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CROATIAN CHAMBER OF ECONOMY

CROATIAN CHAMBER OF ECONOMY. CROATIA BUSINESS AND INVESTMENT OPPORTUNITIES Argentine-Croatian Business Forum Buenos Aires, November 2006. CONTENT. ECONOMIC SITUATION PERSPECTIVES GDP STRUCTURE AND SECTORS EXTERNAL RELATIONS (FOREIGN TRADE AND INVESTMENT) BILATERAL COOPERATION/

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CROATIAN CHAMBER OF ECONOMY

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  1. CROATIAN CHAMBER OF ECONOMY CROATIA BUSINESS AND INVESTMENT OPPORTUNITIES Argentine-Croatian Business Forum Buenos Aires, November 2006 CROATIAN CHAMBER OF ECONOMY

  2. CONTENT • ECONOMIC SITUATION • PERSPECTIVES • GDP STRUCTURE AND SECTORS • EXTERNAL RELATIONS (FOREIGN TRADE AND INVESTMENT) • BILATERAL COOPERATION/ PRESENT AND PERSPECTIVES CROATIAN CHAMBER OF ECONOMY

  3. GEOGRAPHIC PROFILE • Area 56,538 km2 • Population 4.4 mil • Coastline 1,778 km • Islands 1,185 • Capital City Zagreb CENTRAL EUROPEAN COUNTRIES EUROPE CROATIA MEDITERRANEAN SEA CROATIAN CHAMBER OF ECONOMY

  4. ECONOMIC PROFILE(2005) • Gross Domestic Product (bn USD) 38.5 • GDP per capita 8,677 USD • GDP, real growth rate 4.3 % • international reserves(CNB) 8,801 mil USD • average net salary 736 USD • inflation 3.3 % • industrial output growth 5.1 % • unemployment rate 13.1 % (ILO) • long term credit rating:BBB, Baa3 (Standard&Poors, Moody’s) CROATIAN CHAMBER OF ECONOMY

  5. THE GOVERNMENT’SPRIORITIES Achievements: • macroeconomic stability (inflation, exchange rates) • moderate growth • economic enviroment (HITRO HR) • government deficit Improvements needed: • external debt • current account deficit • unemployment • restructuring (shipyards, iron plants, railways) • reforms (health, public administration, justice, fiscal system) • EXPORTS CROATIAN CHAMBER OF ECONOMY

  6. GDP STRUCTURE CROATIAN CHAMBER OF ECONOMY

  7. INDUSTRY SECTOR • 20% of GDP • 25% of total employment • main industrial branches: - food and beverages production - electricity, gas and water supply - chemicals and chemical products - refined petroleum products - machinery - plastic and rubber products - shipbuilding (strongly export-oriented) CROATIAN CHAMBER OF ECONOMY

  8. TOURISM • revenues: 8 bn USD 19% of GDP • 10 mil tourists • 51 mil overnight stays • nautical tourism (47 marinas) • 1,185 islands • 8 national parks • world cultural and natural heritage sites protected by UNESCO CROATIAN CHAMBER OF ECONOMY

  9. AGRICULTURE AND FOOD INDUSTRY • 6% of GDP • 7% of total employment • wide range of products (fish, cattle, cereals, wine, olives, sugar beet etc.) • 82% of cultivated land - privately owned • many well-known export products: Vegeta, chocolate products, canned fish CROATIAN CHAMBER OF ECONOMY

  10. BANKING SECTOR • Banking – almost entirely privatised, stable and developed sector, highly diversified offer and good quality of financial products and services • 36 banks, 5 (building societes) housing savings banks state owned banks 5% private domestic banks 3% foreign owned banks 92% • Croatian National Bank – central financial institution • HBOR (CBRD) – Croatian Bank for Reconstruction and Development – state owned investment bank CROATIAN CHAMBER OF ECONOMY

  11. EXTERNAL RELATIONS • Member of the World Trade Organization (2000) • 37 Free Trade Agreements (CEFTA, EFTA, etc.) • active role in the stabilization of the region • Stabilization and Association Agreement (SAA) with EU (2001) • candidate status - June 2004 • opening of Croatia's accession negotiations with the EU - October 2005 CROATIAN CHAMBER OF ECONOMY

  12. COMMODITY EXCHANGE 2005 • Total 27,356 mil USD • Export 8,809 mil USD • Import 18,546 mil USD • (mil USD) Percentage • EU countries (EU-25) 17,630 64% • CEFTA countries 558 2% • EFTA countries 423 1.5% • other countries 8,745 32.5% CROATIAN CHAMBER OF ECONOMY

  13. FOREIGN TRADE (2005) 9% 3% 84% 2% 1% 0.1% CROATIAN CHAMBER OF ECONOMY

  14. MAIN EXPORT PARTNERS(2005) 7% 10% 8% AUS GER SLO 40% OTHER COUNTRIES(China, Hungary, USA,Serbia and Montenegro) 14% 21% BiH ITA CROATIAN CHAMBER OF ECONOMY

