As Josip Bohutinski/VL/Poslovni Dnevnik writes on the 8th of January, 2019, the Croatian Government is set to propose an increase in the amount of PSO contracts Croatia Airlines receives for domestic flights to the European Commission (EC). Croatia's national airline Croatia Airlines (CA) should select a financial advisor to develop a recapitalisation model and find a strategic partner by the end of this month.

The two-time bidding was announced last September, and as has since come to be known, reputable world companies such as Deloitte, AT Kearney, PwC, the Boston Consulting Group and DBV, which are part of a consortium with Croatia's PBZ, have come to be involved.

From Croatia Airlines themselves, they stated that last year, the Croatian Government put the company back on the list of companies of strategic and special interest of the Republic of Croatia, and that in the national reform program, it was stated that the goal in respect to Croatia Airlines is to ensure the further development and strengthening of competitive advantages and positions in the air transport market through quality strategic partnership. That strategic partner, which is obviously yet to be found, should expand Croatia Airlines' transport network and increase market share, as well as successfully recapitalise the air company.

Just how much money is actually needed?

When asked about this, Croatia Airlines responds the bid is still in process and therefore the company isn't in a position to comment on its details at the moment. The selected advisor should assess the amount of money really needed for the recapitalisation of the airline. Croatia Airlines' provisional director, Jasmin Bajić, has already estimated that it stands at about 250 million kuna.

In the past year, the Polish national airline LOT and the 4K German investment fund, which has already taken over Slovenia's Adria Airways, have both been interested in entering Croatia Airlines. As is already known, some Chinese air carriers have recently shown a somewhat general interest, but air carriers outside the European Union can only have up to a 49 percent share in an airline from within the European Union at most. As potential buyers, the Chinese have also mentioned the previous sales attempts by Croatia Airlines, all of which have failed.

Nobody made any serious offers or even showed a great deal of potential interest back in the 2013 recapitalisation bid, although Indonesia's Garuda and China's Hainan Airlines were mentioned as potential buyers. Of course, nothing came of it.

The then government started looking for a strategic partner for Croatia Airlines once again back in 2015, they hired IFC, a World Bank fund that verified the interest of European and world air carriers for the Croatian national airline. At that time, Korean Air and Taiwanese Eva Air were mentioned as the most prominent companies. IFC was supposed to propose a proper privatisation model for Croatia Airlines, after which a public tender was to be launched. But yet again, nothing came of it, because parliamentary elections were held at the end of the year, and the powers that be were subsequently changed.

While the new advisor elaborates the model of privatisation of Croatia Airlines again, the government will, along with the European Commission, try to find a way and hopefully agree on how the state could further assist the still struggling Croatia Airlines.

The Croatian proposal will be to increase the amount of public service obligation (PSO) contracts that Croatia Airlines gets for domestic flights, currently amounting to 75 million kuna. In addition, this year the Croatian National Tourist Board will receive 7.5 million kuna for joint advertising.

Make sure to stay up to date with the Croatia Airlines saga and much more by following our dedicated business, politics and lifestyle pages.

Click here for the original article by Josip Bohutinski/VL on Poslovni Dnevnik

As Darko Bicak/Poslovni Dnevnik writes on the 10th of December, 2018, Eccos, a Zagreb company, has recently received a very valuable contract in Brussels worth about four million euros with the European Commission.

More specifically, according to Krešimir Paić and Silvio Pregelj, the directors and co-owners of Eccos, what we're talking about here is a four-year agreement on the improvement and maintenance of electronic and electromechanical control systems for both human and vehicle access to all eighty of the European Commission's facilities in Brussels. This includes the headquarters of the European Union where all major events take place and the key decisions that decide ''our destiny" regularly occur.

"We're proud of the fact that we recently managed to win in the strongest European tender and that we managed to conclude a four-year contract with the European Commission.

This job is the crown of our efforts to bring Croatian savvy, knowledge and experience to the European Union, under the Croatian name and the Croatian flag, and not just as cooperators of large foreign companies. When it comes to foreign markets, we intend to do more work on integrated value-added electrical engineering in the form of our software and project solutions, since we have enough knowledge, quality, experience and will,'' Paić said.

