Friday, 7 May 2021

Oleg Butković Presents Reforms And Investments For Transport Sector

ZAGREB, 7 May, 2021 - A part of the National Recovery and Resilience Plan (NPOO) refers to developing a competitive, energy sustainable and efficient transport system, and it is valued at HRK 5.5 billion, Minister of the Sea, Transport and Infrastructure Oleg Butković said on Friday.

The National Recovery and Resilience Plan totals HRK 47 billion and comprises five components, with the economy component valued at HRK 26.2 billion. That component includes a sub-component on developing a competitive, energy sustainable and efficient transport system, with investments worth HRK 5.5 billion, recalled Butković.

The plan, he said, foresees the continuation of significant investments in modernising transport infrastructure with the aim of developing a sustainable transport system and stimulating the development of smart solutions as well as  reforming rail, road and air transport as well as maritime and inland navigation.

We are prepared to make these reforms and that is an opportunity to continue the current strong investment cycle in transport infrastructure, which amounts to more than HRK 25 billion. With the resilience programme we are continuing that investment cycle which will amount to more than HRK 30 billion by 2030, particularly in railway projects as well as all the other projects, said Butković.

He announced that reforms would include amendment of the Roads Act by 2026 to create conditions for the interoperability of electronic road toll systems and improve road safety.

Answering reporters' questions, Butković said that the Hrvatske Autoceste road management company is well on its way to advertising a tender for a new contactless toll system at all motorways in the country.

He estimates that the tender could be advertised in September or October and that the new system will most likely mean the introduction of a digital vignette.

The plan also foresees the adoption of new laws on maritime zones and sea ports, on inland waterway transport and ports, and on regular and occasional sea transport to ensure uniform implementation of regulations on public port management.

The plan also includes the construction and reconstruction of railway infrastructure, the modernisation of sea ports, the procurement of three passenger ships and three catamarans, new ferry boats, trams, buses, a new photovoltaic power station, and the construction of a new Level 5 autonomous vehicle, said Butković.

According to Butković, HRK 2.8 billion of the HRK 5.5 billion planned to be invested in the transport system would be allocated to the private sector.

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

Tuesday, 13 April 2021

Bridge Party Says Investing in Public Sector Won't Result in Economic Recovery

ZAGREB, 13 April, 2021 - The Bridge party on Tuesday criticised the government's National Recovery and Resilience Plan, noting that investing in the public sector will not finance economic recovery but rather cause new scandals and clientelism.

"Each kuna invested in the private sector will yield a return of four kuna and each kuna invested in the public sector means a maximum return of one kuna, if the money is used efficiently, which in Croatia is not the case," Bridge MP Zvonimir Troskot said at a news conference.

He said that he condemned the stigmatisation of people who think critically about the National Recovery and Resilience Plan as "people whose patriotism is dubious."

Ruling HDZ MP Grozdana Perić last week said that those who criticise the National Recovery and Resilience Plan "do not love Croatia."

"Grozdana Perić and the prime minister's special advisor on economy, Zvonimir Savić, are not the only economic strategists. There are the Institute of Economics, the Croatian Employers' Association, the Entrepreneurs' Association as well as independent economists who are saying that the National Plan is not good," said Troskot.

"If entrepreneurs are again disregarded, we won't have money for wages, pensions or COVID allowances," he said.

Bridge against banning "For homeland ready" salute

Bridge MP Nikola Grmoja commented on initiatives to ban the Ustasha salute "For the homeland ready."

"As regards the insignia of the Croatian Defence Force (HOS), that is a legal unit of the Croatian Army. We are not for bans but rather for education and clear distancing from all totalitarian regimes, Fascism, Nazism and Communism alike," said Grmoja, noting that one should not link HOS with the 1941-45 Independent State of Croatia and the Ustasha.

"Banning symbols turns them into a fetish, and we don't want that," he said.

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

 

Thursday, 8 April 2021

HRK 20 Million For Areas Populated By National Minorities

ZAGREB, 8 April, 2021 - The government on Thursday made decisions on the implementation of programmes for financing local infrastructure and rural development projects in areas populated by national minorities, for which HRK 20 million was earmarked in this year's budget.

