Thursday, 7 November 2019

Zagreb Enters World's Top 75 Cities for Opening Business for First Time

As a destination for startups, the Croatian capital city of Zagreb has come 70th place, hot on the heels of Frankfurt (Germany), Birmingham (UK), and Rome (Italy).

As Poslovni Dnevnik/Bernard Ivezic writes on the 6th of November, 2019, Croatia's capital has found itself ranked on the list of international cities suitable for starting a business for the very first time. The result is not stellar, but it's a good start. In total, Zagreb ranks 74th out of 75 cities covered by an analysis made by Europe's largest moving company for moving companies and people, Moving. However, overall, the Croatian metropolis is just behind Zurich in Switzerland and ahead of Tbilisi in Georgia.

In an analysis that spanned twenty of the world's most iconic business destinations, from San Francisco with the Silicon Valley through to London and Berlin to Beijing, Seoul and Tokyo, Zagreb found itself close to the bottom of the list, but the fact it is appearing on it at all is an improvement.

Moving states that the Croatian capital is a better choice for starting a technology business, not only in comparison to Tbilisi, but also in comparison to Marseille, Lille and Lyon in France and Gothenburg in Sweden. Ranked 70th in the rankings in this category, Zagreb is hot on the heels of the likes of Frankfurt, Birmingham and Rome.

Zagreb is 66th when it comes to running an import-export business and 52nd to Toronto and Amsterdam, and stands in a better position than Dublin, Paris and even Munich. Moving argues that it is best to start a healthcare business in Zagreb, which also taps in to Croatia's potential health tourism-oriented future.

Frane Šesnić, CEO of Zicer, says that it's good that Zagreb has started to appear on the global business charts. "Being among the top 75 start-up cities in the world, on a scale that has not only included capital cities, indicates that we're heading in a good direction, and Zagreb can improve because it's safe for life, has affordable rental rates and a university with a long tradition,'' says Šesnić.

Prior to this, Zagreb was on the European Digital City Index 2016 list, ranking 57th out of 60 cities in Europe, where quality of life and human capital were key assets. Last year, Atomico praised Zagreb in its report because it has the cheapest office space to rent in Europe alongside Sofia, Bulgaria. Crane's president, Davorin Štetner, says Zagreb has substantially improved its business support infrastructure over the last 2-3 years.

"More and more business founders are coming to live here because Croatia is generally beautiful to live in, and this can be increased if it's accompanied by a more friendly environment in regard to taxes and a reduction in preregulation," concluded Štetner.

Make sure to follow our dedicated business page for more.

Thursday, 31 October 2019

Young Agronomists Sell Ecological Products of 50 Croatian OPGs

As Poslovni Dnevnik/Lucija Spiljak writes on the 30th of October, 2019, back in the middle of November last year, the Nar store with a rich offer of local and organic fruits and vegetables from Croatian OPGs opened in the Zagreb district of Špansko, more precisely at Ulica Marija Radić 14.

In the first week of the opening the store alone, a large number of interested people gathered in the neighbourhood, and all the credit goes to sisters Azra and Dina Delić. These young entrepreneurs graduated from the Faculty of Agriculture in Zagreb; Azra completed her bachelor's degree in horticulture in the field of vegetable growing, and Dina in agroeconomics in agribusiness and rural development.

With the valuable knowledge gained at the faculty and listening to the needs of others, especially the younger population, who are increasingly choosing Croatian products and paying more careful attention to what makes up their diet, they decided to offer something to such conscious people within the Nar shop.

"Our goal was to find a new area with a predominantly younger population, which brought us all the way to the west of Zagreb, where there are a lot of new buildings and young families with small children who want to know what exactly they're consuming. For some, we're new and we try to listen to new customers and their questions and requests, so we can get new ideas. The interest is very big. The domestic products are much tastier, and of course, they're also healthier, so if someone wasn't interested in buying this type of product initially, after trying some of the domestic products, they come back to buy more and more.

The more we know exactly where the products came from and our customers also get to know that too, gives us even greater confidence to buy local products,'' says 26-year-old Azra, who used the support of the Croatian Employment Service and with the welcome support, help and assistance of expert advisor Alma Jakupović, she successfully stepped into the world of entrepreneurship with her sister.

There's a lot of support for each other, Azra says, so they work excellently when it comes to both business and private matters; while Azra easily agrees with suppliers and local producers on how to produce fruits and vegetables, Dina puts it all down on paper and does the accounts.

From abroad, they procure products that are not actually available here in Croatia, and these are ecologically certified products. Their business network is constantly expanding, and they are currently working with around 50 Croatian OPGs.

