs.
Croatia has an interesting strategic position in Central Europe and huge potential for investment into projects concerning the Three Seas Initiative. Kolinda Grabar Kitarović, Croatian President
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INTERVIEW ARIANA VELA, OWNER, EU PROJECTS ADULT EDUCATION INST
EU FUNDING REQUIRES HARD WORK, EFFORT AND CO-ORDINATION Croatia has to date absorbed only around 20% of the European Structural and Investment Funds allocated for the financial period 2014-2020, but absorbed under 5% of the available €11.69 billion. We cannot be satisfied with such results, yet it is important to highlight that absorption rates will increase as the prospect comes to its close by Miro Soldić
A Since entrepreneurs need to have excellent performance indicators in order to be eligible to apply for invitations and to be able to achieve a maximum number of points during the selection process, we are mainly dealing with large companies without ﬁnancial issues concerning the project implementation
riana Vela, owner of EU Projects Adult Education Institute and Director of the web portal, is one of the most reputable national experts for the preparation and implementation of EU projects which have, sadly, become merely empty phrases in the public sphere and are used and auctioned by many on any occasion. An excellent example of this is the frequent verbal taunting in parliament concerning the absorption of EU funds nationally, where each uses their own data from different sources. Privredni vjesnik talked with Ariana Vela about addressing this issue, as well as a large number of factual stories linked to EU funds absorption, which is intended to signiﬁcantly help the local economy and this opportunity needs to be used.
The absorption of EU funds is a frequent topic of verbal political taunting in parliament. How satisfactory is Croatian performance regarding the absorption of available resources? The issue of EU funds absorption is a topic that has been intriguing stakeholders both in the sector in question and members of the general public, for years. Consequently, clear and unambiguous answers need to be provided on the numerical indicators. Transparency is fundamental in this area, yet Croatian institutions frequently ignore this. According to data provided in June 2017 by three ministries directing four Operational Programmes, Croatia has so far absorbed only around 20% of the European Structural and Investment Funds allocated for the ﬁnancial period 2014-2020 and paid
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out under 5% of the available €11.69 billion. We cannot be satisﬁed with such results, yet it is important to highlight that absorption rates will increase towards its close. It remains to be seen whether this increase will push the absorption rate closer to 100%, yet these ﬁgures do not entitle us to be optimistic, particularly concerning that project implementation, and primarily infrastructure project implementation, is currently still a huge problem. It is important to point out that, following the release of this data, large-scale projects have been contracted or approved in transport sector, such as road connections with Southern Dalmatia and the Zaprešić-Zabok railway project, which will certainly show in absorption rate increase this year, yet project implementation will last until the completion of these projects and hence the ﬁnal results will be visible only at the end.
THE MOST SIGNIFICANT PROBLEM CONCERNING THE INVITATIONS FOR ENTREPRENEURS IS THE ISSUE OF DELAYED PROCEDURES FOR ALLOCATION OF NONREPAYABLE FUNDING AND DEADLINE EXTENSION
ITUTE AND DIRECTOR OF THE WEB PORTAL You have recently mentioned there are no contracted resources from the Priority Axis 5 of the Operational Programme Competitiveness and Cohesion, as well as Priority Axes 2 and 6 of the Operational Programme for Maritime Affairs and Fisheries? Why is this so? That is a question for the ministries representing the governing bodies responsible. To what extent has Croatia managed to organise and enhance the system in order to assist the absorption of funds? The fact that the already complex EU procedure has been additionally complicated through internal institutions is frequently emphasised. Is there any truth in it? Regrettably, the IPA Programme which had been intended as an introduction to EU funding, as well as the generation of EU funds prior to it, were being implemented at the
THERE ARE PROJECTS THAT CAN BE PREPARED WITHOUT EXPERT ASSISTANCE, YET UNFORTUNATELY THEY ARE RATHER RARE
time when most of those who are currently operating in governance and control systems, were totally uninformed about EU funding, and hence there was no signiﬁcant transfer of either knowledge or experience. Civil society organisations and a large number of consultants are being progressive, albeit their recommendations concerning procedure enhancement are rarely considered or followed. A speciﬁc problem lies in the fact that fundamental rules regulating all procedures at state level – Common National Rules – have not been published and they are being kept concealed from the users, without a clear explanation, primarily due to the fact that bodies in governance and control systems frequently refer to the guidance provided by these rules during their communication with users of non-repayable funding. I believe that during the preparation of the ﬁrst draft of these rules and subsequently also upon each amendment to them, wide-ranging public discussion
A shortage of adequately trained human resources concerning the preparation and implementation of projects financed through EU and other sources is a major problem in Croatia
September 2017 | No 272 | PVinternational | 7
ments. Similar situations certainly need to be avoided in EU funding.
More and more frequently we are contacted by investors (both public and private,) who had opted for a DIY approach or had entrusted an important project to their relatives, friends or other persons who lacked relevant and required knowledge and experience, seeking for help after having been excluded from the procedure of non-repayable funds allocation or they had been subject to ﬁnancial correction during project implementation.
How aware are the general public and local communities of the importance of EU projects? How agile are state institutions concerning this issue? EU funds are frequently the only source of ﬁnancing provided for projects by local government and thus of immense interest to them. They recognise the importance of EU ﬁnancing on time and meet the requirements for EU funds allocation, and consequently they can identify signiﬁcant results. On the other hand, there are a large number who constantly address this issue and make many announcements, yet they have not achieved any results to date. EU funds require hard work, immense effort and co-ordination, without unnecessary words. must be held, aimed at involving all relevant stakeholders who would give their opinions. As opposed to this, the rules are currently ‘upgraded’ and adapted to speciﬁc situations that occur ‘on site’, which many users have an experiential familiarity with and which could have been tackled far earlier. That would have reduced the burden on the system and I therefore really do not understand why there is no interest in publishing them.
