Saturday, 13 April 2019

Croatia's Bellabeat Received Second Largest Startup Investment

This Croatian startup's beginnings come from Zagreb and it first became well known back in 2014 as the first startup attract a large investment from outside of the Republic of Croatia.

As Bernard Ivezic/Poslovni Dnevnik writes on the 12th of April, 2019, the Croatian startup Bellabeat received an investment from AOL Ventures in the amount of 14.2 million dollars, the equivalent of 12.5 million euros. It's not the biggest investment to be received by a Croatian startup last year, as that remains marked by Porsche's entrance into the co-ownership of Rimac Automobila for 18.7 millions euros, but it remains the second largest. Bellabeat has so far kept this massive investment secret.

AOL is one of the three largest Internet service providers in the United States of America. The company is part of the large Verizon group, which owns a number of popular media outlets including The Huffington Post, Engadget, TechCrunch, and MapQuest. In the group is also the former Yahoo and the AOL Desktop software solution.

Croatia's Bellabeat underwent restructuring half a year before the investment took place, at the end of 2017 and in early 2018. The company then let a number of its employees go. Sandro Mur, co-founder and director of Bellabeat, subsequently announced that he currently has a total of fifty employees and plans to increase this number to seventy. At that time, the Croatian company's focus was on establishing an office across the Atlantic over in New York. The company has developed a range of high-tech products for women, from jewellery to smart water bottles, and plans to deal with artificial intelligence in the health preservation sector.

Five years ago, the founders of Bellabeat, Sandro Mur and Urška Sršen, set the bar very high for Croatian startups. They received a record 4.5 million dollar investment from a number of well-known investors. Among them were actress Jessica Alba, the creator and leading developer of Google Earth, Paul Buchheit, the founder of TechCrunch, Michael Arrington, one of the hundred richest people, Nicolas Berggruen, and one of the most famous investors in the Silicon Valley and one of the very first to have invested in Google and PayPal, Ron Conway.

Make sure to follow our dedicated Made in Croatia and business pages for much more on startups and companies from Croatia, as well as the overall business and investment climate in Croatia.

 

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

Thursday, 11 April 2019

ACI Achieves Massive Revenue, Biggest Investment in History Completed

As Poslovni Dnevnik writes on the 10th of April, 2019, Croatia's ACI has published its revised annual financial statements for 2018. The company's revenue growth trend thankfully continued in 2018, its total revenue grew by seven percent when compared to 2017, amounting to 216 million kuna, while the company's operating income increased by eleven percent to 211 million kuna.

Revenues have been growing in almost all of ACI's marinas, and the company's profit also grew by 54 percent to a massive 38.4 million kuna, while its EBITDA increased by 22 percent to 93.9 million kuna.

The largest single investment project in ACI's history was also completed. In March, a new license was issued for the new ACI marina in Rovinj. This is a project that in which over 150 million kuna has been invested and can be briefly described in just four words: beauty, luxury, innovative solutions and security. The new marina's categorisation is now underway.

The new ACI marina has 1,400 m2 of commercial space available, and special attention has been paid to providing high level services on the premises, including catering facilities, restaurants and café-lounge bars, grocery stores, wellness centres, world-renowned brands, reputable sales offices for luxury yachts, charter agencies, a service centre for boats, etc.

The Rovinj ACI marina is equipped with the latest generation of WiFi systems, and luxury boats are provided with the most advanced video surveillance and access control system available. Particular care was taken to protect the surrounding environment and maintain the purity of the marine environment, construction materials and energy systems that provide maximum energy efficiency were used during construction, and all the benefits of LED lighting technology and lighting management were properly and readily applied. The official opening of the marina will be at the end of April this year.

The modernisation of the business that ACI has been intensively pursuing over the last few years is primarily focused on raising the quality of its services, attracting new clients and exploring the market potential of the Adriatic region as a whole.

Back in 2018, the company first published its own ACI No1 magazine, both in print and in digital format. It is a magazine which combines an ACI marina catalog, information for boaters, exclusive reportages and lifestyle themes, and a 2019 issue is just been made available.