The programmes pertain to areas that are markedly below the national development average in which national minorities make up at least 5% of the population according to the 2011 census.

Regional Development Minister Nataša Tramišak said the programmes would ensure the minimum standards of municipal and social infrastructure as well as financial instruments for family farms.

The government also adopted a regulation on the financing of national minorities' public needs to enhance their rights and protect as well as promote their cultural, national, linguistic and religious identity.

Waters Act amendments

Also today, the government sent to parliament amendments aligning the Waters Act with EU legislation.

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

Wednesday, 3 March 2021

24 Billion HRK Invested In Islands In The Past 14 Years

ZAGREB, 3 March, 2021 - In the past 14 years almost HRK 24 billion has been invested in Croatia's islands, an average of HRK 1.7 billion a year, a government representative said in parliament on Wednesday, reporting on the implementation of the Islands Act in 2018 and 2019.

MP Anka Mrak Taritaš of the opposition GLAS said a debate on the report was an opportunity to talk about how to keep people on the islands and how much was invested in renewables, environmental protection and waste management.

Croatia systematically caring for islands

MPs of the ruling HDZ said Croatia was systematically caring for its islands, including through investments, absorbing EU funds, renewing the fleet and dealing with waste management.

Mirela Ahmetović of the opposition Social Democratic Party said the increase in investment in the islands was not only a result of the law but also thanks to efficient local government.

She criticised Croatian Post for investing only HRK 430,000 in islands, despite record profits, for the procurement of air conditioning units.

Sandra Benčić of the opposition green-left bloc underlined the importance of investing in quality education.

Number of island residents up by almost 5,000

In 2018, the population of 51 island local units went up by 4,903 from 2011 and in that period 36 island towns and municipalities recorded positive trends, said Spomenka Đurić, state secretary at the Regional Development Ministry.

She said investments in the islands increased every year because the state recognised them as areas of special interest and big potential.

The absorption of EU funds through strategic projects significantly contribute to investments, from HRK 530 million in 2017 to HRK 1.4 billion in 2019, Đurić added.

Speaking of key strategic projects, she mentioned Pelješac Bridge, island ports and water supply.

Đurić said 45 islands are permanently or temporarily inhabited, with 51 maritime routes, 58 community health centres, 102 primary and 13 high schools, and 23 care homes.

(€1 = HRK 7.5)

Monday, 22 April 2019

Is Croatia Really That Important on Chinese Investment Map?

Just how important is Croatia on the Chinese investment map?

As Iva Grubisa/Novac writes on the 21st of April, 2019 China's investment in European Union countries has grown steadily over the past ten years, and the European Commission (EC) has recently referred quite openly to the Chinese as a "systemic rival" and "a strategic competitor," the BBC reports.

The European Union has thus introduced a new mechanism for the strict overseeing of foreign investment, in order to promptly react should they assess that foreign investment could harm the security of EU member states.

According to the EC's report, a third of total EU assets are in the hands of foreign companies and 9.5 percent of companies in the EU have owners based in China, Hong Kong or Macau. When compared with 2007, when this share was only 2.5 percent, it's a significant increase, although the share of European business in Chinese hands is still relatively small. By comparison, back at the end of 2016, 29 percent of EU companies were controlled by Americans and Canadians.

Chinese investment in Europe reached its peak back in 2016, when it amounted to an enormous 37.2 billion euros, followed by a visible slowdown.

"This is mainly a result of stricter control over Chinese capital, but also changes in the global political climate when it comes to China's investments,'' explained Agatha Kratz of the Rhodium Group for the BBC.

Just where are the Chinese investing the most? Although a recent visit by a large Chinese delegation has been accompanied the news of the growth of Chinese investment and ambitions here in Croatia, according to the Rhodium Group, the Republic of Croatia is not even in the top ten countries in which China is the biggest investor in terms of capital.

Between 2000 and 2018, most Chinese investments took place in the largest European economies, such as the United Kingdom, Germany, Italy, and France. The top ten were ranked in the Netherlands, Finland, Sweden, Portugal, Spain, and Ireland.

According to Bloomberg's survey last year, they have owned or used to own shares in four European airports, six naval ports, and as many as thirteen football clubs.