For those entrepreneurs aiming to apply for projects, what obstacles are they most frequently facing? The most signiﬁcant problem concerning invitations to entrepreneurs is the issue of delayed procedures for the allocation of non-repayable funding and deadline extension. The issue of time in entrepreneurship is an issue which does not require any special explanation, whilst entrepreneurs have been brought into a situation where they need to adapt to a system that has been delayed, rather than a system being adapted and tailored to meet their requirements. According to unofficial information, there will eventually be a breakthrough, yet currently it all amounts to entrepreneurs being invited to tender and then subsequently faced with substantial delays in the allocation of funds. On the other hand, entrepreneurs frequently act independently and in a biased manner, ignoring the fact that they need to comply with the rules deﬁned by invitations for allocation of non-repayable funding. They are aiming to be pro-European oriented, yet they occasionally tend to bend the rules slightly in order to meet their own speciﬁc require-
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EU FUNDS ARE FREQUENTLY THE ONLY SOURCE OF FINANCING PROVIDED FOR PROJECTS BY LOCAL GOVERNMENT AND HENCE THEIR IMMENSE INTEREST One gets the impression that local communities are actually copying projects and there is hardly any individuality and innovation in the applications. Is that valid? Is there a general lack of creativity in projects? When development strategies of local government are considered, it becomes evident that their goals are almost identical and they mainly depend on the size of a city or a municipality. This suggests there are two crucial problems. First, due to insufficient ﬁnancial resources, the fundamental infrastructure problems have not been tackled within the local community. Second, there is insufficient creativity and a lack of consistency in planning. Serious planning and strategy are the results of a long period of work and commitment, whose results will be achieved over an extended period that often exceeds a term of office. This does not
85% of total eligible costs has been provided for Croatia for the Pelješac bridge project by the European Commission You have been working on the largestscale Croatian project financed through EU funding so far, the Pelješac Bridge project. What is the current situation? - We have been engaged by Hrvatske ceste (Croatian Roads) during the process of project preparation and for the co-ordination of implementation, primarily concerning EU financing. I am delighted that we have managed to provide a maximum
amount of the available financing and even slightly increase the allocation, and hence 85% of the total eligible costs of €0.42 billion has been provided for Croatia for the Pelješac bridge project by the European Commission. This is the maximum amount of total eligible costs we could have been provided with, and we are extremely delighted that we have succeeded in achieving it through exerting joint
appeal to those striving to assume a new function at any cost.
Is it possible to apply for a project opting for a DIY approach, or is it preferable to consult an expert at inception? There are projects that can be prepared without expert assistance, yet unfortunately they are rather rare. In most cases, especially concerning large-scale investment projects, it is advisable to consult and involve experts who can make sure the process of preparation and implementation is performed without major difficulties. Unfortunately, we are increasingly frequently contacted by investors (both public and private,) who had opted for a DIY approach or had entrusted an important project to their relatives, friends or other persons who lacked the relevant and required knowledge and experience, seeking for help after having been excluded from the procedure of non-repayable funds allocation, or they had been subject to ﬁnancial correction during project implementation. Such negative experiences and huge losses can be avoided by engaging top quality and reputable experts. To what extent is the co-financing principle an obstacle for local entrepreneurs? Are there any quality instruments intended to help them provide the required capital? Since entrepreneurs need to have excellent performance indicators in order to be eligible to apply for invitations, and to be able to achieve a maximum number of points during the selection process, we are primarily dealing with large companies without ﬁnancial issues concerning project implementation. A broad range of instruments is available. Moreover, banks have identiﬁed this market and have very adequately adapted their programmes. I
efforts of the entire team in Hrvatske ceste and with great assistance provided by relevant institutions. Implementation is a separate process and it started in June 2016; the public is always interested in construction work and so all our activities assume secondary importance. I expect it will not all proceed smoothly. Nevertheless, we have a good team and have regularly implemented all our plans thus far.
believe there are no serious investment projects in the entrepreneurial sector for which co-ﬁnancing obligation would present an obstacle to investment implementation.
The fact that we have been faced with a shortage of human resources who have been adequately trained for the preparation and application of projects has been constantly addressed. How much assistance has EU Projects Adult Education Institute provided thus far? A shortage of adequately trained human resources concerning the preparation and implementation of projects ﬁnanced through EU and other sources is a major problem in Croatia. This was primarily what prompted me to launch the Adult Education Institute and I believe we have been exerting a signiﬁcant impact both on the system and users. Our attendees work as consultants and they subsequently provide their clients with EU funding. They are hired in governance and control systems and regularly pass the tenders invited by their entities and also regularly participate in UEP Alumni Programme through which they continue their work on project preparation or use our help in the implementation of their projects. I am always delighted to come across our attendees whilst they are working on the preparation and implementation of projects, having been hired by a relevant entity. It is at that point that I normally become aware of the progress they have made. We are in the position to actually change an individual life and career, since this is an area in which there is an extreme staff shortage and so ﬁnding employment is highly likely, yet exploiting the opportunities is still primarily up to the attendees. Those willing to exert effort, energy and time both in learning and practical work do not have to be concerned about their future.
A special problem lies in the fact that fundamental rules regulating all procedures at state level – Common National Rules – have not been published and are being kept concealed from users, without a clear explanation, mainly due to the fact that bodies in governance and control systems frequently refer to the guidance provided by these rules during their communication with the users of non-repayable funding.
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RANKING TOP 10 ENTREPRENEURS BY TOTAL REVENUE
INA, HE TOP RA Total revenue generated by Li by Ilijana Grgić
ccording to data released by the Financial Agency, there were 114,483 entrepreneurs in 2016 who generated €3.24 billion nett proﬁt, a rise of 234.7% over 2011. It should be noted that data for all companies within the Agrokor Group have not been included, since most have not submitted their annual ﬁnancial statement for last year. Total revenue generated by entrepreneurs in Croatia in 2016 was €85.6 billion employing 830,928 staff. It is also important to point out the analysis of entrepreneurs conducted over the monitored decade, from 2007 to 2016, where the list of top 10 entrepreneurs according to total revenue generated, included only Ina, Hrvatska elektroprivreda and Hrvatski Telekom across all years. HEP-Distribution system operator was included in 9 of the10 lists. Ina, a mixed-ownership company, ranked ﬁrst throughout the analysed decade as the highest revenue-generating organisation at an annualised level, notwithstanding the fact that during the same period revenue dropped from €3.24
Top 10 entrepreneurs according to revenue (ranking according to total revenue generated) Company name
INA - Industrija nafte d.d.
Hrvatska elektroprivreda d.o.o.
HEP - Operator distribucijskog sustava d.o.o.
Hrvatski Telekom d.d.
