Sunday, 9 June 2019

Finance Minister Delighted with Fitch’s Credit Rating Upgrade

ZAGREB, June 9, 2019 - Finance Minister Zdravko Marić said that Fitch's decision to raise Croatia’s credit rating was very good news and that he hoped Croatia would never again fall below the investment-grade level.

"We can all be satisfied, both the Republic of Croatia and all its citizens, entrepreneurs, taxpayers. It's more good news from international financial circles. Fitch is the second credit rating agency which, after many years, has restored Croatia's credit rating to the zone it belongs, the investment credit rating zone," Marić told reporters.

Fitch Ratings on Friday upgraded Croatia's long-term foreign-currency issuer default rating to BBB- from BB+ with a positive outlook.

Marić said it was necessary to see to it that Croatia did not fall below the investment-grade level ever again because "we know well what the sub-investment zone meant and what effects it had also on the cost of debt and capital."

Marić said he was very pleased and proud that the results in the fiscal policy had been recognised again, noting that they were one of the main reasons for the credit rating upgrade.

Certain risks, such as the ailing Uljanik shipyard, have been recognised too but we have adequately addressed all those risks, he said, noting that Croatia has been recording a budget surplus for two and a public debt reduction for three years in a row.

Marić said he was pleased the Fitch report recognised the idea of introducing the euro and the good macroeconomic indicators.

That's positive news which suggests that Fitch is saying very clearly that the rating can be even better if we continue to deliver results, notably in public finance, macroeconomy and euro introduction, he added.

He noted, however, that one must not turn a blind eye to the things Fitch indicated could be challenges, such as the enterprise and business climate, the state and the public administration, notably public companies and their corporate management, the energy sector and healthcare.

If we want completely sustainable public finances, and we do, we must deliver additional results in those areas, said Marić.

Asked if now was the right time to issue an international bond, he said he would say everything when the time came. He recalled that two bonds were due for refinancing this year, one of 1.5 billion dollars on the international market and one of 1 billion euro on the domestic market.

We are making preparations, always looking two steps ahead, following the situation on the markets, and we believe this will be a positive incentive both on financial markets and the price and yield of our bonds, said Marić.

He noted that a credit score upgrade was always related to the cost of debt and capital, not just the cost paid by taxpayers from the state budget, but the cost paid by all entrepreneurs and each citizen.

We are carefully preparing everything and will choose the right time. This will be another year in which we will record a significant decrease of the total interest cost, Marić said, adding that the amount paid on interest was reduced by almost 3 billion kuna in three years, to 9 billion kuna.

More news about Croatia’s credit rating can be found in the Business section.

Thursday, 16 May 2019

Tax Revenues Growing More Slowly Than Budget Expenditures

ZAGREB, May 16, 2019 - Finance Minister Zdravko Marić said on Thursday that tax revenues had increased by 3.3% in the first quarter of the year while budget expenditures increased by about 6%, noting that the somewhat higher rate of expenditures compared to revenues was usual for that time of the year.

Addressing a press conference, Marić said that revenue from VAT and profit tax increased by 3.3% while excise taxes increased somewhat "more strongly." He underscored that he was particularly pleased with contributions for pension insurance, which recorded an increase in revenue of over 5%.

When it comes to expenditures, it increased by about 6%, with Marić noting that the January-March period is always "the worst" in the budget sense.

Responding to reporters' question as to whether VAT would be decreased from 25% to 24%, Marić recalled that that has been regulated by law and will enter into force as of 1 January 2020. "We included that in the law and it was passed in parliament for VAT to be reduced from 25% to 24% as of 1 January 2020," he said.

Marić would not comment on an idea by former central bank governor Željko Rohatinski, who said that the Uljanik shipbuilding company could be salvaged by printing money, but said that that was a question for the central bank.

Thursday's issue of the Novi List daily ran an interview with Rohatinski who said that "we can conduct an active monetary policy and salvage shipbuilding, despite being told that signals from abroad say that isn't possible."

The article also notes the reaction of the bank's incumbent governor, Boris Vujčić, who said that it would be best for Rohatinski to explain just how he would achieve that, as well as noting that Croatia currently has a surplus liquidity of 36 billion kuna.

