ZAGREB, November 7, 2019 - Ericsson Nikola Tesla (ERNT) on Thursday marked its 70th anniversary and on that occasion, President Kolinda Grabar-Kitarović said that the company had been setting a positive example for the domestic business community for years.

"We can be proud of having such a company in a sector that is crucial for the development of technologies," Grabar-Kitarović said at the anniversary-marking ceremony, noting that companies like ERNT raised the level of competitiveness of the Croatian economy and that Croatia needed the competence, excellence, innovation and social responsibility that characterised the company.

ERNT president Gordana Kovačević said that the company was the first on the list of domestic exporters of know-how. Its experts contribute to the development of ICT and promote Croatia and its people that way, she said, adding that the company was oriented to the future and creation of new opportunities, that it constantly researched and developed new solutions and that it had become a strong research and development centre.

Kovačević also expressed hope that Croatia's presidency of the Council of the EU would help create new opportunities for research and development and boost the competitiveness of the ICT sector.

Economy Minister Darko Horvat, who also addressed the event, said that in the last three years 9.8 billion kuna had been invested in research and development, while in 2018 investments totalled 3.7 billion, 18.7% more than the year before.

This year, investments in research and development will amount to 1% of GDP, he said.

The former Nikola Tesla company was founded in Zagreb on 31 October 1949. At the time, it employed 113 workers. Opting for the production of automatic telephone exchanges, in 1953 the company signed a licence agreement with Ericsson thus becoming one of its first licence partners in the world. In the late 1950s, the company started with first exports, to the former Soviet Union.

Since its establishment the company has been one of the biggest suppliers of telecommunications solutions in Central and Eastern Europe.

In the early 1990s more intensive activities were launched to transform and privatise the until then socially-owned company. Eventually Ericsson and the Croatian Privatisation Fund in 1995 signed an agreement on the sale of a 49.07% stake in Nikola Tesla, which made Ericsson its biggest single owner.

Small shareholders obtained ownership of 49.98% of the company's shares while the Croatian Privatisation Fund kept the ownership of a 0.95% interest.

In the last 20 years ERNT has built its reputation as a supplier of modern ICT products, solutions, software and services and it has operated, on an equal footing with other members of Ericsson, in the field of modern communications technologies and creation of global communications trends.

ERNT is a leading domestic ICT company employing more than 3,200 mostly highly educated workers. More than 1,500 of its employees work in the biggest domestic research and development centre. ERNT is the leading exporter in the country.

According to its latest financial report, in the first nine months of 2019 ERNT earned HRK 80.8 million in consolidated net profits, an increase of 29.6% from the same period of last year.

Sales amounted to 1.25 billion kuna, up 16% from the same period of last year. Domestic sales accounted for 24.4% of total revenues, services for Ericsson accounted for 60.6% while exports to other markets accounted for 15% of total revenues.

More news about Ericsson NT can be found in the Business section.

ZAGREB, October 25, 2019 - Finance Minister Zdravko Marić and Croatian National Bank (HNB) Governor Boris Vujčić said that the progress made by Croatia in the latest Doing Business report was good news and that it should be taken as an encouragement for further reform.

Croatia has continued to improve its business regulations and is catching up with global regulatory best practices, the World Bank said on Thursday. Croatia placed 51st among 190 countries in the ease of doing business ranking, moving up from 58th spot last year.

Marić told reporters that the report provided a good picture and a good comparison with other countries in terms of where Croatia stands and in what direction it should be going. He said that all should be done to ease the conditions for doing business as a prerequisite for economic growth.

The minister said that the progress made was due to methodological adjustments and reforms that had been made in the last year, primarily with regard to starting a business, the transfer of ownership and obtaining a building permit.

"This improvement is good news and should encourage us all to continue in this direction. We should not be satisfied now and say, this is good, we have improved our rating, but should look forward," Marić said, adding that further progress should be made in structural reform.

Marić recently led a Croatian delegation to the annual meetings of the World Bank and the International Monetary Fund in Washington. He said that Croatia would continue to use World Bank loans for projects such as modernisation of land registries and further development of the judiciary for the purposes of the economy.