"Some people contact us and offer their products, and we meet some of them at trade shows, through OPGs, with whom we're already working or we find something new and interesting by surfing the Internet. We try to visit our co-workers on their properties as much time allows us to do so, so that we can convey to our customers the best way their fruits and vegetables are grown, and later the processed products,'' explains Azra.

People of all ages come to their store because here, says the entrepreneur, everyone can find something they like. "Kids always choose some healthy biscuits or our freshly squeezed juice, and the older ones will still treat themselves to a bottle of top quality oil or some semi-hard cheese," she adds.

"We're satisfied with the business as we've been able to cover all of our costs so far, but for further progress and development I think we'll have to be patient for a little while longer,'' concludes Azra.

Make sure to follow our dedicated Made in Croatia and business pages for much more on Croatian products, companies, entrepreneurs and services.

Saturday, 22 June 2019

Impressive Croatian Company Altpro Now Working with Mitsubishi

As Bernard Ivezic/Poslovni Dnevnik writes on the 21st of June, 2019, one of the first ''tenants'' of the Zagreb Technological Park is a very successful Croatian startup called Altpro, which, in its 25 years of operation, has grown into a more than impressive organisation of 147 employees and exporters who sell their products in fifty countries across all continents except for Antarctica. In addition, this company has just become the first Croatian IoT solution maker for megalopolises.

The Croatian company Altpro has now released its monorail tracking device, which is not only the first such device in Croatia, but the first on the international level. This Croatian company based in Zagreb is now entering into the world of extremely valuable international partnerships. One of these partnerships is with no less than Mitsubishi, the largest Japanese company to be listed on the stock market. The European Commission (EC) has also included Croatia's Altpro on the list of 22 key technology companies that dictate railroad development on global level.

Altpro is currently developing a device that will enable railway companies to quickly and cheaply switch to the new EU security standard called ''ETCS'', which is expected to become a global standard and expand much further than Europe, because it is slowly being taken over by Japan, China, Indonesia, India and the United States.

It is now being claimed that the Croatian company Altpro is at the beginning of experiencing exponential growth and that it has transformed into a new Croatian industrial giant. Poslovni Dnevnik sat down and talked to the tireless founder and director of this impressive Croatian company, Zvonimir Viduk.

What's your plan?

After 25 years of growth in the terms of the size of a medium-sized company within the Croatian framework, I want Altpro to become a medium-sized company within the global framework over the next 25 years.

There's talk about you preparing for growth, for 1,000 employees over the next two to three years?

I think we've grown slowly. Large growth can only be permitted with large product orders, and on large markets. For the past fifteen years, we've been working on the market(s) and potential business in China and India. In the last five years, we've been exhibiting intensively over in Shanghai and Beijing. In the meantime, we've found quality partners not only in China but also in Japan, the USA, Indonesia, India, and even in large European countries.

If everything goes according to plan, according to the existing market needs in the next two or three years, we'd potentially have the capacity to look at further employment. And here we're talking about the growth of just one of our products.

Does this mean that everything depends on just that one product?

In our offer, we've got more products with which we're completing many years of development, homologation, and for which we know the global market with all its significant diversity and specificity. Being customisable and universal is of utmost importance today.

What can you say about this product for megalopolises?

This regards our infrastructure product for detecting monorail trains.

It's a globally unique product that detects the speed, direction and position of monorail trains and exchanges this data with other infrastructure subsystems. We developed it from our existing detection system. Monorails are a piece of technology in megalopolises, meaning cities with over ten million inhabitants, and which are busy and congested with traffic. In 2010, there were 25, and 2017, 47, with a tendency of further growth. Now, we can see that towns and cities with less than ten million inhabitants are also moving towards this system. Only China has 100 such strategic projects, and this technology is spreading around the world.

Who are your partners?

Several major companies from different countries from France to China, the United States, Japan, and all the way to Indonesia mean those who have noticed our specifically innovative solution.

In collaboration with them for the past three years, we've made joint installations and development tests and adaptation to their traffic control systems. For example, in India, after fourteen years, all of the testing is done, we've got all the permits, and now we're entering a joint venture with a local player.

It's the only way of entering with technological equipment in such large countries. We will have some production in India and there we'll work on the modernisation of their railways. We applied the same model in China and the partial localisation of production is already being prepared. Furthermore, Altpro has been the largest Croatian exporter in Indonesia for some time now. We've modernised more than 80 stations in four years. And there, we conduct our work through joint ventures with our largest technology company - Končar.