ACI also achieves excellent results in the area of ​​digital business with its own reservation system. From last season, boaters have also had ACI's mobile application that provides easy and quick access to information and booking links available to them. For the third year in a row, ACI has also been using a digital sailing system with the help of special applications and devices used by sailors.

Given ACI's steady growth, 2018 was also marked by market research and a look into the development potential of the company, following which, a decision was made to embark on the development of new products and services, which will contribute to the diversification of the company's business.

Business cooperation includes the purchase of six ClubSwan36 sailing boats, and a range of marketing activities aimed at creating a recognisable image, regatta organisation, promotion and the creation of a tourism product aimed at raising the quality of ACI's services and the overall image of the Republic of Croatia as the world's leading nautical destination.

Make sure to follow our business, lifestyle and travel pages for much more.

Tuesday, 9 April 2019

From Dalmatia to Karlovac and Rijeka, Chinese Eye Up Croatia

As Gordana Grgas/Novac writes on the 8th of April, 2019, if there was a European tender held solely to attract Chinese investment, the champion would certainly be Great Britain, followed by Germany, and then immediately by Italy and France. Croatia might not be anywhere near the top of China's European ''wish list'', but despite that, the Chinese interest just keeps on coming...

The countries which make up Central and Eastern Europe are low on the aforementioned European scale, even though with China, at least since the year 2012, they have enjoyed a special relationship through the China + 16 initiative, which, as a parallel diplomatic format, tends to irritate the larger, more powerful members of the European Union, as well as the European Commission itself. One of lowest on the list is Hungary with its Eurosceptic government led by Viktor Orban, and Croatia is at the very bottom, but the desire is to alter that.

This week, there is an official visit by Chinese Premier Li Keqianga to Croatia, and the eighth summit of sixteen countries of Central and Eastern Europe with China down in Dalmatia's southernmost city of Dubrovnik, and it might be the easiest thing to look at it all as part of a political show that could act as bait for investment. Whether or not this investment will really happen and what shape that might take, whether it will be done mainly through private projects, for example in tourism, or through major state projects in the rail and port sector, is not yet clear at all.

Croatia will sign nine general memoranda with China in the areas of trade, investment, agriculture, transport, science, technology and innovation, education, sport and tourism, and the most convenient customs administration protocol that will enable the export of Croatian dairy products, which are greatly loved in China. Croatia also intends to join the Asian development investment and infrastructure bank headquartered in Beijing, how much that will cost Croatia however, is not yet known.

How large European countries cooperate with China was demonstrated just ten days ago by the Italians and the French. For the visit of Chinese President Xi Jinping, Rome signed 20 agreements (and joined One Band, a one way system that connects China with the rest of Asia, Europe and Africa, and expands its trade and influence). In Paris, 15 such agreements were signed, where either contracted or announced transactions amounting to billions of euros were dealt with, covering a wide range of areas - from exports of Sicilian red oranges and French frozen chicken to the opening of Italian ports for Chinese investors, sales of 300 Airbus aircraft, energy projects, shipbuilding, etc.

After the construction of Croatia's much anticipated Pelješac bridge, which is funded primarily by European Union money, Croatia hopes for more Chinese investments in national transport projects. This regards the port of Rijeka and the entire Rijeka traffic route, including the line from Rijeka to Karlovac, as well as projects such as airports.

According to data which takes the whole of Europe into account, during the period from 2000 to 2018, almost 47 billion euros of direct investment from China was invested in Britain, Germany saw 22 billion euros, Italy saw 15.3 billion euros, and France saw 14.3 billion euros. Hungary saw a significantly smaller figure of 2.4 billion euros from the Chinese, Poland saw even less with 1.4 billion euros, Romania saw 900 million euros, and Croatia saw just 300 million euros. A stark contrast to the United Kingdom, which is by far one of Europe's most powerful nations.

