There has been much talk of late about the potential fate of the enfeebled Uljanik shipyard, as well as the 3 Maj shipyard, and what the future might hold for Croatian shipbuilding as a whole. It seems that any potential boost that a Chinese investment could have brought to this ailing industry has been lost.

As Poslovni Dnevnik writes on the 21st of June, 2019, Minister Darko Horvat has admitted that there is no serious interest whatsoever from the Chinese in investing in Uljanik in Pula, or the 3 Maj shipyard in Rijeka, delivering a damaging blow to any remaining hopes that these shipyards could be brought back from the brink.

Horvat added that despite this bad news, the Croatian Government is currently engaged in trying to find a legal route for all of the ships currently at Uljanik and 3 Maj who are in a certain phase of completion are completed and delivered, signalling that there is every intention to honour obligations in spite of the dire situation the shipyards continue to find themselves in.

Economy Minister Darko Horvat was in Mokrice in Slovenia when he commented on the future of Croatian shipbuilding for the media, RTL writes.

Horvat said that the Chinese have no intention of entering as strategic partners in the Uljanik group, but they have expressed interest in the Brodarski Institute, which is located in Zagreb.

"The information I've received from the embassy in the People's Republic of China supports the intentions that we've been talking about over the past month - that there is a serious intention of a Chinese partner to negotiate and have a joint appearance in new projects, but at this point, there's no more serious intention from Chinese shipbuilders to purchase or enter into a strategic partnership with 3 Maj, more specifically with the Uljanik Group,'' Horvat stated, emphasising the fact that the Croatian Government will continue to try to find a way to make sure the shipyards honour their obligations.

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As Poslovni Dnevnik/Bernard Ivezic writes on the 12th of June, 2019, the very first investor in Croatia's highly respected Rimac Automobili, Colombian Frank Kanayet Yepes, has made yet another investment in a Croatian startup. He has put a million kuna into the innovative Zagreb company Hubbig.

Much like Rimac Automobili, this startup investment significantly deviates from what you'd typically see in Croatia, or what you could likely refer to as the Croatian average. Kanayet Yepes has registered his co-ownership in the Court Registry, where the name of his company from Bogota, Colombia, now sits. This means that his investments, therefore, weren't run through any headquarters based abroad, but Hubbig received its directly, right here in Croatia. In in this investment round, this Colombian investor was accompanied by a Croatian investor, Ivan Glavaš, who was also entered as a co-owner of Croatia's Hubbig in the Court Registry.

Glavaš is known to Croatia's continually growing startup community as the founder of blockchain startup Forebit, which Thompson Reuters and Bloomberg are doing in the world of the ''fiat money'' index, with analytics and other sophisticated financial services which are carried out for banks, stock exchanges, and other institutions. In addition to the above mentioned individuals, Monclac Mikac, former operations director at Rimac Automobili, who today is the director of the development of the Spanish company QEV Technologies, joined Hubbig's co-ownership. Mikac has now become Hubbig's adviser.

Hubbig was founded at the end of 2017. In May last year, it started with commercial work and today it has 10 members. Along with interesting investors and the location of the investment, it's also interesting that since the beginning of operations, it's remained profitable. FINA's records state that in 2018, Hubbig enjoyed a turnover of 724,658 kuna, with a net profit of 101,415 kuna. This platform is unique in that, unlike freight forwarders, it immediately prints out final prices, even for the most complex of trips, such as shipping vessels and trucks from China to Europe, or indeed vice versa.

Thar type of job has so far been done manually, so a final price was something that usually needed to be waited for. In addition, there is often no possibility for the shipment to be tracked, and this innovative startup from Croatia also offers this option.

Dragana Lipovac, the founder and director of Hubbig, says it aims to grow into a global logistics marketplace that connects carriers to customers without intermediaries and other ''middle men''.

"Our plan is to expand into the region of Central Europe, because we're currently focusing on Croatia and Zagreb and opening up opportunities for transportation in Latin America and China," stated Lipovac. She added that the contribution of Frank Kanayet, which was then joined by that of Monika Mikac, will be enormously helpful.

She also stated that, due to his investment in Rimac Automobili, Frank comes to Croatia at least twice a year and she finally had the opportunity to meet him last September.

She says that they were able to negotiate in principle, then things became more concrere, they dealt with and resolved all of the other procedures, until the investment became apparent in black and white in the Court Register.

"Frank has invested in 28 startups in the last year alone, he has a great team around him, and we've been doing everything without any problems,'' added Lipovac. Ivan Glavaš, another investor in Hubbig, says that the core of this platform to raise price transparency in freight forwarding.

"My entire career on the stock market revolves around prices, so my work with Hubbig is even more interesting,'' said Glavaš. He is convinced that his return on this investment is safe.

However, he emphasised the fact that he has no intention of pulling out of the investment, claiming that his investment was to help grow the company. How well Hubbig's growth plans are going is perhaps best illustrated by the fact that the company has already exceeded last year's revenue.

"I believe that the revenue in 2019 will be double in comparison to that of last year, and the plans are for the number of clients, despite it still being small base, to triple," said Lipovac.

