Croatian Towns Fighting to Attract Investors

By 10 February 2016

How to attract investment to Croatian towns?

CWS-Boco Group from Germany has recently opened a plant in Čakovec in which it has invested 12 million euros and has immediately created 80 new jobs. Director of its subsidiary in Croatia and Slovenia Senko Judin said that they were choosing between Varaždin and Čakovec, but that they had decided to come to Međimurje due to more favourable conditions offered, reports Vecernji List on February 10, 2016.

Many Croatian towns are trying to attract investors and fill their municipal budgets with the revenues from the sale of land and opening of new jobs. Some are even giving up millions just so that investors would choose them. Varaždin Mayor Goran Habuš yesterday unveiled a package of measures to stimulate the economy, and his main goal is to fill up the Brezje Business Zone. Greenfield investments will be stimulated by the reduction of land prices by 30 to 80 percent, depending on the value of investment and the number of new jobs. The city will also reduce the municipal contribution by 30 percent. So-called brown-field investments will also be subsidized. A large number of cities and municipalities are offering similar conditions, and investors are becoming more interested in the issues of availability of labour and transport links.

"There is no universal formula how to attract investments, you need a whole set of incentives", says Stjepan Ribić, director of the Regional Development Agency of Slavonia and Baranja, who warns that the division of Croatia into two statistical regions, Continental and Adriatic, is bad because it leads to an unfair division of state and EU incentives according to their respective levels of development. He says that entrepreneurs are interested in public utility infrastructure, availability of electricity, water and gas supply, as well as the skilled labour force which will not leave the area. Varaždin hopes to attract companies that will employ its highly-educated citizens. "Interest of investors is largely defined by the local labour market. Our desire is to attract highly profitable industries which offer higher salaries", says Habuš.

Čakovec is also offering lower utility contributions and fees, and various other incentives for opening new jobs in manufacturing facilities. "CWS-Boco has bought the land owned by the county for a relatively favourable price. It also got a discount on municipal contribution given the number of new jobs created", says David Vugrinec from the local city authority.

In Ivanec, investors in the business zone are exempted from paying utility contributions, fees for connecting to the utility infrastructure and they also do not have to pay certain company taxes during a five-year period. The city of Karlovac does not charge municipal contribution to new businesses, while Đurđevac recently decided to free meat processing companies from paying utility contributions and fees in the amount of one and a half million kuna. Everything is being done for much-needed new jobs to be created.