Friday, 18 November 2022

A Week in Croatian Politics - Taxes on Taxes, Drones and Spanish Royalty

This week in Croatian politics, we've had everything from Spanish royalty visiting the country for the very first time to Milanovic insulting the foreign minister, missiles hitting Poland, complaints about taxes being put on taxes and still not actually knowing who dropped a drone on Zagreb back in March.

PM Andrej Plenkovic meets the Spanish king

Andrej Plenkovic met with the Spanish king during the very first visit of the Spanish royals to the Republic of Croatia this week. King Felipe VI of Spain and Plenkovic sat down to discuss economic cooperation, the ongoing energy crisis, migrant policies and Croatia's imminent entry into the Schengen area.

As stated, this was the Spanish royal couple's very first official visit to Croatia, and Plenkovic pointed out that the visit is "a pledge to further strengthen bilateral relations with Spain at all levels, with a special emphasis placed on on cultural, educational and scientific exchange".

A Memorandum of Understanding was also signed between the Croatian Ministry of Science and Education and the Spanish Ministry of Science and Innovation on cooperation in the creation of the DONES Programme, which envisages a partnership between Croatia and Spain in fusion research.

"Projects like this are an opportunity for further cooperation between Croatian and Spanish companies in the high-tech and scientific sphere, they also represent the improvement of economic relations," the press release on the matter stated. Plenkovic was quick to thank King Felipe for Spain's ongoing support in Croatia's entry into Schengen, which is set to occur on the 1st of January, 2023, the same date on which Croatia will officially adopt the euro as its currency.

The pair also discussed current challenges such as the energy crisis caused by Russian aggression against Ukraine and the bloc's migrant policy, which requires a unique European response, as well as the role of the EU in Latin America and in the Western Balkans.

The Croatian Employers' Association (HUP) claims the new tax which was proposed recently will further discriminate against certain companies and work to punish the most successful

''We're shocked by the government's proposal for a new profit tax because it's discriminatory and puts the most successful companies in Croatia at a disadvantage. This is actually the dishing out of a punishment to the most successful companies in this country, the companies that fill the state budget the most, employ the most people, pay the highest salaries and invest the most," said the Croatian Association of Employers, reacting to the introduction of the new profit tax.

"Companies operating here in Croatia don't have extra earnings, this year's profit barely covers losses from previous years, and it's completely unclear as to why the government is doing this. Ahead of us lies a crisis and recession, the depth of which we don't yet know. What we know is that Croatian companies are cancelling orders left, right and centre and that now we need the strength to survive the recession and let people keep their jobs," they warned from HUP.

"This is a proposal to introduce a tax on taxes, which will certainly stop investment in development, which means that there will be no new jobs or salary growth, and we're once again becoming an unsafe country for business and looking unattractive to investors. Along with Hungary, we're the only country that spreads the tax across the entire economy instead of, as prescribed by the European Commission Regulation, keeping it exclusively to the energy sector, which made an unexpected profit thanks to market disruptions caused by the war in Ukraine," announced HUP.

"HUP cannot support the unjustified discrimination of large companies that this proposal brings. On top of that, this tax cannot be introduced retroactively for the year 2022, when investment and employment plans have already been implemented. This proposal will unjustifiably penalise the most successful Croatian companies, the best employers and the largest investors who and they pay the most into the state budget," said Irena Weber, CEO of HUP.

Instead of introducing yet more new taxes, HUP very concretely advocates a full tax reform and stronger work relief through an increase in the personal tax deduction and a reduction in income tax rates. This is the way to strengthen the economy, attract new investments, increase wages and create new jobs, according to them.

Milanovic and King Felipe talk politics while their wives talk healthcare and the prevention of obesity in children

King Felipe VI of Spain and Croatian President Zoran Milanovic are both satisfied with the bilateral relations between the two European countries, while their wives emphasised the importance of preventing obesity in children for preserving the health of the entire population, according to the press releases published after their meetings in Pantovcak.

