Wednesday, 23 June 2021

IMF: Generous EU Funds Offer Croatia Historic Opportunity

ZAGREB, 23 June, 2021 - Despite the considerable setback dealt by the pandemic, Croatia has a rare opportunity in the next five years to restore its economy to health and to ramp up the public investments necessary for appreciably higher growth rates with the help of EU funds, an IMF mission says in a Concluding Statement.

"Following a painful contraction of 8 percent in 2020, the economy looks set for growth between 5 and 6 percent in 2021 driven by a rebound in the services sector and investment - provided the pandemic does not provide further unwelcome surprises," the mission says the statement published on Wednesday after visiting Croatia as part of regular consultations with member states.

"With sufficient luck regarding tourism outcomes, and a successful vaccination drive within the next months, growth could even exceed 6 percent this year. Assuming the pandemic fades by the end of this year, growth could remain high over the next few years, if the country makes full and timely use of the potentially sizable forthcoming inflow of EU funds," according to the statement.

"Since the first quarter, the recovery has picked up noticeably with areas like construction and manufacturing already reaching activity levels higher than in 2019. Overall, the number of registered unemployed persons has fallen by nearly 13 percent since a year ago. However, tourism and directly related sectors are yet to fully recover. This process is likely to take another year or two."

Swift measures by the authorities

"Between the pandemic and two large earthquakes, Croatia has been severely tested, and the country’s resilience has come through. The economic contraction in 2020 - painful as it has been -was not as severe as those experienced by many other economies with a strong tourism component. This is mainly due to the swift measures enacted by the authorities," the IMF staff said.

"Support measures must remain in place until the health of the population and the economy have been fully restored. As conditions improve, support measures need to rotate toward preparing the workforce for the post-pandemic world, and facilitating balance sheet repair of viable businesses. Thereafter, the challenge of once again reducing deficits and the public debt whilst shifting growth into a new high gear must be taken on. The generous funding from the EU represents a historic opportunity, to help meet these challenges successfully - an opportunity that must be fully utilized, in a timely fashion," the IMF mission said.

Not the right time to further cut taxes

Noting the government's support measures, the mission said, "Just as these support measures were essential during the worst of the crisis, they must now be better targeted to lagging sectors of the economy - and they must remain in place till the economy has more fully recovered."

"It is paramount that a vaccination drive be as successful and widespread as possible, that extra healthcare costs are fully met and arrears in the healthcare system are reduced to the maximum possible extent," according to the statement.

"Complementing the use of funds such as the European Social Fund, fiscal resources saved this year due to improving conditions can also be usefully redeployed to train more workers in sectors like greening and digitalization."

"In sum, in the view of IMF staff, the most important fiscal goal in 2021 is to focus on spending available resources wisely to restore the economy to health. If this is successfully accomplished this year, it will more firmly ground the efforts to reduce the deficit and debt over the next few years," said staff said in the Concluding Statement.

"Regarding revenues, the authorities need to conserve all available resources to meet any unexpected expenditures into 2022, and well beyond. This is one clear lesson from this completely unforeseen shock the world has suffered. We hold that this is not the right time for any further tax cuts or weakening of the tax base. Current conditions are still far too fragile for the country to afford them," they said. 

Recovery and Resilience Fund provides unique opportunity for economic development

They said that there were few doubts that a post-pandemic "will be more digitalized in the most basic aspects of our lives, and that it should be greener. In these two areas, Croatia has great strides to take, from which there will be a sizable return on investment, for decades to come."

The IMF reiterated that "our most important recommendation was to raise public investment, for the sake of future growth. Now, that conviction has only deepened, as it is important to acknowledge a singular aspect in which Croatia is actually better off than it was before the pandemic."

That is "the generous allocation of EU Funds, including from the Recovery and Resilience Fund (RRF). The RRF resources amount to 10.6 percent of GDP in grants to be utilized by 2026."

"These funds reflect a truly unique opportunity along the path of economic development, which many countries in the world are not fortunate enough to have. It is important for all stakeholders in Croatia to fully understand the significance of this opportunity. These funds are available, but they need to be absorbed efficiently, and in a timely manner. They must also be accompanied by needed reforms," the IMF said.

"Thanks to the influx of these EU funds beginning towards the end of this year, Croatia can significantly upgrade its public capital stock, decarbonize its economy, catch up with digitalization, and improve its maritime and rail transport systems. If the projected investments go according to plan, we currently assess that the funds from the RRF alone could add as much as 2.9 percentage points to real GDP over the next twenty years."

Opportunity to reduce income gap in relation to EU

"When the effects of the planned reforms, as well as the other EU structural funds are put together, Croatia now has its best chance since independence to significantly narrow the current 35% gap in per capita income with respect to the EU average," the mission said.

It added that "the prospect of living in a vibrant society with prosperity rapidly converging to EU levels could cause the young to fundamentally re-evaluate their future, thereby further stemming the tide of outward migration. That, in turn, would have the positive effect of reducing risks to the sustainability of the healthcare and pensions systems. It is very much possible now, and unlike ever before, to start a virtuous cycle - and to definitively escape past vicious circles."

