Wednesday, 12 May 2021

Croatian Chamber of Commerce Membership to Remain Mandatory

May the 12th, 2021 - The Croatian Chamber of Commerce membership which is bothersome to the vast majority of Croatian enterprises who frequently claim that their membership, and as such their fees to the chamber, don't offer them anything in return.

As Poslovni Dnevnik/Marija Brnic writes, changes to the law on the Croatian Chamber of Commerce (HGK) which were announced after last week's meeting of coalition partners and Prime Minister Andrej Plenkovic left many astonished. Most of those who had their jaws hit the floor in amazement have been waiting for years for a clear message that Croatian Chamber of Commerce membership should become voluntary. Of course, that isn't going to happen.

The idea is, as most expected, to keep Croatian Chamber of Commerce membership as a mandatory obligation, but to release small companies from the obligation to pay their membership fees.

The very fact that some companies will remain under the obligation to pay is doubtful because it brings enterprise owners into the muddy waters of constitutional inequality, since in settling an obligation, the constitution doesn't distinguish between categories of companies headquartered in Croatia.

The move has been made as a partial solution to the problem of dissatisfaction among some company owners with the existing Croatian Chamber of Commerce membership model, which, as lawyers say, if realised according to the announced concept, will open new divisions and continue to generate a sense of injustice among the country's various business owners.

In other words, if we're going to change and abolish Croatian Chamber of Commerce membership fees, then such a reform should be well thought out and prepared for. For now, neither the Croatian Chamber of Commerce nor the relevant Ministry of the Economy have received more detailed information on when the new rules should start to be applied, ie what the transitional period for releasing companies from paying Croatian Chamber of Commerce membership fees will actually look like or be.

Unofficially, it can be heard that this concept envisages a series of changes in the very definition of the size of companies, as well as that Croatian Chamber of Commerce membership fees paid by a smaller number of companies will be "corrected". There are no details on it all yet, but the existing criteria by which the size of the company and the corresponding fee were determined in the Croatian Chamber of Commerce differed from the criteria set by the law on accounting.

According to this law, companies are classified into micro and small, medium and large enterprises depending on their respective amount of total assets, income and the average number of employees during the business year.

Micro-enterprises mustn't exceed two of the three conditions - they mustn't have assets of more than 2.6 million kuna, revenues of more than 5.2 million kuna and they can't have any more than 10 employees, small enterprises may not have more than 30 million kuna in assets, 60 million kuna in revenues and more than 50 workers, while medium-sized enterprises can't have more than 150 million kuna in assets, 300 million kuna in revenue or more than 250 workers.

When calculating Croatian Chamber of Commerce membership fees, the Croatian Chamber of Commerce defines three groups, the first of which, those considered small and currently make up the majority of members and should now be exempt from membership, are companies that do not exceed two of the three criteria - 7.5 million kuna in total assets, 15 million kuna in revenue and 50 employees.

The second group, medium-sized companies, are those with assets of up to 30 million kuna and revenues of up to 59 million kuna, and 250 employees. This category of enterprises currently pays a monthly Croatian Chamber of Commerce membership fee in the amount of 1083 kuna, while large enterprises who exceed two of the three aforementioned criteria are obliged to pay a considerable sum of 3973 kuna per month.

When it comes to just how much the membership fees could increase, there's no unofficial information yet, but it's likely that this will follow. At this moment in time, the Croatian Chamber of Commerce collects about 160 million kuna from various membership fees, and about 32 million kuna from other services and activities.

The open question remains as to which of the rights will be able to continue being used by enterprises who will no longer need to pay membership fees, as well as possible membership fee hikes for those who must continue paying.

The Minister of Economy, Tomislav Coric, announced that part of the financing of the activities of the Croatian Chamber of Commerce will be transferred to the state budget, but there are still no details on the delimitation of financing from fiscal and parafiscal sources.

For more, follow our business section.