More budget news can be found in the Business section.

Wednesday, 15 May 2019

Concern Grows about Health Sector Debt

ZAGREB, May 15, 2019 - Finance Minister Zdravko Marić on Wednesday said that it is obvious that the problem of the health sector debt cannot be resolved only on the revenue side of the health budget but that it requires intervention on the expenditure side too.

Speaking ahead of Thursday's meeting with wholesale pharmaceutical companies convened to discuss hospital debts for delivered medicines, Marić recalled that the Finance Ministry had already on several occasions made a contribution through extraordinary financial injections and by increasing the budget of the Croatian Health Insurance Institute by increasing health contributions on wages.

"The Ministry of Finance will always be a constructive partner in finding systematic solutions. We clearly showed our intentions on three occasions and participated on the revenue side. However, it is evident and being confirmed that the problem cannot be resolved only the revenue side but that it requires intervention on the cost side of the health budget," Marić told reporters.

He added that according to the latest data, the health sector's debts amount to more than seven billion kuna and that some hospitals have very long deadlines for payments.

Marić underscored that the problem of the health sector's debts and payment deadlines have not emerged overnight and need to be observed in the long term, adding that he is convinced that the health sector has certain recommendations and solutions.

"The system needs to be observed as a whole. The financial aspect, the debts and payment deadlines cannot be simply brushed off, and tomorrow, we will discuss that and see whether we can work something out," Marić said.

He added that compared with other countries, Croatia has a fairly high level of accessibility to health services and a very good and quality health service.

"The best confirmation and evidence of how good our doctors, nurses and medical staff are is the fact that they are quite sought after throughout the European Union," he claimed and stressed that an additional problem is how to keep highly qualified staff in the country.

More news about health sector can be found in the Lifestyle section.

Wednesday, 1 May 2019

Marić on Potential Chinese Investment: Too Early to Talk About Anything

As Poslovni Dnevnik writes on the 30th of April, 2019, Croatian Finance Minister Zdravko Marić said on Tuesday that he still needs to see if there really is specific interest from the Chinese shipbuilding company, whose representatives are visiting the ailing shipyards in Pula (Uljanik) and Rijeka (3 Maj), saying that it's too early to be able to say anything and that we "need to be completely realistic".

When aked by a journalist about the expectations of the Croatian Government, given that a delegation from the Chinese shipbuilding company China Shipbuilding Industry Corporation (CSIC) has visited the Uljanik and 3 Maj shipyards, Marić said that first of all, we should be realistic and after CISC's representatives get a proper look at the state of affairs with those shipyards and answers to the questions they are interested in, we will need to wait and see what their response to all of it will be.

At this point, it's still too early for that, he added, recalling yesterday's introductory meeting between the Croatian prime minister, his ministers and the aforementioned Chinese delegation at Banski Dvori in Zagreb, where everything was transparent and very clearly presented.

"A really high level team from the perspective of that company has arrived, but on the other hand, we need to be completely realistic. So, today they will spend all day in both Rijeka and Pula and then after that, of course, we can't expect it immediately but within a reasonable time frame, they'll determine what they saw, state what they think about it, and whether or not there is a certain level of interest,'' said Marić when answering journalists' questions after attending the annual European Investment Bank (EIB) press conference.

The CSIC delegation, headed by Hu Wenming, arrived at the enfeebled Uljanik on Tuesday morning, where talks with the members of Uljanik's management board and its supervisory board took place. Assistant Minister of Economy Zvonimir Novak has also been participating in these talks.

Several representatives of the aforementioned Chinese company arrived at Uljanik as early as Monday afternoon, where they viewed the plants and made an unofficial assessment of the capabilities of the Pula shipyard's production facilities, ie, they got better acquainted with its technical capabilities, the processes that take place there, the technology and its general capacities.

What will coe of the visit is anyone's guess so far, but despite suspicion from some, an injection of Chinese money could truly be Uljanik's very last hope.

Make sure to follow our dedicated business page for more information on Chinese-Croatian business relations, Chinese projects and investments in Croatia, working, doing business and investing in Croatia and much more.