The Spanish king was on a two-day official visit to the Republic of Croatia together with Queen Letizia, and after the ceremonial reception at Pantovcak, President Milanovic and his wife Sanja Music Milanovic spoke with the royal pair. The Spanish king and the Croatian president both stated that they are satisfied with the bilateral relations between Croatia and Spain, which are two friendly and allied countries, members of the European Union and NATO.

King Felipe and Milanovic also referred to the close scientific cooperation between the two countries, which is particularly marked by the joint partnership in the aforementioned DONES programme, which the Spanish king also discussed at length with Plenkovic.

The meeting also discussed current European and global topics, including the security crisis in Eastern Europe caused by Russian aggression against Ukraine, while their wives discussed the importance of preventing obesity in children.

Sanja Music Milanovic and Queen Letizia of Spain separately discussed innovative approaches to obesity prevention in children in Croatia, Spain and the entire continent. The importance of obesity prevention in children for preserving the health of the entire population was emphasised and the importance of a comprehensive approach to obesity prevention through a multisectoral set of interventions aimed at all periods of life was emphasised, the press release on the topic stated.

Music Milanovic presented the professional and scientific activities she carries out in this area in Croatia and Europe and announced the upcoming inaugural summit of the spouses of European leaders on the topic of childhood obesity prevention across Europe, which she will jointly organise with the European Office of the World Health Organisation (WHO).

The King and Queen of Spain were, as stated, on their very first official visit to Croatia during the year which marks the 30th anniversary of the establishment of diplomatic relations between Croatia and Spain, all with the aim of confirming exceptionally good bilateral relations and providing incentives for their further development.

Croatian authorities still don't know who launched the six-tonne drone which hit Zagreb eight months ago

As news broke about an alleged Russian missile having crossed over into Polish territory, killing two people, our memories return to the drone which struck Zagreb eight months ago. It turns out that the powers that be still have no idea who launched the mysterious drone which crash landed and ended up in pieces. 

The Russians are still claiming that the drone which struck Poland had nothing to do with them, saying all those who are claiming it to be Russian are just trying to provoke. Still, we were all shocked and we went from speculating about a Russian attack on Poland, a NATO country, to thinking about the possibility of a third world war to, what is now increasingly likely, finding out that the missile was in fact Ukrainian.

As a reminder, two people were killed after, as Polish authorities then said, a "Russian-made projectile" fell near the village of Przewodow, about 6.4 kilometres west of the Polish-Ukrainian border, around the same time that Moscow forces launched their largest wave of missile attacks on multiple Ukrainian cities in more than a month.

The circumstances of the incident, including information about who fired the missile and from where it was fired, were unknown, which caused possible speculation about Russian involvement in the event and expectations of NATO's next step following the apparent striking of Poland, a NATO member state. But according to US officials, initial findings suggest that the missile that hit Poland was actually fired by Ukrainian forces at an incoming Russian missile.

Three officials told the Associated Press (AP) news agency that the Ukrainians were trying to defend themselves against Russian fire aimed at their electrical infrastructure. This is the event that reminded us of the incident that happened on March the 10th right here in Zagreb, just two weeks after the start of the Russian invasion of Ukraine. Then, a strange Soviet-made Tu-141 unmanned aircraft crashed in Zagreb near the "Stjepan Radic" student dormitory. During the fall, the unmanned aircraft crashed into the ground, leaving a crater behind it.

The circumstances behind it all are still unclear, so Index asked DORH recently if it had ever actually been established who had sent that drone into Croatian territory.

"On April the 13th, 2022, the County State Attorney's Office (DORH) in Zagreb, in the presence of experts, held a press conference where they reported on the results of the investigation related to the crash of the drone.