Friday, 16 April 2021

The Croatian Chamber of Commerce (HGK) Requests Priority Vaccination for Shop Assistants, Builders, Undertakers

ZAGREB, 16 April, 2021 - The Croatian Chamber of Commerce (HGK) on Friday requested that trade and construction workers, as well as those working with infectious medical waste and at cemeteries, be placed on the vaccination priority list, since they are directly at risk from catching coronavirus.

Josip Zaher, the HGK vice president for commerce and financial institutions, pointed out that those employed in trade, especially those working in shops, were much more exposed to the possibility of getting infected with coronavirus, that is, the possibility of the infection potentially spreading is higher.

"The tourist season is coming, and retailers are very important in the overall tourist offer of a country, especially when we know that the percentage of the population vaccinated will be among the most important data for travellers when assessing a destination's safety," Zaher said.

He said that a total of 205,655 people were employed in trade in 2020, or 15.2% of all employees in legal entities. The largest number of employees was in retail trade, 115,352.

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

Monday, 22 March 2021

Croatian Chamber of Commerce Continues Waiving HGK Membership Fees

March the 22nd, 2021 - The Croatian Chamber of Commerce has decided to continue to waive HGK membership fees for Croatian entities as the global coronavirus pandemic rages on.

Mandatory fees paid to the Croatian Chamber of Commerce have been a burning topic of irritation for Croatian companies for many years now, long preceding the coronavirus pandemic which has caused tremendous issues for the income of companies, particularly those who have had their ability to work limited or banned. 

Many Croatian enterprise owners have campaigned throughout the years for the total abolition of HGK membership fees, with some claiming that the institution is useless and does little to nothing to actually help them in any way.

The coronavirus pandemic has seen economic measures introduced by the government to try to preserve jobs and keep the heads of negatively affected companies above water. With various payments, including contributions, being written off for the time being, HGK membership fees were always due to be next in line and the continuation of the temporart abolition of membership fee payments is set to continue.

As Poslovni Dnevnik writes, at the ninth session of the Assembly of the Croatian Chamber of Commerce, a decision was made to continue with the measure of the temporary abolition of the obligation to pay mandatory HGK membership fees for entities/activities whose work remains banned or in some way limited by the country's current epidemiological measures.

Given that the measures to control the infection will continue to be applied in this form until March the 31th, 2021, the Assembly voted to propose to continue, at least for that period, with the abolition of the obligation to pay HGK membership fees for Croatian companies whose operations have been forced to be limited.

It's worth noting that the decision of the Assembly of the Croatian Chamber of Commerce to temporarily (from January the 1st to March the 31st, 2021) abolish the obligation to pay HGK membership fees for members of the Chamber also refers to those companies based/headquartered in the areas affected by December 2020's Petrinja earthquake, and who were prevented from doing business due to those circumstances.

For more, follow our business section.

Wednesday, 10 March 2021

Nadan Vidošević: "Komerički is Lying That I Asked Him to Launder Money"

ZAGREB, 10 March, 2021 - Former Croatian Chamber of Commerce (HGK) head Nadan Vidošević told the court on Wednesday that he did not participate in fictitious business deals, dismissing as lies claims by Davor Komerički, who turned state's evidence, that Vidošević had asked him to launder money for him.

"The indictment is a cobweb and I know why Komerički gave a false testimony... so that he is freed from criminal charges and to have his company's accounts unblocked. There were no fictitious deals and Komerički is the only witness the prosecution has," Vidošević said at the Zagreb County Court while presenting his defence in a case dubbed Remorker.

Vidošević repeated several times during the presentation of his defence that he and his associates had not caused any damage to the HGK or the Kraš confectionery company, and that they had not siphoned money from them. "There is not one piece of material evidence against me, nor any message or text message that I might have exchanged," he said.

He also said that he had been barraged by some media outlets even before the trial started and that two-thirds of the indictment were based on his property whose value some of the media had exaggerated and which, he said, he had obtained legally.

Vidošević added that during a search of his home, documents referring to his artworks and the construction of his house in Gorski Kotar disappeared, of which he accused the police anti-corruption office PNUSKOK, saying it had made his defence more difficult. He also said that the expert estimate of the value of his property was "grotesque."