  15. MAIN IMPORT PARTNERS(2005) 9% 6% 7% RUS AUS SLO 5% 14% PRC GER 43% 16% OTHER COUNTRIES(France, Hungary, Czech Republic, USA) ITA CROATIAN CHAMBER OF ECONOMY

  16. THE MAIN EXPORT PRODUCTS 2005 1. Mineral fuels and oils 13.6% 2. Ships and boats 11.0 % 3. Electrical machines, equipment and parts 9.2 % 4. Machinery, appliances and parts 7.4 % 5. Wood and articles of wood 4.1 % 6. Plastics and articles thereof 4.0 % 7. Articles of apparel and clothing accessories, 3.2 % knitted or crocheted 8. Furniture; bedding, mattresses, lamps 3.0 % 9. Articles of apparel and clothing accessories, 3.0 % not knitted or crocheted 10. Articles of iron or steel 2.5 % CROATIAN CHAMBER OF ECONOMY

  17. THE MAIN IMPORT PRODUCTS 2005 1. Mineral fuels and oils 15.1% 2. Machinery, appliances and parts 12.3 % 3. Vehicles and their parts 9.4 % 4. Electrical machines, equipment and parts 8.5 % 5. Plastics and plastic products 3.7 % 6. Iron and steel 3.5 % 7. Articles of iron and steel 3.2 % 8. Pharmaceutical products 2.7 % 9. Ships, boats and floating structures 2.7 % 10. Paper and paperboard, articles of paper 2.4 % pulp, of paper or of paperboard CROATIAN CHAMBER OF ECONOMY

  18. LEGAL FRAMEWORK FOR INVESTMENTS AND DOING BUSINESS IN CROATIA • The Croatian Constitution guarantees: • free transfer of profit and of invested capital • equal rights for foreign and domestic investors • real estate ownership • Company Law • companies: joint stock company -33,000 USD • limited liability company - 3,300 USD • public limited liability company • limited partnership • One-stop-shop (www.hitro.hr ) • Investment Promotion Law CROATIAN CHAMBER OF ECONOMY

  19. INVESTMENT PROMOTION LAW • Tax incentives: CROATIAN CHAMBER OF ECONOMY

  20. FOREIGN DIRECT INVESTMENTS(1993 - June 2006) TOTAL = 12,502.9 mil EUR Country Share in total FDI 1. Austria 21 % 2. Germany 17 % 3. USA 10 % 4. France 10 % 5. Italy 8 % 6. Hungary 7 % 7. Netherlands 7 % 8. Luxemburg 6 % Source: Croatian National Bank Edited by: Croatian Chamber of Economy CROATIAN CHAMBER OF ECONOMY

  21. FOREIGN DIRECT INVESTMENTS BY SECTORS (1993 - June 2006) Sector Share in total foreign investments Financial sector25 % Telecommunications 12 % Pharmaceuticals 8 % Wholesale, commision and retail trade 6 % Production of petroleum products 4 % Production of non-metalic mineral 4 % products Extraction of crude petroleum 3 % Hotels and restaurants 2 % Source: Croatian National Bank Edited by: Croatian Chamber of Economy CROATIAN CHAMBER OF ECONOMY

  22. MAIN INVESTORS • Deutsche Telekom, Germany • MOL, Hungary • Siemens, Germany • Coca-Cola, USA • Vetropack,Switzerland • RMC Group • Ericsson, Sweden • Agip, Italy • Société Suisse de Ciment Portland, Switzerland • Raiffeisenzentralbank AG, Austria • Carlsberg CROATIAN CHAMBER OF ECONOMY

  23. TAX SYSTEM • profit tax (companies) - 20% • income tax - 15%, 25%, 35%, 45% + city surtax • value added tax (VAT) - 22%, 0% • excise duties: • alcohol, beer, tobacco, coffee, cars, petroleum derivatives, non-alcoholic beverages, luxury products • agreements on avoidance of the double taxation CROATIAN CHAMBER OF ECONOMY

  24. FREE ZONES • all business activities without custom duties and VAT • retail is NOT permitted • profit tax: 10% • no profit tax for investments in infrastructure facilities (164,000 USD - 5 years) • Entrepreneurial zones CROATIAN CHAMBER OF ECONOMY

  25. Varaždin FREE ZONES Krapina Bjelovar Osijek Zagreb Vukovar Kukuljanovo Buje Karlovac Port Rijeka Slavonski Brod Pula Obrovac Port Split Split Ploče CROATIAN CHAMBER OF ECONOMY

  26. WHY CROATIA? • steady economic growth • Croatia’s location and traditionally good business links with neighbouring countries • FTA with most of the countries in Europe • friendly environment and incentives for FDI, over 400 entrepreneurial zones • free transfer of profits and invested capital (profits tax 20%) • agreements on avoidance of double taxation (55) and protection and promotion of investments (62) • EU – prospects / adjustment of legislation to acquis communautaire • modern infrastructure • highly qualified and well-trained labor force (E,D,I) CROATIAN CHAMBER OF ECONOMY

