CROATIA

Business c l imate and opportunit ies in Croat ia

C r o a t i a n - S l o va k B u s i n e s s F o r u m

Z a g r e b , 8 N o v e m b e r 2 0 1 6

CROATIA ...

... in numbers

Croatia in the European center &

the farthest reaching European sea inlet

• Area: 56,594 km²• Population: 4.3 million • Capital: Zagreb (800,000 inhabitants)• Currency: Croatian Kuna (HRK)• Average Exchange Rate (2015)

1 EUR = 7.61 HRK1 USD = 6.86 HRK

CROATIA Central European, Mediterranean & Danubian Country

Strategic position with export potential

GDP (2015): 43.9 bn EUR

GDP per capita (2015): 10,364 EUR

GDP growth rate: 1.6% (2015)

Inflation (2015): - 0.5 %

Unemployment rate (ILO, 2015): 17.7 %

Average net salary (Aug. 2016): 759 EUR

Export (2015): 11.5 bn EUR

Import (2015): 18.5 bn EUR

FDI: 29.7 bn EUR (1993 - Q2 2016)

CROATIA 2015

Source: EUROSTAT

0 200.000 400.000 600.000 800.000

Zadar

Osijek

Rijeka

Split

Zagreb

Major cities (population)

GDP per capita(EU 28=100)

0 20 40 60 80 100

EU (28 countries)

Slovakia

Poland

Hungary

Croatia

Romania

Turkey

Bulgaria

Montenegro

Macedonia

Serbia

Albania

Bosnia and Herzegovina

GDP per capita in PPS (2015)

Foreign trade 2015

88.6%

1.2%

TOTAL TRADE = 30.01 bn Eur Export 11.53 bn Eur Import 18.48 bn Eur

6.7%

0.5%

0.3%

2.1%

Main partners: 1. Germany, 2. Italy, 3. Slovenia, 4. Austria, 5. Hungary… 15. Slovakia (1.75%)

CROATIA - SLOVAKIA

• Trade (2015) = 525 mil EUR

Cro export to Slovakia: 176 mil. EUR (+16%)• 1.5% of total Croatian export (15th export partner)

Cro import from Slovakia: 349 mil. EUR (+22%)• 1.9% of total Croatian import (16th import partner)

Croatian exports to Slovakia: Seats (43.5%); other lether products (5%); elec. transformers (3.4%); television receivers (3.3%); medicaments (3.1%)

Croatian imports from Slovakia:Telephone sets (16.5%); petroleum oils (14.8%); monitor and projectors (14.5%); motor cars (5.3%); data processing machines (2.4%)

Economic relations – trade

Slovakia = Croatia’s: 15th foreign trade partner 15th export partner 16th import partner 23nd biggest investor

70 89 96 129 152 176129

151 157

249287

349

-59 -62 -61-120 -135

-174

20

10

.

20

11

.

20

12

.

20

13

.

20

14

.

20

15

.

Export Import Saldo

CROATIA - SLOVAKIAEconomic relations –tourism

Tourism (2015)

381,000 Slovak tourists = +7.3% 2.6 mil. overnight stays = +7% 7th place in the overall stucture of foreign

overnight stays (6.6%) 6.7 = average no. of nights per arrival

310337 355

381

0

50

100

150

200

250

300

350

400

450

2012. 2013. 2014. 2015.

Tho

usa

nd

s

No. of arrivals of Slovak tourists

2,02,3 2,4

2,6

0,0

0,5

1,0

1,5

2,0

2,5

3,0

2012. 2013. 2014. 2015.

Mill

ion

s

No. of overnight stays

Some of foreign companies active in Croatia... FDI = 29.7 bn EUR

(1993 - Q2 2016)

Leading investors:

Source: CNB

FDI per capita (1994-2013): • Czech Rep. = 10.938 USD• Bulgaria = 7.934 USD• Croatia = 7.863 USD• Slovak Rep. = 6.971 USD• Poland = 5.105 USD• Slovenia = 4.917 USD

20%

18%

10%

7%

7%

5%

5%

4%

4%

3%

NETHERLANDS

AUSTRIA

GERMANY

LUXEMBOURG

HUNGARY

ITALY

FRANCE

SLOVENIA

UNITED KINGDOM

NETHERLANDS ANTILLES

24%

9%

9%

8%

6%

6%

4%

4%

4%

3%

Financial intermediation

Other business activities

Wholesale trade

Real estate activities

Post and telecommunications

Retail trade

Manuf. of coke, petroleum

real estate investments

Manufacture of chemicals

Hotels and restaurants

FOREIGN INVESTMENTSForeign direct investment

Slovakia:

1993 - Q2 2016 = 136 mil EUR 23th biggest investor (0.46%)

FDI in 2013 = 39 mil EUR = 11th biggest investor FDI in 2015 = 37 mil EUR = 11th biggest investor

2.079

318 13677

0

500

1.000

1.500

2.000

2.500

Hungary CzechRepublic

Slovakia Poland

FDI of V4 to Croatia(1993 - Q2 2016; mil EUR)

168

3827 10

0

20

40

60

80

100

120

140

160

180

Poland Hungary Slovakia CzechRepublic

Croatian investments to V4(1993 - Q2 2016; mil EUR)

CROATIA ...