''At the aforementioned press conference, it was stated that the answers to the questions about where the [unmanned] aircraft came from and whose aircraft it was are under the jurisdiction of other bodies, and not under the jurisdiction of the State Attorney's Office," the answer reads. As for the press conference that DORH mentions in the answer, it was said that the drone had Ukrainian colours on it, but also that it was carrying a bomb. "It was undoubtedly established that it was fragments of an OFAB 100-120 aerial bomb," Major Mile Tomic said in a DORH press release back in April, adding that a lighter was also found.

"During the impact, an explosive device did explode, as was evidenced by the creation of a large crater, the scattering of earth and stones, the ejection of fragments from the crater, as well as traces of tearing and hardening of the metal parts of the bomb," said Ivana Bacic, a chief fire and explosion expert.

"The original aerial bomb should contain 40 to 46 kilos of TNT military explosive, which would be characterised by blackening," Bacic noted.

The Zagreb drone incident could therefore have had horrendous consequences, and yet it seems we're none the wiser. By sheer luck, a real tragedy was avoided. When people say the word 'drone', to many people it sounds like a plastic toy or indeed a type of worker bee, but in this case we're dealing with something that weighs six tonnes and was carrying an explosive on it. It fell in the immediate vicinity of the student dormitory and what could have happened doesn't bear thinking about. In spite of all of that, it is still not known who the drone belonged to, how it was launched, or and why.

Back at that time, the drone event stimulated two debates. First, the question arose as to how much protection NATO provides to Croatia in general.

Before entering Croatian territory, the drone flew over two NATO member states, Hungary and Romania, only to crash in the third NATO member state, Croatia, after seven minutes of flight. In those seven minutes, no one reacted, neither the Armed Forces of the Republic of Croatia nor the Directorate of Civil Protection. NATO did nothing either, and all that lack of action in the then very fresh situation of the shocking Russian invasion of Ukraine and the outbreak of war here in Europe once again.

"NATO's integrated air and anti-missile defense followed the flight path of the object that subsequently crashed in Zagreb. The Croatian authorities have announced that they are investigating this incident," said a NATO official at the time.

Second, in parallel with the investigation, there was a debate about whether the drone really had a bomb on it or not. Defense Minister Mario Banozic and Prime Minister Andrej Plenkovic claimed that there was an explosive device in the drone, while a number of experts disputed this. President Zoran Milanovic was also skeptical about the presence of a bomb in the drone, and he was quick to reproach Plenkovic and Banozic for stoking fears.

Even NATO Secretary Jens Stoltenberg entered the discussion about the explosive device on the drone, and he stated at a press conference that the drone was unarmed. After that, another press conference was called by Prime Minister Plenkovic, who denied his claim, along the way showing photos of parts of the drone that he said belonged to the bomb.

As stated, despite the severity of this incident and all of the potential reasons behind it which are extremely concerning to think about given Russia's actions and the ongoing war over in Ukraine, nobody seems much more in the know then they were back on March the 10th.

Foreign Minister Gordan Grlic Radman says that we will not be training Ukrainian soldiers on Croatian territory

If you recall, Zoran Milanovic was among the loudest in his opposition to this idea, and it seems he is far from alone in his thoughts that supporting Ukraine should be as far as Croatia goes, as we don't want to bring the war to our doorstep. 

"I'm absolutely not going to give my consent. Grlic Radman went to Brussels without my prior consent. There are enough of Plenkovic's mini ministers going up to Brussels without the prior consent of the commander-in-chief, and it isn't going to carry on that way. Grlic Radman is nobody and nothing, Plenkovic is actually important here, but he went and pushed himself to the front row like a dumb nerd,"  Milanovic said about the Minister of Foreign Affairs, once again using another opportunity to sling mud and throw insults around.

Grlic Radman also said later today that there will be no training of Ukrainian soldiers in Croatia, and he remained polite and professional in his wording.

"What Croatia can offer, it will offer. Is it the training of Ukrainian soldiers on our territory? No, no it isn't, it will be on the territory of some other EU member states that have offered. However, the countries in which that might take place still haven't been determined,'' Grlic Radman said in an interview with RTL Danas/Today.