The authorities have requested a Public Investment Management Assessment from the IMF, to take place in August 2021, the statement noted. "This assessment will help prepare an action plan to help make sure investment spending is effective, is sensitive to climate change related considerations and supports sustainable long-term growth."

The authorities’ National Recovery and Resilience Plan "has laid out major complementary reform commitments across five components: green and digital economy, public administration and judiciary, education, science and research, labor market and social protection, and healthcare. These are essential for the flexibility Croatia needs to operate its economy smoothly, once inside the eurozone."

Reforms needed for stronger public finance

Within the reform areas where the strength of public finances is the focus, IMF staff re-emphasizes the importance of support, from all stakeholders, for civil service and administrative reforms, "including a modernization of the public salary system, as well as improving the territorial organization of sub-national governments."

Support is also called for ending "stop-gap measures to take care of healthcare arrears, through an overhaul of its cost structure" and "exploring a more sustainable revenue base, to preserve healthcare quality standards."

The IMF also recommends the development and implementation of a full-fledged strategy for state-owned enterprises (SOEs), "including the separation of core from non-core businesses, and a strengthened oversight system for the former to ensure that they contribute their fair share to the budget by remaining financially durable after their public service obligations are met. The authorities’ commitments to sell some non-core SOEs over the next few years is a promising start." 

Also recommended is ensuring the long-term sustainability of the pension system, given population aging.

In addition to these areas, constantly improving the competitiveness of the Croatian economy through active dialogue with the private sector, remains essential.

"For the forthcoming increase in public investment to have maximum effect on the economy’s growth rate, it must be complemented by increases in private investment, as well. Reforms to the framework of debt restructuring, insolvency, and efforts to further improve predictability and efficiency in legal procedures remain central to unlocking more resources from investors, as it allows them to invest with greater confidence."

Banking system liquid and sufficiently capitalized

"Monetary policy remains highly expansionary, within the exchange rate anchor in place since 1993. This stance is appropriate given the need to nurse the economy fully back to health," the IMF staff said.

The recent pick-up in inflation is more likely than not to be transitory in nature, but should inflationary pressures prove more persistent than in the euro area, the central bank "may consider reducing excess liquidity in the banking system, while maintaining exchange rate stability."

"The banking system has remained liquid and is on average well capitalized," the mission said, adding that there was more than enough money to meet the demand for corporate loans.

Housing lending remains strong, while uninsured household cash loans have decreased, which the IMF said was positive.

Although the ratio of non-performing loans to total loans has remained stable, the so-called stage II loans, a forward-looking indicator of future asset quality problems, has risen - particularly for non-financial corporations. This development warrants continued close monitoring."

"The pandemic has not affected the upward trend in house prices in Zagreb and coastal areas. To the extent that housing purchases are not driven by excessive household borrowing, they do not constitute an immediate financial stability risk," the IMF said.

However, this also requires continued monitoring by the central bank, If circumstances require it, the central bank "might wish to consider putting in place more formal macro-prudential measures (than the current implicit debt-service-to-income ratio included in the Foreclosure Act)."

"Despite the considerable setback dealt by the pandemic, Croatia has a rare opportunity, over the next five years, to restore its people and economy to health. It can ramp up the public investments necessary for appreciably higher growth rates, with the help of EU funds. Such opportunities should not be taken for granted. The onus of efforts is not exclusively on the authorities. All stakeholders in society must offer them the support for vital reforms, while doing their parts to re-energize private investment, and innovation. Adopting the euro will help remove some existing economic frictions by removing exchange rate risk. Yet, reaping the full benefits of the currency union requires strong focus and preparation. A brighter future is very much within reach. The time to act is now," according to the Concluding Statement.

For more about business in Croatia, follow TCN's dedicated page.

 

Wednesday, 23 June 2021

Zagreb Stock Exchange Indices Increase

ZAGREB, 23 June, 2021 - The main Zagreb Stock Exchange (ZSE) indices went up on Wednesday, the Crobex by 0.37% to 1,988.49 points and the Crobex 10 by 0.05% to 1,220.39 points.

Regular turnover amounted to just HRK 3.3 million or about HRK 400,000 less than on Monday.

An additional HRK 29 million was generated in block trading with HT telecom's stock at HRK 185 per share.

The HT telecom's stock also generated the highest turnover, of HRK 687,400, in the regular session, closing at HRK 184 per share.

(€1 = HRK 7.493222)

For more about business in Croatia, follow TCN's dedicated page.

Wednesday, 23 June 2021

Total Household Loans Reach HRK 137.5 Bn in April

ZAGREB, 23 June, 2021 - Total household loans in Croatia reached HRK 137.5 billion at the end of April 2021, increasing by HRK 3.6 billion from April 2020, Raiffeisen Bank (RBA) said in its recent analysis of data provided by the Croatian National Bank (HNB).