In the region, the intensity is getting stronger, and in neighbouring Serbia, Chinese loans have come in handy when building transport infrastructure and energy projects and, but that medal, like any other, has two sides, and the takeover of companies hasn't always been met with welcome arms by the Serbs.

The aforementioned data report shows that the culmination of Chinese investment in the EU was reached back in 2016, largely through the take over of companies, and over the last two years, it has fallen, which is attributed to more stringent rules implemented by some EU member states, as well as increased capital controls conducted by Beijing.

For Zagreb, it was a bit uncomfortable to get closer to Communist China in the above mentioned period, as the common policy of overseeing and limiting the Chinese penetration of the ''Old Continent'', especially in strategic and technologically sensitive areas, was being undermined. That chapter however, appears to be well and truly over in Croatia's eyes.

While large investments and projects are anxiously anticipated here in Croatia (and the Chinese interest in Rijeka and the Rijeka-Karlovac line is at least nine years old), data on trade relations show that there is a deficit. State Secretary Nataša Mikuš Žigman notes that there has been a noticeable increase in the volume of trade between Croatia and China, but imports are growing more than exports are. Last year, exports of goods amounted to 133.4 million euros, an increase of 19 percent when compared to 2017, while imports amounted to 803 million euros, an increase of 15.6 percent.

Croatian companies might be able to export more to China in the future, and the business forum being held in Dubrovnik is an excellent chance to showcase some innovative Croatian export ideas, but for now, the main export products continue to be raw or semi-finished products such as stone, leather, untreated wood and polymers, while when it comes to imports, we can see the reign of traditional Chinese consumer goods, white electronics and telecommunications equipment, as well as a constantly increasing number of Chinese tourists visiting Croatia, too.

As the Chinese continue to ramp up their business in Croatia, from Pelješac bridge to Rijeka's port, more announcements continue to appear, and just recently we reported on the Chinese plan to open up a car factory tucked away among the citrus trees of southern Dalmatia's fertile Neretva valley, more precisely in the Nova sela business zone near Kula Norinska in Dubrovnik-Neretva County. While many remain concerned about Chinese influence in Croatia, many others are much more occupied and lured by the promise of an economic boost and employment opportunities.

Make sure to follow our dedicated business page for more information on China-Croatia relations and much more.

 

Click here for the original article by Gordana Grgas for Novac/Jutarnji

Monday, 8 April 2019

Croatia to Gain New Tourist Destination with 68 Million Kuna Project

As Poslovni Dnevnik writes on the 8th of April, 2019, the Cerovac caves are some of the most interesting geomorphological attractions nature has to offer in Croatia, and the caves were originally set up for visitors back in 1951.

The ''Cerovac caves'' centre of excellence deals with the sustainable management of natural heritage and karst underground, and this new tourist project should be able to get completely off the ground in two to three years, writes Večernji list.

The Cerovac cave project is being carried by the the Velebit Nature Park public institution (JUPP Velebit) and the project's partners, which include the Zagreb Speleological Association, Zadar County and the public institution for the protection of nature of Zadar County, Natura Jadera.

''The total value of the project stands at 68.5 million kuna, out of which approximately 53 million kuna of non-refundable money is being granted by EU funds, and the rest of the money, along with that of the project's partners, will be provided by the Ministry of Environmental Protection and Energy and the Environmental Protection Fund,'' stated the president of the Zagreb Speleological Association and historian Stipe Tutiš, who was immediately followed by architect Roman Šilje, who went on to explain the meaning behind and the ultimate goal of the whole project.

''In southeastern Velebit, in Crnopac just above Gračac, the largest natural speleological sight in the Dinaric karst, the Cerovac caves, can be found. So far, only the ipper and lower Cerovac caves were visible and accessible, but owing to the passage of time and to the Homeland War, they remained neglected. Therefore, Croatian speleologists, as the initiators of this project, have begun with all of their other partners to return to this unique karst phenomenon and give it the importance it deserves, so, back in 2010, we started with the development of this project. Five years later, the project documentation got started, which was funded by the Environmental Protection and Energy Efficiency Fund.