From the Zagreb company itself, they acknowledge that their decision to bid to the EU tender happened quite randomly, as their business activities are mostly related to Croatia and the wider region. Namely, this job is indirectly being credited to the negative trend of Croatian labour force departure to Western Europe. Recently, they admitted, a colleague who sought a future in a similar company in Belgium recently left the company.

As we remained in a good relationship, we continued to socialise occasionally and in those gatherings we realised that they didn't really do anything better than us and that we ourselves could actually come out with their strength and knowledge in any tender in Europe.

Since Croatia is member of the EU, we decided to take advantage of this and we started to follow the tenders in the EU and one came up which was interesting to us, and in which we ultimately won,'' Krešimir Paić recalls.

He added that this is a project where all their knowledge and creativity will come to fruition, because ultimately, the exact value of the contract will depend on what the contracting authority can offer and actually go ahead and implement. Although it's a multi-million euro job, the Zagreb company says it's more valuable to them because of the references they will acquire through it, rather than simply because of the high value of the actual contract.

Eccos is engaged in the development and the implementation of sophisticated solutions in the field of electrical engineering, information technology and security.

This year, they celebrated their 20th anniversary, and currently have 115 employees, half of whom are graduate engineers, and their annual revenue is at the level of one hundred million kuna. Paić and Pregelj recall that their first jobs were installing alarms in family houses, and their first major job was at the Rijeka Oil Refinery, in which they were engaged in designing complex systems in the field of electrical engineering and technical protection.

Energy is still a significant sector for them and they have, along with an American partner, just developed a project for monitoring various pipelines (gas pipelines, etc) through which they're hoping to boost global interest.

Today, as they explain, there is hardly any company in Croatia with which this Zagreb company hasn't cooperated to some extent or another. Silvio Pregelj points out that they are particularly sought-after when a company wants to integrate more than one system into a complete solution.

"In the development of this system, we're striving to unify information from all peripheral devices and sensors, which are all the more smart. This information is collected through various algorithms and by using artificial intelligence, and in this way the behaviour of the system is adapted to the specific needs of its users. We're developing our own software and hardware solutions that are part of our projects (Epsimax, Orgman and ICMS). Today, our development team has about twenty engineers,'' says Preglej.

They have worked on such solutions in both IKEA department stores in the region, in Zagreb and in Belgrade, and there are almost no airports in this area in which they aren't present. They provide a range of electrical and information services, and they are probably the most recognisable publicly for their smart parking systems.

The product of this Zagreb company is also the systems that are being built in the capital and in a number of other cities across both Croatia and the region, and the latest product is the so called smart kiosk, which can already be seen in the centre of Zagreb.

"The new car parking metres in Zagreb are smart kiosks that, besides dealing with parking charges, also provide information to tourists on the sales of other city services, items etc. We have the strongest partners in the world, and we're complementing our solutions with the Eccos Smart City Entablation Platform, which brings together all the participants involved in the process and offers full and complete reporting,'' says Preglej.

Like most other companies, Eccos say they have noticed a lack of workforce, with particular issues regarding successfully attracting young engineers, but for now at least, the situation for this Zagreb company is not alarming.

"We retain people in the team by fostering quality and open relationships, investing in education, the ability to progress in line with the results achieved and by stimulating quality work and effort.

We offer our people the opportunity to participate in sophisticated projects in Croatia, in the countries of the region, and in the European Union, and to expand their knowledge in software development, the hardware, implementation of complex engineering solutions, project management, and all other aspects of our activities,'' says Krešimir Paić.

For now, the company has a head office in Zagreb and Sarajevo, with offices in Split and Dubrovnik, and the opening of an office in Brussels is underway. Their intent is to become more and more present in western Europe and that the existing ratio of domestic market revenues and exports of 80 to 20 will change in the coming period. In that light, there is no exclusion of the opening of new offices in Europe for this successful Zagreb company.

Make sure to follow our dedicated Made in Croatia and business pages for more information on Croatian companies, products and services, as well as on the investment and business climate in Croatia.

If it's just Zagreb you're interested in, stay up to date with Total Zagreb.

