March the 18th, 2021 - The state can count on far less when it comes to Croatian company profit this year when compared to 2020, but the Ministry of State Property had a far better year than could ever have been predicted given the dire circumstances.

As Marija Brnic/Poslovni Dnevnik writes, last year was marked by a state of emergency due to the ongoing coronavirus pandemic and several serious earthquakes, but the Ministry of State Property still managed to yield even better results than could have been expected.

According to the Annual Report on the Implementation of Specific Objectives and Reform Measures of the Strategic Plan for State Property Management for the Period from 2020 to 2022, recently published by the Ministry of Physical Planning, Construction and State Property, activities and financial effects in property purchase and activation are above expectations, and although things are weaker than they were back in pre-pandemic 2019, there was an extremely high level of income. That income came from the collected dividend from the operations of companies of special state interest and those from the portfolio of the Centre for Restructuring and Sales (CERP).

As a rule, Croatian company profit comes in its largest part in the form of income earned from property, after the emptying of the portfolio finally reduced the scope of privatisation processes, and last year the total profit of companies in which the state is a shareholder earned 946 million kuna.

Most of it relates to the so-called strategic companies, while 52 million kuna came from Croatian company profits that are in the CERP portfolio. One year earlier, the state collected slightly more from Croatian company profit than it did in pandemic dominated 2020 - 1.118 billion kuna.

The report doesn't provide any details on payments made by individual companies, so it isn't clear whether or not they're all included the aforementioned figures, because for example, in INA's case, the Croatian state and MOL agreed that the payment would be given to them as large shareholders to preserve business stability before January the 15th, 2021.

The payment of INA's profit, from which 279 million kuna went to the state, was made the day before the aforementioned deadline. Regardless of whether this amount is added to last year's or this year's profit income, the effect of the coronavirus pandemic and the earthquakes which rocked the country will be felt in this year's profit income, which, in the annual plan of the Ministry, for this year is projected to stand at only 360 million kuna.

The biggest failure has been recorded from the sale of shares and stakes in the Croatian company portfolio. For the last year, it is optimistically predicted that "classic privatisation" will bring with it 870 million kuna, but last year privatisation failed and brought not even a tenth of the expected amount, resulting in a mere 85 million kuna.

All revenue was generated through transactions of CERP, which sold shares in 42 companies with a total of 5 million kuna through public bidding, earning 34 million kuna through the stock exchange by selling shares in 12 companies.

Individually, the most valuable for the state was the procedure of withdrawing Badel 1862 from the registration fee on the Zagreb Stock Exchange, which earned it 38 million kuna.  It also earned 7 million kuna in the process of ousting minority shareholders in seven such cases.

Apart from natural disasters, last year's election cycle also had an effect on the functioning of property management in Croatia, when the new government was followed by a transformation of the organisation of ministries and the Ministry of State Property was annexed to the Ministry of Physical Planning and Construction.

However, the matter of dealing with the registration and activation of state-owned property under the new competent minister Darko Horvat remains in focus. The report shows that last year the number of properties under said management increased by more than 500, and the year ended with 6,723 such properties, and the total value of the lease agreement stood at 96 million kuna.

However, the real estate portfolio of the Ministry of State Property was reduced last year, so even in the conditions of the pandemic, the economic lockdown and the elections, public tenders were announced and 316 contracts on the sale of property worth more than 120 million kuna were concluded.

The Ministry of State Property also emphasised in the report that after the earthquakes that hit the City of Zagreb, and Zagreb and Krapina-Zagorje counties, a significant amount of employees were engaged in recording the situation and work related to repairing damaged buildings, but also in resolving the housing of citizens whose property was damaged during the earthquake.

The growth of the number of new lease agreements slowed down, with only seventeen being concluded, worth a total of 5 million kuna, which, in terms of reforms and property activation, is a weaker achievement, so the revenues from property management were significantly "thinner" in the end than they were back in 2019, when they amounted to 210 million kuna. In 2020, that figure was 155 million kuna less.