Defence presented four years since trial started

Vidošević's defence comes four years after the trial started in the Remorker case in which the former HGK head was accused of siphoning money from the HGK which he had led for years.

Vidošević's long-standing associate Zdenka Peternel was also accused in the case as was Josipa Mladinov, Jasna Mikić and Jadranka Ivčić, who have all pleaded not guilty.

Four other co-defendants pleaded guilty prior to the trial and were convicted after plea-bargaining with the prosecution. They are the key figures in the scandal - Igor Premilovac, who was the first to own up to issuing fictitious invoices via his Czech-based company Remorker and returning laundered money to Croatia for a commission; Davor Komerički, a marketing expert who accused Vidošević of being involved in a chain that was siphoning money from the HGK; real estate agent Vesna Rodić who advised Vidošević, and Jasna Mrakovčić Grubić, who admitted that she had siphoned money from the HGK with Vidošević by faking artwork purchases.

The USKOK anti-corruption office pressed charges against Vidošević and the eight other defendants in July 2015. USKOK proposed that assets equivalent to the HRK 33.4 million that was allegedly siphoned be confiscated from Vidošević.

However, a new expert analysis has shown that Vidošević acquired 26 properties and 444 works of art, worth HRK 22.3 million, legally and that property worth only HRK 9.2 million remains suspicious.

In mid-December 2020, USKOK withdrew its motion to expand the confiscation of Vidošević's assets after it was determined that the discrepancy between his income and expenditure was smaller than the value of the assets he was charged with having illegally gained.

Friday, 12 February 2021

Around 500 Croatian and Israeli Companies Partook in Business Talks

February the 12th, 2021 - Croatian and Israeli companies have put their heads together and engaged in what could potentially be important business talks for the future, and as many as 500 such enterprises have done so.

As Novac writes, almost 500 Croatian and Israeli companies participated in the aforementioned business talks and prepared the ground for further strengthening economic cooperation between the two countries in the future, despite the ongoing coronavirus pandemic and the economic woes it presents, the Croatian Chamber of Commerce (HGK) announced.

HGK President Luka Burilovic pointed out that the Israeli economy is among the most propulsive in the world, and there's a lot to learn from them as they have some of the world's best research institutions because they spend about 5 percent of GDP on research and development and 8.1 percent of GDP on education.

"I hope that these virtual meetings between Croatian and Israeli companies will result in some concrete agreements and that we'll mamage to cooperate strongly in improving both of our economies," said Burilovic, noting that the goal of this project is to export what as many Croatian companies do as possible to Israel and indeed to other such developed markets.

Tomislav Pokrajcic, the director of the Samobor-based company Jel-Tom, who also participated in the talks with Israeli companies, believes that there is great export potential for the export of their products in particular, such as ventilation pipes, greenhouses, tents and wave breakers.

His optimism is shared by the director of the Toptours travel agency, Marina Marunic, who hopes that the the good vaccination process of the Israeli population will have a positive effect on Croatian tourism as it will attract more Israeli tourists to our shores this summer and indeed in future summers.

"I know from previous experience that the people of Israel really like to travel. Over the past month, I have come in contact with three travel agencies from Israel and we've successfully held some online meetings, so we're hoping for positive results from that,'' said Marunic.

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Thursday, 11 February 2021

Croatian Mechanical Engineering Untapped Export Potential Worth $400million

February 11, 2021 – The total untapped export potential of Croatian mechanical engineering machinery and equipment production is a staggering $399.8 million, according to an analysis by the Croatian Chamber of Commerce

The total untapped export potential of Croatian mechanical engineering machinery and equipment is 399.8 million US dollars, according to an analysis by the Croatian Chamber of Commerce (HGK) as part of the Fit4Globe project.

According to this analysis, the Croatian mechanical engineering groups with the greatest export potential are parts for gas turbines and turbojet engines, parts of machines and devices for lifting, moving and construction works, parts for air pumps, compressors and fans, agricultural machines for use in harvesting, valves for temperature control and parts for internal combustion devices.