Wednesday, 24 April 2019

State to Pay Additional 500 Million Kuna in Guarantees for Uljanik

ZAGREB, April 24, 2019 - Finance Minister Zdravko Marić told Croatian Radio that over the next few weeks the state will pay between 400 and 500 million kuna to cover the enforced guarantee for the Pula-based Uljanik shipyard, adding that the government would do everything so that the company that commissioned the construction of a dredger from Uljanik shipyard does not demand the repayment of all advance payments.

The Dredging and Maritime Management company, owned by the Jan De Nul group, is demanding the repayment of all advance payments for the construction of a dredger by Uljanik plus interest, with government collateral having been given for a part of the advance payments.

Asked whether there was hope for Uljanik and 3. Maj docks, given that the Belgian contractor was asking for its advance payment back and how much of a burden would the repayment be for the state budget, Marić said that the state was originally exposed towards the capital amount of Uljanik's loans in the amount of 4.3 billion kuna, and together with plus interest rates that amounts comes to 4.5 billion kuna.

"Most of it has been paid, some of it was paid in 2018 and the rest at the start of 2019, namely all together 3.1 billion kuna," Marić said adding that before the Belgian client's dredger there were other enforced guarantees so the state would need to pay between 400 and 500 million kuna over the next several weeks.

Asked to comment on Eurostat reports according which Croatia recorded a 0.2% government surplus in 2018, Marić said this was proof of the stability of public finances.

"The figures about Croatia released on Tuesday is another great recognition in international and domestic circles and the confirmation that public finances are stable, namely consolidated. This is the third year in a row that the public debt is going down and Croatia's consolidated gross debt was 74.6% of GDP," the minister said.

A hearing before the Commercial Court in Pazin which was expected to discuss preconditions for opening bankruptcy proceedings for the Uljanik shipyard was once again postponed on Wednesday and rescheduled for May 13.

Judge Ivan Dujić said the 60-day legal deadline for the postponed had expired, but that there were other legal grounds so he allowed another postponement. The judge said he would declare bankruptcy if Uljanik's accounts are not unblocked by May 13.

The proposal to launch bankruptcy proceedings at Uljanik was made in late January by the financial agency FINA, which said at the time that on January 21 the dock had overdue liabilities in the amount of 75.9 million kuna which it had not been able to pay for a period of more than 120 days. The Uljanik shipyard has 1,400 employees.

Uljanik said on Tuesday that the Dredging and Maritime Management company, owned by the Jan De Nul group, is demanding the repayment of all advance payments for the construction of a dredger by the Pula-based Uljanik shipyard plus interest, with government collateral having been given for a part of the advance payments.

Economy Minister Darko Horvat said on Tuesday that the negotiations with the company that commissioned the construction of a dredger from Uljanik were still under way and added that claims that the government would soon have to cover the enforced guarantee in the amount of half a billion kuna for that job were irresponsible and dangerous.

Horvat recalled that on 30 April and on 1 and 2 May, executives of the biggest Chinese shipbuilding company would tour the 3. Maj and Uljanik docks to see what can be done about their possible engagement or cooperation.

More news about Croatian shipbuilding industry can be found in the Business section.

Wednesday, 24 April 2019

''Easier Opening of Companies Raises Croatian Competitiveness''

The Croatian Employers' Association (HUP) has welcomed changes to the Law on Companies and has urged that no new burdensome regulations be introduced.

As Ana Blaskovic/Poslovni Dnevnik writes on the 23rd of April, 2019, recent changes to the Law on Companies, which simplifies the establishment and the liquidation of companies, will enable entrepreneurs to be more competitive and help Croatia to climb up and improve its place on lists such as that of the World Bank, Doing Business, on which Croatia occupies 68th position out of 140 countries worldwide. 

The Croatian Employers' Association (HUP) has openly welcomed these positive changes, but has warned that this step in the right direction should not end up with people simply becoming lost once again but this time in a maze of new obstacles.