 

For more on Croatian politics, make sure to keep up with our dedicated section and keep your eyes peeled for our Week in Croatian Politics articles which are published every Friday.

Friday, 27 May 2022

Croatian Employers Association Launching Underage Drinking Prevention Action

May the 27th, 2022 - The Croatian Employers Association (HUP) is launching a praiseworthy initiative aimed at the prevention of underage drinking, which continues to pose a very real issue across the world.

As Novac/Jutarnji writes, the Croatian Employers Association is launching activities for the public and for those in the hospitality and catering sector, with the aim of providing additional information on the importance of the moderate and responsible consumption of alcohol, as well as responsible serving of alcohol in restaurants to encourage the proper prevention of underage alcohol consumption.

One of the activities of the Croatian Employers Association in this regard is the launch of an online educational page called www.konzumirajodgovorno.hr (consumeresponsibly) where readers can find useful information on the impact of alcohol on the body and on overall health, warnings about groups for which alcohol consumption isn't at all recommended, with special emphasis placed on the negative impact of alcohol on minors.

The site contains useful tips and educates parents on how to approach and talk to their children and other young people when it comes to alcohol. With this initiative, Croatia has joined other European countries which work to promote responsible alcohol consumption as part of the campaign and the international website www.responsibledrinking.eu.

This branch of the Croatian Employers Association simultaneously launched a quiz on responsible alcohol consumption across eleven European countries and supported a project launched by spiritsEUROPE, a European association that brings together the spirits sector through 31 national associations. The quiz provides guidance and answers to key questions about moderate alcohol consumption, explains the differences between moderate and excessive alcohol consumption, contains tips on responsible consumption and explains the differences between different alcoholic beverages. The quiz can be accessed via the website konsumirajodgovorno.hr or directly via the link: http://edapp.click/spiritseu-hr.

In addition to educating the public, the aforementioned association has also developed a platform for online educational training on the responsible serving of alcohol intended for the hospitality sector. Entitled "I serve responsibly", it aims to reduce irresponsible alcohol consumption, and point out the problem of juvenile alcohol consumption, as well as to promote catering and hospitality facilities that serve alcohol responsibly.

"Raising awareness among both the public and among those working with alcohol in a professional sense is key to encouraging responsible behaviour, which is why we've launched a series of activities to highlight the importance of moderate and responsible alcohol consumption, the prevention of juvenile alcohol consumption, and the need for education on potentially dangerous situations such as driving under the influence, with the goal of building responsible behaviour in the community in which we operate and do business. Consumers must have access to information to know the effects of alcohol on their health, and those working with alcohol should contribute to the promotion of moderate and responsible consumption through doing responsible service and business,'' said Zoran Maksic of HUP.

For more, make sure to check out our dedicated lifestyle section.

Sunday, 13 June 2021

Illegal Tobacco Market Costs Croatia €186m

ZAGREB, 13 June, 2021 - An estimated potential loss for the Croatian budget due to the illegal tobacco market in 2020 was HRK 1.4 billion, according to findings of a survey conducted by the Croatian Employers' Association (HUP) and the Ipsos pollster.

The findings of the survey, conducted on a representative sample of 1,344 households with a total of 3,299 respondents, show a marked share of untaxed cigarettes and tobacco products used by consumers.

As many as 28.1% of adult Croatians are tobacco consumers, and 17% of tobacco products consumed in a year are illegal products, with illegal cut tobacco accounting for the largest portion.

As a result, in 2020 Croatia lost 1.4 billion kuna in tax revenue due to tobacco smuggling, HUP main economist Iva Tomić said last Wednesday at the presentation of the survey's findings.

Nearly 3 in 10 Croats aged over 18 are smokers

Davor Tolić of the Ipsos pollster said that 28.1% of adult Croatians consume tobacco products and they mainly smoke cigarettes, followed by cut tobacco.

The consumption of e-cigarettes, cigars and pipe tobacco and cigarillos amounted for less than 1% of the total consumption.

