June 29, 2020 — Tourism accounts for 20 percent of Croatia's economy, but nearly all of the government and public's attention. What about the other industries in the remaining 80 percent?

Croatia's tourism industry will find it difficult to generate even 30 percent of last year's revenues. So the country must seek other sources of revenue alongside what citizens working in the EU send back home. Queue the commodities exporters, whose income is from foreign markets.

The nation's exporters saw revenues fall in the first four months fell by five percent, to HRK 34.4 billion. They're the sort of numbers Croatia's tourism industry will struggle to reach despite the government's and the media's attention.

During this time, Croatia's wood, textile and auto parts companies fell off the radar. Apart from being exporters, these are also companies that employ hard-to-employ people and are located in rural areas, so there is no alternative for additional employment.

The Croatian Association of Employers noted that the wood industry realizes over 70 percent of its turnover on the foreign market, with Italy its main partner. Currently, few consumers are considering buying furniture or adapting their residential or business space. They add that even the few goods that could be sold are stuck due to the difficult organization of transport. The association is asking the Government for help in this branch, in which most companies are currently working and in which there are no major layoffs.

The Croatian Chamber of Commerce said the situation in the main markets such as Italy, Germany, Austria, France and China shows visible signs of recovery by receiving orders from existing customers and accelerating shipments, while the furniture market shows signs of recovery as a result.

"However, the only thing that is certain is uncertainty, given that it is a durable good whose purchase is postponed by buyers in times of crisis," the Chamber of Commerce said. "Pellet producers are witnessing the normalization of demand, after a six-month disturbance in the main market of Italy, where there was a saturation of cheap products originating from Eastern Europe."

The chamber added that there are still problems with the placement of fresh beech wood on the Egyptian market, where 60 percent of those products usually ship. The market is simply oversaturated.

There is great uncertainty, according to the Croatian Chamber of Commerce, among manufacturers of parts for the automotive industry.

Some companies at the beginning of the crisis closed their plants and sent workers on vacation. Delays in the procurement of raw materials and semi-finished products also created difficulties in business.

The situation in the textile industry in Croatia is also wobbly. The first to be hit by the corona crisis were clothing manufacturers, because, they note from the Croatian Chamber of Commerce, they had difficulties in delivering raw materials.

"Considering that this is a predominantly export branch, export activities have been disabled for a long time," the Chamber said. "All stores were closed and this also affected a large loss of traffic, especially if they did not have online sales before. All of this has resulted in full warehouses and a shortage or reduction of new orders. Given the difficult situation and the inability of some companies within the textile industry to adapt to the new situation in the short term, this will in the future contribute to significant layoffs and the inability to pay salaries regularly." The production of protective clothing, which is in great demand in both the domestic and foreign markets, is the only branch that can compensate for significant losses.

President of Croatian Exporters Darinko Bago said that the Government's measures at the beginning of the crisis significantly helped all companies, including those that export. But elections and tourism have sucked all the attention and energy away from helping exporters at a crucial time, he said.

"We should have sat down and talked about how to proceed," he said. "Work out a few of the most likely variants and measures for them. Instead, elections began to dominate."

The shift away created an impression of government success, which Bago denies.

"There's this impression that there is nothing the state cannot do and there is no reason to worry," he said. "Of course not. A good part of the exporters were lucky that their partners from, for example, Germany did not cancel their orders. But what will happen from August, will customers need more stock? Supply and sales channels are still threatened."

He points out that Croatia missed an opportunity to discuss what products we can offer in the new circumstances, because production in Europe is once again becoming an advantage. While Croatia comes up with this topic, he is afraid, its companies will go out of business.

Asked how he assesses Croatia's prospects of attracting a large investment, especially important because what is in question is a propulsive industry, Croatian entrepreneur Branko Roglić emphasised the fact that it depends solely on whether or not Croatia will do everything necessary to actually set itself apart and as such be selected for this project.

As Suzana Varosanec/Poslovni Dnevnik writes on the 22nd of October, 2019, Mate Rimac is a great Croatian innovator, and I'm 100 percent sure that thanks to his involvement and business activities in the field of electric cars, which is growing by 10 percent per year, has drawn the attention of global players from the automotive industry to the possibility of investing and launching new projects in Croatia.

This was stated by the respected Croatian entrepreneur Branko Roglić, the owner of Orbic, which operates in twenty countries and employs more than 8,000 workers, generating more than two billion euros in revenue. As one of the founders of the Croatian Employers Association (HUP), as well as an active member and Chairman of the Supervisory Board, Roglić welcomes Rimac's membership within HUP.