Click here for the original article by Darko Bicak for Poslovni Dnevnik

According to Ipsos research, at least one negative shopping experience was reported by 29 percent of the respondents so far. In line with EU rules, a new Croatian Central Consumer Portal may provide the answer for consumers to be able to access everything they need to know about their rights.

As Darko Bicak/Poslovni Dnevnik writes on the 25th of November, 2018, a new set of European Union rules will soon be incorporated into domestic consumer protection legislation with the adoption of proposals sent to the Croatian Parliament.

Despite the generally welcome move, practice hasn't reflected theory so far, and information has shown that consumers tend to find it very hard to deal with the proverbial "forest" of regulations that exist when it comes to consumer rights and protection, and want easier access to information about their rights, as well as clear instructions to find out exactly who to contact when they feel that their rights have been denied, violated, or otherwise infringed upon.

The Ministry of Economy is therefore preparing a unique, Croatian central consumer portal entitled "Everything for Consumers" (Sve za potrošače) which should kick off with work by the end of this year, or just a little later at the very beginning of 2019.

"Our goal is that consumers no longer have to waste their time to first get the information [they need] about which competent body they require, then [spending more time] on just how to get to the [required] information from that body, but instead to have everything they need to know at their disposal - from how the product needs to be labelled in order for them to get all the information they need, and how it's necessary to point out the retail price to the possibility of the termination of the contract and the return of the goods, to what to pay attention to before they make purchases online,'' they state from the Ministry of Economy.

For the launch of the Croatian central consumer portal, inspiration drawn directly from field experience was used, and this year, campaigns across the country were organised, in March, September, and even on this coming Saturday another one will held at Zagreb's Zrinjevac.

The research conducted into this by the Ipsos agency back in September for the aforementioned Ministry shows how just a very small number of those over the age of 16, a mere 16.7 percent, believe they are somewhat or completely acquainted with their consumer rights. As many of 33.5 percent of consumers are totally unaware of what their rights as consumers are, and at least one negative customer experience was experienced by as many as 29 percent of the respondents, and most of them, as much as 71 percent, had a problem with a purchased product, followed then by public service irregularities (20 percent).

The move on creating the Croatian central consumer portal, and generally on placing greater emphasis and concern on consumer rights has been welcomed by Croatia because it ensures the continued proper functioning of the market, and the customer's satisfaction is very much in the interest of business people working in this field because transparency and fair rules often work as a trustworthy condition for returns, with re-purchases often then being made.

Make sure to stay up to date with our dedicated business and politics pages for more information like this.

Click here for the original article by Darko Bicak for Poslovni Dnevnik

Brexit. It's irritating, it sends pound sterling up and down like a rollercoaster, and quite frankly, it's become a farce.

Nevertheless, British PM Theresa May has somehow managed to get her Brexit deal past the first wobbly stages of acceptance (at least for now, which might still mean very little), and while we're still miles and miles away from the end of a road which may well simply have no actual end, what does the withdrawal agreement actually mean for citizens rights?

You don't want to read 500+ pages of political jargon to find out, so I've done it for you. Let's take a look at what has now been formally agreed between the United Kingdom and the European Union on the status of Croats in the United Kingdom, and British nationals living here in Croatia.

First things first, no, you're not getting kicked out after Brexit. There has been a lot of scaremongering and frankly ridiculous headlines from various newspapers, particularly British ones (naming no names here, but you know which I'm referring to), claiming such absurdities. You can breathe easily, not only are mass deportations barely legal, but such a move is in nobody's interest. Nobody wants to punish citizens for exercising their treaty rights in good faith.

What does this all mean for British nationals living in Croatia?

Believe it or not, but Croatia's love of residency cards for EEA nationals as well as third country nationals has actually come in handy. Countries like France and the UK don't demand you possess a card, so while Brits in France scramble to make themselves as known to the French Government as possible before Brexit, Brits in Croatia will already have been issued a bit of paperwork and a residency permit. The system already knows about you, and just this once, that's a good thing.

If you're a Brit and you've been living in Croatia, ie, exercising your treaty rights derived from EU law (freedom of movement), and continue to exercise them after Brexit day (which in this case, doesn't actually refer to the 29th of March, 2019, it refers to the end of the foreseen transition period, which is December the 31st, 2020), you're safe.