The annual nominal household loan growth rate was 2.7%, picking up from 1.6% in March 2021.

The share of kuna-denominated loans in total loans was 55%, and the nominal amount of loans was affected by the euro-kuna exchange rate, which was 0.4% lower on an annual level and 0.1% lower on a monthly level.

Compared with December 2020, household credit claims in April 2021 increased by 1% or HRK 1.35 billion as a result of a rise in the nominal value of housing loans and the impact of housing subsidy schemes on them.

Housing loans accounted for 46.4% of total household loans, reaching HRK 63.8 billion, up by 1.61 billion from the end of 2020. The annual growth rate picked up from 8.3% in March to 9% in April.

On the other hand, general-purpose cash loans, despite a slight monthly rise of 0.2% to HRK 52.5 billion, were 1.4% lower than in April 2020, while increasing by 0.5% compared with the end of 2020.

RBA analysts expect that the rise in household loans will continue this year on the back of subsidised housing loans and the need for funding for the reconstruction of housing damaged in last year's earthquakes.

With the easing of COVID-19 restrictions and the acceleration of economic activity, there will be an increase in demand for cash loans, but this year it will be more modest than two-digit growth rates seen between mid-2018 and the outbreak of the coronavirus pandemic, RBA said.

(€1 = HRK 7.5)

For more about business in Croatia, follow TCN's dedicated page.

Wednesday, 16 June 2021

Friends of Croatia: Japanese Embassy - Friendly Relations between Croatia and Japan

June 17, 2021 -The eighth article in the series, "Friends of Croatia: Japanese Embassy", saw TCN reporter Ivor Kruljac sit down with Japanese Ambassador Misako Kaji and discuss all things regarding diplomatic relations between Japan and Croatia. Overall, Croatia and Japan are friendly countries with many shared values. With Croats and their expertise in improvisation and the excellent crisis response of the Japanese, the two countries can benefit greatly by learning from each other.

Croatia and Japan officially established diplomatic relations on March the 5th, 1993.

I was nervous while the taxi drove me to the Ambassador's residence. Japan is known for punctuality, and I worried whether or not I'd manage to make it on time as my cab was trying to break through Zagreb's midday rush. But in the end, I managed to arrive ahead of schedule. It was great that I wasn't late, but that's still clearly a very far cry from the punctuality of a country where a train conductor apologised when the train left the station 25 seconds ahead of schedule.

As I was rewinding the questions I had prepared in my head, I thought about greeting my interlocutor-to-be. Handshakes are a bit of a risky thing due to the coronavirus pandemic, but even if that annoying virus was somehow erased from existence, in Japanese culture, people would still greet each other by bowing. Do I need to bow, or does the Ambassador need to follow the Croatian culture of handshaking (or perhaps bumping fists in these pandemic-dominated times)?

Cultural Attache, Yutaro Nishida welcomed me to the premises, and at last, introduced me to the Japanese Ambassador Misako Kaji, who welcomed me with a smile, respect, and kindness. The debate on whether to bow or fist-bump was resolved by doing both, with both sides respecting and accepting each-others cultural background. For safety, I kept my mask on while the Ambassador removed hers so that her voice could be more clear as the interview was recorded. I moved my mask only occasionally to drink the amazing traditional green tea that was served during the interview, which was paired well with a warm and friendly atmosphere from the official representative of Japan in Croatia.

Misako Kaji graduated with a BA in the economy at the University of Tokyo, followed by an MA in philosophy, politics, and economy at no less than Oxford University. Inside the Japanese Ministry of Foreign Affairs, she served in the Japanese Embassies in the UK and Vietnam, but also in Japanese EU and UN missions. As an Ambassador and deputy of the main representative, Kaji also served in Japan's Delegation to international organisations in Geneva. In Japan, she was the deputy spokesperson for the Japanese Prime Minister and was a professor at the Tokyo and Hitotsubashi Universities. Ambassador Kaji also has quite some experience with the United Nations (UN). She was a special advisor of the high committee of the UN Refugee Agency (UNHCR) as well as a member of the UN Advisory Committee on Administrative and Budgetary Questions and a member of the advisory committee of the UN Peacebuilding Fund. She has represented Japan in Croatia since May 2019. Two years and twenty days, as she stated on the day of the interview that occurred last Friday.

Japanese culture is beloved in Croatia

''If you'd asked me a year ago, I would've said the Adriatic sea, the scenery, and the colour blue, all of these wonderful UNESCO heritage sites and nice people ready to help when you're travelling,'' started Ambassador Kaji, explaining what she had found most interesting and impressive in Croatia.

''But, after two years, I have something more to say, and what I like about Croatia is the 'Japan' I encounter in Croatia, and that is a very positive discovery. I didn't realise Japanese culture was so widely embodied in a variety of Croatian minds,'' noted ambassador Kaji.