"I believe that Rimac, by with his results in the production of electric cars, contributes to the possibility of Croatia becoming a place where the big car industries can realise their business plans,'' stated Roglić encouragingly.

The understandable reaction, which is more or less HUP's rightul congratulations to Croatia's beloved entrepreneur Mate Rimac on his merits, comes after he just confirmed that a recent meeting attended by Porsche (a member of the VW Group) and Hyundai leaders in Zagreb resulted in the opening of a communication channel between the Croatian Government and some of the big players in the automotive industry. Something hardly imaginable without the likes of Mate Rimac's involvement.

More astonishing yet, this is an important complement to the latest information from the Ministry of the Economy regarding the confirmation of Croatia's involvement in a major tender for Volkswagen's new factory.

The German car giant, as was initially reported by Večernji list, considers Croatia as its potential location for the planned relocation of Passat and Škoda Superb's production in 2022, in a brand new plant that would produce 300,000 vehicles a year and employ 4,000 people, while existing plants in Germany and the Czech Republic would see the production of electric cars organised.

While the majority of us are likely surprised that any sort of major investment would focus on Croatia, the inclusion of Croatia is no surprise to Roglić, who simply says that everything depends on the country's true willingness to be chosen.

"The government has to do literally everything possible to attract a strong German investor in an industry that is creating big jobs, high levels of investment and dictating new technological developments. This means that we should follow the recipe of Slovakia, known for its administration having opened the so-called ''big door'' precisely to the automotive industry before it entered the EU: it provided it with construction sites that were granted free of charge, as well as the entire infrastructure, and introduced a tax exemption over a period of time. Our government should follow in those steps, because Croatia must not miss this chance,'' Roglić warned.

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

Mate Rimac, Croatia's golden entrepreneur gave an example to the Croatian Government when it comes to attracting investment and the automotive industry - that example was Slovakia.

As Poslovni Dnevnik writes on the 6th of July, 2019, over in Slovakia, which is hardly on the other side of the world geographically, however seems to be in every other term when compared to Croatia; Kia provided incentives of as much as a billion euros, with which they built a brand new factory.

Two years ago, the young innovative Croatian entrepreneur Mate Rimac invested in developing a strategy for attracting the automotive industry to Croatia, and the project he presented to the Croatian Government was designed to be the basis for new measures for this sector, Marina Šunjerga writes for Večernji list.

As stated, the apparently endlessly talented Rimac found inspiration in the most successful country in this sector - Slovakia. The timing is now excellent considering that at this point, consideration is being taken in how to boost the development of electric car technology for the new century.

Rimac Automobili is a Croatian company that has been recognised as a real generator of knowledge and experience in producing the best electric batteries in the automotive world, with the development of the fastest electric car in the world, and there lies an opportunity for Croatia to take advantage of what Rimac has achieved against the odds and properly position itself the ''car map'' of the world.

Prime Minister Andrej Plenković briefly commented on yesterday's session of the Government on Rimac's initiative, saying that he believed his suggestions and ideas would be of particular importance to the Ministry of Economy for the further improvement of Croatia's investment and business climate, as well as other institutions through the aspect of education and the labour market, to contribute to further attracting the automotive industry to Croatia.

We have not yet heard the new measures that could attract companies such as Hyundai or Volkswagen to Croatia, and from the Ministry of the Economy, which Plenković has been pushing to develop new measures, they stated that Rimac and other automotive investors can count on all the measures within the Investment Promotion Act, which includes a reduction of the profit tax base and incentives for every new employee.

They also added that consideration is being given to the possibility that the realisation of a Rimac Campus would be facilitated by the Croatian Government, by giving the company land owned by the state.

This is a project that comes with a hefty price tag of between 80 and 100 million euros, which would include a centre for development and innovation for as many as 2000 employees.

While it all sounds straightforward enough, this is still Croatia, and the idea of realisation through land-delivery is not as feasible as it might sound at first, because they would have to go through a local unit that could eventually provide the company with a free location. This doesn't happen overnight.

With that land, Rimac would be able to count on all the standard incentives like all the other investors in this field do. According to the investment calculator, the investor would receive about 12 million kuna of direct incentives and about six million kuna of tax incentives in support for employment, which is a substantial amount for an investor as it exceeds 15 percent of the investment value.