Pliva Hrvatska d.o.o.
Lidl Hrvatska d.o.o. k.d.
Kaufland Hrvatska k.d.
Zagrebački holding d.o.o
OVERALL TOP 10 Source: Fina
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P AND HT IN THE NK FOR A DECADE dl ensures jump of 100 positions – to 7 billion in 2007 to €2.04 billion in 2016. It has to be pointed out that Prirodni plin, which, according to total revenue generated, ranked amongst the highest revenue-generating companies for three consecutive years (2010 and 2011 ranking 5th and in 2012 ranking 4th) merged with Ina in October 2014. Ina generated the highest revenue of €3.79 billion in 2011.
a proportion of its revenue is generated through grants, government assistance and subsidies, whose share in the total revenue generated varied, ranging from 15.5% to 21.4%. HEP-Distribution System Operator (HEP-Operator distribucijskog sustava) also generated revenue from grants, government assistance and subsidies from 2007 to 2013, yet its share of total revenue generated was lower than Zagreb holding, ranging from 4.2% to 5.4%. Pliva Hrvatska, with Ina, was another company involved in processing industry, ranking in the top 10 highestrevenue-generating companies in 2016 and in 2015. Lidl Hrvatska and Kauﬂand Hrvatska were newcomers to the list in 2016. During the same period, total revenue generated by Lidl ensured a jump of 100 positions to 7th. The percentage of the ﬁrst top 10 entrepreneurs according to total revenue generated across this time period ranged between 9.5% in 2016 and 14.7% in 2012 shows the importance of a small number of organisations within the overall results of all enterprises in Croatia.
LIDL AND KAUFLAND NEWCOMERS During the analysed decade, HEP, a state-owned company, ranked 2nd or 3rd according to revenue generated and alternated these positions with Konzum, which was not included on the list for last year since it did not submit its annual ﬁnancial statement. During the same period, HT, another mixed-ownership company, ranked either 4th or 5th according to total revenue generated. Zagreb holding (Zagrebački holding) ranked amongst the top 10 organisations from 2007 to 2016 with the exception of 2014 when it ranked 11th and 2015 (13th). In the case of Zagreb holding it has to be noted that
INA RANKED 1ST THROUGHOUT THE MONITORED DECADE, AS THE HIGHEST REVENUEGENERATING ORGANISATION AT AN ANNUALISED LEVEL
generated in 2016, analysed across the period 2007 to 2016 (amounts expressed in HRK millions) 2016. Rank
Total Rank Total Rank Total Rank Total Rank Total Rank Total Rank Total Rank Total Rank Total Rank Total revenue revenue revenue revenue revenue revenue revenue revenue revenue revenue
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KAMANJE MUNICIPALITY 1,000 INHABITANTS AND 500 JOBS CREATED
A WORTHY BASE FO This small municipality located near Karlovac has been the most successful local government throughout the whole European Union in attracting EU funding. Its development is based on SME’s, in the manufacturing sector by Svetozar Sarkanjac
I €81,000 the municipality budget in 2004
around €2.577million budget for this year
€2.16million earmarked for social projects and other infrastructure
n 2004, after the creation of Kamanje municipality located near Karlovac and near the Slovenian border, its starting budget was a modest €81,000. In 2017 its budget now is almost €2.57 million, of which some €0.5 million is within the initial budget, and almost €2.16 million is intended for projects for social and other infrastructure, mainly those that could be linked with Measure 7 of the Rural Development Programme, such as the construction and furnishing of a kindergarten, renovation and upgrading of a cultural centre and road construction, amongst others. As pointed out by Damir Mateljan, mayor of Kamanje municipality, who has been mayor since its creation, there are currently few local governments in Croatia that are able to ﬁnance large-scale infrastructure projects such as roads, sewage system, water supply, pavements, kindergartens, sports halls, amongst others, exclusively with the resources from their initial budget. Consequently, local governments who aim to seriously consider both the present and future, are focusing on projects and move towards co-ﬁnance or fully ﬁnance such projects through EU funding.
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THE MOST SUCCESSFUL MUNICIPALITY Nevertheless, this is certainly not the ﬁrst instance of EU funds absorption in the region. Almost immediately after its creation, it absorbed almost €1.35 million of EU funds, far higher than anywhere else in Croatia, taking into consideration the number of inhabitants. Funds were used for the redevelopment of the riverbanks, as well as for solar street lighting and the introduction of waste sorting for the whole municipality. Furthermore, the ﬁrst kindergarten was constructed and furnished in the municipal building through a public/ private partnership. During that period, the municipality ranked as the best municipality across the European Union in terms of absorption of pre-accession EU funds per capita. Privredni vjesnik spoke with the mayor concerning these issues and asked him how they managed to achieve such results. “Solely through hard work. If every employed person in this country, irrespective of their occupation– irrespective of whether they are a chimney sweep, a teacher or a professor, a municipal mayor or a politician in general – did their job in a responsible manner, we would certainly not rank near the bottom in the EU
R EU FUNDING based on our performance across almost all economic sectors”, pointed out Mateljan. “Our municipality is small, both in area and numbers. 1,100 inhabitants live in seven locations in an area covering around 20km2. The inhabitants are hardworking with entrepreneurial spirit and consequently around thirty businesses are headquartered here, four of which are large, both in terms of proﬁts generated and the number of employees. SME’s are considered the backbone of our small community. The municipality has created almost 500 jobs, exclusively in manufacturing. Textile, machine engineering, transportation and construction are the most widespread economic areas hiring most of the people employed”, stressed the mayor of Kamanje municipality.