Nevertheless, one must not forget the new big Chinese project, the Silk Road, known as the "One Belt, One Way" Initiative, in which the Chinese plan large investments in European infrastructure to strengthen trade links between China and Europe. Croatia is along that ''road'', and therefore the Chinese are investing in Rijeka Port, the Rijeka-Karlovac railway, mentions of investments in Croatian airports have been floating around, and there's almost no need to mention the fact that the Chinese are building Peljesac bridge, although its cost is mostly paid for by European Union funds.

The Chinese are also investing in Croatia's neighbouring countries, building roads and railways in Serbia, Bosnia and Herzegovina, and even in Northern Macedonia. In addition, Montenegro, as Novac.hr reported earlier this week, provided part of its state territory as a guarantee for the repayment of credits for the construction of part of the Bar-Boljari motorway to the Chinese Exim bank.

Since Montenegro has less of a chance of repaying this loan, it's not an entirely unbelievable option to remain without part of the state's territory, as bizarre as it might sound at first, and in that context, it's possible to understand some Croatian fears about entering into partnerships with the Chinese. This example is often cited as a warning to European countries to be extremely cautious when concluding economic agreements with China, to make sure they don't eventually fall into becoming a slave to the debts.

Trump's administration is much more closed to Chinese investment activities in the United States, and the authorities of other non-EU countries are much more cautious in entering into such partnerships, especially in the areas of telecommunications and defense. In any case, positively or negatively, China is certainly an extremely important player in Europe.

Make sure to follow our dedicated business page for much more on Chinese presence in Croatia. Chinese investment in Croatia, Chinese projects in Croatia and more.

 

Click here for the original article by Iva Grubisa for Novac/Jutarnji

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

Saturday, 16 March 2019

Investment in Croatia - Doing Your Laundry Pays Off

If one goes in search of a definitive answer to the question of what type of business concept with great market potential and small initial investments is currently worth investing in in the Republic of Croatia, few people would be able to give you the real answer, and the real answer is as bland as laundry. No, really.

As Jasmina Trstenjak/Poslovni Dnevnik writes on the 15th of March, 2019, the current estimates are that the number of overnight stays realised by foreign tourists, especially in private accommodation, will increase in Croatia this sumemr season, and such commercial facilities will have virtually no real outlet to deal with proper cleaning, washing, drying and the general supply of products for accommodation units like hotels do, which is an increasing problem with each passing season.

Along with the strengthening of the position of Croatia as an attractive tourist destination far from Europe's shores all the way over on distant markets such as China and Korea, it's expected that this guest profile will visit more than one destination within the country. As the trend of short overnight stays of course goes hand in hand with doing a lot of laundry, this is a big challenge for renters along the coast and beyond.

In Croatia, numerous hospitality and accommodation facilities rely heavily on laundry services to enable them to operate smoothly throughout the season. Although such facilities, which until rather recently only appeared in American films, are becoming more and more of a common sight here in Croatia. Regardless of the fact that they're making more ''regular appearences'', there still aren't enough of them currently in operation.

Mario Martinek, the owner of the Bijeli svijet (White world) company that has been doing business successfully on both the domestic and European markets for many years now, says that a significant number of Croatian workers are working abroad now, and lack of service staff is one of the main obstacles to overcome:

"Because of this, there's often a lack of people to do the basic activities such as the frequent washing and drying of bedding,'' says Bijeli svijet's owner. In the last four years in Croatia, Martinek's company has worked to open more than 80 such facilities, through which more than 200 people were employed.

"In addition to hotels and campsites, there are many families looking for an independent source of income, and we're particularly proud of that,'' he added, noting that no special technical skills or previous entrepreneurial experience are needed to run a laundry service.

They offer their clients free education, assistance with self-employment, and a step by step guide through the entire whole process: from collecting grants to starting work and opening and working in their own facilities. On the other hand, hotels, camps, restaurants and other larger facilities, by incorporating professional equipment, manage to realise significant savings on energy, such as on electricity and water. Savings on electricity consumption are 25 percent, and on water, a significant 44 percent per year.

According to the Bijeli svijet's data, in 90 percent of cases, laundry facilities are profitable business-wise all year long, and the process from idea to realisation takes a mere two months on average.