Croatia gets a lot of bashing for its poor investment climate, but there are actually measures in place which are quite favourable, and although incentives in Croatia aren't small, the automotive industry's attraction to the country is spoiled by the poor attitude and the slow, cumbersome approach that has become synonymous with Croatia, and are looking for a much more proactive approach from politicians.

Slovakia has attracted billions of euros in investments over the past twenty years, resulting in the realisation of 34 large projects, and it's now the country with the highest number of cars per capita in the world. The project started with a smaller VW investment in Bratislava way back in 1993.

Slovakia cut profit tax from 40 all the way down to just 19 percent, and the investors completely free from having to pay tax for five years. Like Croatia, it offered quite handsome incentives in terms of employment, and he Slovakian politicians were at the disposal of investors. VW has invested 302 million euros in Slovakia so far, and has received tens of millions of euros in incentives from the Slovaks. It's a relationship which works harmoniously, and is also something that is difficult to imagine for Croatia and its draconian laws and rates.

Could everything be about to change? Has spending time with the amazing Mate Rimac opened the Croatian Government's tightly closed eyes? Only time will tell.

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

Mate Rimac and his company Rimac Automobili are known for their tireless efforts, but they've been all systems go over the last few weeks in terms of trying to finally make the Croatian Government see sense when it comes to attracting foreign investment into the automotive industry, which is currently an industry entirely bypassing Croatia, favouring its neighbours with more friendly, less draconian policies instead.

Is all this about to finally alter? After Mate Rimac managed to arrange a meeting with the Prime Minister, following a long period of HDZ's main man seeming to disregard the idea, this innovative Croatian entrepreneur has been doing all he can to show PM Plenković, who was visibly impressed with what he saw at the Rimac Automobili plant in Sveta Nedjelja, as well as his government delegates, just how investment can be attracted, and how Croatia can jump on the well-paying automotive industry's train before it's too late.

As Poslovni Dnevnik writes on the 1st of July, 2019, following the meeting held between Mate Rimac and Andrej Plenković last week, Mate Rimac announced on Facebook that Hyundai, which has the utmost respect for Rimac, now officially supports the initiative to bring the car industry to the Republic of Croatia.

This is a truly incredible move for a country which succeeds in doing very little in terms of investment, other than turning it away and giving anyone who does try a far more difficult time than could ever be considered necessary. A move that could not have been made a reality if it weren't for the incredible Mate Rimac.

"Hyundai officially supports the initiative to bring the automotive industry to Croatia. I hope this opportunity will be utilised,'' said Mate Rimac on his Facebook profile today after Hyundai released a press release on its official website regarding Friday's meeting on the potential of the automotive industry in Croatia.

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

As Jasmina Trstenjak/Filip Pavic/Novac writes on the 1st of May, 2019, the Republic of Croatia does have a chance in the car industry, and it can improve its investment portfolio with certain active and proactive measures, open up opportunities for the development of new industries, and not miss this third train, since it has already missed two. Rimac Automobili, the company of one of Croatia's most successful entrepreneurs, Mate Rimac, is more than ready to help if Croatia truly wants to attract the car industry to Croatia. With some work put in to it, it's possible.

The above is one of the key messages given by Mate Rimac, the founder and CEO of Rimac Automobili, which was part of the "Croatia E-mobility Forum", held recently at the Esplanade Hotel in Zagreb and organised by the American Chamber of Commerce (AmCham) and Jutarnji List, during which spoke about "How Croatia can attract the automotive industry".

In his presentation, among other things, analysed the countries that make up Central and Eastern Europe, what the automotive industry brought to them (growth, jobs, contribution to GDP...), which attracted investors, just how Croatia stands in this aspect. He also noted some key trends that are already transforming the car industry.

The automotive industry is completely changing, therefore the use of cars will eventually alter too. People will, at some point, no longer be car owners, they might not even bother to learn to drive, but all this will open up many new doors. Trends show that many cars will become autonomous by 2030, they will all be connected to the internet, more electrification will occur, and the car sharing will become more common. Mate Rimac discussed these points, full of experience as his own company, which has grown into a powerful technology company over the past decade and attracted more investment than all the technology companies in Croatia.

So far, Rimac Automobili has attracted more than 60 million euros in foreign investment, and that's not even counting the European Investment Bank (EIB), which has provided the company with a 30 million euro loan last year. The last investor in Rimac Automobili was no less than Porsche, and that was the very first time Porsche invested in another company.