The most recent instance was last week's handover ceremony of the Foreign Minister's Commendation to the Croatian Origami Society, which took place at the Ambassador's residence. Some of the members have been engaged with this artistic papercraft (taught in Japanese kindergarten) for over 20 years now.

''They are very much interested and dedicated without being imposed or forced to be, and its members included chemistry students, medical doctors, and even an 11-year-old boy. There were so many different categories of profession, and some even folded Origami while on probation, and that is where they'd encountered the art of origami,'' continued the Ambassador, fascinated with such love for one of the essentials of Japanese culture, keeping hold of plenty of works donated by participants of the ceremony.

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The handover ceremony of the Foreign Minister's Commendation to the Croatian Origami Society, June 2021 © Japanese Embassy Croatia

She is also particularly delighted with Biograd na Moru, a Croatian city in the Zadar area that not only commemorates the Atom Bomb falling on Hiroshima and Nagasaki but also has a metal crane bird as a monument to this dreadful tragedy that occurred on August the 6th, 1945.

''There is a legend that cranes live for a thousand years, so they are often used as presents for somebody who has been met with disasters or illness. In Hiroshima, they have a thousand cranes (made in the origami technique) folded and presented for the wish of peace,'' explained the Ambassador. Such a ceremony was also seen in Biograd na Moru, initiated by mayor Ivan Knez with a large metal crane made to outlast paper for generations to come.

The Japanese martial art of Karate is also popular in Croatia with some quite good successes achieved by Croatian athletes. Last month, the European Karate Championships were held in Poreč, where Ambassador Kaji was invited and was again fascinated with the use of the Japanese language and overall traditions despite there not having been a single Japanese athlete present there.

With so much of Japanese culture being present here in Croatia, it's difficult to say what the most beloved aspect of Japanese culture is for the Croats.

Before the pandemic struck, Ambassador Kaji remembered the Japan Day event in Zagreb's popular Mimara Museum, which saw huge attendance and a presentation on Japanese food, sake (Japanese rice schnapps) degustation, Ikebana (flower art), a tea ceremony, bonsai (aesthetical horticultural shaping of small trees), martial arts such as Karate, Judo, Kendo, haiku poetry workshops, calligraphy, Igo chess and much more.

2019 was also a big year for a Japanese promotion with the 2020 Olympic Games, which saw Croatian athletes from the 1964 Olympics attend the promotion for 2020. Additionally, for Japan, as Ambassador Kaji pointed out, the Paralympic Games are an important measure for the general success of the Olympics, which was evident in the ParaBOX installation (where visitors were challenged to find a ball in complete darkness), and the presentation of the Japanese car company Toyota's car which is designed to be able to be driven by people with disabilities.

However, when it comes to younger people, particularly students of Japanology (which Croats can study at either Zagreb or Pula University), one cultural trend emerged.

''The Japanese language is very tricky to learn, so I asked one graduate student how she first encountered Japan and heard the language, and it was anime,'' Ambassador Kaji recalled. She added that the Japanese cartoon art of anime became pretty universal and is no longer limited only to Japan. (The same goes for Japanese comics such as manga, with both of these pieces of pop culture being incredibly diverse in genres and having something for everyone, covering all social groups and even not avoiding vivid graphic images of violence and/or sex).

''At the Foreign Ministry of Japan, we have an award from a world competition because of the promotion of manga, but without trying to focus or push deliberate energy into that promotion,'' stated Ambassador Kaji.

As Japanese pop culture, anime and manga are indeed very popular here in Croatia, which is visible at the Pandakon conference that is held annually at Zagreb's Močvara club. Fans often dress up as their favourite characters, and there are often rewards for the best cosplay.

However, there are also heated debates between fans and people in the manga/anime industry that also affect Croats. On the one hand, representatives of the anime and manga industry are unhappy with cosplay, viewing it as a copyright infringement and believing that fans should be paying for cosplaying these characters. On the other hand, fans say they are just trying to show love and appreciation for their work, and they are also promoting and attract new audiences. It's indeed true that someone might not know what is ''Deadman Wonderland'', but upon seeing a brilliantly crafted cosplay of Shiro, they may ask the cosplayer about the character and then watch anime or read manga.

Ambassador Kaji says the Japanese Government is aware of the problem.

''Earlier in January, the Minister for the "Cool Japan“ Strategy (with Cool Japan being a brand strategy, aiming to disseminate Japan's attractiveness and as a unique culture throughout the world), Shinji Inoue said that he was aware of an opinion among the cosplay community rising, and this could be a real legal problem. It was important to secure an environment in which people can enjoy cosplay at ease, without worrying about possibly breaching laws. So, the Minister declared that he would come up with ways to deal with it but has not yet specified what those ways will be,'' explained the Ambassador. 

Friendly Nations: sharing values, but trade could be better...

The cosplay question is one of the political issues in Japan, but when it comes to politics, what exactly is going on between Croatia and Japan?