... why do business

CROATIA - Your reliable business partner

Unique geostrategic location in Europe

Stability & safety of business activity

Stimulating investment climate

Highly educated, multilingual & competent workforce

Modern transport infrastructure

Long tradition in industrial production

EU member (1 July 2013)

Possibility of using EU funds

MODERN INFRASTRUCTURE

• 3 Pan-European corridors passing through Croatia (V, Vb,Vc; VII; X)

• Croatia – a part of the future Trans – European Network –Transport (TEN – T)

• 26,958 km of roads• 2,722 km of railroads• 7 international airports and 2 airfields• 3 intermodal terminals

• Internationally important seaports – Port of Rijeka (among main European sea ports), Port of Ploče

IMPROVING BUSINESS ENVIRONMENT

World Bank – Doing Business 2017 Report:

CRO 43/190

Recognized improvements:Protecting minority investors

Crossborder tradeEnforcing contracts

Labor market regulation

The Global Competitiveness Report 2016–2017

CRO 74/138

Act on Investment Promotion Act on Strategic Investment Projects New legal framework in construction and

physical planning Obligatory e-contribution payment

e-Construction permit e-Consultations e-Court Case Fiscalisation Open data portal e-Class register

e-Employment records & e-Employee registration

e-Medical Appointments e- Polling Place Registration e-Craft e- Residence Registration

STIMULATING INVESTMENT ENVIRONMENT

Equal rights for foreign and domestic

investors

Free transfer of return on equity from the

country

Avoidance of double taxation 0% profit tax on reinvested capital Numerous incentives for business activities to investors

INVESTMENT PROMOTION ACT:

• Tax incentives (reduction of profit tax to 10-0%; regularprofit tax 20%)

• Employment grants (up to 18,000 EUR)

• Education grants

• initial and capital expenses

• labor intensive investment projects

REQUIREMENT: Minimum investment: 150,000 EUR + 5 new workplaces

Micro entrepreneurs: 50,000 EUR + 3 new workplaces

Incentives for:

• manufacturing activities, technology centers, strategic business support and high value-added services, tourist activities (4 plus star hotels..)

Stimulating investment environment

Source: Eurostat

51

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41

,3

39

,1

37

,4

36

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35

,1

34

,1

33

,0

32

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32

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30

,0

28

,1

25

,7

25

,0

21

,2

15

,8

15

,6

13

,2

13

,0

10

,3

10

,0

9,9

9,6

8,6

7,5

7,1

6,8

5,0

4,1

0,0

10,0

20,0

30,0

40,0

50,0

60,0N

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Den

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Bel

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Swed

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Luxe

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Fran

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Fin

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Au

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Ger

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Ital

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Kin

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EU2

8

Spai

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Cyp

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Mal

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Labour costs EUR/hour 2015

CROATIA ...

...business possibilities

INDUSTRY 21.2% of GDP (2015) 18.5% of total employment (2015) Industrial production growth rate: 2.7% (2015)

Main industrial branches (export-oriented): refined petroleum products; manufacture of other transport equipment; electrical equipment; chemicals and chemical products; food products; manufacture of fabricated metal products; pharmaceuticals

Investment possibilities:

Pharmaceutical, ICT, wood, textile & leather processing, metal, automotive, electrical, chemical, plastic & rubber industry

23%

17%

10%9%

7%

6%

5%

5%

18%

food processing and beveragesoil & refined petroleum productschemicals, plastics & pharmaceuticalselectronic, ICT & optical productsmetal productswood processing, furniture & paper industrytransport equipmenttextiles & leather

Industry total

income

Croatian companies - suppliers & contractors supporting the investment:

tradition & quality in manufacturing

educated workforce

experienced with extensive track record on foreign markets

Business possibility 1/4

TOURISMCharacterictics: Natural beauties Climate Geographical location Cultural and historical heritage

Tourism in numbers (2015): Travel receipts (2015): 7.96 bn EUR (+7.4%) 14.3 mil tourist arrivals in total (+9.3%) 12.7 mil foreign tourists (+9.1%) 65.9 mil overnight stays of foreign tourists (+7.4%) More than 15,500 registered companies 85,000 employees

Business possibility 2/4

Investment possibilities:

Priority - Investments in high quality tourist facilities

Greenfield/brownfield projects

Nautical tourism Health tourism Congress tourism

45

50

55

60

65

70

75

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Mill

ion

s

No. of overnight stays

AGRICULTURE & FOOD PRODUCTIONCroatia – a country of high quality products

6.5% of GDP; 5.7% of total employment (2015) 1.3 million hectares of utilized agricultural area Wide range of products (wine, cereals, fish, olives,fruits,

vegetables etc); internationally known food products –milk and diary products, meat products, soft drinks, water, beer, tobacco products, olive oil, mediteranean fruits ...