In October 2016, the project was submitted to the Operational Program for Competitiveness and Cohesion 2014-2020. The evaluation lasted from October 2016 to April last year, and on April the 4th, 2018, around one year ago, an agreement was signed with the Ministry of Regional Development and EU Funds,'' concluded Šilje.

Make sure to follow our dedicated lifestyle page for more information on current projects in Croatia and much more.

Sunday, 7 April 2019

Chinese Building Car Factory in Dalmatia, Jobs for 500 People

Chinese-Croatian relations grow ever closer as the Chinese expand their business empire in Dalmatia, not merely stopping at Pelješac bridge. The Chinese are now setting their sights on a vehicle factory in southern Croatia.

As Poslovni Dnevnik writes on the 7th of April, 2019, an army of unemployed people, almost three thousand of them in total who are registered at the employment centres in Metković and Ploče in the Neretva region, received the news with understandably huge enthusiasm.

The Chinese will re-launch the Neretva valley, Slobodna Dalmacija writes, breathing life back into a part of Dalmatia that really needs it. Apart from the fact that they are already working on the aforementioned construction of the much anticipated Pelješac Bridge, the Chinese will soon embark on yet another major project in Croatia - a factory for electric cars and scooters in the Nova sela business district, which has so far been being developed in the Neretva valley's Kula Norinska area, but at a very slow pace.

This slow page is set to change a lot when the Green Tech Group, registered as a company in Zadar by Karl Soong along with Croatian entrepreneurs Mladen and Anthony Ninčević, starts with the construction of electric vehicles intended for the markets of Central and Eastern Europe down in Nova sela.

There are many unemployed people living in and around the Neretva valley, which is close enough yet just a bit too far away from potential employment in tourist areas like Dubrovnik. This news naturally brought a smile to the faces of many seeking steady work as in Kula Norinska, work began on the infrastructure in the future business zone in Nova sela, thus making this potentially enormous capital project start right there on ground in Dalmatia.

Twenty people would be employed to start things up at Dalmatia's brand new factory. However, when investment in the production of electric scooters, automobiles and batteries begins to add up and things gain some motion, up to 500 workers will be able to gain employment in various positions in the electric vehicle production facilities.

Make sure to follow our dedicated business page for more on China-Croatia relations, business in Croatia, the investment climate and working in Croatia, and much more.

Saturday, 6 April 2019

Invest Croatia: New Data Source for Investment Launched

At the beginning of April 2019, the Ministry of Economy launched a new website dedicated to investors - Invest Croatia.

As Poslovni Dnevnik writes on the 5th of April, 2019, Invest Croatia is available in both Croatian and English language and contains an abundance of useful and necessary information for the preparation and eventual realisation of investment projects in the Republic of Croatia, from general macroeconomic indicators, all the way to the examination of entrepreneurial zones and a list of available incentives for investors.
 
After making a decision or selecting Croatia for the realisation of an investment plan, the next step for the investor is to find an adequate location and set about completing the investment project. In addition, on the brand new Invest Croatia page, a map of available entrepreneurial zones by county - http://investcroatia.gov.hr/zone/, with a very detailed view of the size of the available land, its purpose and prices, all the way up to information about communal connections and companies which already operate in this area are readily available.

Furthermore, would-be investors will have a detailed overview of the steps and necessary actions that need to be taken in realising their respective investment projects http://investcroatia.gov.hr/investirati-pregled-koraka-realizaciji-investijskih-projekta/.
 
In addition to this, Invest Croatia has several very useful tools, such as the Investment Calculator, which allows you to calculate the amount of incentives an investor can get for their project. The calculation is based on the introduction of a number of specific variables - the type of investment, foreseen investment costs, the planned number of new jobs, employee average salaries, the investment location, and the enterprise/company size.
 