''We don't want this to be the last investment, but we need to attract investments. Not only because of us, but also because of the state, so that the automotive industry invests in other things in Croatia. This year, a big investor will enter into the structure of our company. It's a 150 million euro investment, and the details on that will be known in a few weeks,'' revealed Rimac. He also emphasised the significance and the power of the branch in which he works - if the automotive industry was a country, it would be the fourth largest in the entire world!

However, rather unsurprisingly, Croatia is lagging behind quite significantly when compared to others, the automotive industry has spread very well across the whole of Europe and Croatia is almost the only exception. Two waves of investment in the region have already been and gone. The first was in the Czech Republic, Poland, Slovenia, the second was in Romania and Slovakia, and now a lot is being invested in neighbouring Serbia.

In the aforementioned countries, the automotive industry started practically from scratch and through the investments of other manufacturers, unassuming little Slovakia has become the largest car maker per capita in the world today. Therefore, in his extensive presentation, Rimac also commented on the way companies choose their sites, what their criteria are, and, when comparing Croatia with other countries, he found that Croatia is not one of the best candidates at all.

''Croatia has thirteen billion dollars worth of exports, with four million people. Slovakia has a million residents and more than 78 billion dollars in exports, out of which, 20 billion dollars of exports are in cars and parts alone. Let's look at some closer neighbors. Slovenia, with more than two million inhabitants, is exporting more than Croatia, and once again, their main export products are cars, and for us, it's wood,'' said Rimac, adding that these countries attracted companies with their favourable labour costs, but also for their talents and good faculties, infrastructure and available capital.

He also noted that Croatia has less than a billion dollars of automotive revenue, while, let's say, the Czech Republic has 41 billion dollars, and it has a strong potential. Thus, Croatia has less than half a percent of GDP, and the Czech Republic accounts for more than five percent of its GDP directly from the automotive industry, which is indeed a very defeating comparison. In the CEE region, investments have occurred thanks to generally cheap labour, and although much of it has well and truly bypassed Croatia, Mate Rimac is certain that there is a way to attract this industry still. Not necessarily with cheaper labour, but also with new opportunities.

''Hundreds of e-car models are coming onto the market. They're developed during a period of four to seven years and what's going on in the labs today will be on the roads within several years. There is a tremendous opportunity since today's share of three percent in sales will jump to 60 percent in the coming decades. That's why there's a lot of investment going on in the automotive industry, in startups and in technology companies. So far, more than 25 billion dollars has been invested through investment ventures, and this is where that industry is heading. There are investments in the development of batteries, in companies that make sensors and the like. The portfolio is bigger than it used to be. Also, there's a lot of heavy investment in development, and budgets are larger,'' noted Rimac.

Rimac also added that not everything is so black, although Croatia is of course late ''to the party'', and is missing out on the opportunity to join the development of the automotive industry by modelling itself on the countries of the CEE region. That industry, he says, is growing steadily, and countries are committed to receiving investments and attracting firms.

''We don't want just any investment, but those that give maximum benefit. But it's not about how much the state will encourage these industries to come. The state must first determine in which direction it wants to go, which industries it has, and then work proactively. England has a great initiative and it does very well because it has a complex program for the automotive industry, it works proactively, runs research centres, test sites... Therefore, proactive measures and projects are needed if there's a desire to go in that direction,'' Rimac said.

The presentation outlined nineteen action measures that the Croatian state should take to accelerate the automotive industry's progress in Croatia.

He mentioned that employees should be allowed to enter into company ownership and there should be a reduction in income taxes on high salaries.

Universities should make sure their programs include more machine learning, artificial intelligence, and electrical engineering.

Universities should employ professors from the STEM sector with scientific reputations, Rimac believes, and invest in equipping faculties and linking universities with actual investors.

In addition, the state should implement tax incentives for R&D-oriented companies, as well as meet with relevant engineers, as well as take a more proactive role in industrial development in co-operation with potential foreign investors.

As far as infrastructure is concerned, it's very important to encourage international contacts with cities that have developed automotive and innovation hubs and additionally invest in the 5G network for all households.

When it comes to specific measures for the automotive industry, among the measures listed above, it's necessary for foreign automotive employees to have temporary housing and job search support provided to the employee's life partner.

Additionally, one of the measures implies the establishment of an international school, where teaching will be conducted in foreign languages.

As far as the infrastructure of the auto industry itself is concerned, Rimac says that the testing of autonomous vehicles on public roads should be legalised, there should be an institute for electric and autonomous vehicles established, as well as an institute for artificial intelligence, as well as centres of competence and innovation hubs.

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

Click here for the original article by Jasmina Trstenjak/Filip Pavic for Novac/Jutarnji