(€1 = HRK 7.5)

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Sunday, 6 June 2021

Local Government Given Weak Grade by Entrepreneurs

ZAGREB, 6 June, 2021 - Entrepreneurs expect local authorities to cut costs, downsize the number of employees in the administration, reduce administrative burden and utility fees, a survey by the Croatian Employers' Association (HUP) has shown.

In May, HUP carried out a survey among its members with the aim of examining what entrepreneurs expect from representatives of local and regional government in the coming period. Nearly 200 companies from all over Croatia, which employ more than 14,000 people, have responded to the survey, HUP said on Tuesday.

In the survey, local goverment received a weak grade  (D), which indicates less than satisfactory performance.

Top three priorities for entrepreneurship recovery

HUP members also highlighted the top three priorities that the municipal/city government must deal with immediately to encourage the recovery of entrepreneurship, and scaling down the costs and the number of employees in public administration was ranked as number one priority, as said by 47% of the respondents.

The second priority is the abolition of administrative and utility fees (44%) and the third priority is the abolition or reduction of surtaxes and other fess (41%).

HUP representative also expect and encourage greater involvement and participation of entrepreneurs in the work of local government.

We propose that economic councils be formed in the offices of mayors and county prefects, which would consist of up to fifteen entrepreneurs from the private sector, education representatives and representatives of other factors important for the local economic development. The council would discuss local economic issues, business conditions, permits and education, and in this way give added value to the economy and the wider community, said HUP's Kristian Krpan.

Local government gets weak grade D

The average grade HUP's entrepreneurs assigned to city/municipal government for encouraging entrepreneurship and an entrepreneurial climate is a weak grade D, or an average of 2.3 on a 1-5 scale, HUP said.

The cities of Bjelovar, Virovitica, Sveta Nedelja and the municipality of Lokve were exceptions and received high average grades.

When it comes to counties, the two initiatives rated as most significant for launching a stronger investment cycle and creating new jobs were awarding non-repayable grants and adopting new county development plans to tap EU funds.

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

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Wednesday, 2 June 2021

Associations Request Urgent Meeting With PM Andrej Plenković on Regular Public Transport

ZAGREB, 2 June, 2021 - The Croatian Employers' Association (HUP) and the SSSH trade union federation have asked Prime Minister Andrej Plenković for an urgent meeting on the regulation of regular public transport, stressing that if the meeting is not held, they "will be forced to take certain joint activities".

The answer and the date of the urgent meeting are expected by Friday, 4 June, at the latest, the associations said in a letter to the prime minister.

Employers and unionists say they have been "more than active" in proposing solutions and "more than patient" over the last three years, waiting for the final implementation of European and national regulations.

The HUP and the SSSH warn that the already ready legal solutions that were a prerequisite for signing contracts for regular public passenger transport on county and inter-county lines up to 100 kilometres are not implemented due to the inactivity of state administration bodies.

They also said that the decision had not yet been made on the distribution of funds from the state budget to counties, even though the funds, according to the SSSH and the HUP, had already been secured, and that public service contracts between counties and private transport companies involved in regular public passenger transport had not been signed yet.

"Private bus carriers from the HUP transport association account for 80% of the public transport on county and inter-county lines up to 100 kilometres and employ over 7,000 workers who are directly affected by such irresponsible behaviour of the relevant ministries," the HUP said.

Without a public service contract, the process of collective bargaining to improve working conditions in the transport sector is at a standstill and existing jobs are in jeopardy, they noted.

The operation of most public bus lines is at risk, especially in rural areas, and workers and private public transport providers haven't been able to plan their business and their companies' prospects for three years now, the HUP and the SSSH warned.

The HUP and the SSSH think that the government should make a decision on the distribution of funds from the state budget to counties (signatories of contracts with transport companies) at its next session.

They added that it was also necessary to stop discrimination against private bus carriers and their workers in relation to carriers owned by the public sector since private companies still didn't have public service contracts, while public companies did, for the same service.

