Growth of Optimism Among Foreign Companies in Croatia?

Doing business in Croatia in 2018 was rated as better by 72 percent of companies who partook in AmCham's research on the development of Croatia's business climate, a jump in comparison to just one year earlier, in which that figure stood at 65 percent. It appears that the image of doing business in Croatia is gradually improving in the eyes of the foreign business community and their companies.

As Poslovni Dnevnik/Darko Bicak writes on the 7th of March, 2019, the international business community is visibly more optimistic about the development of the business climate in the Republic of Croatia, yet the main challenge continues to be the difficulty in finding skilled labour and the functioning of the legal state, as was reflected in the results of an analysis of the American Chamber of Commerce in Croatia - AmCham. The aforementioned results were presented to the public on the 6th of March.

This is a relatively reliable sample because AmCham brings together 230 mostly very successful companies employing nearly 80,000 workers in Croatia alone. While this analysis is similar to that which was conduced by Croatian professional associations or foreign chambers and consultants, the specificity of AmCham's research is that American companies are mostly more global and more inclined to export markets than the Croatian average, and in that same scope, AmCham compares Croatia with countries in its ''region'' which covers a much wider geographic area than what is commonly referred to as "the region" in Croatian terms.

As explained by Andrea Doko Jelušić, the executive director of AmCham, every American, international, and ultimately Croatian company has its own definition of what the ''region'' actually refers to, and in AmCham's case it most often includes, along with the Adria region, central and eastern European countries such as Poland, Czech Republic, Hungary, Romania, and Bulgaria.

However, 130 members of the management of American, international and Croatian companies who partook in the AmCham research have reported a 72 percent increase in performance in 2018, compared to the previous year, during which it stood at a significantly lower 65 percent. At the same time, as many as 60 percent of them have increased their number of employees, which is more than encouraging.

As far as the business environment in Croatia over the last five years stands, respondents have assessed the main constraining factor in business to be lack of an adequate workforce, an unstable regulatory framework, and tax. The worst deterioration in the last five years is linked to the availability and the quality of the workforce, as well as the ''relaxed'' implementation of legal rules and procedures.

"The lack of an adequate workforce has appeared as a significant problem for the Croatian economy last year, and this year's survey rates it as the biggest obstacle to business in Croatia. At the same time, this is the area in which the worst deterioration has been seen," stated Andrea Doko Jelušić. On the other hand, the biggest improvements are visible in terms of financing, the demand for goods and services, and trading opportunities.

As many as 76 percent of the research's respondents see the impact of state administration on the business environment as either negative or to no particular effect, which, compared with last year, represents a 10 percent decrease. Most of AmCham's members, of which there are 68, also operate in other Central and Eastern European countries (SIEs), of which 65 percent operate in more than five countries in the region.

Only eight percent believe that the business conditions in Croatia are better than those in other SIE countries, while 45 percent believe that conditions in Croatia are worse than they are in other countries.

The biggest disadvantages of Croatia in relation to other countries relate to the small market and in the same threshold, the slow administration and the absence of a long-term government strategy. The main advantages Croatia boasts according to the respondents are the general advantages of the country's membership of the European Union, the tourism potential of the country, and its handy geostrategic position.

In the upcoming three year period, 81 percent of AmChama members are planning to expand their operations in Croatia, and 75 percent of them are planning on opening up new jobs.

Out of the total number of surveyed, as many as a quarter of them are planning to employ more than twenty new employees. On the other hand, seven percent of these companies expect to reduce the number of existing employees over the next three years.

The introduction of the euro into Croatia is seen as welcome by as many as 91 percent of AmCham's entrepreneurs who say it would have either a positive or neutral impact on their business. In last year's survey, 49 percent of respondents emphasised the possibility of using EU funds as the third major positive impact of Croatia's EU membership. However, just 11 percent of the companies involved stated that they were beneficiaries of EU funds that at the time of the conduction of this research.

Among the respondents, the greatest interest appears to lie in obtaining money from EU funds for projects in the field of Information Communication Technology (ICT), 36 percent, and for production projects, or 17 percent, along with related production facilities.

"The optimism of the business community in Croatia continues to be visible from the results of the survey this year," commented Berislav Horvat, Chairman of AmCham's Council of Managers.

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Click here for the original article by Darko Bicak for Poslovni Dnevnik