"The Croatian Employers' Association welcomes the simplification of procedures related either to the establishment of companies or to their liquidation, and we expect the introduction of changes that will stimulate the competitiveness of the Croatian economy and make it easier to monitor rapid changes on the global market," stated Admira Ribičić, the director of legislation and legal affairs at the Croatian Employers' Association which itself proposed changes in the same direction.

Better competitiveness should bring forward the ability to establish a simple and ''normal'' d.o.o. online, just with the payment of court fees, and without the cost of a public notary. The changes to the law open the doors for faster and easier business/company registration. However, even though e-foundation has now come into effect, the application that will enable it to function correctly will only come into force in September.

The Croatian Employers' Association has also readily welcomed the removal of the stipulation of reserving a company name, the shortening of the deadline for the court to make a decision on registration in the court registry from fifteen to five working days, as well as the provisions for the simpler and cheaper liquidation of a company, simply with a statement proving the non-existence of any debts.

"What worries us most is that we don't end up with a situation in which we remove a whole host of regulations and end up accidentally replacing them with different ones through changing the regulations. In Croatia, there are between 300 and 400 new regulations introduced annually, or amendments to existing ones, and each of them "laments" the danger of introducing a new administrative or financial burden,'' Ribičić concluded.

Make sure to follow our dedicated business page for much more on Croatian companies, doing business in Croatia, investing in Croatia and Croatian products and services.


Click here for the original article by Ana Blaskovic for Poslovni Dnevnik

Sunday, 21 April 2019

Marić: ''Kujundžić is Great, But Croatian Health System is Unsustainable''

As Frenki Lausic/Novac writes on the 20th of April, 2019, the Croatian Government's convergence program for the next three-year period has identified the pension and health system as the two largest structural risks, both of which are associated with the country's worryingly negative demographic trends.

This government assessment came at a time when trade unions are busy organising a referendum on pension reforms, as well as during a somewhat shaky period in which Zdravko Marić, the Croatian finance minister, said that Milan Kujundžić, the minister of health, is an excellent minister but that the Croatian health system with over seven billion kuna's worth of debt is unsustainable in an interview for N1.

When it comes to Croatia's concerning demographic trends, the program states that, when comparing the European Union and the Republic of Croatia, in the period 2016-2070, the remaining life span after 65 years of age will be extended by 6.4 years in men and by 6.2 years in women in Croatia, whereas in the EU, it will be 5.3 years more for men and 5.1 years more for women.

It has been stated that the life expectancy at birth in 2016 was 81.1 years for women and 75 years for men, which is less than the average for the EU, where the expected life expectancy at birth for women was 83.7 years, for men 78.3 years. However, data for the Republic of Croatia showed that life expectancy up to 2070 will be 9.4 years more for men and 7.8 more for women, while for the EU, life expectancy is expected to grow to 7.8 years more for men and 6 more years for women.

In this context, the results of the long-term projections for the Republic of Croatia for the period 2016-2070 show that without the calculated effects of the reform which came into force at the beginning of this year, pension expenditures from the first pillar should be reduced from 10.6 percent of GDP, which is what it was back in 2016, to 6.8 percent of GDP to the year 2070.

At the same time, transfers from the national budget to cover the deficit would gradually fall from the current 4.8 percent to about 1.2 percent of GDP by the year 2070. Expenditures for pensions from the second pillar should gradually increase to 1.6 percent in 2070, which means that overall retirement expenditures from the first and second pillars in 2070 would amount to 8.4 percent of Croatia's GDP.

Thus, looking at the situation macroeconomically, the pension system would remain viable, but with inadequately small pensions. That is why the government states that measures from the latest pension reform will increase pension adequacy and, accordingly, retirement expenditures in the first pillar.

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


Click here for the original article by Frenko Lausic for Novac/Jutarnji

Thursday, 18 April 2019

''Business Model of Croatian Tourism is Unsustainable''

As Lea Balenovic/Iva Grubisa/Novac writes on the 17th of April, 2019, Croatian tourism's current business model is unsustainable and has some serious challenges, according to Emanuel Tutek, a partner at the Horwath HTL consulting house, who stated this at the very beginning of a conference on the challenges of the Croatian tourism sector at Edward Bernays High School, the co-organiser of which was Jutarnji list.