LABOUR SHORTAGE As opposed to most places in Croatia, the businesses operating in the municipality during the past year have been faced
with a labour shortage. In past years, most of the working-age population in the municipality (over 80%) worked in neighbouring Slovenia. A few years ago, that ratio changed completely, since people had used their severance pay, as well as their expertise and experience to establish their own businesses and micro companies. Slovenian companies involved in the same activities (textile, metal processing industry) are currently working to attract Croatian workers using slightly higher salaries. Local businessmen are working to maintain their competitive advantage against the backdrop of the Croatian economic and tax framework. Concerning the average salary, the municipality currently ranks as the best in Karlovac County, on a par with the city itself, with an average nett salary of some €670 per month. Concerning future plans, the mayor pointed out that plans and vision for development were deﬁned back in 2004. The plans have been constantly elabo-
rated and enhanced with new projects. “We are working to be a community in which SME’s are considered the backbone, one that creates jobs leading to higher income. Our objective is to upgrade and improve the existing infrastructure, as well as to construct new social and other infrastructure in order to be on a par with developed EU member states. In addition, we are aiming to develop a tourism infrastructure (climbing, hiking, cycling routes, bathing resorts and an archaeological park), as well as to provide assistance and training for entrepreneurs wishing to become involved in tourism as the second most important ranking area of our development. Moreover, our objective is to have a wellorganised and arranged community able to retain its inhabitants, as well as attract new people, since, in a decade or two, unless the paradigm of demographic policy has been drastically altered, rural Croatia will be completely uninhabited”, he warned.
DAMIR MATELJAN, MAYOR OF KAMANJE MUNICIPALITY
EU funds absorption should be a national priority
When asked whether colleagues from other municipalities or cities had contacted him for advice and whether it was true that the municipality has in absolute terms absorbed more EU funds compared with the city of Karlovac, Mateljan noted: “EU funds absorption should not be considered as a competition or as a league in which local government and other users compete to see who will be the first and who will gain. EU funds absorption needs to be a national priority
encouraged, co-financed, arranged and organised by central government. Networking and co-operation are imperative, as opposed to everyone being stuck in their particular provincial hole, political party or pursuing their own special interests”. “The municipality cannot be compared with a city like Karlovac with over 60,000 inhabitants, which is also the centre of the County, and I do not believe it is true that in absolute terms we have absorbed more EU funds compared with Karlovac. Perhaps this can be true for some specific years depending on EU funds absorption dynamics. Nevertheless, it is a fact that EU funds absorption rate for Karlovac has been unsatisfactory. Projects such as Aquatika (freshwater aquarium) and the grain boat replica project showed that Karlovac has both the potential and human assets and
that it is capable of developing, preparing and implementing high quality projects. Nevertheless, each project needs to be sustainable and integrated into a broader development initiative. EU funding is only a tool, an instrument intended to provide assistance and accelerate the achievement of strategic development goals, whilst the funding is still available, as it may soon not be, or at least not in the level and under such favourable conditions. Nevertheless, a clear strategy needs to be defined in order for one to strive to achieve strategic development goals. Karlovac County and Karlovac itself currently still lack that and so they are considered as a serious obstacle for those who realise, understand and are aware the that future is created solely and exclusively through investment in the future”, concluded Mateljan.
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FOOD PRODUCTS TRADE
DEFICIT STILL HIGH During the first four months of 2017 the import-export ratio was 65%, a slight improvement over the 64% for the same period last year by Krešimis Sočković
D €842 2million of imports during the period January to April 2017
€543 3million the value of goods exported during the same period
uring the period January to April 2017, the value of Croatian imports of agricultural and food products came in at €842 million, with exports at €543 million. When these ﬁgures are compared, during the ﬁrst four months, the import-export ratio was 65%, a slight improvement on the 64% for the same period last year. The comparison between the ﬁrst four months of 2017 and those of 2016 shows that exports were 9% up, and imports increased 7%. The negative balance of trade was almost €300 million, exceeding the same period last year by €13 million. Agricultural and food products within total exports of goods accounted for 13%, and their percentage of total imports stood at 12%.
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EU – THE LARGEST TRADING PARTNER The largest Croatian trading partner for both exports and imports are EU member states. Exports of agricultural and food products to the EU market accounted for 57% of the total value of agricultural and food products (€310 million), with the percentage of imports from
PRIME IMPORTS ARE FRESH PORK, CHOCOLATE, BREAD, PASTRY AND CAKES, AS WELL AS ANIMAL FEED
Import/export of food products in €millions 2000
Import/export of food products in €millions 1000
500 0 IZVOZ
Source: DZS, data processing HGK
Source: DZS, data processing HGK
the EU was 86% of the value of total imports (€725 million). During the ﬁrst four months of
PRIME EXPORTS ARE FRESH FISH, MAINLY TUNA, FOLLOWED BY SUGAR, CHOCOLATE, CORN, SOYBEAN AND MALT EXTRACTS 2017, exports of agricultural and food products to CEFTA, which is still highly signiﬁcant for Croatia, accounted for slightly less than a third of total exports (27%), as opposed to imports of 6%. The main Croatian export markets are currently Slovenia, Italy, Bosnia and Herzegovina, Germany and Serbia, and the prime import markets currently Germany, Hungary, Italy, Slovenia and Holland. According to data provided by the Croatian Bureau of Statistics, meat products account for the largest value of imports (€102 million). In relation to the same period last year, imports of these products were 13% up. The value of imports of milk and dairy products was €64 million during the ﬁrst four months of 2017, and exceeded the value of imports of such products during the same period last year by 25%, as opposed to imports of wheat and starch-based products worth €59 million, which were unchanged compared with
the same period last year. It is also important to note that animal feed imports showed a 4% increase, reaching €58 million, with fruit imports rising 1% to €54 million. Concerning speciﬁc products, fresh pork, chocolate, bread, pastry and cakes, as well as animal feed ﬁgured in the highest share of total imports.
€300 million negative nett trade balance
FISH A PRIME EXPORT According to various categories of goods traded, ﬁsh is a prime export (€67 million) and ﬁsh exports rose 4% over the same period last year. Croatia also exported a variety of food products with a value unchanged over the same period last year (€55 million). It is important to note that wheat exports soared by 24%, or €45 million, and wheat and starch-based products exports rose by 6%, or €43 million. During the ﬁrst four months, the export of alcoholic beverages showed an increase of 9% with a value of €5.5 million. September 2017 | No 272 | PVinternational | 15
Construction of a polar cruise vessel The vessel will be entirely constructed at Brodosplit and will be the first vessel constructed in the LR PC6 class, meeting the latest requirements of Lloyd Register for Polar Class 6 vessels by Jozo Vrdoljak
he processing of steel for Hull 484 (Novogradnja 484) has recently started on a sheetcutting at Shipbuilding Industry Split (Brodograđevna industrija Split). The construction of a polar cruise vessel - a Polar Expedition Passenger Ship, contracted by Polar Expeditions Inc. has just started. Although Brodosplit sources were not willing to disclose the price of the vessel, (a contract was signed at the end of November 2016), its market value is considered to be in the region of €50 million. The entire construction from design to delivery will be by Brodosplit. Interior ﬁt-out of the vessel will also be done by Brodosplit. The polar cruise vessel will be the ﬁrst vessel constructed in the LR PC6 class, and will meet the latest requirements by Lloyd Register for Polar Class 6 vessels. The vessel is 107.6 meters long, 17.6 meters wide; it is equipped with two main engines totalling 4,260 kW, developing a speed of 15 knots. It will accommodate 196 passengers in 85 cabins.