Last year, based on the results, that part of the business was raised to an even higher level. We signed a strategic partnership with the Indonesian partner, together with the Czech Škoda and the American Progress Rail, a member of the Caterpillar group, at Innotrans, the largest international fair in Berlin. Our plan is to develop even more business in Asia on classic two-track railways.

How long have you been building these business relations?

The high technology for infrastructure, such as railways, has been being developed for years. You have to prove not only things in a technological sense, but also in a business sense, you have to make huge investments before you even get a chance at getting your first job. We first tested our monorail sensory technology back in 2010 with a French partner, then with an Indonesian partner, then a Japanese one, then Chinese and American ones.

Do you have support from the Croatian Ministry of Economy?

The Economy Minister, Darko Horvat, is also an engineer and a businessman himself, and he's made it clear that he wants to help and emphasised the fact that such an industry is in the focus of interest. But more importantly, that ministry is actively working on incentive measures, such as removing obstacles, and communicating openly. An example of this are TIVs, an advisory team of the minister composed of manufacturing exporters themselves.

Make sure to follow our dedicated business and Made in Croatia pages for much more on Croatian startups, Croatian companies, Croatian products and services, as well as all of the measures the Croatian Government and the competent ministries have put in place to aid entrepreneirship and innovation in Croatia.

Thursday, 30 May 2019

First Time at Italian ScaleIT Conference for Successful Croatian Startup

The presentation of this Croatian startup from Sveta Nedelja in Italy is due to its encouraging levels of success and the realisation of organisers that Croatia boasts a quiet but rather promising startup scene, despite all of the negative headlines.

As Bernard Ivezic/Poslovni Dnevnik writes on the 29th of May, 2019, one of the largest Italian startup conferences, ScaleIT, opened up for new companies from the Republic of Croatia for the first time this year. ScaleIT is an event that brings together fifteen of the most successful startups, mostly from Italy but also from abroad, and connects them with more than seventy VC funds and 150 active business angels.

Lorenzo Franchini, the founder of the ScaleIT program and the founder of the Italian Angels for Growth business association says that due to the eighty million euro Hyundai investment in Croatia's wildly successful Rimac Automobili, headed by Mate Rimac, he is now aware that there are also promising scaleups and other rapidly expanding businesses located in neighbouring Croatia.

"Inspired by the story of Rimac, who has collected more than one hundred million dollars from major international brands such as Hyundai, Kia, Porsche, Camel Grupai and others," stated Franchini.

He added that ScaleIT is looking for startups who want to expand onto international markets and need between three and thirty million euros in capital.

"We create a healthy balance of more than ten investors per single scaleup, and in the last three years, we've secured more than 230 million dollars in capital," said Franchini.

Among the group of investors who will listen the pitches of fifteen of the best startups are investment houses such as Accela, Cisco Investment, EarlyBird VC, Eight Roads, Holtzbrinck Ventures, Index Ventures, Iris Capitals and Partech Ventures, as well as companies such as Euronex, AWS, to Salesforce.

Over the past several years, the aforementioned Italian conference has successfully attracted startups from Slovenia, Bulgaria, Macedonia, Greece and the Czech Republic, in addition to those from Italy.

Make sure to follow our dedicated business page for much more on Croatian companies, Croatian startups, Croatian products and services and the general Croatian investment climate.


Click here for the original article by Bernard Ivezic for Poslovni Dnevnik

Friday, 3 May 2019

Rimac Gives Croatian Government Lesson on Innovation and Car Industry

As Jasmina Trstenjak/Filip Pavic/Novac writes on the 1st of May, 2019, the Republic of Croatia does have a chance in the car industry, and it can improve its investment portfolio with certain active and proactive measures, open up opportunities for the development of new industries, and not miss this third train, since it has already missed two. Rimac Automobili, the company of one of Croatia's most successful entrepreneurs, Mate Rimac, is more than ready to help if Croatia truly wants to attract the car industry to Croatia. With some work put in to it, it's possible.

The above is one of the key messages given by Mate Rimac, the founder and CEO of Rimac Automobili, which was part of the "Croatia E-mobility Forum", held recently at the Esplanade Hotel in Zagreb and organised by the American Chamber of Commerce (AmCham) and Jutarnji List, during which spoke about "How Croatia can attract the automotive industry".

In his presentation, among other things, analysed the countries that make up Central and Eastern Europe, what the automotive industry brought to them (growth, jobs, contribution to GDP...), which attracted investors, just how Croatia stands in this aspect. He also noted some key trends that are already transforming the car industry.