Vujčić said that the Doing Business report was a very important indicator of competitiveness and business climate. "I don't think we should be satisfied with 51st place, but should move on and make the economy even more competitive and further improve the business environment," the central bank governor said.

More news about doing business in Croatia can be found in the Business section.

ZAGREB, October 24, 2019 - The latest Doing Business study, issued by the World Bank on Wednesday, shows that Croatia has continued to improve its business regulations and now ranks 51 on the ease of doing business ranking, moving up seven spots since its previous ranking.

The World Bank says that Croatia "is catching up with global regulatory best practices."

This year when the study covers 190 countries, Croatia ranks 51 on the ease of doing business, compared to 58 last year.

"The country’s ease of doing business score went up from 73.0 in the Doing Business 2019, to 73.6 in this year Doing Business 2020," the bank says.

"The European Union’s top performer in the Doing Business report is Denmark, with a score of 85.3. This year Croatia ranks closer to other EU countries such as Belgium, Slovak Republic, Netherlands and Poland."

The bank says that "Croatia implemented three reforms."

The country is praised for having made starting a business easier "by abolishing the requirements to reserve the company name and obtain director signatures for company registration, and by reducing the paid-in minimum capital requirement."

"Dealing with construction permits has become less costly by reducing the water contribution for building a warehouse. Transfer of property has become easier by decreasing the real estate transfer tax and reducing the time to register property title transfers. But Croatia also made accessing credit information more difficult by ending the distribution of individual credit data."

“We are encouraged to see Croatia improving its business regulations and narrowing the gap with the global regulatory frontier," Elisabetta Capannelli, World Bank Country Manager for Croatia, was quoted as saying.

"The Government chose to focus on easing doing business as one of its top priorities by establishing a working group under the Prime Minister’s watch and efforts made during the past year are reflected in this year’s improved ranking," Capannelli said.

"We expect to see even stronger commitment this year in areas such as starting a company and the implementation in Zagreb and at local level, of the recently launched reforms in construction permits. The World Bank’s Justice for Business Project currently under preparation with the authorities will help support the government’s reform agenda to improve the business climate," she said.

Croatia has the best score in the category of cross-border trade, maximum 100 points.

Its worst performance is in the category of issuing construction permits.

The ease of doing business ranking is topped by New Zealand, and is followed by Singapore and Hong Kong.

Denmark, South Korea, USA, Georgia, the UK, Norway and Sweden are also in the top ten performers.

More news about doing business in Croatia can be found in the Business section.

ZAGREB, September 30, 2019 - The assembly of Kraš-ESOP - the Employee Stock Ownership Plan at the Kraš confectioner - on Monday voted against an agreement for joint action with the Braća Pivac meat industry group, Zrinka Vrhovski of Kraš-ESOP said.

The decision was made following a debate and it was concluded that the reason to vote against the proposal for joint action with Braća Pivac was that Kraš-ESOP may not be able to ensure a sustainable financial scheme for the joint takeover of Kraš, Vrhovski said.

She noted that the only reason why the Employee Stock Ownership Plan was established was to preserve the right of workers to participate as shareholders in the confectioner's ownership structure.

That is a way of protecting jobs, non-tangible and other workers' rights. It promotes social dialogue within the company and motivates Kraš workers to achieve better results and to further develop the company, Kraš-ESOP said on Monday.

Following announcements of a possible takeover of Kraš, its shares were the most traded on the Zagreb Stock Exchange last week, closing at a price of 1,000 kuna per share, up 17.65%.

The company's shares have been in focus since September 9 when the largest shareholder, the Braća Pivac meat industry company, announced its intention to take over Kraš.

Last week the Kappa Star Limited, an investment company owned by Serbian businessman Nebojša Šaranović, continued increasing its stake in Kraš, passing the threshold of more than 16%.

More news about Kraš can be found in the Business section.

ZAGREB, September 26, 2019 - Croatia ranks 51st in the IMD World Digital Competitiveness Ranking 2019 among the world's 63 leading economies, slipping seven spots from last year, the National Competitiveness Council (NVK) said on Thursday.