LOCAL DESIGN The design and all technical requirements have been provided by Brodosplit vessel designers who have again pointed out the importance of their role in the positioning of Brodosplit and its high ranking regarding concerning its technical competency and shipbuilding competitiveness. The vessel will be equipped with stabilisers and will be suitable for advanced
THE MAIDEN CRUISE WILL BE IN THE ARCTIC IN MARCH 2019 and innovative research cruises in Arctic and Antarctic waters, as well as being provided with all the required facilities
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and 15 inﬂatables and other requirements to provide passengers the opportunity to fully explore icebergs and enjoy the view of unique ﬂora and fauna from the best perspective The construction work includes not only sheetcutting and the assembly of steel sheets, as such vessels require an higher than normal degree of equipment, but also requiring compliance to the highest shipbuilding standards. This is considered as luxury vessel construction segment in which value added is achieved. The construction of such vessels creates a large number of jobs in supply chain industries. These vessels are built with large quantities of composite materials, aluminium and various accessories. Passengers will be provided with high-level hotel standards, in various cabin categories, ranging from spacious suites to two-room and four-room cabins where they will be provided with safe and comfortable accommodation via multiple safety systems. The maiden cruise will be in the Arctic in March 2019.
BUY CROATIAN 20TH ANNIVERSARY OF THE “BUY CROATIAN” INITIATIVE
PRODUCT PRESENTATION IN ZAGREB Over the last 20 years, the Croatian Chamber of Economy has been constantly working to promote companies, crafts and artisans, cooperatives, associations, family farms and individuals who have made a significant impact on economic development through their committed work, expertise and creativity by Krešimir Sočković
he Croatian Chamber of Economy is inviting all companies, artisans and family farms, as well as associations, co-operatives and handicraft businesses to mark the 20th anniversary of the “Buy Croatian” initiative in Zagreb by participating in the celebration of this important anniversary. The “Buy Croatian” project was launched in 1997, aiming to provide an idea on how to identify, label and endorse high quality Croatian products and thereby have coveted Croatian Quality and Croatian Origin labels. The project has currently expanded into a comprehensive national initiative of wide economic and social importance. Over the last 20 years, the Croatian Chamber of Economy has been constantly working to promote companies, crafts and artisans, co-operatives, associations, family farms and individuals who have made a signiﬁcant impact on economic development through their committed work, expertise and creativity
THE IMPORTANCE OF BUYING CROATIAN This year’s initiative to be held in Zagreb will be a two-day event, highlighting the selected exhibitors.
Key retail representatives, as potential distributors, as well as companies involved in the ﬁnancial sector and other key stakeholders will be joining the initiative. The speciﬁc objective is to raise the awareness of the importance of buying Croatian products which will promote new jobs and preserve existing ones, in addition to enhancing the competitiveness of the Croatian economy. Croatian businesses will be given the opportunity to exhibit their products in the central city square in Zagreb from 9 a.m. to 7 p.m. on 21st and 22nd September. The Croatian Chamber of Economy will yet again this year give its members the opportunity to participate in Buy Croatian initiative free of charge, whilst all other non-member exhibitors (crafts and artisans, family farms, associations, co-operatives and handicraft businesses) are expected to pay a registration fee of €70. The Chamber will provide an exhibition stand for each exhibitor, as well as power, the inscription board and focus on the exhibitor promotion before, during and after the initiative, in addition to advertising provided both through the Buy Croatian website and its Facebook proﬁle and initiative.
CROATIAN BUSINESSES WILL EXHIBIT THEIR PRODUCTS AT BAN JELAČIĆ SQUARE IN ZAGREB FROM 9 a.m. TO 7 p.m. ON 21st AND 22nd SEPTEMBER
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€800 MILLION IN INVESTMENT THIS YEAR AND NEXT Croatia needs to be a destination for tourists in the medium spending level bracket. Investment in quality is imperative if we are aiming to extend the tourist season and attract a wide range of tourists, stressed Capelli, adding that in 2016 over 57% of tourist arrivals and overnight stays were related to four and five-star hotels by Jozo Vrdoljak
the value of private investment, as opposed to €300 million public sector investment
around € million
the value of last year’s tourism investment
ccording to data provided by the Ministry of Tourism, the value of this year’s investment in tourism is slightly above €800 million, which included the opening of some forty new and newly renovated hotels throughout Croatia. Of this amount €500 million was private investment implemented, with public investment making up the additional €300 million. “In addition to last year’s tourism investment of €670 million, the value of tourism investment implemented over the past two years has been in the region of €1.5 billion and this relates to some 100 new and newly renovated hotels in Croatia, primarily of higher category. We are highly delighted with the level of investment aimed at improving the quality of services and tourism programmes, the more so since the focus has been on accommodation capacities with the highest annual occupancy to provide a more vigorous impetus to transforming the tourist season into a yearround process; this is one of the key development challenges”, stressed Gari Cappelli, Tourism Minister. The highest investment this year, of around €75.9 million, was implemented in two luxury summer resorts by Valamar Riviera – the
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four-star category Family Life Bellevue Resort and four and ﬁve-star Valamar Girandella Resort in Rabac. “In addition to being an excellent example of creating high quality new visitor experiences within a destination, this
THE LARGEST INVESTMENT THIS YEAR, WORTH AROUND €76 MILLION, HAS BEEN INTO TWO LUXURY SUMMER RESORTS OWNED BY VALAMAR RIVIERA IN RABAC investment is also highly important in order to provide additional impetus to tourism development locally. These two resorts hire around 630 employees, with 350 accounting for new jobs created in 2017”, noted the
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We are extremely delighted with high level of investment intended to improve the quality of services and tourism programmes provided, primarily since the focus has been on those accommodation capacities with the highest annual occupancy, which will provide a more vigorous impetus to transforming the tourist season into a year-round process, which is one of the key development challenges. Gari Cappelli, Tourism Minister
Minister of Tourism. Furthermore, Cappeli highlighted a tourism project which will be implemented on the island of Hvar through co-operation between Arqaam Capital Investment Bank and the reputable Four Seasons Hotels & Resorts, an international luxury hotel chain. It is a construction project of Resort and Private Residences, a luxury tourist complex, located in Brizenica Bay, valued at almost €0.3 billion; construction is planned to start by the end of this year. 240 accommodation units
RESORT AND PRIVATE RESIDENCES IN BRIZENICA BAY IS WORTH ALMOST €0.13 BILLION are planned with around 800 beds, which includes a 120-room hotel and around 70 luxury villas and apartments which will create around 320 new jobs. In addition to accommodation capacities, the complex will include a wide range of accompanying facilities for rest and relaxation such as swimming pools, a spa and ﬁtness centre, several restaurants, coffee shops, bars and boutiques, as well as conference and banqueting premises.