''We're friendly countries; we share the same values. Unfortunately, you can't speak your own mind in every country, but Croatia and Japan belong to those countries where you're free to have as many children as you want, free to say what you like, free to travel where you want, free to choose your own vocation. In other words, we're both free countries that share the same values, democracy, human rights, and rule of law,'' said Ambassador Kaji, adding there are occasional disagreements, but that is normal and nothing to worry about.

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The Emperor and Empress of Japan grant an audience to the Speaker of the Croatian Parliament Gordan Jandroković and Mrs Jandroković during their visit to Japan upon the invitation of Speaker Oshima of the Japanese House of Representatives, June 2019 © The Imperial Household Agency

Kaji also pointed out that Croatia is pretty prevalent in Japan thanks to its sporting heroes. ''Everybody knows who Modrić and Čilić are; Croats are disproportionately present in world sport,'' she said.

Ambassador Kaji also rates Croatian EU membership as a great advantage.

''Through the EU, you're very well represented. When Croatia held the European Council Presidency during the first half of 2020, one of the most important parts of Croatian foreign policy concerned the Western Balkans and you advocated the EU's perspective for them as we don't want to roll back into a conflict or the changing of the borders after such a great sacrifice,'' Ambassador Kaji stated, referring to the war back in the '90s.

An important instance of that is the Zagreb Declaration from June the 22nd, 2020.

''We're part of the group that supports the European idea, and through that, the Croatian idea, as we share the same values,'' confirmed the Ambassador.

She added that while it may seem far away, the issues of the Balkans are relevant to such ideas like the Free and Open Indo-Pacific, and advocating the peace and freedom of nagivation, for example, is required on both locations, and Japan sees Croatia as a partner in that regard.  

Ambassador Kaji also regularly contacts the Croatian Ministry of Foreign and European Affairs (MVEP), the Government, Parliament, the President's office, various cultural institutions, sports institutions such as the Croatian Judo Federation, the Croatian Karate Union, and the Croatian Olympic and Paralympic Committees, educational institutions, local government units and more. She also works on maintaining friendly ties with other ambassadors and diplomats in Croatia.

''My diplomatic colleagues know that only those who are blessed get to be stationed in Croatia,'' revealed Ambassador Kaji, not hiding her happiness for representing Japan in this Southeastern European country.

She is also particularly excited about going to Virovitica this week since she has never been. The visit is to attend the exhibition on Japanese pottery titled ''Yakishime: Earth Metamorphosis'' which is coming to Virovitica after already having been held in Vukovar and Pula.

Commenting on the most frequent contact she keeps in Croatia, she said that it's very hard to say, but statistically, maybe the Japanese Embassy communicates the most with MVEP. ''We're only two minutes away from the Ministry,'' said Ambassador Kaji.

Of course, not everything can be equally balanced and trade is unfortunately currently sitting on pretty low branches of the overall tree.

''When it comes to trade, we made up only 0.28% of Croatia's exports with tuna being a major portion - which is nice. In addition, when it comes to investments in Croatia, only 0.5% of all investments come from Japan. So there's room for improvement there,'' stated Ambassador Kaji with optimism.

Some of the instances of trading and business between the two countries can be seen in the Japan-based company Nipro taking over Piramida, a Croatian pharmaceutical packaging producer from Sesvete near the City of Zagreb last month.

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A visit to Nipro PharmaPackaging Croatia, June 2021 © Japanese Embassy Croatia

Knowledge – the way forward while not forgetting culture or tradition

As mentioned, Japanese culture is widely popular and much loved among Croats, the Japanese love Croatian athletes, and the two countries share friendly relations. Both Croatia and Japan have their traditions and cultural heritage. With ever-present technological development, some people in Croatia do fear that progress will lead to Croats forgetting their traditions, ways, and cultural heritage. On the other hand, Japan has seen huge technological development evident in very fast internet, modern trains, robotics, and more. Yet, their tradition and culture remain well preserved. What's the secret, and how can technological advancement be balanced with keeping a focus on tradition?

As Ambassador Kaji explained, the gist is to ''keep your spirit, but introduce technology''. While the Ambassador believes that the path of economic development makes sense in the long term, it wasn't always so easy. In the past, economic development was accompanied by pollution, and Japanese people, apart from developing health issues, entered an atmosphere that wasn't very kind to their traditional ways. But things have improved since then.

''In the 21st century, people and governments are more focused on green technologies and digital technologies which can be friendly towards and resonate with keeping up with traditions. Like when drinking tea, you have a ceremony, but the leaves for the green tea need to be carefully nourished in a kind environment, so that isn't very compatible with mass production or polluted air. But when, for example, you use the wind to produce energy, that's a nice eco-friendly way that co-exists with traditional culture,'' explained Ambassador Kaji.

She added that this way of co-existing then becomes mutually supportive and crafted to be resilient and long-lasting. That being said, new technologies also need to be carefully crafted to keep an eye on traditions, and improvisation is troubling in that regard.