The automotive industry is completely changing, therefore the use of cars will eventually alter too. People will, at some point, no longer be car owners, they might not even bother to learn to drive, but all this will open up many new doors. Trends show that many cars will become autonomous by 2030, they will all be connected to the internet, more electrification will occur, and the car sharing will become more common. Mate Rimac discussed these points, full of experience as his own company, which has grown into a powerful technology company over the past decade and attracted more investment than all the technology companies in Croatia.

So far, Rimac Automobili has attracted more than 60 million euros in foreign investment, and that's not even counting the European Investment Bank (EIB), which has provided the company with a 30 million euro loan last year. The last investor in Rimac Automobili was no less than Porsche, and that was the very first time Porsche invested in another company.

''We don't want this to be the last investment, but we need to attract investments. Not only because of us, but also because of the state, so that the automotive industry invests in other things in Croatia. This year, a big investor will enter into the structure of our company. It's a 150 million euro investment, and the details on that will be known in a few weeks,'' revealed Rimac. He also emphasised the significance and the power of the branch in which he works - if the automotive industry was a country, it would be the fourth largest in the entire world!

However, rather unsurprisingly, Croatia is lagging behind quite significantly when compared to others, the automotive industry has spread very well across the whole of Europe and Croatia is almost the only exception. Two waves of investment in the region have already been and gone. The first was in the Czech Republic, Poland, Slovenia, the second was in Romania and Slovakia, and now a lot is being invested in neighbouring Serbia.

In the aforementioned countries, the automotive industry started practically from scratch and through the investments of other manufacturers, unassuming little Slovakia has become the largest car maker per capita in the world today. Therefore, in his extensive presentation, Rimac also commented on the way companies choose their sites, what their criteria are, and, when comparing Croatia with other countries, he found that Croatia is not one of the best candidates at all.

''Croatia has thirteen billion dollars worth of exports, with four million people. Slovakia has a million residents and more than 78 billion dollars in exports, out of which, 20 billion dollars of exports are in cars and parts alone. Let's look at some closer neighbors. Slovenia, with more than two million inhabitants, is exporting more than Croatia, and once again, their main export products are cars, and for us, it's wood,'' said Rimac, adding that these countries attracted companies with their favourable labour costs, but also for their talents and good faculties, infrastructure and available capital.

He also noted that Croatia has less than a billion dollars of automotive revenue, while, let's say, the Czech Republic has 41 billion dollars, and it has a strong potential. Thus, Croatia has less than half a percent of GDP, and the Czech Republic accounts for more than five percent of its GDP directly from the automotive industry, which is indeed a very defeating comparison. In the CEE region, investments have occurred thanks to generally cheap labour, and although much of it has well and truly bypassed Croatia, Mate Rimac is certain that there is a way to attract this industry still. Not necessarily with cheaper labour, but also with new opportunities.

''Hundreds of e-car models are coming onto the market. They're developed during a period of four to seven years and what's going on in the labs today will be on the roads within several years. There is a tremendous opportunity since today's share of three percent in sales will jump to 60 percent in the coming decades. That's why there's a lot of investment going on in the automotive industry, in startups and in technology companies. So far, more than 25 billion dollars has been invested through investment ventures, and this is where that industry is heading. There are investments in the development of batteries, in companies that make sensors and the like. The portfolio is bigger than it used to be. Also, there's a lot of heavy investment in development, and budgets are larger,'' noted Rimac.

Rimac also added that not everything is so black, although Croatia is of course late ''to the party'', and is missing out on the opportunity to join the development of the automotive industry by modelling itself on the countries of the CEE region. That industry, he says, is growing steadily, and countries are committed to receiving investments and attracting firms.

''We don't want just any investment, but those that give maximum benefit. But it's not about how much the state will encourage these industries to come. The state must first determine in which direction it wants to go, which industries it has, and then work proactively. England has a great initiative and it does very well because it has a complex program for the automotive industry, it works proactively, runs research centres, test sites... Therefore, proactive measures and projects are needed if there's a desire to go in that direction,'' Rimac said.

The presentation outlined nineteen action measures that the Croatian state should take to accelerate the automotive industry's progress in Croatia.

He mentioned that employees should be allowed to enter into company ownership and there should be a reduction in income taxes on high salaries.

Universities should make sure their programs include more machine learning, artificial intelligence, and electrical engineering.

Universities should employ professors from the STEM sector with scientific reputations, Rimac believes, and invest in equipping faculties and linking universities with actual investors.

In addition, the state should implement tax incentives for R&D-oriented companies, as well as meet with relevant engineers, as well as take a more proactive role in industrial development in co-operation with potential foreign investors.