  27. INVESTMENT RECOMMENDATIONS • green-field investment in export-oriented manufacturing sectors • co-operation in manufacturing and product development – advantages: tradition, quality and engineering know-how • booming tourism sector • numerous infrastructural projects • privatisation process • production and assembling in free zones • development of new technologies • energy sector… CROATIAN CHAMBER OF ECONOMY

  28. COMMODITY EXCHANGE CROATIA - ARGENTINA source: Croatian Bureau of Statistics - mil USD YEAR EXPORT IMPORT TOTAL BALANCE • 2000. 2.1 4.4 6.5 - 2.3 • 2001.1.31011.3- 8.7 • 2002. 1.2 14 15.2 - 12.8 • 2003. 0.3 14.8 15.1 - 14.5 • 2004. 0.3 37.7 38 - 37.4 • 2005. 3.8 82.7 86.5 - 78.9 • 2006.I-IX. 0.5 38.6 39.1 - 38.1 CROATIAN CHAMBER OF ECONOMY

  29. COMMODITY EXCHANGECROATIA - ARGENTINA in 000 USD CROATIAN CHAMBER OF ECONOMY

  30. EXPORT STRUCTURECROATIA - ARGENTINA Export in 2005 • source: Croatian Bureau of Statistics • PRODUCTS mil USD % • Turbojets, turbopropellers3.2 85 • Machinery for working rubber or plastics0.2 6 • Moulding boxes for metal foundry 0.08 2 • Antibiotics 0.06 2 CROATIAN CHAMBER OF ECONOMY

  31. IMPORT STRUCTURECROATIA - ARGENTINA • source: Croatian Bureau of Statistics • PRODUCTS mil USD % • Leather further prepared after tanning 56.6 68 • or crusting, of bovine or equine animals • Cheese and curd 8 10 • Fish fillets and other fish meat 3.6 4 • Aluminium wire 3 3 Import in 2005 CROATIAN CHAMBER OF ECONOMY

  32. BUSINESS IMPROVEMENT POSSIBILITIES • TRANSPORT – PORT OF RIJEKA, PORT OF PLOCE AIRPORT ZAGREB FREE ZONES • INFRASTRUCTURAL PROJECTS (ROADS, ENERGY SECTOR) • SHIPBUILDING • EXPLORATION OF OIL AND GAS • MACHINE-BUILDING INDUSTRY • CHEMICAL AND PHARMACEUTICAL INDUSTRY • FOOD INDUSTRY • AGRICULTURE CROATIAN CHAMBER OF ECONOMY

  33. CROATIAN COMPANIES PRESENTED BY CATALOGUES • ALTPRO d.o.o., Zagreb Research, development and production of the safety signalling systems for the railway infrastructure and rolling stock • ATLANTIC GROUP, Zagreb Production of cosmetics, instant vitamin drinks • FERO-LEKO d.o.o., Pozega Production and trade of food supplements (antidiabetic, liver disease) • INSTITUTE OF IMMUNOLOGY Inc., Zagreb Production of viral and bacterial vaccines, plasma derivatives • PORT OF RIJEKA, Rijeka Port activity: loading, unloading, warehousing, transportation of cargo CROATIAN CHAMBER OF ECONOMY

  34. CROATIAN COMPANIES PRESENTED BY CATALOGUES • PECON d.o.o., Zagreb Engineering, production and trade in process industry (food processing industry, chemical industry, pharmaceutical industry) • RIZ-TRANSMITTERS Co., Zagreb Design, manufacturing and supply of radio broadcasting transmitters and watthour meters • ZAGREB FAIR, Zagreb Organising international fairs and congresses • GENERALTURIST d.o.o., Zagreb Tourism – inbound, outbound, air ticketing CROATIAN CHAMBER OF ECONOMY

  35. CROATIAN CHAMBER OF ECONOMY • established in 1852 • since 1991 public law institution with obligatory membership • 20 county chambers • 7 Representative Offices abroad • 9 departments, 5 centres, 42 professional associations, 73 groups, 21 affiliations • Euro Info Correspondence Centre • member of ICC, Eurochambres, CEI, Alpe-Adria Chambers, UNECE, ASCAME, UEAPME, ECSB, TII, FIATA, OICA, EMEC • ISO 9001/2000 CROATIAN CHAMBER OF ECONOMY

  36. HOW THE CHAMBER CAN HELP YOU? • Biznet - simple and quick access to information and the companies database via Internet (www.hgk.hr) • register of Croatian companies • information about regulations and laws in the field of economics • business opportunities exchange • The Permanent Court of Arbitration - efficient system for resolving commercial disputes CROATIAN CHAMBER OF ECONOMY

  37. CROATIAN CHAMBER OF ECONOMY • International Relations Department phone: + 385 1 4828 382 fax: + 385 1 4828 380 Rooseveltov trg 2 10000 Zagreb Croatia, Europe www.hgk.hr e-mail: eoi@hgk.hr Thank you for your attention! CROATIAN CHAMBER OF ECONOMY

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