''If you show respect for tradition, and you use academic knowledge or research, then there must be a way of remaining aligned with tradition and pursuing technology to have them both be mutually supportive,'' concluded Ambassador Kaji, and her belief about Croatia's technological development is that it will not be fatal to Croatian tradition.

Speaking of tradition, traditions form habits that then become accepted in various societies. With the already mentioned Japanese love for punctuality and the general perception of the Japanese as organised people that like order and plans, the perception of Croats can be quite the opposite. Many see Croats as laid back and relaxed, not making a fuss if they are a bit late. However, Ambassador Kaji sees a different picture of the Croats from her experience, particularly when it comes to Croatian women.

''A cleaning lady from Slavonia that comes to clean my office every day just starts working and cleans meticulously. She doesn't leave one small thing out and she is very responsible. In Japan, you don't see so many women gardening, and here, the women that watch over my garden are very powerful and professional, and that is very impressive,'' she noted. The work ethic and responsibility are something she sees with all of the Croats working for her.

''When it comes to Japan, we plan for perfection, so the dark side of that characteristics is, for instance, being late with the vaccination rollout. There are all sorts of verifications that take place there, making sure everyone can get them, and yes, they're proven safe abroad, but we had our own evaluations done, and that was the main reason we've been criticised for being too slow. Here in Croatia, you're really good at improvising. We can learn from each other,'' Ambassador Kaji said, sharing her observations on the habits of Croats and people in Japan.

She added that one such thing where Croatia can learn from Japan is crisis response, particularly when it comes to earthquakes.

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At the Civil Protection Headquarters for Dealing with the Aftermath of the Petrinja earthquake in December 2020, March 2021 © Japanese Embassy Croatia

Post-earthquake reconstruction by Japanese experts: Zagreb's buildings can keep their looks and also become safer

Japan is famous (or as Ambassador Kaji rated with a humorous touch, perhaps notorious) for regularly having earthquakes. Tsunamis happen as well. This was even noticed by reporters from the Croatian paper Jutarnji List, who, when following the earthquakes in Zagreb and Petrinja, interviewed Ambassador Kaji in search of advice on living with earthquakes. An equipped backpack with water, food, batteries, and lights ready for evacuation, along with agreeing on a location at which were to meet with your loved ones, are some great bits of advice for planning once you accept that earthquakes can happen at any time, anywhere.

''You can't stop earthquakes, but if you're prepared, you can mitigate the damage they cause and protect lives. People often think earthquakes happen, and that's that, but earthquakes are never over,'' said the Ambassador when recalling that interview.

''I was at my residence when the Zagreb earthquake happened more than one year ago, and the epicentre was just three kilometres away. It was pretty bad but not serious with only small cracks on the wall,'' recalled Ambassador Kaji, not seeming to feel unsafe in a Japanese earthquake-conscious building, while Croatia isn't always so aware that the Earth's plates can move and cause total chaos.

The earthquake that gave Zagreb such a heavy blow in March 2020 is a normal monthly, if not weekly, occurrence in Japan. The country's ultra-modern buildings and skyscrapers were built to sustain such rumbling, but even the traditional signature Japanese style of architecture (such as the signature Pagoda of Horyuji, the oldest wooden high-rise Japanese building built in 680A.D.) sustained numerous earthquakes over centuries, as Japanese builders always had to try to cope with earthquakes. But, with Zagreb being proud of its architecture, particularly in the downtown area, can the Croatian capital possibly preserve its signature look but also become safer for its residents if such magnitudes or higher strike once again?

''I asked some Japanese experts about whether or not it would be possible to preserve the nice, historic architecture of Zagreb and not just totally transform it into a modern but very common city, and they said it was possible. That needs investment, but there are ways to somewhat reinforce the basic structures and preserve their looks,'' assured Ambassador Kaji. She also added that the speed and focus of reconstruction is something Croatia can learn how to be better at from Japan.

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Towards the Tokyo 2020 Olympic and Paralympic Games, December 2019 © Japanese Embassy Croatia 

The Adriatic is nice, but UNESCO heritage really excites Japanese people

With data acquired before coronavirus, Ambassador Kaji stated that there were 150 Japanese nationals living in Croatia, and 150,000 Japanese tourists visited the country. What several people noticed was that while many foreigners come to Croatia primarily to enjoy the coast and swim in the Croatian Adriatic, Japanese tourists can rarely be seen on the beach and prefer sightseeing.

''Japan is surrounded by the sea, so the sea isn't something amazing to them, but Japanese people are very interested in cultural heritage, and when something is recognised by UNESCO, people in Japan really rejoice. So, the Japanese are very much interested in historical or artistic values Croatia offers,'' explained Ambassador Kaji, clarifying why so many Japanese tourists can often be seen as frequently in continental Croatian towns and cities and not just on the coast.

Despite some Croats sometimes being a bit xenophobic or looking differently at people of other races, Ambassador Kaji was surprised when asked about whether there were any racial issues that Japanese people experienced and reported in Croatia.