Since 19 percent of Croatian GDP comes either directly or indirectly from tourism, the unsustainability of the system is a more serious issue, he added.

''First of all, our tourism is an extremely seasonal sector and as much as 86 percent of all tourism activities in Croatia take place during the summer months. It's also problematic that 96 per cent of these activities are realised on the coast and in Zagreb. In translation, this means that we have plenty of room for progress and the development of our tourist offer across the rest of Croatia, as well as the extension of the season. We are well below the European average. For example, if we compare just the peak of the tourist season, ie July and August, there is 10 to 20 times more of a burden on the area and the residents in Croatia than there is in other European countries. Just remember how some of the destinations and beaches look in July or August,'' warned Tutek.

He also added that Croatia has plenty of room for progress and development in the quality of the accommodation it provides. The Croatian hotels that, as Tutek says, are the pearl of Croatia's hospitality, are very much losing the battle with the hotel industry in the rest of Europe, and the alarm that should be enough to wake the country up is also the fact that the revenue made from tourists' overnight stays in Croatia is less every year.

In addition to this, Croatian tourism is feeling the country's ongoing demographic crisis bite hard, and has a human resource problem as a consequence. This is, as was explained by Tutek, actually a global problem. However, since the international labour market is far more competitive than the Croatian one is, foreign countries are filling their gaps with Croatian workers. Croatia is, unfortunately, at an unimpressive 100 of 138 countries in the world according to the labour market competitiveness index. An even more concerning piece of information shared by the Horwath HTL consultant was that Croatia is the last and second to last in the world on the ladder of attracting and retaining workers.

''We have no solution. The answers to this can't just be some lump sums and other initiatives, we need something more fundamental,'' he warned. One of the negative factors in each case is the uncompetitive average salary. In nearby Austria, for example, in the hotel sector, wages are about 122 percent higher. Still, the hotel industry here in Croatia has experienced a great discrepancy in numbers, and they have therefore begun to increase employee salaries for the last two summer seasons, which has been a fruitful decision. With the rise in salaries and expenses, revenue also grew.

In addition to the inadequate management of human resources, huge problems are also created by the Croatian tax policy. Property tax, Tutek said, practically doesn't exist in Croatia. ''We're the champions of how good private landlords have it. Croatia is a tax oasis,'' he claims.

''We want to be competitive, but there are a number of things that we're not even close to, not even in the wider environment. VAT reduction is certainly important, and there is also the question of consistent policies. It is important for us to have a perception of what will happen in the future at some point, but if the policies constantly change then we can't have a stable business,'' said Sanjin Šolić of the Lošinj hotel group Jadranka.

Davor Lukšić, President of the Lukšić Croatia Group, agreed with him, pointing out that Croatia's 25 percent VAT rate is very high, and even with a rate of 13 percent there would still be room for progress. "We have to remain competitive, especially now when other destinations in the Mediterranean are making a come back," Lukšić added.

But if one was to as Croatian Tourism Minister Gari Cappelli, the problem of the high VAT rate is one of the easiest problems to solve in the Croatian tourism industry. The minister claims that the Croatian Government could lower the VAT rate with one decree, bringing it down to 10 or 13 percent, and such a decision is in the government's plans for the beginning of next year.

''We have a problem with having five-star hotels in two star destinations. First of all, we have to start improving the quality of the destination and spend the whole year measuring what's happening and only after a few years will we see whether both residents and tourists are happy, as well as service providers and the environment. If everyone is more or less happy, then it makes sense to invest in a four or five-star hotel,'' stated Minister Cappelli, adding that in Croatia, it often happens that investments are made in luxurious hotels first, but not in the development of the destination in which it is located.

"Well, we have cases where five-star hotels don't have sewage systems but septic tanks," he said. The minister also referred to the initial lecture by Emanuel Tutek about the key challenges facing Croatian tourism. He agreed that there was always room for progress, but he also pointed out that he was tracking the figures daily and that he couldn't bring himself to agree with all the alarming warnings about the unsustainability of Croatian tourism.