One of the most important models of activating state property last year lay in donations for various projects, and a total of 62 such contracts were concluded last year for property worth 402 million kuna. A significant number of them relate to infrastructure projects, as well as business incubators and waste management projects.

The most valuable donated property is part of the former Dracevac barracks (with a price tag of 138 million kuna) which was handed over to the City of Split for the construction of the Technology Park and Traffic Centre, and among other things, land worth 49 million kuna on which Novalja will build the ZaglavaProzor business zone, as well as donated land and eight office buildings which were given to the municipality of Marija Bistrica for the construction of an entrepreneurial zone.

The report also looks into unplanned leasing for the use of such property, including temporary accommodation until the consequences of the earthquake are remedied, and by the end of the year, five properties were listed in this category.

From the report on the implementation of the planned reform measures and the improvement of the Ministry of State Property's management system, one of the novelties that has just been mentioned is the establishment of the Register of Inactive Assets of State-Owned Enterprises.

All that has been stated is that a report has been put together with recommendations for the identification of non-operating assets in strategic and majority-owned companies, but without many details, while the new annual state property management plan for 2021, which recently passed public discussion, brings with it another novelty in the form of asset management - the establishment of an early warning system, which will ensure a timely response to possible instabilities in the operations of state-owned enterprises.

For more, follow our business section.

March the 6th, 2021 - The eReconstruction system is now in operation in earthquake-stricken Sisak-Moslavina County in central Croatia, aiming to make administrative processes for those who need construction services more easily accessible.

As Poslovni Dnevnik/Marija Crnjak writes, Minister of Construction Darko Horvat recently presented a new system for the electronic submission of requests for the reconstruction of earthquake-damaged buildings - the innovative new eReconstruction system. Croatia´s eReconstruction system has otherwise been in operation for a couple of days now, and the minister has emphasised the fact that it will speed up the process of submitting and receiving applications.

"In cooperation with the company APIS IT, we created the eReconstruction system in order to make the process of applying for renovation/reconstruction following the earthquake as easy as possible for our affected residents and to offer them several different opportunities for this purpose," explained Horvat.

Easy access to the application for all natural and legal persons is provided through the e-Citizens (e-Gradjani) system, and a level three credential will be sufficient for entry via NIAS.

The Minister revealed that the doors of the Reconstruction Information Centre will also open in the centre of Zagreb by March the 15th, which will house officials of the Ministry, the Reconstruction Fund and the Central State Office for Reconstruction and Housing, as well as employees of the Legal Clinic.

People will be able to get their hands on all of the necessary information and advice there, and they will also be able to submit requests for property reconstruction.

"We want to continue to be here, present on the ground as much as possible, so that we can make the procedures for submitting applications for reconstruction as simple as possible. Our focus now is on issuing the first decisions on reconstruction, so that they are sent to the Fund and the Central State Office for operationalisation and the beginning of the organisation of reconstruction, " concluded Minister Darko Horvat.

For more on the Petrinja earthquake, follow our dedicated section.

ZAGREB, 17 January, 2021 - The state will fully finance the reconstruction or construction of buildings in assisted areas affected by the earthquake, Construction Minister Darko Horvat said on Sunday, adding that whether citizens would cover 20% of the costs would depend on their income threshold.

Horvat told the press a bill on post-quake reconstruction said that Sisak-Moslavina County would co-finance 20% of those costs. If the county will not be able to pay that amount, the state will do so, he added.

As for buildings and houses that have been demolished and will not be reconstructed, the state will fully finance the construction of new ones, he said.

On Thursday, the government sent to parliament a bill of amendments to the law on the reconstruction of buildings in the City of Zagreb and Krapina-Zagorje and Zagreb counties damaged in a March 2020 earthquake, proposing that the law also apply to Sisak-Moslavina and Karlovac counties, which were struck by a devastating quake in December.