The analysis dealt in detail with 12 Croatian mechanical engineering products. 10 were chosen specifically because they hold unused export potential and two were chosen for their importance to domestic Croatian mechanical engineering. The untapped export potential of these Croatian mechanical engineering products exists in 34 countries, in the total amount of 127.8 million US dollars. The realization of the full potential of these Croatian mechanical engineering exports would increase by more than one-third, or 37.2 percent.

634 companies operate in the Croatian mechanical engineering sector of machinery and equipment manufacture. As much as 94 percent of them are small and medium-sized enterprises. They employ a total of 11,400 workers, generate HRK 7.7 billion in revenue (4.4 percent of the gross value of the manufacturing industry), and their annual profit is HRK 337 million. With a total of $1.22 billion in exports, they make up 6.6 of Croatia's total foreign trade.

Currently, the leading export markets for Croatian machinery are Germany with a share of 21.5 percent, Slovenia with a share of 12.5 percent and Austria with a share of 8.5 percent.

In response to the findings, the President of the Croatian Chamber of Commerce, Luka Burilović, pointed out that by exploiting the full potential, the total export of Croatian mechanical engineering machines and devices would increase by almost a third (32.6 percent) from the current 1.22 billion US dollars, which is 6.6 percent of total exports.

"The markets most likely to increase exports are Germany, Italy, the United States and Hungary," said Burilovic, while the president of the Metalworking Industry Association Zeljko Mazuran said that the biggest challenge for the industry is the need for greater and faster investment in plant modernization. He attributed a lack of investment to an unfavourable monetary policy, an unrealistic exchange rate of the kuna against world currencies and the low level of technological processes, industry retardation being compounded by a lack of educated metalworking workers.

According to financial reports submitted for last year, the five largest exporters of Croatian mechanical engineering parts and machines generated approximately 40 percent of total revenues in the foreign market within their sector. The top 10 largest exporters accounted for almost 50 percent.

The world market in the production of machines and devices is dominated by the USA, which in 2019, along with China and Germany, was also the leading global exporter. These three countries are also the largest importers of machinery and equipment. In the European Union, along with Germany, the largest producer is Italy.

Friday, 5 February 2021

Milanović: HGK Has Become Pointless, Mandatory Membership Fee Should Be Abolished

ZAGREB, 4 February, 2021 - President Zoran Milanović said on Thursday it made no sense any more for the Croatian Chamber of Commerce (HGK) to be funded by everyone in business who did not know what they were getting in return, adding that the mandatory monthly membership fee should be abolished.

"The mandatory fee is a parafiscal levy par excellence," he told the press.

Milanović said the HGK was "a political den," much more so than the Croatian Chamber of Trades and Crafts which "has a certain function, although politics managed to become implanted there as well, and deeply. But it has its point, its function and use for Croatia's economy and enterprise."

He said the HGK was not an essential institution of the Croatian people and state, but a useful institution which had become useless. "Political showdowns are taking place there on a weekly basis. The election of a new HGK president after Nadan Vidošević left has turned into a political showdown."

Milanović said that he too had paid a monthly HGK fee but received nothing in return. However, he stressed, he is not for abolishing the HGK.

He agreed with the demand by the Voice of Entrepreneurs NGO for abolishing the mandatory HGK membership. He said that when he was prime minister, his cabinet failed to do so because of serious and deep problems. "That should be done right away."

Asked about yesterday's protest in Zagreb, organised by the Voice of Entrepreneurs to show dissatisfaction with how the COVID-19 crisis is being dealt with, the president said the epidemiological measures were not equal for all.

However, he added, he does not see in that "any devious scheme or conspiracy" by the national COVID response team, only inconsistent messages. "I see no evil intent in that, but it should be elaborated further".

Protests were expected

Milanović said that the protests were expected because when people give up something they demand consistency. He recalled that he had been warning from the start that restrictions must be clearly based in law and logic.

"Legally, the measures should have been passed by a two-thirds majority in parliament because this is a state of emergency," he said, adding that some people were fed up with the state of emergency and the government should talk to them.