Publications posted on the new Invest Croatia page will offer proper assistance to investors in decision-making, as well as during the actual investment project implementation process. They include an investment guide, a catalog of investment opportunities and sector publications, as well as an array of successful stories of companies who are already operating in the Republic of Croatia, and official statistics claim there are almost 16 thousand such companies at the moment.

Make sure to follow our dedicated business page for more on investment in Croatia, the investment climate, doing business here, and much more.

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.''

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

 

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

 

Wednesday, 20 March 2019

Pula's Arena Hospitality Group Announces 500 Million Kuna Investment

As Barbara Ban/Novac writes on the 19th of March, 2019, Pula's biggest hotel group, the Arena Hospitality Group announced the continuation of its large investment cycle yesterday, the amount of which will be about half a billion kuna. These are investments in the hotel Brioni (Brijuni) and the apartment resort of Verudela Beach in Pula, the Kažela camp in Medulin, and the doing up of the Art'otel Berlin Kudamm over in Berlin, Germany.

Namely, this Pula hotel company is the only one which owns hotels in Germany and Hungary at the moment. The Arena Hospitality Group recalled that by mid-2017, via a public offer on the Zagreb Stock Exchange, they raised about 750 million kuna to continue their investment cycle.

''We're continuing with our investment cycle, which will be around half a billion kuna from 2018 to 2022. Some of the investments have already been done, some have started, and some are just beginning. Last year we renewed camp Pomer, which became the first glamping site in the country, and we believe it's one of the best in the world. That investment stood at 70 million kuna,'' said the Arena Hospitality Group's Reli Slonim.

With that move, the path to rejuvenating their camps is definitely wide open, which is a sector of theirs which they haven't invested significantly in before last year, as they devoted themselves to raising the quality of their hotels and apartment resorts, as well as their numerous acquisitions in Europe. Part of their facilities are also branded as Park Plaza.

''This year we started with the complete doing up of the Kažela camp in Medulin, and this investment is worth 128 million kuna, which is our biggest investment in the camps. After the completion of the investment, the camp will offer its guests 1,300 spacious places and 164 new luxury mobile homes. In addition, the camp will get a new entrance and reception, new beach bars, and entertainment and sports facilities,'' Arena Hospitality Group's Reli Slonim said.

It is interesting to note that mobile homes in this camp will be made up of ecological and recycled materials, and each of them will be about 40 square metres in size. This will be one of the biggest investments in camps this year in the country, and it should be finished by this [tourist] season.

A member of the management of the Arena Hospitality Group, Manuela Kraljević, also added that along with all of their current investments, they are preparing for the renovation of the Verudela Beach apartment complex too, which will begin in autumn this year. As of now, they have refurbished a ten-unit building, which is an example of how the other apartments will look when finished.

In the tourist resort of Verudela Beach, the plans are to invest about 60 million kuna during the second half of 2019. Ten accommodation units will be upgraded by this season, while the remaining 146 units and 20 villas will be renewed in time for the 2020 summer season. After the completion of the investment, the resort will be under the brand of Arena Hotels & Apartments, Kraljević said.

They also announced the reconstruction of Hotel Brioni, which for the time being, remains the only hotel in Punta Verudela that hasn't been given a ''fresh face''. It is a cult hotel which was built back in the 1970s, primarily for American guests. So far, only two showrooms have been done up, which will be somewhat larger than the existing ones, but this won't change the number of rooms.

''We have decided that we're not going to change the size of this hotel, but we will rebuild it as it is, and the room sizes will be about the same. We will invest 190 million kuna into it, and we'll start doing it up in 2020 after the [tourist] season. The hotel will be finished in one year and [everything] will be completed by 2022,'' Slonim said. In addition to investments in Croatia, this year the Pula hotel group is also renovating its hotel in Berlin, investing the equivalent of 53 million kuna into it. The hotel is located in Berlin's famous Charlottenburg district and is dedicated to the works of the famous pop art artist Andy Warhol. The investment will include a total accommodation capacity of of 152 rooms, as well as all of the other hotel facilities one might expect.