Under the bill, those counties will set aside 20% in their budgets for reconstruction, as will property owners. In assisted areas where a state of disaster was declared, the entire cost will be covered by the state, in line with a special regulation.

A property owner is exempt from covering 20% of the reconstruction costs if their household income in the previous and the current year does not exceed the non-taxable income amount, if they had no other assets on 22 March 2020 whose value exceeded HRK 200,000, and if they receive welfare benefits.

Horvat said the bill was clear and that it included the income threshold, so pensioners and people out of work need not fear.

He said that in assisted areas where a state of disaster was declared, the government would fully cover the construction of new homes.

Everything in the bill also applies to the City of Sisak, Horvat said, commenting on Mayor Kristina Ikić Baniček's statement yesterday that "Sisak will be reconstructed under the same model as Zagreb" which, she added, her city could not afford.

Horvat said that under the bill, Sisak would not have to pay anything for the reconstruction, adding that 80% of the reconstruction amount had already been ensured without the city paying anything.

He said the residents of Sisak who had a second or third property outside the city "whose value exceeds certain amounts" would have to pay for 20% of any reconstruction costs.

"The government has not nor will it leave anyone in the lurch," Horvat said, adding that the state would fully cover a replacement home for all people whose homes have been demolished and which will not be livable.

ZAGREB, 15 January, 2021 - Construction Minister Darko Horvat said on Thursday that around HRK 12 billion had been secured through the EU Solidarity Fund, World Bank loans and the state budget for the reconstruction of areas hit by last year's earthquakes.

Speaking in an interview with the HTV public broadcaster, Horvat said that clear rules on how to organise reconstruction would be published in the Official Gazette within a month from the earthquake that hit Sisak-Moslavina County on 29 December.

He added that the government still did not have a complete financial framework for reconstruction but that so far HRK 12 billion (€1.6 billion) had been secured.

"Some sources are known and some we are still trying to secure. Around HRK 12 billion has been secured - through the Solidarity Fund, World Bank loans, the budget. As part of the National Recovery Plan we will also seek.... grants as well as loans," the minister said.

The Croatian government earlier on Thursday formulated amendments to the Act on Post-Earthquake Reconstruction, originally intended for the City of Zagreb and Zagreb and Krapina-Zagorje counties, hit by a 5.2 magnitude quake on 22 March 2020, to make the law refer also to the post-earthquake reconstruction of Sisak-Moslavina and Karlovac counties.

The reconstruction of buildings destroyed in the 29 December earthquake in Sisak-Moslavina and Karlovac counties will be fully financed by the state.

Bosnian Croats to finance reconstruction of one institution, houses

Leaders of the Croats in Bosnia and Herzegovina said on Thursday they would finance the reconstruction of one state institution as well as build family houses in the quake-hit areas of Croatia.

This was agreed at a meeting in Mostar between the leader of the HDZ BiH party, Dragan Čović, and local officials from a number of towns and municipalities in the neighbouring country and visiting Croatian state secretaries Zvonko Milas and Nikola Mažar.

Solidarna foundation raises HRK 8.4 mn for quake-hit area

The Zagreb-based Solidarna foundation earlier this week reported that it had raised more than HRK 8.4 million (€1.12 million) for Sisak-Moslavina County.

Some of the donations paid into the foundation's 5.5 Fund have already been used to buy consumables for people affected by the earthquake and the foundation also plans to participate in the long-term reconstruction and recovery of the quake-hit county.

The 5.5 Fund was established by the Zagreb Earthquake Relief civic initiative and the Solidarna foundation after the 22 March 2020 earthquake in Zagreb. At the time, the foundation raised HRK 1.5 million for earthquake victims. It reactivated its fund after the earthquake in Sisak-Moslavina County and its fund-raising campaign is still underway.