INVESTMENT IN CONTINENTAL CROATIA “These are examples of both construction of new premises and facilities and renovation of existing ones, which is fundamental. Improvement in the quality of existing hotels is also crucial, since of a total of 1,100 hotels available, medium and lower category hotels account for over half, with over 400 hotels being three-star. Croatia also needs to be a destination intended for tourists in medium spending power level bracket, investment in quality is imperative if we are aiming to extend the tourist season and attract a wide cross-section of tourists. It is important to highlight the fact that in 2016 over 57% of tourist arrivals and overnight stays were seen in four and ﬁve-star hotels, which further conﬁrms that these rank as the accommodation segment characterised by high occupancy and year-round operation”, explained Cappelli. Regarding continental Croatia, Cappelli pointed out his pleasure that a signiﬁcant proportion of investment went
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into health tourism, which has huge potential which has been increasingly recognised by investors. According to the survey on investment planned in 2017 conducted by the Ministry of Tourism, signiﬁcant investment will be implemented in Terme Sveti Martin spa resort and renovation of Regina apartments, as well as the construction of a new four-star hotel in Krapina Spa Resort and the reconstruction of Villa Magdalena Hotel. Moreover, in Stubičke Spa Resort renovation the Matija Gubec Hotel has been planned and the construction of Stubaki, a new hotel and tourist centre, whilst in Jezerčica Terme there are projects for the construction of 66 additional rooms and an additional outdoor swimming pool. In addition, SE-MI Hotel located in Veliko Trgovišće which is a project for the construction of additional premises - a further 30-room hotel, wellness facility and meeting premises, Zagorje wine cellar, a swimming pool and conference hall. Zagreb County will also see signiﬁcant investment including the Royal Airport Hotel reconstruction in Velika Gorica worth€2.4 million, as well as the construction of Garden Hill Hotel also located in
Velika Gorica, whose opening is planned for September 2017. Pakrac will see the opening of the Pakrac Hotel, as well as the renovation of the historically important Kursalon, Wandelbahn and Perivoj in Lipik. “Notwithstanding the fact that the survey on investment planned for 2018 will be conducted in the autumn amongst leading hotel operators, according to current announcements the value of investment to be implemented is expected to be on par with this year’s. Increasing investment annually suggests that Croatia is an attractive investment destination. Construction projects are mainly focused on higher category hotels and enhancing visitor experiences in campsites. This survey did not include strategic investment which also comprises investment in the tourism sector and also excluded hotels that had applied to any public tenders for EU funding”, pointed out Cappelli. The large-scale investment into the construction of the Rovinj-based Park Hotel project with 209 accommodation units is expected to be completed next year. The investment implemented by the Rovinj-based hotel operator Maistra is worth around €81 million.
STRATEGIC PLANNNING Concerning Valamar Riviera, its investment in Rabac is both this year’s largest investment in Croatian tourism and the largest single investment project implemented by the company this year. During the development, Valamar Riviera established two strategic partnerships with major European tour operators TUI and Rewe Group. “The Rabac-based project is the most signiﬁcant aspect of this year’s investment cycle worth a total of €118 million and conﬁrms our long-term focus on raising the level of tourism programmes and the creation of the infrastructure for sustainable growth in this important economic sector. In addition to Rabac, this year we have continued with investment intended to improve the quality and programmes provided in campsites and so invested €13 million in Lanterna Camping Resort and €9.2 million in the Zablaće and Ježevac camping resorts on the island of Krk”, noted Željko Kukurin, President of the Management Board in Valamar Riviera. It has to be noted that during the investment cycle lasting until 2020 Valamar Riviera is planning to invest up to €0.27 billion into their portfolio development, September 2017 | No 272 | PVinternational | 21
The merger between Istraturist Umag and Plava Laguna will result in the establishment of the largest hotel operator in Istria, and consequently its growth and development prospects will also be measured in terms of investment potential, as well as concerning its employment potential and improvement of conditions for the existing employees. Neven Staver, Director of Plava Laguna
working to further improve quality and focus on tourists with a higher purchasing power. Regarding Plava Laguna Resort, according to its Director Neven Staver, the company is aiming to plan and focus on long-term development in accordance with their sustainable business model. “We are moving to focus on strategic planning and decision-making concerning the development guidelines in accordance with the premises we operate and thereby implement it all successfully in accordance with economic principles. Moreover, the plans include the completion of the merger of Istraturist Umag with Plava laguna and consequently the establishment of a potentially more successful hotel operator both at local and national level. The merger will result in the establishment of the largest hotel operator in Istria and consequently its growth and development prospects will thus be measured in terms of investment potential, as well as concerning its employment potential and improvement of conditions for existing employees”, stressed Staver. Zagreb Stock Exchange announced that Erste Mandatory and Voluntary Pension Fund Management Company increased its stake in Sunce Group (Sunce Koncern) to 16%. This suggests further investment by Sunce Group into the hotel sector. It has to be noted that Sunce Group runs the Bluesun hotels and saw the end of last year and the beginning of 2017
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with an investment cycle worth around €27 million at the Adriatic Coast, although it also invests in continental Croatia. “Jadran Hotel in Tučepi will be categorised as a ﬁve-star hotel and will provide 161 rooms. It will be run by TUI. Moreover, the Brelabased Berulia Hotel has been renovated and
INVESTMENT IN HEALTH TOURISM SEGMENT IN CONTINENTAL CROATIA ACCOUNTS FOR A SIGNIFICANT PROPORTION OF INVESTMENT will be a four plus-star hotel with 44 rooms covering an area of around 2,600 m2 of new premises, including a swimming pool and a wide range of facilities such as restaurants and bars, amongst others. Berulia will be run by Sentido by Thomas Cook”, emphasised Jako Andabak, President of the Supervisory Board of Sunce Group.