As Luka Cvitan said, the German part of the portfolio is extremely important to the Arena Hospitality Group because it gives them stability and doesn't depend solely on tourism flows in Croatia. Last year, hotels in Germany saw the largest growth, while in Croatia, things unfortunately stagnated somewhat. Business last year amounted to 758 million kuna, and was higher than last year's gain by 30 percent. That is why the Arena Hospitality Group is also thinking about further acquisitions in Belgrade in Serbia, as well as in other countries in the region.

''Also, since we have a portfolio abroad, we can offer our employees full-time employment,'' said Cvitan.

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

 

Click here for the original article by Barbara Ban for Novac/Jutarnji

Monday, 18 March 2019

Kolinda Grabar-Kitarović Discusses Investment at InvestCro Conference

The InvestCro conference was opened by the editor-in-chief of Poslovni Dnevnik, Vladimir Nišević, who stressed the fact that this project opens up discussions topics that are of great importance to our society.

As Poslovni Dnevnik writes on the 18th of March, 2019, the "InvestCro: Investment in (Non) Opportunities in Croatia" conference, whose central theme is rather depressingly inspired by missed opportunities, ie planned investments that have not been realised, as well as obstacles investors encounter and also possible improvements to the arrival and treatment of foreign investors, is being held at the Westin hotel in Zagreb.

This conference is the second in a series of four conferences as part of the all-year-round multimedia project headed by Croatian news and media outlets Večernji list, Poslovni Dnevnik and 24sata entitled "InvestCro: Kako do ulagača" which discusses how investors can be attracted.

The President of the Republic of Croatia, Kolinda Grabar-Kitarović, stated that the current results of foreign investments don't match the desired image. She said that lessons should be learned from the mistakes alreayd made to avoid repetition.

President Kolinda Grabar-Kitarović said that Croatia was missing out on so-called Greenfield investments and has proposed five specific guidelines to the Croatian Government in order to attempt to tackle that problem.

"The results of direct foreign investment don't match the desired image. In 26 years, 33.5 billion euros has been invested in Croatia, but the problem is that the investments were mostly Brownfield [investments] and focused on ''nontradeable'' sectors. We're missing out on Greenfield investments, investment in the production of goods and services that will create quality jobs and be more export-oriented,'' said the president at the InvestCro conference in Zagreb.

She feels that the direction of development can be directed in the desirable direction if the appropriate lessons learned from the mistakes made are properly taken into consideration. "First of all, I'm thinking of investment woes, the shortage of people involved in attracting investors, the lack of approach planning and coordination," she said.

On their way directly from Pantovčak to the Croatian Government are five key guidelines for the faster and easier growth of investments in Croatia. It is necessary to consolidate the competences of all those responsible for attracting FDI (foreign direct investment) at a single national level, to create an investment attracting strategy aligned with other economic strategies, to focus on new models and soft investment incentives for added value and to constantly create an attractive investment climate.

The five recommendations include the continuation of work on a better overall image of the Republic of Croatia and the promotion of the country as a destination for investment, not just a tourist destination. In this regard, Grabar-Kitarović announced that the working group who deal with branding Croatia will come out with guidelines within a month.

"We decided to do something for our society, as well as for those who will still be here when we're gone. Without healthy investments, we will remain without investors, and for this reason we have just decided to speak [on the subject] through various conferences, just like this one today.

''I hope this conference will contribute to the progress of Croatia,'' Niševic said.

'' the last two years, two-thirds of greenfield investments in the EU took place in just six European countries. I believe that Croatia will raise its rating in 2019 and come over to the side of these six countries, with the help of new laws and a better quality framework for stimulating investment,'' said Minister of Economy Darko Horvat at the InvestCro conference.

"The share of investment in GDP is growing, we're at the average of EU countries. The third quarter in 2018 was, according to current information, optimistic, as there was a 4.9 percent rise. Croatia needs economic growth of five percent. Step by step, we're strengthening competition, there is no instant solution, and changes need to be deeply rooted.