Investment possibilities: healthy food production; aquaculture

Croatia can offer the world market a number of distinctive and original high quality products Business activities conducted according to the highest food quality and safety standards (ISO 9001,

ISO 14001, ISO 22000, HACCP, Halal, Kosher, IFS, BRC, OHSAS 18001 etc.)

2,500 year old wine producing tradition

Prize-winning top quality olive oil & wine

Business possibility 3/4

ENERGY

• Favourable climate & unpolluted natural environment:

Over 2,700 hours of sunshine per year

Windy regions by the Adriatic sea and East Slavonia

Geothermal energy from natural sources on the continent

Access to vast amounty of biomass

substantial, mostly already engaged, hydro-power potential

Development possibilities: development of an existing hydro power plant system (on rivers Lika and Gacka HES Kosinj/Senj II), RES; environment protection & production of clean energy

INFRASTRUCTURE• 3 Pan-European corridors passing through Croatia, a part of

future TEN-T

• 7 inter. airports, 6 seaports, 4 riverports

• 26,958 km of roads, 2,722 km of rail network

• Development possibilities: sea ports - construction of newterminals (Port of Ploče); airports - reconstruction andmodernisation (Osijek Airport, Rijeka Airport)

Business possibility 4/4

• INFRASTRUCTURE Seaports: Port of Ploče (transport and trade integration project), Brajdica Nautical Port, Eco Marine Tučepi, Airports: Osijek, Rijeka (reconstruction/modernisation)

Other: Gate of Zadar, Western Žabica Complex, Sports Centres etc

• TOURISM Tourism real-estate projects (brownfield/greenfield)

Sale of state owned touristic company (Hoteli Makarska Plc)

• ENERGY Development of an existing hydro power plant system on rivers Lika and Gacka HES Kosinj/Senj II

PUBLIC PROJECTS

Public companies investment plan:

Investment projects catalogue of the Croatian Chamber of Economy:

An overview of investment potential throughout Croatia

Information on almost 120 private and public investment projects

Estimated value: 6 bn EUR

www.hgk.hrwww.investincroatia.hr

PRIVATE PROJECTS

tourism (acquaparks; wellness & health tourism; modernisation & renovation of existing facilities; golf tourism;

high-end tourist resorts) infrastructure (transport infrastructure, utility infrastructure, construction of business and logistics centres)

energy (power plants producing energy from biomass, combined cycle power plant) industry (development of innovation centres, production of construction materials, food industry, etc)

environmental protection, etc.

Easier access to information on investment potential in Croatia

INVESTMENT SITES

• More than 100 ready entrepreneurial zones- utility services, clear ownership, good logistic & traffic connection

• Strong support form local communities

• Additional tax reliefs: relief from utility tax lower payments for municipal services lower land prices

SLOVAKIA AND CROATIA – POSSIBILITIES OF COOPERATION

Energy sector & RES Environment protection Infrastructure, transport & logistics

Joint cooperation on third markets

EU Structural & investment funds

Tourism Food industry IT Technology Automotive manufacturing industry Electrical industry Machinery manufacturing &

engineering

CROATIA

... how to proceed

CROATIAN CHAMBER OF ECONOMY

modern, professional institution with a 164 year old tradition

represents, promotes and protects economic interests of its members

a reliable source of information to companies

More than110,000 member

companies

Professional associations

20 county chambers in

Croatia

Representative offices abroad

(Bruxelles, Moscow)

WHAT WE OFFER...

Numerous databases

Online catalogue of investment projects

Croatian company directory – more than 110,000 active members

Business opportunities exchange

Business zones

Croatian export directory

Croatian Waste Materials Exchange

Information On relevant regulations and laws in the field of investment and economics

On current economic situation in Croatia

On how to start-up business in Croatia

On national and local investment incentives and opportunities

Assistance Linking investors with project holders

Facilitating communication with institutions on national and local level

Support in dealing with administrative procedures on all levels

Providing suppliers’ database & facilitating contact with potential business partners

Organizing tailor-made vistits of potential investors to Croatia

www.investincroatia.hr

CROATIAN CHAMBER OF ECONOMY

We promote, we connect, we can help!

INTERNATIONAL AND EU AFFAIRS SECTOR

INVESTMENT PROMOTION DIVISION

Tel.:+385 1 4828 382

Fax:+385 1 4828 379

Rooseveltov trg 2

10000 Zagreb, Croatia

e-mail: investicije@hgk.hr

www.investincroatia.hrwww.hgk.hr