This group has invested in Tučepi in the Neptun Hotel, signiﬁcantly improving local facilities, and in Alga Hotel where 28 new rooms were developed from management board rooms. It also invested in Alan Hotel in Starigrad Paklenica where a contract has been signed with the British tour operator, Neilson, and has been transformed into a club-hotel. Furthermore, investment has been made in a hotel for workers in Zadvarje and Bol. The value of all these investments on the Adriatic coast currently stands at €27 million. The Group also invested into Bizovačke Spa Resort where the ﬁrst investment phase of swimming pools and a spa treatment centre was completed last year. The second phase includes the renovation of the existing rooms and the campsite and further investment into other attractive facilities.
DEVELOPMENT ON KORCULA – DUBROVNIK AT A STANDSTILL A signiﬁcant investment worth around €10 million has recently been implemented on the island of Korčula to renovate Port 9 which is currently categorised as a four-star unit. The investment was preceded by the entry of Prosperus Fund for Economic Co-operation into the ownership structure of HTP Korčula in April 2014, which formally marked a successful completion of the Pre-Bankruptcy Settlement Agreement of HTP Korčula. HTP Korčula comprises of 6 accommodation units with a total capacity of 632 accommodation units, which accounts for over 90% of hotel accommodation capacities in the city. “We have completed our three-year investment cycle with the upgrade of Liburna
Hotel as well as the upgrade of Korčula De La Ville Hotels and Korkyra Gardens apartments and so Porta 9 currently ranks as a four-star hotel which has provided the groundwork for the development of the complete destination. We are currently planning to invest in the renovation of Park Hotel, but we are going to postpone it until 2019, since it is a highly demanding urban planning project”, highlighted Ivana Hatvalić, President of the Management Board of HTP Korčula. Regrettably, against the backdrop of the dire situation in Agrokor, one of more ambitious investment projects needs to be postponed until the problems have been adequately tackled. We are talking about the investment project in Plat Hotels in Dubrovnik, which, like the Rovinj-based Park Hotel, has been declared a Croatian strategic investment project. The investment should have been implemented this year by Karisma Hotels Adriatic, owned by TUI Group, by Mexican Karisma and Agrokor, which has recently stepped out of the ownership structure. The project concerns the reconstruction of the hotel complex Plat Hotels and its transformation into a four and ﬁve-star hotel resort with a capacity of 600 rooms. Should the plans be successfully implemented, tourism investment is expected to further increase in the immediate future. The number of investors is continuously rising as is the number of attractive projects. What currently appears a major obstacle is certainly the non-professionalism of local contractors and local equipment manufacturers. Most investment managers in hospitality operations will conﬁrm this fact during an informal conversation.
We have completed our three-year investment cycle through the upgrade of Liburna Hotel, as well as the upgrade of Korčula De La Ville Hotels and Korkyra Gardens apartments and so Porta 9 currently ranks as four-star which has provided prerequisites for the development of the entire destination. Ivana Hatvalić, President of the Management Board in HTP Korčula
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EXPORTING SERVICES AND SOLUTIONS
CROATIAN SOFTWARE ON FIVE CONTINENTS Cinnamon develops digital solutions for web and mobile platforms – from market research, to prototype development, the writing of technical specifications, design, implementation and development to solution provision by Boris Odorčić n tive of the fact that we have not operated on the domestic market so far, our plans for the forthcoming 12 months include business de-
CINNAMON EXPORTS 100% OF ITS SERVICES AND SOLUTIONS TO CLIENTS IN 14 COUNTRIES GLOBALLY
Our employees and clients are crucial to us, and if we manage to maintain successful relationships with both, we will not have to rely on the state or banks, at least not in the near future.
Ivan Kovač, founder and Director of Cinnamon
ustom software development, as well as the development of their own products is the core activity for Cinnamon. The company began under its current form some two and a half years ago when it provided only Android app development services. It is currently involved in the development of comprehensive digital solutions for web and mobile platforms - from market research, to prototype development, writing of technical speciﬁcations, design, implementation and development to solution provision and accompanying activities. Ivan Kovač, founder and Director of Cinnamon, stated that the company currently has 15 employees and are currently planning further growth at a sustainable pace, or, ensuring that an increase in the volume of work does not adversely affect the quality. It is important to note that Cinnamon exports 100% of its services and solutions to clients in 14 countries throughout the world. “Our clients are small to medium-sized businesses in search of new software solutions that work to improve their performance, or start-ups that have been given investment and are creating software solutions aiming to expand to the local or global market. Irrespec-
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velopment in Croatia and the region. We have already taken some concrete steps and are involved in negotiations on the sale of Unimod Collect, a meter reading software solution”, he stressed. It has to be pointed out that Cinnamon developed a mobile app called Unimod Collect for VOLAG System AG. The app reads smart meters using Bluetooth technology. VOLAG System AG is a leading Swiss company involved in the development of solutions for remote data collection and analysis. The software provided by the Zagreb-based company is used for reading some 2.2 million meters in Switzerland. Irrespective of the fact that the app has been developed for the Swiss market, Kovač believes that such solutions will soon ﬁnd their way towards wider use in Croatia.