The ranking was topped by the United States, ahead of Singapore, Sweden, Denmark, Switzerland, Finland, Hong Kong, Norway and the Republic of Korea.

The results were published by the International Institute for Management Development (IMD) from Lausanne, of which the NVK is a partner.

The IMD World Digital Competitiveness Ranking measures countries' capacity and readiness to adopt and explore digital technologies as a key driver for economic transformation in business, government and wider society. It examines three factors: knowledge, technology and future readiness, and uses statistics and opinions of business leaders.

The study found that the factors positively affecting Croatia's position in the ranking are knowledge (the pupil-teacher ratio in tertiary education, the number of women with degrees, the number of women researchers and high-technology patent grants) and technology (expenditure on research and development).

The weaknesses identified include international experience, foreign highly-skilled personnel, employee training, immigration laws, development and application of technology, agility of companies, use of big data and analytics, knowledge transfer, and private-public partnerships.

The considerable fall in the ranking shows Croatia's lack of readiness to adopt technologies and create a stimulating environment to keep up with global, and especially digital, development, NVK president Ivica Mudrinić said.

It is high time we activated our resources in seeking solutions that will speed up our development and increase Croatia's competitiveness, he added.

More news about Croatia’s IT sector can be found in the Business section.

ZAGREB, September 24, 2019 - The Cyprus-based KappaStar Group, an investment company owned by Serbian businessman Nebojša Saranović, is continuing to increase its stake in Croatia's Kraš confectioner, saying on Tuesday that it has passed the threshold of 10% and now owns 12.45% of Kraš shares.

KappaStar reported that it now holds 186,653 shares in Kraš or 12.455%.

KappaStar started buying into Kraš on 9 September when the largest individual shareholder in Kraš, the Braća Pivac meat industry, announced its intention to take over Kraš.

Since then Saranović's KappaStar Ltd has actually bought the most shares and last week it reported that it had acquired more than 5% of voting rights in Kraš and now it has crossed the 10% threshold.

Media, however, have reported that other investors appear to be interested in buying Kraš shares as well. Data provided by the Central Depository and Clearing Company (SKDD) on the top ten shareholders in Kraš show that there are two other custodial accounts at Zagrebačka Banka, one with 1.89% of Kraš shares and the other with 0.40% of shares.

Interest in Kraš shares became obvious two weeks ago when the Braća Pivac meat industry, which has a 30.73% stake in Kraš, announced that it would take over the confectioner.

On 9 September Braća Pivac announced its plan to take over Kraš' shares and said that it had opened negotiations with the Kraš-ESOP with the aim of jointly taking over Kraš.

Kraš is known for its Employee Stock Ownership Plan or Kraš ESOP, which holds 18.45% of the shares in the company. Kraš ESOP will decide on the joint acquisition with Braća Pivac at its general assembly on September 30.

More news about Kraš can be found in the Business section.

ZAGREB, September 23, 2019 - President of the Croatian Employers' Association (HUP) Gordana Deranja has been elected vice president of BusinessEurope, one of the largest independent employers' associations in Europe that advocates the interest of employers in the European Parliament, the Council of the European Union and the European Commission, HUP informed on Monday.

BusinessEurope, a European social partner, advocates the interests of small, medium-sized and large companies in 35 European countries.

Deranja's term as vice president of the association will last until 30 June 2021.

Deranja was quoted in the HUP's press release as saying that it is a great honour to be recognised as the person for that responsible position and that she will not betray the trust she is enjoying.

"As president of the Croatian Employers' Association, it is my duty to strongly and clearly articulate the interest of Croatian employers and to fight for their rights and a better business climate in the country, which is something I have been doing all these years with satisfaction and I am glad that now I will have the opportunity at the European level to be engaged even more strongly on those issues and in that way impact on stronger recognition of Croatia's business community in the world," she said.

HUP is a member of several reputable international organisations including BusinessEurope, the International Organisation of Employers (IOE), the European Association of Crafts and Small and Medium-Sized Enterprises (SMEUnited), UN Global Compact and 12 other European industrial associations.