Prior to this million-kuna investment, this unusual company from Croatia received a total of 365,000 kuna of seed capital on two occasions. At the beginning of the year, it took a convertible loan of 200,000 kuna, and at the end of 2017, it won at Zagreb Connect, winning 165,000 kuna.

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As Poslovni Dnevnik/Jadranka Dozan/Sergej Novosel Vuckovic writes on the 4th of June, 2019, the continental Croatian town of Križevci is set to get a shopping destination covering more than 4,000 square metres this autumn under the title of Capitol Park Križevci, and new retail jobs for the local population will be opened, both in retail itself and in the initial construction of the premises.

The news about this investment was initially announced by Podravski List recently, citing unofficial information that the investor, the British investment group Poseidon, will invest about 15 million kuna into the shopping centre.

This British company, which deals with investment, development and real estate management in the business, housing and tourism sector, has expressed no desire to comment on the as yet unofficial figures in regard to the investment itself. It neither confirms nor denies the aforementioned figure. But they were happy to point out that Križevci will get a brand new shopping park that will "eventually employ more than fifty people, thus stimulating the local economy".

With the Križevci project, they say, they are continuing to expand their retail portfolio by strengthening the brand of Capitol Park in South East Europe. Most of the investments outside of their domestic market are directed precisely towards countries that make up the former Yugoslavia; including Croatia, Slovenia, Serbia and Bosnia and Herzegovina. Here in Croatia, both Makarska and Split have gained Capitol Park's much earlier on, and the British company has now announced that they will open five more such centres next year.

The completion of the up and coming Križevci premises will be carried out in two different phases, the first being opened in August (with Spar instead of Konzum), and the second a bit later on, in October. The location in Križevci, which is more precisely located on Smičiklasova ulica, was allegedly purchased from Raiffeisen Bank by Poseidon, according to a report from Podravski list. The British company apparently aims to change the shopping centre concept considerably.

Instead of Konzum as the principal tenant along with a few of the other ''usual suspects'' such as Muller, names like Spar and Bipa will occupy the space, and they're counting on New Yorker too, among other well known retail names.

Britain's Poseidon Investment Group's investment portfolio of around 1.2 billion euros is highlighted on its web page. In the area of ​​shopping malls under the brand Capitol Park in Southeast Europe, its portfolio exceeds 60,000 square metres, and in planning and construction there are more than 400 residential buildings

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There has been much talk, both positive and negative, about the potential for Chinese investment in Croatia. They're already building the long awaited Peljesac bridge down in Dalmatia and have since expressed great interest in the Port of Rijeka and in constructing a railway line linking Rijeka to Karlovac. 

Many believe that the apparently huge interest of the Chinese (and their money) is a bad omen, and that Croatia will end up trapped by yet more debt it can't pay off in the end. Others see it as a welcome move, despite their suspicions. Whatever the truth behind China's interest in Croatia is, the EU aren't too pleased with it, especially in the case of Peljesac bridge. Peljesac bridge is one of the most important strategic projects in the history of the country, and it has been financed mainly by European Union funds, the fact that a Chinese company has been chosen to construct it hasn't filled the European Union, nor the Commission, with much joy.

What will be the situation with one of Croatia's most pressing issues of late, its ailing shipyards? As Uljanik's dire situation continues to worsen, could the already suggested investment from China be its saviour at the eleventh hour? Maybe.

As Poslovni Dnevnik writes on the 29th of April, 2019, a delegation from China's largest shipbuilding company, China Shipbuilding Industry Corporation, headed by Hu Wenming, the head of the company, will arrive in Zagreb on Monday, as N1 reports.

The Chinese delegation will first be welcomed by Prime Minister Andrej Plenkovic and his government ministers at Banski dvori in the heart of the capital city. After exchanging all of the usual diplomatic pleasantries, they will discuss the burdensome issue of Uljanik (Pula) and 3 Maj (Rijeka), which the Chinese guests will visit on Tuesday.

At today's meeting between the Croatian premier and the Chinese delegation from CSIC, the bosses of Uljanik and 3 Maj, Emil Bulić and Edi Kučan, will present, as was confirmed to N1 by the Croatian Government.

Will the giant Chinese company actually agree to invest in Croatia's ailing shipyards, however? The answer to this question could be known definitively in as little as ten days, Economy Minister Darko Horvat announced last week.

Concerning the potential interest of the Chinese for the Uljanik and 3 Maj shipyards, Minister Tolušić said that this really is "probably the last chance to do something." If there is any possibility whatsoever that the Chinese will enter into some sort of investment arrangement to rescue the shipyards, they'll enter. If there's no possibility, they won't. We'll leave it up to them.'' stated Horvat.

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''ECA has never been supported by the Croatian administration even though we have linked the islands and the coast without the use of one kuna of state money,'' says D. Thiele, the representative of German investors who were shoved from pillar to post in an attempt to get the seaplane project off the ground again.