They also think that it is necessary to continue with the job-retention subsidies for all companies that continue to register a decline in business and meet the prescribed criteria.

That is especially important, they said, for passenger transport on lines in rural areas, where the number of passengers is declining sharply, also because of the end of the school year and the holidays, and cannot be sustained without state support.

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

Friday, 28 May 2021

Croatian Employers Propose Keeping Economic Measures in Place Longer

May the 28th, 2021 - Croatian employers have proposed that the Croatian Government keep some economic measures, namely the job preservation measures introduced to try to combat the economic effects of the pandemic in 2020, in place for longer than planned.

As Poslovni Dnevnik/Ana Blaskovic writes, with the abolition of some of the country's epidemiological measures with even more relaxations to come in the foreseeable future, the Croatian Employers' Association (HUP) sent to the Minister of Finance Zdravko Maric proposals for a new set of economic measures.

The existing ones, this association of Croatian employers says, should be very carefully and only gradually rolled back in order to avoid a wave of bankruptcies and layoffs, and the introduction of several new ones are crucial in order to preserve liquidity and start an investment cycle.

“Maintaining liquidity isn't just a matter of a period of closure - it's necessary to provide liquidity to a company for a longer period of time, so that the business can start up again (and return to the point of coverage) at the moment when restrictions (work, movement) are removed,'' say this group of Croatian employers.

They noted that small and micro enterprises, which are the most numerous Croatian enterprise, are more at risk than others as measures expire and recovery is possible only with investment momentum.

"Although not all activities are equally affected by this crisis, for the sustainable growth of the overall economy, it's necessary to start up business again in all sectors. However, given the effect of the coronavirus pandemic, it's questionable to what extent companies are able to finance any new investment cycle on their own,'' the Croatian employers stated.

Although savings have increased, access to finance is limited, so support from the state in the form of additional measures and programmes is absolutely necessary, as are different types of grants and incentives to launch investments.

Aware of the jump in government indebtedness from the association of Croatian employers, they claim that the risk of a sudden relaxation of economic measures is significantly higher than additional (favourable) borrowing.

"The worst thing would be that after the introduction of all of those measures and everything we then endured following the suspension of those measures, that the affected companies remain in trouble and start firing people. Why would the owners of affected businesses have to bear the loss of revenue all on their own? They aren't any more to blame for the consequences of the pandemic than business owners who just happen to not be particularly affected by this particular crisis,'' they stated.

Therefore, in their range of requests addressed to the Minister of Finance, they propose to retain support for job preservation until companies achieve at least 90 percent of their respective pre-pandemic revenues.

"It is extremely important that the decision to get rid of certain measures to support the economy be introduced gradually, depending on the epidemiological situation, but also on the situation in a particular sector so as not to cause a wave of bankruptcies and layoffs," said the Croatian employers, supporting OECD and IMF recommendations, as well as those recommended by the EC.

They're also asking the government to continue covering part of companies' fixed costs, taking into account the percentage drop in revenues, ensuring easy access to liquidity and working capital loans with guarantee schemes for the SME segment and the possibility of converting loans into grants, continuing the moratorium until at least the end of 2021 and investing in Industry 4.0.

For large Croatian companies, they propose support for investments by increasing support in the Investment Incentives Act and additional support to companies for co-financing a project from EU funds.

Among the proposals are the possibility of compensating receivables between companies for preventing chain illiquidity, speeding up the determination of bad loans, speeding up bankruptcies and the liquidations of companies, additional (non) tax relief or their abolition, and more tax relief for investments.

"We believe that the government measures introduced as a result of the coronavirus crisis should continue as long as we have enterprises who cannot function and preserve jobs on their own without assistance measures," the association of Croatian employers concluded in their request to the Finance Ministry.

For more, follow our business section.