More Business news can be found in the dedicated section.

ZAGREB, September 11, 2019 - Justice Minister Dražen Bošnjaković on Tuesday announced that his ministry in cooperation with the Economy Ministry would facilitate efforts of new companies entering the business world.

Unlike the current process of starting up a company where business people are faced with several obstacles, the Start project, which is being implemented by the Economy Ministry, will enable companies to be established from their own home, Bošnjaković said during a business lunch organised by the American Chamber of Commerce (AmCham) in Zagreb

"That is part of the Start project and we want to facilitate entering the business world for people which means that all administrative red tape will be simplified as much as possible," Bošnjaković said.

The current complex process to establish a company envisages a series of steps from going to a public notary, signing various documents that need to be submitted to the court and then waiting for a court decision after which they have to go to the bureau of statistics, open an account and procure a certificate of having met all the requirements.

The intention is to speed up the process which means that it will be possible to register a company from your own home by completing a form online which will be sent to the court digitally and the court will decide on registering the company and everything will flow much easier, Bošnjaković said.

More business news can be found in the dedicated section.

ZAGREB, September 9, 2019 - Twenty-two Croatian small businesses will participate in the 52nd International Trade Fair in Celje, Slovenia next week, representatives of the Trade Fair, Slovenia's Chamber of Craft and Small Business and the Croatian Chamber of Trades and Crafts (HOK) have announced.

"Croatian small businesses will participate in the fair for the 24th time. We cover 50% of the costs of our exhibitors. Sixteen of the exhibitors are HOK members while the other six are participating directly," said HOK president Dalibor Kratohvil.

The Celje Trade Fair, the largest in the region, will be held on September 10-15 with more than 800 direct and 1,500 mediated exhibitors, and is expected to attract over 100,000 visitors.

The fair's executive director, Robert Otorepec, said that the fair is divided into 5 mini-fairs: Home, Tourism, Technology, B2B and Fair PLUS.

This year's country partner is Montenegro.

More business news can be found in the dedicated section.

August 11, 2019 - And why does 80% of the Croatian private sector have no expectations from the most important political mandate Croatia has taken on since entering the EU?

Croatia will assume the EU Presidency for the first half of 2020. We are delighted to welcome Aco Momcilovic to TCN who looks at some of the issues surrounding Croatia's preparations for this role in his first article for us. Aco is currently the President of MBA Croatia, the former head of HR for Rimac Automobili, who now runs his own HR firm, FutureHR.  Welcome, Aco. 

To answer this question above, we should firstly ask ourselves how familiar are we with the topic, and what kind of information is available or discussed in business circles. MBA Croatia did a survey to answer some of the basic questions connected to the upcoming Croatian Presidency of the Council of Europe. In general, professionals from only a few business associations are familiar with the Presidency – 75% of them state they know what it means. Still 25% don’t know what it means at all. An even higher number of people are aware that we will run the presidency in a few months – > 80%, although obviously some of them don’t understand what it is. Only 10% of responders are not even aware of that fact. So it seems that the Croatian Ministry of Foreign and European Affairs did a good job there.

What could be the contribution of the EU Presidency to Croatian businesses specifically?

Since general awareness is relatively high, it is a bit concerning that despite that fact, more than 80% of businesspeople are completely unaware of any goals that Croatia as a country or our business society might have, or different agendas that could be raised for our benefit. The fact that 76% of decision-makers in the country’s private sector don’t have any idea how the Presidency could impact our business, in the short term or long term, is saying something about our level of knowledge about this potentially very important topic. Business at the highest level is quite internationalized and often managed on the country levels, and connected legislations that are put forward, and Croatian entrepreneurs are obviously not participating in that process. A very important detail is to understand that it is not possible in theory to directly advance national interests but to steer them through managing and reaching consensuses on the different legislations that could be our priority – the Presidency sets the agenda in the Council and can speed up or delay dossiers according to the national interest. If you want to sell anything in the single market you necessarily have to engage with EU law; your employees' health and safety at work are protected by EU law; decisions on trade policy with third countries are made by the European Commission and might directly affect your business' competitiveness and ability to export. Is it up to the Ministry of Foreign Affairs or to somebody else to disseminate this information remains a question?