A MODEL EMPLOYER Soon after the completion of his studies, the Director of Cinnamon was employed in Sony in Sweden. There, he worked on software development for the latest models of Sony mobile phones (Xperia product line) and he had the opportunity to gain an insight into software development at the highest level. After one year he refused an offer to extend
his contract and decided to return to Croatia and use the skills acquired for the development of his own business. “I was joined by Mateja Bartolović and Mladen Šimić who I had known since my student days. Task diversiﬁcation has led to a gradual increase in the volume of work and our entering new markets and establishing new business relationships”, remembered Kovač, adding that the company has been increasingly identiﬁed on the labour market as a model employer and as a place where one can gain extensive new knowledge and acquire and develop their skills. “We are delighted with this and we are planning to go further down this path”, he noted. The company is moving to reduce its relationship with the state and banks to the required minimum. It regularly settles all liabilities and has no lending; it simply does not consider issues it cannot directly change, such as mandatory contributions or excessive bureaucracy. “Being primarily and exclusively focused on our business operations, we are absolutely convinced that our growth potential is entirely in our hands. Our employees and clients are crucial to us and if we manage to maintain successful relationships with both, we will not have to rely on the state or banks, at least not in the near future”, he emphasised.
Biljana Cerin, Croatian member of the Management Board Biljana Cerin, Director of the Croatian company Ostendo Consulting, has recently been selected as one of four new members of the Management Board of the world’s leading cybersecurity organisation (ISC)². This organisation determines global cybersecurity standards with over 125,000 certiﬁed experts, and this is the ﬁrst time a Croatian expert has been selected as a member of the Management Board. David Shearer, Chief Executive Officer at (ISC)², stated that the four newly appointed Management Board members will be joining the other directors, who are all high-quality Internet, IT, software and infrastructure security experts, as
well as representatives of academic community, private organisations and international government agencies, in order to jointly deﬁne the strategic guidelines of this organisation. In addition to Biljana Cerin, the newly appointed members are Tony Cole, Earl Crane and Tiffany Jones. Biljana Cerin graduated from the Faculty of Electrical Engineering and Computing and ﬁrst became involved in information security some ﬁfteen years ago. She specialised in systemic risk management in information security and regulatory compliance. She is currently focused on the area of personal data protection and harmonisation with the GDPR regulation. (B.O.)
KNOWLEDGE ACCUMULATION On the other hand, Kovač added, they are faced with severe competition on the market. “I believe all Croatian companies that are searching for a highly qualiﬁed staff are faced with the problem of labour emigration and the inability to keep abreast with job offers abroad due to purely ﬁnancial issues. Nevertheless, one can make a decent living even in Croatia due to the fact that salaries in the IT sector are considerably high and thus most people still opt to remain. We are certainly fully aware that labour and workforce mobility is also our greatest advantage in our business operations, since it is primarily for this reason that we can exclusively focus on international markets”, he stressed. The company is planning to further develop in the area in which it has already achieved signiﬁcant results, that is in design and custom software development. “We, as an agency, are working to accumulate knowledge to the maximum and successfully perform each task assigned. We are currently not planning to enter any new markets, with the exception of the local market, as we are aiming to deeply penetrate our existing markets, primarily Switzerland, the US, the United Arab Emirates and Sweden”, concluded Ivan Kovač.
€146,000 raised on Funderbeam At the end of June, Aspida launched a campaign on Funderbeam, starting with an initial objective of raising €100,000. This amount was exceeded soon after the launch of the campaign, as confirmed by sources at Aspida. During a one-month period, 99 investors, half of whom were foreign, invested in the Croatian start-up in which they had identified their huge potential for global expansion. “That was primarily the reason why we were raising funds, as we were moving to exit the Croatian market, as well as neighbouring countries’ markets and penetrate a larger market, since we believe that both our products, Izzy keyboard and TVizzy broadcaster have potential at a global level”, noted Marin Erceg, Director and founder of Aspida. The leading investor in Funderbeam is Jadran Kapital, which had also previously invested in Aspida and provided it
with initial funding in 2015, making it possible for the company to move on from the idea towards the programming of Izzy app. Funderbeam has provided a large number of small-scale investors and individuals with the opportunity to invest amounts from €100 and hence individual investors ranked immediately after Jadran Kapital according to the amount invested – an investor from Croatia with €15,000 and another from Germany with €13,000. Funderbeam is a fundraising platform where investors are given the opportunity to trade in their stakes immediately after the phase of initial investment, due to a system based on bitcoin technology. (B.O.)
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INSTITUTE OF ECONOMICS ZAGREB
Revenue of €126 million generated by GAME OF THRONES During the period from 2012 to 2015, the Dubrovnik-Neretva County saw an increase of 244,415 in tourist arrivals due to the filming of Game of Thrones, resulting in a rise in overnight stays of almost 1.5 million
son. Dubrovnik was selected as a location for King’s Landing, a ﬁctional city and the capital of the Seven Kingdoms, which frequently appears in the series. A deep and extremely well-preserved Dubrovnik cultural and architectural heritage was perfect to provide the medieval context of the series and as a result, footage of Dubrovnik City Walls,
esearchers at the Institute of Economics, Zagreb have recently published their ﬁndings in the scientiﬁc journal for tourism International Journal of Tourism Research covering their research study The Effects of Film Industry on Tourism: Game of Thrones and Dubrovnik in which they assessed the effects of the ﬁlming on tourism in the DubrovnikNeretva County. The evaluation of the results obtained through the methods for assessing treatment effects, suggest that the ﬁlming of the series Game of Thrones in Dubrovnik had an extremely positive impact on tourism. According to the results and evaluation conducted during the period 2012 to 2015, an annual increase in tourist arrivals of 60,000 was identiﬁed in Dubrovnik-Neretva County primarily due to the ﬁlming of the series. Throughout the entire period analysed, Dubrovnik-Neretva County saw an increase of 244,415 in tourist arriv-
als due to the ﬁlming, achieving a rise in overnight stays of almost 1.5 million (that is, an increase in overnight stays of 1,441,395). During this period, spent a total of €126 million.
INCREASED DISTINCTIVENESS OF DUBROVNIK The scientists from the Institute of Economics, Zagreb also discovered that the ﬁlming also led to positive tourism results in other counties, yet the spill-over effect to other counties was not analysed in the published study. Filming in Dubrovnik of one of the most popular series throughout the world began in 2011 during the second s e a -
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THE FILMING IN DUBROVNIK OF ONE OF THE MOST POPULAR SERIES GLOBALLY BEGAN IN 2011 DURING THE SECOND SEASON Lovrijenac and Lokrum, frequently appear in the series. This footage has made a strong impression on viewers, increasing the global distinctiveness of Dubrovnik and boosting tourist numbers in that city. (V.A.)