Here's an example, let's say you moved to Croatia in 2016 and you're still registered as living in Croatia, legally, with a residence permit, after the end of December 2020, you're safe and your rights will be protected as if nothing has altered. You'll go on living your life in Croatia broadly as you did before.

If you have temporary residency, which, as you applied for it as an EU national, will likely be proven with a five year biometric residency permit/card, then you'll be allowed to apply for permanent residency just as you would before, providing only what is asked of an EEA citizen, and not what would be asked of a third country national. If you already have permanent residency, then you've got literally nothing to even think about.

The EU has left it up to national governments to decide whether or not they want to scrap the ''permanent residency'' title for something else, as the UK has changed its own to ''pre-settled'' and ''settled status'', so if you're in possession of a permanent residency document and Croatia decides to alter its name, you'll have the card replaced free of charge to whatever the new system and name will be. The likelihood of Croatia altering this though, is not high, so don't worry about it.

Applications for permanent residency made during the UK's transition period (which it likes to refer to as the implementation period) will also remain the same, you'll only pay what nationals pay for other similar documents for your permanent residency card when approved, and the process will be the same as before.

You do not need to be physically present in the country on December the 31st, 2020, when the UK's transition period ends, in order to be legally resident, you only need to be in possession of a permit proving your residency in Croatia.

The only change, which is actually rather welcome, is that you'll be allowed to leave Croatia for up to five consecutive years without losing the right to permanent residency here. Previously, that was two years. So, essentially, unless you're out of the country for five years straight, you'll enjoy permanent residency for life, renewing the card as normally every ten years like you do with a passport.

It's worth remembering that Croatia dropped the restrictions on the domestic labour market for British nationals when Britain dropped its restrictions on Croatian nationals, so you no longer need a work permit to work in Croatia as long as you have residency. Permanent residents have never needed one, nor do they now.

What does this mean for Croatian nationals in the United Kingdom?

To put it bluntly, not a lot.

There has been heightened anxiety about the issue of citizens rights from the very beginning of this long process we've come to know as Brexit, but they have always been a top priority for both the EU and the UK, and nobody wants to cause upset in people's lives.

If you're a Croat in the UK, you'll know that the UK doesn't require EU nationals to register with the government, unlike in Croatia and several other EU countries. The presentation of an EEA passport has been enough to prove your right to live in the United Kingdom, and for nationals of those countries who don't have labour market restrictions against them in the UK, that means you can work too.

The UK dropped its labour restrictions on Croatian nationals, and Croatia did the same, as mentioned, with Brits in Croatia. This means you can now look for work and gain employment without obtaining a work permit, a stay and work permit, or a work registration certificate.

What will change, however, is your need to be registered with the British Government before the 30th of June, 2021, but if you can do it before December the 31st, 2020, that's better. 

The British Government created an app (which doesn't work on iPhones. Ah, good old technology), where you'll prove your right to live and work in the UK and be issued with a status, either ''pre settled'' for those who have been in the UK for less than five years when applying, or ''settled status'' for those who have been in the UK for five years or more. You'll be allowed to stay in the UK if you're applying for ''pre settled status'' until you meet the criteria for ''settled status'', which is the same as Indefinite Leave to Remain.

Click here for more. Oh, and go and buy an Android phone.

Once you're approved with ''settled status'' which is essentially just permanent residence, you'll be allowed to leave the UK for five consecutive years without losing your status. Just like with Brits in Croatia, you do not need to be physically present in the country on December the 31st, 2020, when the UK's transition period ends, in order to be legally resident, you only need to be in possession of a permit (or whatever the UK decides to offer in this regard), proving your residency in the UK.

We at TCN sincerely hope this answers your questions about what the withdrawal agreement means for you, whether you're in Croatia or the United Kingdom. While the Brexit road is far from over, and questions as to whether it will even actually happen are more frequent than ever, you won't be being removed from your host countries.

If you want to find out more about residency in Croatia, click here. To keep up with more news on Brexit, and on Croatian and European politics, follow our dedicated politics page.