ZAGREB, 4 January, 2021 - Physical Planning and Construction Minister Darko Horvat said on Monday some houses destroyed in last week's earthquake would be permanently replaced with prefabricated homes, and that those responsible for the collapse of houses built after the 1990s war would be held to account.

Asked by the press if the reconstruction of Sisak-Moslavina County would be incorporated into the law on the post-earthquake reconstruction of Zagreb, Horvat said a decree to that effect was being finalised and that the government would address it on Thursday.

The decree will make it possible for the Zagreb reconstruction law to apply to Karlovac and Sisak-Moslavina counties, and also to submit applications and define decisions on those entitled to reconstruction without losing any time, he added.

"Most importantly, it will enable regulating the payment of temporary accommodation for those who will be entitled to it."

Asked when the reconstruction of houses would begin, Horvat said some documents were commissioned today, including data on how buildings react during an earthquake.

He announced for tomorrow a meeting with Croatian manufacturers who could participate in making prefab homes as a lasting solution in the area struck by a magnitude 6.2 tremor last Tuesday.

Experts from the faculties of civil engineering, geodesy and architecture have to make a project so that replacement homes can be commissioned, Horvat said, adding that regardless of dimensions, all must have the same earthquake-resistant foundation.

He said everything must be ready as soon as possible for construction to begin, adding that part of his ministry would be relocated to Sisak or Petrinja.

Horvat said the decree the government would adopt on Thursday would make it possible to include Sisak-Moslavina and Karlovac counties in the contracting of works for the reconstruction of schools, hospitals and other public buildings.

Asked to comment on the dissatisfaction of the mayors of Petrinja and Sisak with the distribution of HRK 120 million worth of emergency aid, he said the money was allocated after the first damage estimates.

He said almost 700 structural engineers were currently on the ground and that the next amounts would be distributed based on more detailed damage estimates.

Horvat dismissed "any suspicion" that the damage was estimated "with partisan or political connotations. "The damage was estimated on the ground by the only people who can do it."

As for assistance from international institutions and the EU, he said applications for money from the European Solidarity Fund should be prepared in the next 12 weeks, after the total damage was estimated.

In the meantime, he added, the government has managed to communicate that the 5.1 billion received after the Zagreb quake may be utilised to deal with the damage in Sisak-Moslavina County.

Investigations into poorly rebuilt houses

Asked if anyone would be held to account for the fact that the earthquake demolished houses in Sisak-Moslavina County which were rebuilt after the war, Horvat said there would be investigations after talks were held with all those responsible from that time.

He said the central state office for reconstruction had reliable data and that it was pointless to accuse anyone "until we are 100% sure of what happened and who the stakeholders were."

January the 4th, 2021 - The Petrinja earthquake has called the state of some of this neglected central Croatian town's (now former) buildings, and Minister Darko Horvat has assured that the issue will be thoroughly investigated.

As Poslovni Dnevnik writes, the Republic of Croatia now has twelve weeks to prepare a new application to the Sisak-Moslavina County Solidarity Fund, and it will know how much it will receive in about three months, explained Minister Darko Horvat.

He also pointed out that orders have been sent for projects according to which, depending on the affected households, the state will respond in the construction of replacement permanent facilities.

Commenting on how the buildings in Petrinja were built and how some obviously failed rather miserably in meeting all of the typically stringent standards because they collapsed during the quake like a weak house of cards, Minister Darko Horvat said:

"Yes, there will be investigations in to all that, but in order for this not to happen again, we need more systematic preparation - a tender for authorised designers, an institution that will control it all, operational coordinators, so that this would now all be done properly and according to the rules of the profession. The legislative framework is in force and the participants in the construction have full responsibility, and the Law on Construction clearly defines who they are, the people who design, supervise and carry out the construction,'' reported N1.