Asked about the appointment of former deputy prime minister Martina Dalić as the president of the management board of the Podravka food company, he said that pension funds had a lot of shares in this company with an annual revenue of HRK 4.5 billion. If Podravka had not been restructured and recapitalised in July 2015, the government would now hold less than 25% and would not have such influence on the appointment of the board president.

"This is obviously a political appointment, but it does not necessarily mean that it will be a bad one. We'll see," Milanović said. He recalled that between 2012 and February 2017, when the company was led by the Social Democratic Party's Zvonimir Mršić, Podravka had doubled its stock-exchange capitalisation and increased its revenue during deflation by a quarter. He warned that in the last four years Podravka's revenue had increased by the difference in prices.

"It's a company with millions and millions in savings and our future pensioners also have expectations from it. There is also the responsibility of pension funds and pension insurance fund management companies which apparently agreed to the political demand of Prime Minister Andrej Plenković. If the company grows, and it has been stagnating for years, fine, but if it does not, the question of political appointment will be raised because Martina Dalić was never in this business," the president said.

As regards the planned purchase of multi-purpose fighter jets, Milanović said he understood that a decision was delayed because of the present situation, but stressed that a decision must be made in the months ahead.

Commenting on the decision by some of the banks to withdraw from arbitration proceedings relating to the conversion of Swiss franc-denominated loans into euro loans, Milanović said he was pleased with his contribution because when he had served as prime minister his government passed the conversion law.

Asked about the shortage of coronavirus vaccine, the president expressed regret, saying that it was a problem of procurement and agreement with pharmaceutical companies.

Wednesday, 3 February 2021

Radimir Cacic Claims Desire to Remove HGK Membership Fee Irresponsible

February the 3rd, 2021 - Radimir Cacic has stated that the ever louder desire to remove the need for membership fees paid to the Croatian Chamber of Commerce (HGK) are irresponsible, claiming that HGK needs reforms, but that it shouldn't be dismantled. Many who pay their fees would strongly disagree.

As Poslovni Dnevnik writes, after a recent coalition meeting, Varazdin County Prefect Radimir Cacic gave a short statement to the media, more precisely to N1.

"My position is that everyone had a chance - MOST, SDP, HSLS and HNS. Everyone has had the opportunity from 1991 until today,'' said Prefect Radimir Cacic after a coalition meeting when asked by a journalist to comment on the proposal to abolish what many consider to be a banal and pointless membership fee to the Croatian Chamber of Commerce.

He then added: ''Everything they wanted to do... they did. What we've now heard from the gentlemen of MOST consists of one terrible amount of effort made to change one article in the 1991 law that says the Chamber should be abolished. Once you stop funding it, and keep everything else that the law proposes obligations, public authorities… At that moment you can say that the chamber doesn't exist,'' said Radimir Cacic in his usual style of speech.

He then expressed his opinion on the proposal: ''Unserious, irresponsible, dangerous, populist. This is something that I personally, neither we as Reformists, have ever been able to, nor will we ever support,'' he said.

He also noted that the Croatian Chamber of Commerce should be reformed, but not abolished entirely. "The chamber needs to be redefined, it needs to be sent out onto the market to a large extent, but it also needs to recognise its public powers. No to populism, yes to reforms. The chamber isn't good enough, not even close to good enough, but on the other hand, it doesn't occur to us to support the destruction of one of the institutions that is important for the Croatian economy and society,'' he concluded.

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Wednesday, 20 January 2021

HGK's Ivan Barbaric Highlights Problems Croatia and USA Must Solve

January the 20th, 2021 - The US Government has changed, and with Joe Biden as the new president, the Croatian Chamber of Commerce's Ivan Barbaric has looked at precisely which questions must be answered, and which issues must be solved by the countries on either side of the vast Atlantic.

As Poslovni Dnevnik writes, the change of Government in the USA could pave way to an additional impetus to the economic relations between Croatia and the USA, and so far the highest priority is to solve the problem of double taxation and abolish visas for Croatian citizens, the Croatian Chamber of Commerce (HGK) announced.