Tuesday, 25 May 2021

Employers Propose Continuation of Government COVID Subsidies

ZAGREB, 25 May, 2021 - The Croatian Employers' Association (HUP) has proposed measures for maintaining liquidity and launching private investments which include retaining jobkeeping measures and covering a portion of fixed costs, ensuring favourable loans and prolonging loan maturity.

In expectation of COVID measures and lockdown of businesses being lifted, HUP addressed Finance Minister Zdravko Marić and underscored that maintaining liquidity is not only relevant during the lockdown period but should be extended for a longer period, and that recovery can only be possible if investments are boosted.

HUP proposes that jobkeeping measures be extended even after busines restrictions are lifted until such time that  all enterprises generate at least 90% of their pre-pandemic revenue in 2019. HUP believes that abolishing support measures for the economy should be gradual, depending on the epidemiological situation, but also on the circumstances in each individual sector so that Croatia is not faced with a wave of bankruptcies and layoffs.

HUP also calls for a portion of fixed costs to continue to be covered, taking account of the percentage revenue has decreased, and for facilitating access to loans for liquidity and working capital, including guarantee schemes for micro, small and medium-sized enterprises.

HUP advocates possibly transforming a portion of loans into grants and for the moratorium on loan maturities to be extended for existing loans, along with state guarantees, at least until the end of this year and longer if need be, based on transparent criteria.

HUP proposes additional support loans for exporters and enterprises investing in the 4.0 industry, and support for investments by large companies through increased support for EU co-funded projects.

It also recommends the possibility of deleveraging debts between companies to prevent a chain reaction, and for non-recoverable loans to be identified faster, as well as speeding up bankruptcy procedures, and introducing additional tax cuts.

"We believe that government subsidies to cover the disrupted economic activities due to the COVID crisis should continue until such time that enterprises can do business normally and save jobs without that support," HUP said.

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

Friday, 5 March 2021

No Restrictions on Aid to Enterprises, Says Daily Paper Jutarnji List

ZAGREB, 5 March, 2021 - Brussels will leave it to Zagreb to decide on how to distribute money from the EU Recovery Fund, the Friday issue of the Jutarnji List daily reports, noting that there are no restrictions on aid to enterprises. 

There are no strict limits in drafting the national recovery and resilience plan, through which around HRK 45 billion of EU funds will be made available to Croatia to help it recover from the crisis caused by the coronavirus pandemic, in terms of how much funds can be allocated for public investments and how much for private investments, as there is no such distinction in EU regulations.

This conclusion is based on a reply from the European Commission, after the Croatian Employers' Association asked that at least 50% of the available money be disbursed in direct grants for investments by the private sector, instead of spending most of the HRK 45 billion on investments in the public sector.

According to an interpretation presented earlier by Croatian negotiators and published by Jutarnji List, entrepreneurs would have access, through the National Recovery and Resilience Plan, to direct grants and loan subsidies and guarantees in the maximum amount of HRK 4.5 billion, or only 10% of the available amount. In citing the amount, Croatian negotiators referred to restrictions imposed by the EC.

Zvonimir Savić, PM Andrej Plenković's advisor and national coordinator for the National Recovery and Resilience Plan, has nonetheless said that around 30% of the HRK 45 billion could end up in the private sector, if one takes into account the involvement of businesses in planned public projects, from research and development, energy transition and development of innovative tourism to stronger food supply chains, the daily says.

Thursday, 25 February 2021

Croatian Employers Association Wants EU Funds Sum Directed to Private Sector

February the 25th, 2021 - The Croatian Employers Association (HUP) want more European Union cash to be directed towards the private sector, with employers doing their best to urge the government to amend a certain document to ensure this happens.

As Novac/Gordana Grgas writes, at least 50 percent of European Union money is set to be available to Croatia in the next period, which is a total of about 24 billion euros. The Croatian Employers Association believes that around half of that massive amount should be made available to the private sector through calls for grants.

Employers are also urging the Croatian Government to properly amend the draft National Recovery and Resilience Plan (NPOO), the first version of which it has already sent to the European Commission (EC), and to further strengthen the role of the private sector in it.