As far as infrastructure is concerned, it's very important to encourage international contacts with cities that have developed automotive and innovation hubs and additionally invest in the 5G network for all households.

When it comes to specific measures for the automotive industry, among the measures listed above, it's necessary for foreign automotive employees to have temporary housing and job search support provided to the employee's life partner.

Additionally, one of the measures implies the establishment of an international school, where teaching will be conducted in foreign languages.

As far as the infrastructure of the auto industry itself is concerned, Rimac says that the testing of autonomous vehicles on public roads should be legalised, there should be an institute for electric and autonomous vehicles established, as well as an institute for artificial intelligence, as well as centres of competence and innovation hubs.

Make sure to follow our dedicated business page for much more.


Click here for the original article by Jasmina Trstenjak/Filip Pavic for Novac/Jutarnji

Wednesday, 24 April 2019

What is it like to Work in One of the Top Croatian Startups?

Although the Croatian economic situation isn't the most promising one in the world and you’ll encounter and many young people are leaving the country in search of better future, not everything is as bad as the news might suggest.

Croatia is full of young, driven, educated and ambitious individuals who want to create something for themselves in their own country by founding startups.

On a very long list of successful Croatian startups, TalentLyft, is a name you should remember. It was recently recognised as the best Croatian startup by Global Startup Awards. EU-Startups, the leading online publication with a focus on startups in Europe, has also found TalentLyft to be the most promising Croatian startup you should look out for in 2019 and beyond.

Founded in 2015 in Zagreb by two developers, Mario Buntić and Nikola Biondić, TalentLyft is a startup that developed a recruiting software that modernises and simplifies the recruiting process, in other words, it is a recruiting tool that helps companies find, attract and hire the best talent. It offers both recruitment and marketing solutions to attract the best candidates, and an applicant tracking system to solve post-application problems such as effective candidate communication, a database with all the applicants and their profiles, candidate assessment kits and scorecards, and interview scheduling all in one place.

Today, TalentLyft boasts thirteen full time employees and is currently located at Technopark (venue for startups at Velesajam).

In a brief interview with Total Croatia News, they revealed that startup life in Croatia isn't easy. There are many barriers to overcome in order to enter the market and start a business, starting from bureaucratic conundrums to finding capital investors, which is difficult to do in this environment. There is not much support for small firms and startups, so you’re very much on your own. Instead of focusing on new, promising sectors such as IT, the Croatian Government still invests in outdated industries.

Times and job markets are changing, and so should their investments.

‘’There's always a solid chance that your product will fail,'' they say. The startup life is risky, challenging and uncertain and requires a lot of hard work, devotion, persistence and compromise. However, despite, or exactly because of that, working in a startup offers a unique chance for personal and professional skill development and career advancement. When you are a small startup, you need to deliver a game changing solution and product in order to compete with the big guys. The only way to do that is by having all of your employees constantly learn new things, experiment and innovate.

‘’Since TalentLyft is a small group, every employees’ opinion is important; changes are embraced rapidly making us more agile’’, they state.

They are also proud of the fact that they're working with latest technologies in the fields of artificial intelligence and machine learning, emphasising the fact that their employees’ knowledge needs to be up to date and that you can lose good people if they’re stuck working with old technologies.

‘’Yes it’s the employees’ responsibility to keep learning, but it’s our responsibility to provide them with the tools necessary for that,'' they state from this Croatian startup.

They love the fact that they are a small team because it means there's a better connection: ‘’You know everyone by their name, you work hard together, you share your struggles and the laughs, and you get the chance to build something from the ground up.’’

The startup life is for those who embrace challenges, seek new ways of doing things, and question the status quo.

‘’When you manage to gather together a group of people like that, every day feels like an adventure and there is no challenge you can’t tackle in the end.’’

Let's hope we'll see more examples like this across Croatia in the near future.

Follow our dedicated business page for more information on Croatian startups, Croatian companies, products and services, and doing business and investing in Croatia.

Saturday, 20 April 2019

Croatian Startup and Entrepreneurship Discussion in Koprivnica

''The most important thing is to have a clear plan and a vision and to be persistent and never give up, because every good idea will find its way to a buyer,'' this was the message sent out to those thinking of becoming Croatian entrepreneurs.

As Ivan Tominac/Poslovni Dnevnik writes on the 18th of April, 2019, an event organised by Vecernji list and Poslovni dnevnik has the ultimate goal of which is the retention of young educated people in Croatia, and after Osijek, the event will move to Koprivnica, two continental Croatian regions which are often overlooked.