He added that they aren't yet thinking about who will conduct the investigation because "now the priority is to provide everyone with adequate temporary accommodation and restore some level of normalcy." Regarding the responsibility of the prefect Ivo Zinic, he said:

"Both Zinic and other actors in Petrinja's reconstruction will sit down at the table to discuss this. The Central State Office has all the information and therefore invoking anyone's responsibility is pointless until we're one hundred percent sure what was happening and who the actors involved were,'' stated Minister Darko Horvat.

Let us remind you, architect Ivan Krizic commented on the situation after the earthquake in Sisak-Moslavina County where he said that the laws clearly prescribe the method of construction and that poor construction in Petrinja after the Homeland War can be referred to as nothing less than a crime.

"Such situations simply cannot happen, it's a crime and the services in charge of crime should react to this," said Ivan Krizic, and when commenting more concretely on the poor construction in Petrinja, he stated: "According to the laws governing construction, i's known who is responsible for these omissions. There is no other word for it than the word crime. It prescribes the role of the supervising engineer, the construction manager, the investor… I'm sure that this is a process that must enter the domain of criminal liability research.''

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ZAGREB, November 6, 2020 - Construction Minister Darko Horvat said on Friday that the organised post-earthquake reconstruction of Zagreb and Krapina-Zagorje and Zagreb counties would start in early spring and that EU funds for that purpose should be paid already around December 1.

"A certain number of projects are nearing completion and we will start with them. I am optimistic that organised reconstruction will start already in early spring," Horvat said after a meeting of an expert group in charge of EU reconstruction grants.

The minister said that requests for the payment of close to HRK 80 million worth of finished reconstruction work had arrived, adding that of around 130 facilities in the education system requiring reconstruction, 119 had been repaired.

Horvat dismissed as insinuation claims that one was stalling with reconstruction and that nothing was being done in that regard.

The Fund for the Reconstruction of the City of Zagreb, Krapina-Zagorje and Zagreb Counties has been formally registered today, Horvat said, noting that the fund will primarily be in charge of the process of reconstruction of privately-owned houses and apartment buildings.

He said that more than HRK 250 million had been secured from the state budget for the Fund's work and that at the moment there was sufficient funding for organised reconstruction in Zagreb and the two counties in 2021, 2022 and 2023.

The rest of the European money will arrive when the triage is completed and when the European Commission, European Parliament and European Council reach agreement, Horvat said, noting that this could happen around December 1.

18-month deadline to justify money spent

Once the EC pays the entire amount for reconstruction work, totalling €683.7 million, an 18-month deadline starts running during which the amount spent will have to be justified, he said.

The deadline for the establishment of a mechanism to supervise how the money is spent is November 15, Horvat said, adding that a decision on the matter would be ready by the government session next Thursday, when implementation bodies in the competent ministries would be determined.

After the government session, the relevant documents will be sent to Brussels and information on their verification or necessary correction will arrive soon, meaning that a formal decision will arrive by December 1, after which payments will be made into the state budget. The finance minister will then distribute the HRK 5.1 billion for reconstruction work among government departments, said Horvat.

At a recent session the government approved the establishment of the Fund for the Reconstruction of the City of Zagreb and Krapina-Zagorje and Zagreb Counties, appointing Damir Vandjelic its temporary director.

PM Andrej Plenkovic said that the signing of the agreement on the Fund's establishment marked the formal beginning of reconstruction work in Zagreb following the March 22 earthquake.

ZAGREB, Sept 24 (Hina) - The government is considering a security clearance requirement for officeholders as part of a package of anti-corruption measures, the Minister of Physical Planning, Construction and State Assets, Darko Horvat, told the press on Thursday.

"Work is ongoing on an anti-corruption package, and the Minister of the Interior, Davor Bozinovic, and the Minister of Justice and Public Administration, Ivan Malenica, will inform you about it in due course," Horvat said before a cabinet meeting when asked about the security vetting of government officials in light of the JANAF corruption case.

Horvat said that as far as he was concerned, security checks could be carried out every six months.