''We're a strange people, two years ago there were no tourists and they wanted to get rid of me, now there are a lot of tourists, and they want to get rid of me again, the projections of what's to come in two years keep coming in, and they're already that I'm shaking in my chair,'' said Cappelli, adding that Croatia is spending what it earns and has therefore finally got an investment rating.

''Now the pressure on public finances is being relieved and the taxes on the economy can be reduced slowly,'' he said.

If the Croatian tourism association is asked for their opinion on the matter, this is last chance saloon for this tax relief to actually become a reality. Namely, it is anticipated that hotels could reduce the volume of their investments by as much as thirty percent over the next three to four years. ''We want to warn the government that it must not let that happen. We have to invest, but we expect that the government to create measures to encourage that and not just put us off,'' said Jadranka's Sanjin Šolić.

Dubrovnik has experienced not only growth in terms of tourism but also the improvement of infrastructure in recent years, Lukšić believes. However, despite the wild popularity of this particular southern Croatian city, it has multiple problems during the winter season.

''In the last two years, we have extended the [tourist] season and the so called ''congress season'' has helped a lot. But we all have to sit around the table and design a strategy for the winter season, which is actually the only problem,'' Lukšić said, arousing a grin from Šolić, who, having being on an island, has much bigger problems.

''It's easy for Dubrovnik. Imagine how it is for us to extend the season! You need to get to the island, the bridge is a problem, the bura is a problem, everything is a problem. We're less competitive than our colleagues on the mainland whichever way you turn. The Chinese, the Koreans, whoever comes to Croatia, lands in Zagreb, goes to Plitvice, Split and Dubrovnik, nobody comes to us,'' complained Sanjin Šolić.

That is why his team sat down together at the table and decided to turn to health tourism for which Lošinj has natural resources, a strategy and a future, said Šolić. Another solution for the development of island tourism is golf. Therefore, a location permit is currently being sought for the construction of a golf course with eighteen holes, with which will be a hotel and villa that will have a total of 800 beds.

''These are the two routes we have on Lošinj. People don't play golf in July and August because its too hot. During November, December, January, February and March, the weather is wonderful and we'll fill our capacities that way,'' he noted.

Emanuel Tutek welcomed this discrepancy in Croatia's tourism development strategies at various locations.

''Not all destinations are suffering the same issues. In Dubrovnik, there is a problem with excessive demand, and the quality of the offer needs to be worked on to reduce the number of tourists. In Istria, the offer should be increased. This has, for example, been done in Maistra. Nobody thought it would pay off to build a five-star hotel in Rovinj, but after the construction of the hotel, the rest of the sector was accompanied by the arrival of tourists and the development of the destination.

However, in addition to the respective issues destinations face in Croatia, the eternal problem facing the entire Croatian tourism sector is labour and wages.

''Salaries are a problem, they're still a base for attracting workers,'' said Tutek, agreeing with the CEO of Jadranka, but as he said, it's difficult to increase salaries because there isn't enough revenue.

"When the minister sorts us out with less taxes, I'll give the rest of it in salaries," he stated.

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


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

Wednesday, 17 April 2019

Number of Companies Which Would Reinvest in Croatia Falls Significantly

Croatia hasn't done the best job of showcasing itself in the investment world, with investors often referring to it as the ''Bermuda Triangle'' and with the phrase ''ABC'' having come to mean ''Anything but Croatia'', things aren't looking all too bright. Things can be altered, but as the old British saying goes; mud sticks.

As Ana Blaskovic/Poslovni Dnevnik writes on the 16th of April, 2019, when compared to 2018, the share of companies that would reinvest in the Republic of Croatia dropped from 68 down to 54 percent. If they were asked to do so again today, almost half of the German companies operating here would decide against investing here again, and over sixty percent of those investors have an extremely poor economic picture of the country.

This is the result of a survey by the German-Croatian Chamber of Commerce conducted between February and April of this year among 150 of its member companies. In almost six years since joining the European Union, investors first had high expectations which quickly fell, but that was apparently somewhat expected. Following Croatia's accession to the EU, there was a period of transition in which investors were waiting anxiously and looking forward to seeing European practices come to life here, but that wasn't quite the case here.