ZAGREB, November 8, 2018 - The European Commission on Thursday revised upward Croatia's GDP growth forecast for 2018 to 2.8% from 2.6%, noting that a surprisingly strong growth in the second quarter signalised a solid growth throughout the year.

The growth forecast for 2019 was revised upward as well, to 2.8% from 2.5%. GDP is expected to eventually reach pre-crisis levels in 2019, while in 2020 it is expected to slow down to 2.6%.

"After closing 2017 on a weak quarterly reading, real GDP growth regained momentum in the first half of the year, posting a 1.1% q-o-q rate in the second quarter," reads the European Commission's latest European Economic Forecast. In the second quarter of 2018, growth picked up to 2.9% from 2.5% in the first quarter.

The EC forecast says that household consumption is not expected to slow down and that it is supported by positive employment and income trends. "Household consumption is expected to remain the main growth driver over the forecast horizon, as disposable incomes benefit from rising wages and employment, as well as steadily increasing tourist receipts and remittances," says the report.

Furthermore, the purchasing power of households will be supported by subdued inflation, thanks to the planned reduction of VAT rates for some products to 13% in 2019 and 2020, and consumer credit at low interest rates, according to the report. Also, private investment is set to benefit from favourable financial conditions, while public investment is projected to intensify as the currently lagging absorption of EU funding picks up toward the end of the programming period.

"The pace of export growth for both goods and services slowed down in the first half of the year and is set to moderate further in the second half. At the same time, imports of goods and services, while slowing somewhat, continue posting high growth rates," reads the report.

External demand for Croatian goods is expected to remain solid. However, the pace of exports' market share gains is likely to have peaked, and growth of goods exports is projected to continue moderating. "Similarly, after years of record-setting numbers, revitalised competition in the Mediterranean is expected to have a dampening impact on the expansion of tourism services exports," says the EC forecast.

Goods imports are projected to continue increasing steadily on account of strong domestic demand, while growth of imports of services is expected to slow down. As a result of these developments, the trade balance is set to progressively deteriorate, but remain positive. In turn, the current account surplus would edge down to below 2% of GDP by 2020, also thanks to higher profits in the banking sector owing to the absence of temporary effects, such as the Agrokor-related provisioning of last year, the EC says.

The Commission expects employment to grow by 2.3% this year, and to grow moderately in the next two years. Wage growth is expected to peak this year on the back of higher wages in the public sector. With unemployment falling rapidly and demand for labour intensifying in some sectors, wage pressures in the private sector are expected to grow stronger in 2019 and 2020.

As the labour market continues improving, migration outflows are expected to ease and the negative trend in participation rates is expected to turn positive, the EC says.

The inflation rate is projected to rise up to 1.6% in 2018 while in 2019 it is expected to be at 1.5%.

Downside risks to the forecast come from the external side. "A slowdown in some of Croatia's main EU trading partners could dampen goods exports, while tourism could suffer more severely than expected from intensified competition in the Mediterranean."

"Positive risks may come from investment, should there be a more substantial pick-up in the absorption of EU funding."

Government surplus declining as contingent liabilities materialise

After recording a first-ever surplus, of 0.9% of GDP in 2017, Croatia's public finances remain in good shape in 2018. "Revenues are growing strongly on the back of positive labour market developments and retail spending. Expenditure is pushed up by rising public sector wages, partly offset by declining debt servicing costs and lower-than-anticipated public investment."

"The materialisation of contingent liabilities (government guarantees to the shipyard industry) in excess of 1% of GDP is expected in 2018-2019. Largely due to this, the surplus is set to drop to 0.2% of GDP in 2018. In 2019, revenue is expected to grow slower than nominal GDP due to the effects of the forthcoming tax reform, which will cut VAT, personal income taxes and social contributions," the report says.

"Expenditure growth should remain contained, largely due to the strong base effect of the rising wage bill and capital transfers in 2018. The surplus is thus expected to increase to 0.4% of GDP in 2019 and fall again to just above balance in 2020, largely on account of public investment growth. In structural terms, the general government balance is projected to fall into negative territory this year and deteriorate thereafter," it adds.