Minister Malenica recalled that security clearance was no longer required after the law was amended in 2012. He said that the matter would be discussed by the task force in charge of drawing up the anti-corruption strategy. "Something should definitely be done about it," Malenica said.

Stressing that she had nothing against security checks, Culture Minister Nina Obuljen-Korzinek said that she had undergone security vetting when she first became an assistant minister. She added that the press should ask President Zoran Milanovic why he had scrapped this requirement when he was prime minister.

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ZAGREB, May 23, 2020 - Economy Minister Darko Horvat has said that following analysis on the profitability of open shops on Sunday, the government will propose that 14 Sundays in a year will be working days and employers will choose on which 14 Sundays they will open their shops.

This proposal of 14 Sundays in a year when shops can be open is the result of an analysis which has been conducted for more than two years and also of a high amount of consensus reached with social partners and the segments of the public interested in this matter, said Minister Horvat in the northern city of Cakovec on Saturday.

Also, the position of the chambers of commerce and trades as well as a great number of members of the Croatian Employers' Association (HUP) is that they agree that 14 Sundays are profitable, while working on other Sundays is not profitable, he added.

The pertaining changes of the relevant legislation on trading will be put for public consultation. as soon as epidemiologists give a green-light and rescind their ban on trading Sundays, imposed for health safety reasons.

Asked by the press how all that could be regulated during tourist seasons, Minister Horvat said that the trade sector in the regions where tourism is the main business activity also considered that working on 14 Sundays brought a profit.

He said that being aware of the fact that trading on Fridays, Saturdays and on Mondays each, made up 16% of the total volume of trading, while trading Sunday contributed with 8% to that volume, then there is "a clear economic connotation" why Sunday should be non-trading.

In addition, the last three months have shown that trading on Fridays, Saturday, and Mondays can offset the non-working Sundays, Horvat said, refuting claims that the latest proposal was made for the sake of campaigning before the July 5 parliamentary elections.

 As for the criticism made by Social Democrat leader Davor Bernardic that Prime Minister and HDZ leader Andrej Plenkovic was indecisive whether to have working or non-working Sundays, Horvat replied that he had not heard any constructive proposal from Bernardic.

Responding to Bernadic's claims that a vote for HDZ is a vote for corruption, Horvat said that many more members and officials from the ranks of the SDP were convicted of corruption.

He went on to say that in the last three years, this government had stabilized public finances, increased the ability of the Croatian economy to produce added value, boosted exports and made a budget surplus, which proved that this government could control well the budgetary money and invest it where it was most needed.

 April 4, 2020 - Members of the Glas Poduzetnika (Voice of Entrepreneurs) Association give their verdict on Minister of Economy Darko Horvat after the latest economic measures were announced.

Last week’s poll about public perception of minister Horvat, made after the first set of inadequate and inefficient measures, has shown worrying results and perception in the private sector. Following that, there were rumours of relieving the minister of his position. The reaction was pretty quick, and new, much more thought out measures were taken, similar to what the GP Initiative suggested. After that, we repeated the public poll about the public perception of the work of minister Horvat and we got noticeable changes in a positive direction:

The number of people who consider that minister Horvat doesn’t do a good job (and that he should think about resigning) has gone down by 22% percent. An additional 21.8% begin to perceive his actions in a more positive light (mostly because of the Glas Poduzetnika Initiative) and thinks he is improving. Although they are few, we are finally beginning to see some people who think he is doing a good job - 1% to be precise.

Although the result as a whole is far from good or acceptable, the encouraging fact is that the entrepreneurs are ready to change their perceptions based on incoming new information. They are not tied by ideology, furthermore, they recognize results and quality decision making. Differences measured in tens of percentage points suggest that, with a few good decisions and good and transparent communication, perception and even popularity can be changed easily and for the better, as demonstrated by minister Beroš's situation.

The association Glas Poduzetnika was formally formed today. You can learn more about that, as well as its structure and aims in this press release. 

For the latest on the coronavirus crisis, follow the dedicated TCN section.