''I don't know if things were different before regarding racial issues, but the story I heard when I came to Croatia was that back in 2011, many Croats gathered in front of the Embassy of Japan with flowers, candles, and cranes to express their grief and support regarding the Fukushima Tsunami and the earthquake,'' said Ambassador Kaji.

Just like those who came with flowers, the Embassy is equal and open, too. The Embassy issues scholarships for people wanting to study in Japan twice a year, and apart from being open to anyone that wants to travel to Japan and get informed about the country and visa requirements, the Embassy also has a library people are welcome to come to and read through Japanese books and literature.

Apart from being in regular contact with other colleagues based in Croatia, Ambassador Kaji also regularly contacts the Croatian Ambassador in Japan, Drazen Hrastic.

''Before I left Tokyo, we had dinner together, and now we talk often, as well,'' said Ambassador Kaji with a smile.

With Japanese culture being so appreciated in Croatia, and Croatian sporting heroes and UNESCO heritage being so beloved in Japan, spiced with common political values and friendly diplomatic relations, Croatia and Japan truly have the chance to learn from each other and continue to work on the further nurturing of their diplomatic ties, and their shared trade.

If you're a Japanese citizen or a Croatian citizen in need of information, here is how you can reach a Japanese diplomatic mission in Croatia:

In Zagreb:

Japanese Embassy

Adress: Boškovićeva 2

Mail:

Consular Section: This email address is being protected from spambots. You need JavaScript enabled to view it.

Political Section: This email address is being protected from spambots. You need JavaScript enabled to view it.

Economic Section: This email address is being protected from spambots. You need JavaScript enabled to view it.

Section of Culture / Public Relations: This email address is being protected from spambots. You need JavaScript enabled to view it.

Phone number: +385 1 48 70 650

In Split:

Consulate Office

Adress: Marasovićeva 67

Mail: This email address is being protected from spambots. You need JavaScript enabled to view it. 

Phone number: +385 21 32 35 80

And of course, you can find all the latest news concerning Japanese-Croatian relations on the official website.

To read more from the series "Friends of Croatia", follow TCN's dedicated page.

For more about Japan - Croatia relations, follow TCN's dedicated page.

Wednesday, 16 June 2021

Zagreb Stock Exchange Main Indices Up About 1%

ZAGREB, 16 June, 2021 - The main Zagreb Stock Exchange (ZSE) indices increased on Wednesday, the Crobex by 0.99% to 1,993 points and the Crobex10 by 1.8% to 1,226 points, both reaching their highest levels since February 2020.

Regular turnover was HRK 6.9 million, with only one stock crossing the million kuna mark, the Valamar Riviera hotel company, which turned over HRK 1.63 million. It closed at HRK 31.3 per share, up 2.3%.

Another HRK 16.32 million was generated in block trading with HT telecom's stock at HRK 185 per share.

Thirty-seven stocks traded today, with 14 gaining in price, 15 decreasing and eight stagnating.

(€1 = HRK 7.485466)

For more about business in Croatia, follow TCN's dedicated page.

Wednesday, 16 June 2021

Labour Costs in Croatia Grow For First Time Since Pandemic Started

ZAGREB, 16 June, 2021 - Slower salary growth halted the growth of hourly labour costs in the EU in the first quarter of 2021, while in Croatia labour costs increased for the first time since the start of the pandemic, Eurostat data show on Wednesday.

In the first quarter of 2021, the hourly labour costs rose by 1.7% in the EU, compared with the same quarter of the previous year. In the fourth quarter of 2020, hourly labour costs increased by 3.2%.

The costs of hourly wages and salaries increased by 2.6%, after growing 3.8% in Q4 2020.

The costs of salaries increased the most in arts, entertainment and recreation (+8.3%), followed by accommodation and food service activities (+6.1%).

The costs of contributions at the start of this year went up 1%.

The highest increases in hourly labour costs in Q1 2021 were registered in Lithuania (+12%) and Slovenia (+11.1%), while the lowest were in Austria (+0.3%) and Belgium (+0.9%).

In Croatia, they went up 2.3%, for the first time since Q2 2020. In Q4 2020, they dropped 1.1%. The costs of hourly wages and salaries increased 2.3% after falling 0.2% at the end of last year. The costs of contributions went up 2.2%, after falling 6.4% at the end of 2020.

The largest decrease in hourly labour costs in Q1 2021 was registered in Malta (-2.6%), followed by Ireland (-2.5%).

For more about business in Croatia, follow TCN's dedicated page.

Tuesday, 15 June 2021

Zagreb Stock Exchange Indices Rebound

ZAGREB, 15 June, 2021 - The Zagreb Stock Exchange (ZSE) Crobex and specialised Crobex10 indices on Tuesday rebounded by 0.41% to 1,973 points and 1,213 points respectively.

Today's regular turnover was HRK 6.4 million, or HRK 800,000 more than on Monday.

The Maistra hotel company was the only one to cross the one million kuna mark in turnover. It generated HRK 1.25 million and its share price stagnated at HRK 302.