Driven by surpluses and GDP growth, the debt ratio is set to continue declining strongly - to 73.5% of GDP in 2018, 70.1% in 2019 and 68.2% in 2020. Risks to this forecast include the possibility of greater-than-expected capital transfers to distressed companies, the Commission said.

EC projections of GDP growth similar to those of other analysts

Most domestic and foreign analysts expect a slight slowing of growth this year from last year's 2.9%.

The Croatian National Bank has recently revised down its growth forecast for this year to 2.7% from 2.8%, while the European Bank for Reconstruction and Development expects the Croatian economy to grow at a rate of 2.7%. The most optimistic are analysts at Addiko Bank and the Zagreb Institute of Economics, who expect growth of 3%, while Erste Bank has forecast the growth rate at 2.8%. Raiffeisenbank Austria has revised up its growth projections from 2.3% to 2.6%. The government drew up the budget for this year on a growth projection of 2.9%.

The Croatian GDP rose by 2.5% in the first quarter of 2018 compared with the same period of 2017, while in the second quarter it grew by 2.9%.

For more on Croatia’s economic growth, click here.

ZAGREB, October 29, 2018 - Valdis Dombrovskis, the European Commission vice-president for the euro and social dialogue, said on Monday the Commission supported Croatia on its journey to the euro area, not just politically, but also through a structural reform programme, noting that economically 2018 was a good year for Croatia.

The Commission can help countries working on introducing the euro technically and financially, he said after meeting with Prime Minister Andrej Plenković and cabinet ministers.

At the meeting we discussed economic and fiscal matters and it must be said that 2018 has been a good year for Croatia. The economy shows robust growth, close to 3%, which is the European Union average, Dombrovskis told reporters, adding that a budget surplus was also recorded.

He said the government had announced its intention to join the Exchange Rate Mechanism (ERM II) in 2020 as a step towards introducing the euro, calling this a sort of waiting room before joining the euro area. Countries usually spend two years in ERM II but it may be longer.

Commissioner welcomes pension and other reforms

Dombrovskis underlined the need for awareness of the importance of structural reforms, saying they played an important role, not just for joining but also successfully participating in the euro area. He added that countries which intend to join must show a certain economic resilience.

He welcomed the reforms which have been launched, including the pension and education reforms, the strengthening of the financial sector, and efforts to reduce non-performing loans and to bolster the financial situation and sustainable economic growth. Dombrovskis also pointed to the macroeconomic imbalances which still exist in Croatia.

Finance Minister Zdravko Marić said the government was aware of the job ahead, such as dealing with unemployment. He added, however, that it was very important for Croatia to have exited the Excessive Deficit Procedure.

Agriculture Minister Tomislav Tolušić said Croatia "is doing its job, with which the European Commission is happy."

Euro adoption strategy

Dombrovskis arrived in Croatia for a two-day working visit and is due to be received by President Kolinda Grabar-Kitarović. He will meet parliamentarians and hold a roundtable discussion on the introduction of euro and the European budget at the Zagreb Faculty of Economics.

A year ago, the government and the Croatian National Bank (HNB) launched a document entitled "The Strategy for the Adoption of the Euro in the Republic of Croatia". On that occasion, Prime Minister Plenković said that his cabinet had set two important goals: one of them is to make Croatia prepared in 2019 to join the passport-free Schengen zone, and the other is to enable Croatia to join the euro area. Plenković said then that his cabinet's target would be to enable Croatia to enter ERM II in 2020 when Croatia will hold the rotating EU presidency from 1 January to 30 July.

I don't want to speculate on the date for the adoption of the euro. What is realistic and what we are working on is to make sure that 2020, when Croatia chairs the rotating presidency of the Council of the EU, is the year Croatia can become part of ERM II, he said at the presentation of the strategy on 30 October 2017.

If you want to more known about relations between Croatia and the European Commission, click here.

Croatia's decision to allow a Chinese state-owned company to construct Pelješac Bridge isn't sitting well with many...

Unwelcome news for the neighbours!

Will Croatia's islands finally be given the proper means to catch up with the mainland?

While significant improvements have indeed been made, Croatia still has a very long way to go in terms of the justice system.