The event will include a tender for student development projects, round tables and forums entitled ''Future in Croatia'' which will be held across six Croatian cities in cooperation with six universities and a traveling exhibition to mark the the occasion of the 60th anniversary of Večernji list. In Koprivnica, the event will be held in cooperation with the North University on Tuesday at 10:00. Croatia's Minister of Tourism Gari Cappelli will give his view of Croatia and available opportunities, and before that, the event will be bringing two stories from Koprivnica that prove that you definitely can succeed in Croatia.

Boris Poljak, the owner of the Pobis company, noted at the very beginning of the conversation that entrepreneurship is not easy but challenging as the market does indeed offer countless possibilities, but whether or not we're successful is down to nobody and nothing but us.

"Being an entrepreneur depends on the person, and not on the place he's in. If one has the will and the desire to be an entrepreneur, then he won't care whether he's doing it in Croatia, Austria, Germany, or elsewhere," Boris Poljak said. For success, it's important to abide by the established plan and rules of the game, ie, certain legal frameworks.

According to him, young people aren't going straight into business today, but instead, they're moving into ''entrepreneurial waters'' because they want to ensure a secure existence for themselves. "The statistics on the opening and the closing of companies is proof of this. Unfortunately, many people don't succeed, but there are many who do succeed and who achieve excellent results here, and more and more are doing so internationally. Running your own business today doesn't require that much capital," Poljak stated with a short and clear message that says that without a clear plan and vision there can be no success.

"You have to work really hard with young people, they're most often not prepared for work and have a lot of prejudices towards employers," emphasised Poljak, adding that in his company he recognised that with the effort and investment poured into young people, he was creating quality staff who could compete on the world market level. Young people are increasingly involved in entrepreneurial ventures, and as a result, there are numerous startups popping up all the time across Croatia, leading to more tenders and investments.

Codebox managed to stumble upon such a welcome fat, the core activity of this organisation is the creation of personalised software, web design, computer equipment maintenance, and processing and data transfer. Martin Kolarić and Filip Stojić began on this path through a startup tender, and today they can safely say that it was a great opportunity to gain new experiences, try out their knowledge and skills and also have some fun.

"For all those who want to be successful, our advice is to work on themselves and their knowledge. A great deal of information is available to all of us and we have the opportunity of continuous learning and training. Innovation and creativity are the most important competencies today, which is why we need to work on our own improvement, this is the only path to real success,'' concluded Martin Kolarić.

Make sure to follow our dedicated business page for much more.


Click here for the original article by Ivan Tominac for Poslovni Dnevnik

Friday, 5 April 2019

Seaplane Saga Over? Investment Collapses, Dismantling to Begin

''ECA has never been supported by the Croatian administration even though we have linked the islands and the coast without the use of one kuna of state money,'' says D. Thiele, the representative of German investors who were shoved from pillar to post in an attempt to get the seaplane project off the ground again.

As Sasa Paparella/Poslovni Dnevnik writes on the 4th of April, 2019, two and a half years after inspectors of the Croatian Civil Aviation Agency (HACZ) grounded all four of ECA's airplanes for allegedly endangering flight safety back in August 2016, European Coastal Airlines (ECA) and the project of returning seaplanes to the Adriatic sea has now definitely collapsed. Soon, the dismantling of twelve airports on the water will begin, this encompasses all of the pontoons designed to receive ECA's airplanes set up at sea ports from Lošinj to Hvar, to Lastovo.

It's difficult to find someone willing to return the seaplanes to the Adriatic. German investors, who started the project all the way back in 2001, are extremely dissatisfied with the behaviour of the Croatian authorities.

"The ECA project has never been really supported by the Croatian administration. Investors from Germany and Malaysia have invested 25 million euro in the project to set up the transport infrastructure which is necessary for seaplane traffic. They did so without the use of one kuna from the state, and without an HBOR loan, even though we did apply for them. We have linked the islands and the coast and we employed 150 people,'' recalls Dietmar Thiele, executive director of OTAGO Beteiligungs GmbH, representing German investors and their Chinese partners from the Shanghai Jet star company, who were more than willing to invest in the reconstruction of seaplane traffic on the Adriatic.

Despite the total and utter lack of support from the Croatia authorities, and sometimes allegedly faced with the opposition of local and port authorities, the German investors were still able to launch the project and get all of the necessary permits to start the operations of the first hydro carrier in Europe.