Do we have the right people to do it?

As a general rule, we don’t have confidence that our representatives and employees sent to this project (in Brussels or in Croatia) are competent enough to do that job successfully. Only 5% believe they have the required skills and proper education for the task. 15 % answer that they are not sure, and 80 % state that they think or at least assume that we are not prepared. This should concern the Croatian Government and Prime Minister Andrej Plenkovic since it may reflect on the perception of their competence.

That lack of trust is not a very comforting fact, considering that it seems that our government has spent 7 million Kn on the education of a few hundred people that will participate in EU Presidency from the Croatian side. Many experts claim that the amount was spent on basic information, and that it lacks the depth and finesse required to do diplomacy at the highest level. Of course, it is possible that some other, more complex education programs, will be organized in the remaining time by the Ministry of Foreign and European Affairs, in cooperation with other experts from the public affairs and government relations companies (companies like Vlahovic Group that is member of FIPRA or the newly established Seeport) or diplomatic circles. That problem is not Croatia specific – it is recognized that many new (and especially small) members have a lack of experienced people working in administrative EU positions.

Strategically speaking, a country can achieve some individual goals depending on its tactics, but for that we have a deficiency if not in diplomatic knowledge then in administrative and lobbying experience. Only after the presidency we will be able to recognize if the right targets were set (if any), and if they were achieved. For example, Bulgaria used their opportunity to organize 200 political and cultural events to promote their country. Estonia was successful in pushing the digital market topic and digitalization policies. On the other hand, Malta was skilled in reaching political consensus in previously unresolved areas. Romanian intentions are clearly stated by their Victor Negresku: "Romania's priority is to show professionalism in the exercise of the Presidency of the Council of Europe, but also to take advantage of this moment to improve its image and strengthen its position at the European level.” It would exceed all our expectations if Croatia would be remembered for achieving anything of that level of importance.

It seems that current hot topics are in the area of human rights, so the post-election focus will be in protecting and renewing European values which will enable current Trio (Romania, Finland and Croatia) to make significant changes. As expected many stakeholders will promote their “policy papers” to try to advance their agenda. For example, representatives of civil society are actively participating in the process and doing quite a good job. Is there a business agenda created to protect or promote Croatian companies or at least estimation how will potential policy changes in different sectors/legislations (low carbon emission, Brexit or Digital Single Market, EU Budget 21-27 for example,) influence their financial results? A few round tables will be organized by the Ministry of Foreign Affairs in the remaining months, so maybe they could contribute to that cause. Almost equally important is the question - what the Croatian Chamber of Commerce is doing (if anything) to make the most of this opportunity on behalf of Croatian businesses? Are any business summits or investment fairs being organized? If not, why not?

We can all hope that this “graduation exam” as some are describing it, will demonstrate our competence and allow our deeper engagement in the political process. If we lose this chance to promote our political priorities and innovations, the opportunity cost will be significant, alliance building and collaboration with other countries will have to wait for better times. If anything, we have proved that media exposure of our country, for example through sports (World Football Championship), will not bring us many advantages if we don’t have proper tools and knowledge to use it.

Responsibility also lies with our business associations since their members, according to the conducted survey, don’t have enough information and interests about opportunities placed in front of them. It was a bit surprising to see that the only company doing some marketing connected to the EU Presidency and potential projects is Vlahovic Group  – a public affairs company.

The cost of this “project” is estimated to be around 70 million Euros, and it would be a shame not to get anything in return. So let’s hope that our government will do their best to prepare and educate their representatives, and also motivate them to achieve some clearly set goals. What business sector should care about is whether Croatia is planning to use the Presidency to deliver national objectives and goals, to raise its profile in the EU and international community and to promote the benefits of EU membership to the Croatian people? Or is its objective merely to get through the coming six months without anything going disastrously wrong? “

Fortunately, the results will be visible very soon, some of them already in the second part of 2020.

Aco Momcilovic LinkedIn

President of MBA Croatia 

Owner of FutureHR