Although the draft itself hasn't yet been published, and has only recently been roughly presented to the Croatian Employers Association, it appears that most of the 6 billion euros in grants from the NPOO, to be funded by the European Recovery and Resilience Mechanism as a result of the ongoing coronavirus crisis, could end up in reform-related public sector projects. As announced by the Croatian Employers Association at a recently held press conference, they plan to urgently send their remarks and suggestions to the European Commission itself. The final draft, they say, should be ready and sent to Brussels in April.

So far, a quarter of the money available to Croatia from EU funds has gone to the private sector, warned the Croatian Employers Association's Damir Zoric. The rest ended up going to public investments and public infrastructure, and Croatia needs larger investments in production for the development of the economy. Boris Drilo, President of the aforementioned associations's ICT Association explained that previous investments in the private sector have been shown to have a significant impact on economic growth.

"It's a minute until midnight for all of us, after which we can turn into either a princess or a pumpkin," he said in a rather picturesque manner. He also stressed that investments in private sector projects lead to sustainable employment for high-value jobs.

In February, the Croatian Employers Association conducted a survey among 1,700 enterprise owners, which showed that more than two thirds of them have prepared projects or investment plans for the next financial period in the amount of more than 21 billion kuna. As many as 94 percent of them would exclusively utilise EU grants, so there is extremely little interest in these so-called financial instruments, such as loans, and 30 percent say they will not be able to invest if these grants aren't enough.

On top of that, 28 percent of enterprise owners say they will not survive the ongoing pandemic crisis without better co-financing. Most of them stated that they would invest in capacity expansion and modernisation if they could be more certain, and the projects they have in those areas are the ones which are the most ready to be realised.

Drilo explained that, in general, the investment potential of available European Union money is significantly higher if it is directed to private investments, and it is also less burdensome for the state budget. Namely, a private company from the EU receives 40 to 70 percent of the investment amount as support, and the rest is financed by itself. The public sector, on the other hand, receives 85 percent of the money from the EU for the project, and the rest is added from public sources, which is less favourable.

Answering a question related to the National Recovery and Resilience Plan, the Croatian Employers Association said that the state should be prevented from competing with the private sector with its projects.

Ana Fresl, president of the Croatian Employers Association's Association of Professionals for EU Funds confirmed that the draft plan presented to them, in which only state bodies participated, exceeded the available six billion euros, and there has not been any feedback on which parts of the plan will remain and which will be discarded. In their belief, what was presented to them under the name "economy", the first version of the plan envisages a series of projects that have nothing to do with entrepreneurship whatsoever.

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Thursday, 26 November 2020

Hospitality Sector Proposes Compensation Measures to Survive Lockdown

ZAGREB, November 26, 2020 - Bar and restaurant owners on Thursday proposed two sets of measures that could help them survive the new lockdown, saying at a conference organised by the Croatian Employers Associations that many would go bankrupt otherwise.

The president of the national association of bar and restaurant owners, Marin Medak, said the first model envisaged long-term compensation by slashing VAT to 5% for three years and to 13% in the long term, and providing job-retention aid until April 2021, i.e. HRK 4,000 per employee and writing off taxes and contributions until 1 May 2021.

They also propose compensation of €10 per square metre of their establishment, COVID loans to ensure liquidity for three years and a moratorium on loan payments for businesses which are not allowed to work.

The second model envisages ensuring revenue for entrepreneurs in the amount of 50% of their turnover at the same time a year ago as a direct grant which would also be used for salaries, including a contribution write-off.

This model also envisages exemption from all fixed liabilities for the duration of the lockdown, including rent and utilities. Bar and restaurant owners also propose exemption from parafiscal levies.

Medak said they acknowledged the extent of the pandemic crisis and were unanimous that the most important thing was to keep their businesses going and prevent layoffs which would ensue without adequate lockdown compensation measures.

The government decided today that as of Saturday, bars and restaurants will be closed until before Christmas.

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