"Regular lines began in 2014, and in August 2016, ECA performed 60 flights per day connecting 11 destinations, it transported up to 600 passengers per day and earned a daily income of up to 40,000 euro, as planned. However, the administrative overhaul of ECA prevented further business, resulting in enormous costs, which stalled any further funding of the project. HACZ grounded the seaplanes due to, as was noted, those established deficiencies. The unreasonableness and the illegality of this grounding has already been confirmed by four court witnesses, and this has lead us to a court dispute,'' Thiele stated.

To the contradictions that ECA was facing huge debts and would have otherwise failed because the model was not market-friendly, the response is as follows: "The business plan was based on achieving the project's profitability after five years, with seven seaplanes and 23 seaports," they added that every airline in the world plans for losses during their very first years of doing business, as they plan to cover said losses with the company's capital.

He added that the new Chinese investors were ready for the further financing of assets and new loans, the debts remained with the German investors, and the fleet would have been financed through leasing. Although the seaplanes have not flown since 2016, the project didn't fall away into the abyss immediately, but has been attempting a new beginning - some co-owners of ECA are opening a prebankruptcy process and are finding new investors from China's Jetstar.

The judge gave them two chances.

The Chinese wrote their intention to confirm that they want to invest 15 million euro in the project's renewal, to open a new company and to transfer the concession to twelve certified airports. The Chinese also sent that letter to the judge at the Commercial Court in Split, Velimir Vuković, who gave them an additional four months to complete the planned investment, but the executive powers failed to show any understanding.

In June 2018, the investors sent an official letter of intent to the Minister of Maritime Affairs, Transport and Infrastructure, Oleg Butković, from whom they received no answer. In August 2018, they asked for an answer once again. However, in communication with the then State Secretary for Maritime Affairs, the receipt of the letter was confirmed, but any official response has remained entirely absent. At the end of the prescribed four month period, Judge Vuković was forced to open bankruptcy proceedings in September 2018, resulting in the collapse of all of the existing concessions, and the investors naturally withdrew.

Much like with answering the letters from the investors, Minister Butković's office failed to answer why investors didn't get an answer when asked by Poslovni Dnevnik to comment on the matter. Instead, the portal was told: "The Ministry fully supported the project of the introduction of seaplanes and regulated the legislative framework by amending existing laws in the field of maritime and air transport, as well as the adoption of the Ordinance on water airports. Representatives of the Ministry assisted the investor in the realisation of the project,'' the letter went on to state all of the apparent ways in which the aforementioned ministry helped. This letter, which came much, much too late, didn't do much for the exhausted would-have-been investors, of course.

However, not entirely beaten, the foreign investors have initiated several litigation claims for damages and lawsuits against HACZ. They informed the German Embassy of everything, ​​as well as the Chinese diplomacy.

The collapse of the seaplane company began with a real tragedy back in June 2015 when, as the German investors themselves say, "two irresponsible Croatian ECA pilots, without having a license to fly that type of airplane, illegally took a small seaplane from the Lake company to four places, and because of their inability and their failure to comply with the flight rules, caused a plane crash resulting in two dead and one seriously injured pilot. Although two persons were killed in the accident, the State Attorney's Office in Split hasn't opened an investigation into the matter for more than 3.5 years.''

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Click here for the original article by Sasa Paparella for Poslovni Dnevnik


Wednesday, 3 April 2019

Vienna Institute: Croatia Continuing to Slow Down, Kosovo is Rising Star

As Adriano Milovan/Novac writes on the 2nd of April, 2019, the economic expansion period for most of the transition countries, including the Republic of Croatia, is now over, and in the coming years we can count only on very modest rates of economic growth, this was the message from experts from the renowned Vienna Institute for International Economics Studies (WIIW).

According to the latest forecasts of the Vienna Institute, this year, Croatia can expect a growth rate of 2.6 percent. However, in the coming years, economic growth will slow down even more, meaning that the Croatian economy will likely grow at a rate of 2.5 percent in 2020 and again in 2021. Although the GDP growth rate of 2.5 percent doesn't deviate much from the previous growth rates in Croatia, given that they were still less than in other comparable countries of the so-called "New Europe", it's worth noting that this rate is still less than was previously expected.

Additionally, and more concerningly yet, the Republic of Croatia will be among the new EU member states with the lowest rates of economic growth of all. On the other hand, the fastest growing economies among transition countries will rather surprisingly be non-EU European countries, such as Kosovo and Albania and even more surprisingly, Moldova, at least according to an analysis taken by the esteemed Vienna Institute. According to these forecasts, Kosovo's economy, for example, was to grow at a rate of 4.1 percent this year, in the following year at a rate of four percent, and in 2021, at a rate of 3.9 percent.