We should help entrepreneurs to retain as much of their own funds as possible for the new investment cycle. We're digitising business and the state, in order to reduce the burden on entrepreneurs. Therefore, I expect growth in production, especially in the private sector. Through the Investment Incentive Act alone we attracted 16 billion kuna, with 12,750 new jobs being planned. We know exactly what kind of educational profile we need, we need to make sure we've got young people who will be employed there. We need a synergistic effect with cities and counties," the minister said, hinting at the need to all be on the same level.

"We want investments with new technologies and added value. Despite the global boom in the digital economy, less than 20 percent of such investments fell into the ICT sector. We are not only looking at the volume, but also the character and type of investment, as well as the quality of jobs which is what our young people who are leaving are looking for abroad. We need a bit of courage and some enthusiasm in order to turn these issues into a chance.

The Ministry of Economy has announced five new tenders, which is an innovation opportunity for domestic entrepreneurs. I'm sure that 303 million euros will be invested in Croatia's investment potential and that this year will end with development,'' concluded Horvat, adding the encouraging fact that this week, the representatives of several Swiss companies are browsing northwestern Croatia and looking for business zones that are ready for them to move part of their business to.

Mladen Fogec, president of the Association of Foreign Investors in Croatia, noted that Croatian pessimism could affect foreign investors very much.

"The rating agencies are constantly positioning us at the end of the second-third on the doing business scale, but they all get their perceptions from talking to our political parties, non-governmental organisations, and we're very inclined to being negative - we have to turn to optimism. When it comes to the perception of corruption... we're not in the best position, but when you ask a person whether or not they bribed someone, the answer is always that they didn't. Please spread optimism because Croatia has a lot of potential. In principle, there's an enormous problem with our mentality, the capacity for change isn't big enough, we're still not ready to start to change, and we're living in the era of digitisation and computerisation,'' Fogec said.

"We've spent far too much time wrestling with the past, we spent an actual minister of economy on Agrokor, and her successor is now spending most of his time trying to deal with Uljanik, which is also grappling with the past. We need to deal with the future. It's good that we have introduced a law on strategic planning. It's not a question of whether foreign investors want to come to Croatia, but whether or not we actually want foreign investors,'' claims Fogec.

He noted that the association he leads didn't issue the so-called ''white book'' for business for 2019 because the problems still remain exactly the same as they were before. "Nothing has changed, or it has changed at a slower rate compared to changes in neighbouring countries, so our latest edition is still valid," he concluded rather sarcastically.

For those of you who understand Croatian, here's a video of what has been said, suggested and discussed at the conference:

Make sure to follow our dedicated business page for more on doing business and the overall investment climate in Croatia.

Sunday, 17 March 2019

Citizenship for Sale - Could Croatia Reward Wealthy Investors?

Could Croatia soften its laws on the acquisition of citizenship for foreign investors bringing money, jobs and other benefits with them to Croatia? It's a sensitive topic for many, but more and more people in business circles are beginning to believe that this could be one answer to Croatia's increasingly bleak demographic picture.

As Boris Oresic/Novac writes on the 17th of March, 2019, the value of a passport is measured by the number of countries to which its owner can travel without the need for a visa. On the World Passport Index, the Republic of Croatia holds a high ranking of sixteen because the owners of its travel documents enjoy visa-free travel to 169 countries across the world.

According to the latest research by the Swiss agency Henley & Partners, which helps individuals who want to acquire the nationality of a country, the most powerful passports are Japan and Singapore, which allows visa-free access to 189 countries, with Germany coming second with just one number less. Following that come Finland, France, Italy, South Korea, Spain, Sweden, and Denmark.

From year to year, more and more countries abolish visas for Croatian passport holders, making the blue passport with the Croatian coat of arms more and more sought after in general. However, unlike some European countries, the Croatian state has not yet decided on what is considered by many to be a controversial move - selling its citizenship to those who want to pay good money for it and don't pose a risk to national security.