Unlike former new member states of the EU who were given the green light to join during previous wave of the EU's enlargement, Croatia stalled, at least that is the overall impression one gets when asking members of the German Chamber of Commerce, including huge names such as Allianz, Siemens, Bauerfeind, Knauf, Müller, Spar, RWE...

"The survey is a perception, but it speaks about the overall impression of companies doing business [in Croatia], and that's that nothing important is changing,'' said Thomas Sichla, president of the Chamber. As stated, when compared with the previous year, the share of companies that would reinvest in the country dropped from 68 percent to 54 percent, which speaks volumes about perception and just how mud really does stick.

The fact that this isn't just an isolated case of pessimism, but is the contour of very worrying trends is best illustrated by the fact that eighty percent of the respondents had already previously responded to the survey.

While in Croatia almost half of investors would say "Auf Wiedersehen" to investing here again, in other countries in Central and Eastern Europe where parallel research was conducted, only one fifth of the companies who responded would say the same, so it shouldn't come as any surprise whatsoever that investments and their investors simply bypass Croatia entirely. Things aren't changing in Croatia, and if they are, it isn't fast enough at all.

Out of twenty Central and Eastern European countries, Croatia is still "relatively attractive" in eighth place on the list. Siemens' leader Medeja Lončar says that "more flexibility and speed in Croatia for a better economic and investment climate are needed", adding that Siemens will continue to invest in Croatia, depending on the business environment. If one scratches the surface, the companies that make up the German-Croatian Chamber of Commerce are almost repeating some very well-known criticisms that many have about Croatia.

At the top of that ''criticism list'' lies an insufficient fight against corruption and crime, followed by the burden of high taxes and general dissatisfaction with the tax authorities and the system despite the three waves of ''tax relief'' under Finance Minister Zdravko Marić. The top five barriers are Croatia's below par public administration and lack of legal security.

On the other hand, as a business advantage, investors pointed out the fact that operating in Croatia opens the door to the EU's single market and to infrastructure. Despite the ever-burning workforce problem that is rapidly evolving into an enormous problem of epic proportions for Croatia, employee qualifications and the quality of higher education continue to be among the main benefits in Croatia, are are productivity and employee motivation. However, in Germany the Chamber notes that the Croatian state should engage and talk much more to the private sector about the demand for labour and adapt its education system to that need.

With Croatia's continually deteriorating growth prognosis, which without reform is falling more and more, more than sixty percent of the surveyed companies find Croatia's economic environment to be very poor, and only a third claim it to be satisfactory.

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


Click here for the original article by Ana Blaskovic for Poslovni Dnevnik

Wednesday, 3 April 2019

Finance Minister Calls for Belt-Tightening in Healthcare

ZAGREB, April 3, 2019 - Finance Minister Zdravko Marić on Wednesday recommended the introduction of cost-saving measures in the public healthcare system that was faced with a high debt exceeding seven billion kuna.

"Debts in the healthcare system have been accrued for years. We are the first government to have managed to cut the healthcare debts without raising the public debt. Nevertheless, the debts are still at high levels and exceed seven billion kuna, concerning (the debts of) the Croatian Health Insurance Agency (HZZO) and the public healthcare institutions," Marić told reporters outside Government House.

He dismissed media speculations that the debt in that sector was the cause for his dissension with Health Minister Milan Kujundžić.

Marić insists that he has a good relationship and communication with Kujundžić, however, he explained they could not have the identical opinion on everything.

In terms of the revenue side in the healthcare system, a lot has been done, however, it cannot solve all problems, and cost-saving is necessary, Marić said noting that there is room for belt-tightening.

Certain cost-saving can be performed through the optimisation of conditions for work (of hospitals), he said.

Marić recalled that in 2017 the government redirected 1.5 billion kuna to the healthcare system without a rise in the public debt. Also, during 2018, some 500 million kuna was redirected to the healthcare system for the purpose of debt reduction, he added, announcing some more funds for that purpose in 2019.

More healthcare news can be found in the Lifestyle section.

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