In their forecasts, the analysts of the Vienna Institute cited the slowdown of economic growth in the world as a whole, especially in Germany, and the strengthening of protectionism in world trade and uncertainty brought about by Brexit (should it occur at all), as among the main reasons for the ''cooling'' of the transition economies.

Openly, however, the question remains about how the current crisis in Uljanik will reflect on the Croatian economy as a whole. Vladimir Gligorov, a longtime analyst at the Vienna Institute and now an external associate, says the events in Uljanik will have negative effects on the Croatian economy in the short term, primarily through the activation of state guarantees and the cost of dealing with former workers who will be left jobless, but in the medium term, it shouldn't actually reflect all that much on the macroeconomic image of the country that significantly.

The attitudes of Croatian macroeconomists, Zeljko Lovrinčević from the Zagreb Institute of Economics and Zdeslav Šantić, the chief economist of OTP banka, don't differ significantly from the above statement from the Vienna Institute, and they also don't expect huge consequences on the Croatian economy from the collapse of Uljanik. Moreover, Lovrinčević believes that the first half of this year could be even better for Croatia than expected, whereas we will likely only feel a slight slowdown in the second half of this year and next year.

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Click here for the original article by Adriano Milovan for Novac/Jutarnji

Friday, 29 March 2019

Silence Reigns as Bankruptcy Knocks on Uljanik's Frail Door

At the start of the enfeebled Uljanik's bigger problems, the Croatian Government's view was either restructuring or bankruptcy, and now there's no time to devise any sort of new solution.

As Marija Brnic/Poslovni Dnevnik writes on the 28th of March, 2019, the government rejected the offer of strategic partner Brodosplit for Uljanik's restructuring, and thus, although the prime minister tried to avoid actually saying it, a process that would have a domino effect on all the companies operating within the Pula-based group system was launched.

The fact that there is no longer a strategic partner for Uljanik, which was the main argument for the postponement of the opening of bankruptcy proceedings in the previous proceedings on the 3 Maj shipyard and Uljanik's other companies, is changing the situation and it is now clear that no matter how much room the government initially left for some possible new solutions, the judge in Pazin doesn't have much of a choice today and will determine that the conditions for declaring bankruptcy for the Uljanik shipyard are now fulfilled. Such a decision automatically withdraws what the Rijeka court stated and opens bankruptcy proceedings for the 3 Maj shipyard.

All the speculations that there could be another possibility for Uljanik, for which Prime Minister Andrej Plenković left space in his statement, are empty stories, not only because of the fact that right at the very beginning of Uljanik's growing woes, the government's position was that the only possible scenarios for Uljanik's rescue were restructuring or bankruptcy, but also because of the fact that now, there is definitely no more time available to come up with a new solution for the burdened shipyard. When it comes to the question of the possibility of the continuation of shipbuilding in Pula and Rijeka as a whole, the key question remains the same - how many ships could buyers actually be found for, and then arrive other questions regarding financing through bankruptcy.

Two ships that are now in their final stages of construction in Pula were de facto detained over the past few days by the company's emotionally exhausted employees, and Uljanik's workers aren't finishing the job, because "other" workers, not from that shipyard, are working on Scenic's polar cruiser, while Jan de Nul is awaiting the government's decision to pay the requested difference of 22 million euros and to take over and finish it in Trieste, Italy.

From Pula, the request was for the completion of construction to be carried out in Uljanik, but the government didn't even discuss that yesterday, so it remains unknown as to whether the Ministry of Finance has worked to meet the necessary conditions, and if so, when it intends to pay any price differences and deal with the issue of the contracted vessels.

Although it's quite impossible to describe the situation surrounding Uljanik and Croatian shipbuilding as a whole as anything remotely positive, its rather lucky, analysts agree, that all of this happened and seems to have finally reached its peak in a year in which a surplus was recorded, but that doesn't minimise the issues Uljanik faces, nor does it even begin to confront the shipyard's overworked and well and truly underpaid employees.

The interesting thing which always happens in Croatia is the intertwining of business and politics. Just like with the messy Agrokor situation that has dominated the Croatian media for the past couple of years, there is always a political element, and if there isn't really one, someone will make you believe there is. The Istrian Democratic Party (IDS) has accused the Croatian Government of purposely trying to cause issues by using the Uljanik saga to its benefit, even claiming that the ''government's lack of action and indecisiveness'' is an attempt to destabilise Istria.

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Click here for the original article by Marija Brnic for Poslovni Dnevnik

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