Portugal, Austria, Malta, Spain, Latvia, Lithuania, Greece, Cyprus and Bulgaria are some of the EU countries which, under varying conditions, do offer such opportunities to foreigners. By selling their passports or permanent residence permits, these countries manage to earn significant income from East Asia, Russia and the Middle East who aren't lacking money and who want EU documents which automatically enable them to move freely and operate in 28 member states, some of which fall into the most powerful countries of the world.

The European Commission doesn't take such a bright view at such practices, and at the end of January it warned EU member states that third-country investors seeking such so-called ''golden passports'' and ''golden visas'' increase the security risk throughout the EU. This criticism is mostly related to Malta, Cyprus and Bulgaria, which have the most liberal laws on the matter. For example, Malta charges 650,000 euros for its passport, and the applicant must have possessed 350,000 euros worth of real estate on its territory for five years. Cyprus offers its citizenship to those who invest 2 million euros and have real estate worth more than 500,000 euros. As one of its arguments for deterring the practice of selling citizenship, the European Commission cites the potential problems of Russian capital of suspect origin.

The former government of SDP's Zoran Milanović discussed the idea of major investors being allowed to acquire citizenship back in 2015, but such notions appear to have been quickly given up on and there is no indication, at least at the moment, that these regulations could change significantly. In business circles however, there are plenty of people who think that it's high time that Croatia softens its rigid attitude, because by selling a certain number of passports, it would not have lost anything and could in turn gain many benefits. With the country's demographic image becoming more and more bleak, many believe a softened stance wouldn't hurt.

Globus's interlocutor, who is otherwise very well-versed in this topic, argues that when looking for security and business opportunities, the Croatian passport is most likely to be sought after by businessmen from Asia and Russia.

''The Agency conducts an investigation to make sure the applicant isn't a criminal, that he isn't in political asylum, that he doesn't abuse taxation... Then it's handed over to the country whose official services also do their part before deciding whether or not to comply with the request,'' says Globus's source, adding that this year alone, Croatia has raised its quota for the employment of foreign workers from non-EU countries to as high a figure as 65,000.

''How can we know that there are no criminals among these people? It's hard to believe that some rich man would come to Croatia with the intent of blowing it up with explosives. It's not known that anyone with a Maltese passport is linked to some terrorist attack. Security risks don't exist,'' explains a Croatian entrepreneur who is well acquainted with some very wealthy business people and others who would like to spread their wings, their work and their money into Croatia if they were to gain citizenship.

The number of people who can be granted citizenship can be limited by each country or by set quotas. Globus's source believes that a quota of the first thousand passports offered for sale would be completed within a year to a year and a half. This would mean that 300 million euros would be pumped directly into the state budget, which roughly covers the entire value of Pelješac bridge. Advocates of such ideas believe that several thousand wealthy foreigners would acquire all of the rights and obligations of all other Croatian citizens, and would not undermine the demographic picture of Croatia, which is already as grim as grim can be. Most of them, however, would probably not spend much time here in Croatia, and they would certainly not vote in national elections.

The Ministry of the Interior (MUP) is responsible for all issues related to the acquisition of Croatian citizenship, yet most member states do have rather vague legislation, however difficult it might be to come across, that points to discretionary procedures for naturalisation. In such proceedings, a state may freely grant nationality to a foreigner based on its national interests, that is typically related to outstanding achievements such as those in the field of culture, science or sport, but it can also be equated with economic interest.

There is a legal possibility for a foreign entrepreneur or an investor to acquire Croatian citizenship in a more privileged manner if the competent ministry feels that it is in the interest of the state to grant it. The Ministry of the Interior notes that the process of amendment to the Law on Croatian Citizenship is indeed in progress, but it does not foresee an amendment to Article 12 in order to facilitate the acquisition of citizenship for foreigners who want Croatian nationality purely for investing in Croatia.

Make sure to follow our dedicated business and politics pages for more information on doing business and the political and investment climate in Croatia.

 

Click here for the original article by Boris Oresic for Novac/Jutarnji

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