The Croatian Chamber of Commerce states that Croatian exports to the United States are continuing to grow solidly and constantly, and that a change of government in one of the world's strongest economies could give an additional spring to the step of the two countries' economic relations. 

Back in 2019, the total trade exchange between Croatia and the United States amounted to an impressive 649 million US dollars, of which 461 million kuna was made up by Croatian exports (14 percent more than in 2018). In the first nine months of 2020, the amount of exports of goods to the United States also reached almost 370 million US dollars, an increase of almost three percent over the same period a year earlier. Ivan Barbaric, Vice President of the Croatian Chamber of Commerce for International Affairs, believes that the economic and trade policy of the new administration of President Joe Biden will change the current direction, will go back into the direction of the process of economic globalisation, cooperation with international organisations and possible inclusion in some new/old trade agreements.

"The currently weakened strategic partnership between Washington and the European Union could now also be repaired, with the hope that the new US administration will enable stability and predictability of EU-US relations and trade. In the end, it would certainly benefit Croatia, ie Croatian companies that do business internationally,'' said Ivan Barbaric, adding that double taxation is one of the burning problems of economic relations between Croatia and the United States and has been for a long time now.

Namely, as he stated, Croatian companies export a significant number of services to the USA, during the first nine months of 2020 revenues from such services amounted to 152 million euros, and the companies that export services will be most helped out by signing the Double Taxation Agreement.

"We believe that the new US administration will realise the importance of this agreement and sign it as soon as possible," Ivan Barbaric stressed. The current topic is the abolition of visas for Croatian citizens, and the Croatian Chamber of Commerce also cooperated with the US Embassy in Croatia in resolving this problem. According to the latest unofficial information, Croatia has met all the conditions, so visas could be abolished soon.

An example of quality economic and political cooperation, the Croatian Chamber of Commerce points out, is the LNG terminal on Krk, which was put into commercial operation at the beginning of the year. This is a project of great strategic and geopolitical importance for both Croatia and the EU as a whole, because the import of American gas reduces the dependence of European consumers on Russian gas, meaning that it diversifies energy supply sources.

President-elect Biden has already announced the return of the United States to the Paris Agreement, which means a greater possibility of American investments in the field of energy, and Croatian companies should also look for their chance in this field. The Croatian Chamber of Commerce also added that wines from Croatia, more precisely Peljesac dingac and zinfandel, will be poured at the inauguration of the new American president, which is just the culmination of long-term trends of successful export and promotion of local wines over on the American market.

Croatian wine exports are growing at a rate of 10 to 15 percent per year, and according to data for the first ten months of 2020, it reached the amount of 860,000 US dollars, meaning that despite the pandemic, it remained at the levels from 2019.

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Monday, 4 January 2021

Earthquake Insurance Premium Rises 28%

ZAGREB, 4 January, 2021 - It is estimated that the earthquake insurance premium at the end of 2020 will total around HRK 110 million, up 28% on the year, the Croatian Chamber of Commerce (HGK) said on Monday.

The devastating earthquakes which hit Croatia last year have caused over HRK 100 billion worth of damage and many people have lost their properties, so it is not surprising that after the tremor which struck Zagreb and its environs in March there was an increase in earthquake insurance, the HGK said, adding that the tremors which struck Sisak-Moslavina County last week will certainly further raise people's awareness of the need for earthquake insurance.

It is estimated that the number of insurance policies by the end of last year will have risen to 140,000, up 30% from 2019, the HGK said, adding that the average earthquake insurance premium was HRK 800.

The HGK said that although the property insurance premium was rising, it amounted to €48 per capita, far below the EU average of €168.

The big disproportion of investing in property insurance in Croatia is especially worrying considering that besides Greece, Turkey, North Macedonia and Italy, Croatia is in tectonically the riskiest part of Europe, the HGK said.

After the March 2020 earthquake, insurance companies paid HRK 237.5 million and processed 7,269 damages claims by the end of November, the HGK said, adding that the Zagreb quake showed that an extremely low percentage of apartment buildings had earthquake insurance.

(€1 = HRK 7.5)

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