Make sure to stay up to date with investment and doing business in Croatia by following our dedicated business page.

 

Click here for the original article by Jasmina Trstenjak for Poslovni Dnevnik

Tuesday, 12 March 2019

As Investments Fall, is Croatia's Hotel Business Stagnating?

As Marija Crnjak/Poslovni Dnevnik writes on the 12th of March, 2019, Croatia's hotel sector stagnated last year in terms of the number of new rooms and in the sense of the level of entry of foreign hotel brands. A lot of this, but of course not all of it, is because Croatia has deemed it more profitable to build and invest more in private accommodation, an often ''grey'' area of Croatia's tourism industry with much lower taxes and a very poor level of general regulation. The level of major investments in new hotel rooms has fallen significantly, the number of which grew by a mere one percent in one year.

Due to all the above mentioned conditions, the market is still dominated by local investors, quite a few new names have appeared on the scene in the last year, which are still to be properly positioned as hotel brands, according to the annual global report on hotel chains in 22 European countries, "European Chains & Hotels Report 2019" by the Horwath Consulting House HTL. In the Republic of Croatia, more than a quarter of these hotels, more specifically 186 of them, operate under 43 brands in total, of which 22 are local and 21 are international brands.

"High seasonality and an unfavourable environment for investors, especially with [granting the necessary] permits, are the main reason we're in 159th place on the Doing Business list, they're the biggest barriers for foreign investors, who find it difficult to decide on taking risks in developing projects in Croatia, although a few positive examples have occurred on the market which do lead to more optimism,'' stated Siniša Topalović from Horwath's Zagreb-based office.

Horwath's analysis, which is based on the numbers from Real Capital Analytic, only takes into account investments of more than 5 million dollars, reveals that investment in hotels in Croatia is down by as much as 90 percent, from 59 million euro to a mere 7 million euro.

''The growth of hotel brands in 2018 in Croatia (4 percent) should be observed through the proper placement of several local hotel names, and only time will reveal whether or not these names will be branded on the market,'' Topalović explained.

Additionally, although Croatia can be statistically put in a very good position in terms of the number of brands operating here, the market situation shows that the level of activity is lagging behind some countries which are considered to be weaker than Croatia. A good example of that is Serbia and its increasingly popular capital city of Belgrade, which has received 40 new hotels since 2014, with growth in the hotel sector in Belgrade mainly based on foreign investments and globally respected brands such as Crowne Plaza, Radisson Blu and Luxury Collection.

Although the RevPar (revenue per hotel room) rose by an average of 16 percent in Croatia in 2018, this year a slow down is expected, caused primarily by other Mediterranean countries which are recovering from their respective problems to return to the market (this includes longtime tourism kings like Turkey and Tunisia).

The main potential seems to lie outside of the height of the summer season. Along with Serbia, where further growth is expected in the hotel segment, Albania has some great potential for foreign investors, Albania currently has the smallest share of branded hotels per total number of rooms (2 percent), and Montenegro, Croatia's neighbour to the south, also offers investors fairly favourable investment conditions and is very active in encouraging a more luxurious tourist product for the country.

Greece, known for its numerous financial issues, has entered the world's top fifteen tourist destinations despite the country's somewhat infamous ups and downs, with 150 new luxury hotels ''born'' in Greece in 2018, becoming a destination in which more than one in five hotels is in the category of 4 or 5 stars. Last year, the largest amount of investments in hotels went from the United States across the Atlantic to Spain (2.1 billion euro), following came transactions from Israel to the United Kingdom totaling over one billion euro, French investors also invested 951 million euro into the United Kingdom.

Despite all of the potentially (and likely) damning economic risks from Brexit, one of the European continent's most powerful countries, the United Kingdom, had a total of nearly 4 billion euro in investment in its massive hotel business. In 22 countries from the Horwath analysis, there were a total of 146,600 hotels on the market last year with more than six million rooms, with an average of 61 rooms per hotel. The least-branded hotels had Albania, only 12, while France has 3885 hotels in the hotel chain.

Make sure to stay up to date with our dedicated business page for more on investment and doing business in Croatia.

 

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

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