A total of 39 stocks traded today, with 18 of them registering share price increases, 14 recording share price decreases and seven remaining stable in price.

(€1 = HRK 7.489862)

For more about business in Croatia, follow TCN's dedicated page.

Friday, 11 June 2021

WB, HBOR Ink €200 HEAL Scheme to Help Croatian Businesses to Have Access to Liquidity

ZAGREB, 11 June 2021 - The World Bank and the Croatian Bank for Reconstruction and Development (HBOR) on Friday signed a Loan Agreement for the HEAL Croatia Project (Helping Enterprises Access Liquidity) in the amount of EUR 200 million intended as support to businesses hit by the corona crisis and the 2020 quakes.

A press release issued by the WB and HBOR reads that "the COVID-19 crisis has caused a sharp decline in the economic activity of Croatian businesses and has had a profound effect on jobs and livelihoods."

"The pandemic disrupted firms’ production and reduced the demand for their goods and services, while the financial sector tightened lending to companies, due to rising credit risk. The crisis also exacerbated Croatia’s regional disparities and reduced credit access for young firms and for firms owned and managed by women."

The HEAL Croatia scheme "will provide liquidity and financial restructuring to firms that have been hit by the COVID-19 pandemic and by the two devastating earthquakes of 2020 and will support an inclusive and resilient recovery. "

The HEAL project will increase access to finance to firms focused on export, both small and medium enterprises (firms employing fewer than 250 people) and mid-caps firms (employing from 250 to 3000 people), as well as for firms from less developed regions of Croatia, and firms owned or managed by women. It will also increase access for young enterprises (operating less than five years).

HBOR management board president Tamara Perko was quoted as saying that the Croatian development bank is pleased " that the World Bank has recognized the significance of financing entrepreneur groups whose importance has also been recognized in HBOR's five-year strategy."

Elisabetta Capannelli, the World Bank Country Manager for Croatia, was quoted as saying that the World Bank looked forward "to a smooth and quick implementation of the HEAL Croatia project which will help preserve jobs and support household livelihoods through direct support to approximately 150 firms employing around 25,000 people."

Finance Minister Zdravko Marić, who signed with the World Bank a contract on loan guarantee, said that "the loan being signed today represents a continuation of the significant support provided by the World Bank to the Republic of Croatia since the beginning of the crisis in 2020, which is reflected in operations worth a total of EUR 760 million (including HEAL)."

"With this project, we are contributing to the further recovery of Croatia’s private sector, following the existing measures of the Government of the Republic of Croatia adopted in the context of the COVID-19 pandemic, post-earthquake reconstruction and creating foundations for future sustainability and resilience."

The World Bank has been a partner to Croatia for over 27 years and during that period the bank has supported more than 50 projects, worth almost US$5 billion, and provided technical assistance to help strengthen institutions and support the design of policies and strategies.

For more on politics in Croatia, follow TCN's dedicated page.

Wednesday, 9 June 2021

Zagreb Stock Exchange Indices Up For Second Day in a Row

ZAGREB, 9 June, 2021 - The main Zagreb Stock Exchange (ZSE) indices rose on Wednesday for the second day in a row amid modest trading.

The Crobex gained 0.43% to reach 1,958.03 points, its highest level in nearly a month, while the Crobex10 rose by 0.56% to 1,210.84 points, its highest level since the end of February 2020.

Turnover at the close of the trading session was HRK 4.5 million, about 600,000 higher than on Tuesday. None of the stocks passed the turnover mark of one million kuna.

A total of 35 stocks traded today, with 14 of them registering share price increases, 10 recording share price decreases and 11 remaining stable in price.

(€1 = HRK 7.493408)

For more about business in Croatia, follow TCN's dedicated page.

Wednesday, 9 June 2021

Podravka Group to Invest HRK 5 Bn Over Next Five Years

ZAGREB, 9 June, 2021 - Over the next five years, the Podravka Group plans to invest about HRK 5 billion in the modernisation and digitalisation of production and logistics, marketing and acquisitions, the group said on Wednesday after the Supervisory Board green-lighted its business strategy until 2025.

"The implementation of the adopted strategy includes investment of about HRK 1.7 billion in the modernisation and digitalisation of production and logistics processes, about HRK 1.4 billion in marketing to achieve organic growth, and about HRK 2 billion for acquisitions," Podravka said in a statement.

The group's Food division will focus on product and packaging development and innovation to increase the availability of products and adjust them to the needs and habits of different consumer groups.

The business strategy also sets the criteria for the consideration and selection of acquisitions. With possible acquisitions in the Food division, Podravka aims to strengthen its presence and position on markets to pursue further accelerated growth.

The Pharmaceuticals division (Belupo) will focus on strengthening growth on international markets, notably in central and eastern Europe, expanding its portfolio with products  in additional anatomical, therapeutic and chemical groups, and boosting growth on the domestic market by introducing new products.

(€1 = HRK 7.5)

For more about business in Croatia, follow TCN's dedicated page.

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