As Sasa Paparella/Poslovni Dnevnik writes on the 4th of April, 2019, two and a half years after inspectors of the Croatian Civil Aviation Agency (HACZ) grounded all four of ECA's airplanes for allegedly endangering flight safety back in August 2016, European Coastal Airlines (ECA) and the project of returning seaplanes to the Adriatic sea has now definitely collapsed. Soon, the dismantling of twelve airports on the water will begin, this encompasses all of the pontoons designed to receive ECA's airplanes set up at sea ports from Lošinj to Hvar, to Lastovo.

It's difficult to find someone willing to return the seaplanes to the Adriatic. German investors, who started the project all the way back in 2001, are extremely dissatisfied with the behaviour of the Croatian authorities.

"The ECA project has never been really supported by the Croatian administration. Investors from Germany and Malaysia have invested 25 million euro in the project to set up the transport infrastructure which is necessary for seaplane traffic. They did so without the use of one kuna from the state, and without an HBOR loan, even though we did apply for them. We have linked the islands and the coast and we employed 150 people,'' recalls Dietmar Thiele, executive director of OTAGO Beteiligungs GmbH, representing German investors and their Chinese partners from the Shanghai Jet star company, who were more than willing to invest in the reconstruction of seaplane traffic on the Adriatic.

Despite the total and utter lack of support from the Croatia authorities, and sometimes allegedly faced with the opposition of local and port authorities, the German investors were still able to launch the project and get all of the necessary permits to start the operations of the first hydro carrier in Europe.

"Regular lines began in 2014, and in August 2016, ECA performed 60 flights per day connecting 11 destinations, it transported up to 600 passengers per day and earned a daily income of up to 40,000 euro, as planned. However, the administrative overhaul of ECA prevented further business, resulting in enormous costs, which stalled any further funding of the project. HACZ grounded the seaplanes due to, as was noted, those established deficiencies. The unreasonableness and the illegality of this grounding has already been confirmed by four court witnesses, and this has lead us to a court dispute,'' Thiele stated.

To the contradictions that ECA was facing huge debts and would have otherwise failed because the model was not market-friendly, the response is as follows: "The business plan was based on achieving the project's profitability after five years, with seven seaplanes and 23 seaports," they added that every airline in the world plans for losses during their very first years of doing business, as they plan to cover said losses with the company's capital.

He added that the new Chinese investors were ready for the further financing of assets and new loans, the debts remained with the German investors, and the fleet would have been financed through leasing. Although the seaplanes have not flown since 2016, the project didn't fall away into the abyss immediately, but has been attempting a new beginning - some co-owners of ECA are opening a prebankruptcy process and are finding new investors from China's Jetstar.

The judge gave them two chances.

The Chinese wrote their intention to confirm that they want to invest 15 million euro in the project's renewal, to open a new company and to transfer the concession to twelve certified airports. The Chinese also sent that letter to the judge at the Commercial Court in Split, Velimir Vuković, who gave them an additional four months to complete the planned investment, but the executive powers failed to show any understanding.

In June 2018, the investors sent an official letter of intent to the Minister of Maritime Affairs, Transport and Infrastructure, Oleg Butković, from whom they received no answer. In August 2018, they asked for an answer once again. However, in communication with the then State Secretary for Maritime Affairs, the receipt of the letter was confirmed, but any official response has remained entirely absent. At the end of the prescribed four month period, Judge Vuković was forced to open bankruptcy proceedings in September 2018, resulting in the collapse of all of the existing concessions, and the investors naturally withdrew.

Much like with answering the letters from the investors, Minister Butković's office failed to answer why investors didn't get an answer when asked by Poslovni Dnevnik to comment on the matter. Instead, the portal was told: "The Ministry fully supported the project of the introduction of seaplanes and regulated the legislative framework by amending existing laws in the field of maritime and air transport, as well as the adoption of the Ordinance on water airports. Representatives of the Ministry assisted the investor in the realisation of the project,'' the letter went on to state all of the apparent ways in which the aforementioned ministry helped. This letter, which came much, much too late, didn't do much for the exhausted would-have-been investors, of course.

However, not entirely beaten, the foreign investors have initiated several litigation claims for damages and lawsuits against HACZ. They informed the German Embassy of everything, ​​as well as the Chinese diplomacy.

The collapse of the seaplane company began with a real tragedy back in June 2015 when, as the German investors themselves say, "two irresponsible Croatian ECA pilots, without having a license to fly that type of airplane, illegally took a small seaplane from the Lake company to four places, and because of their inability and their failure to comply with the flight rules, caused a plane crash resulting in two dead and one seriously injured pilot. Although two persons were killed in the accident, the State Attorney's Office in Split hasn't opened an investigation into the matter for more than 3.5 years.''

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Click here for the original article by Sasa Paparella for Poslovni Dnevnik

The InvestCro conference was opened by the editor-in-chief of Poslovni Dnevnik, Vladimir Nišević, who stressed the fact that this project opens up discussions topics that are of great importance to our society.

As Poslovni Dnevnik writes on the 18th of March, 2019, the "InvestCro: Investment in (Non) Opportunities in Croatia" conference, whose central theme is rather depressingly inspired by missed opportunities, ie planned investments that have not been realised, as well as obstacles investors encounter and also possible improvements to the arrival and treatment of foreign investors, is being held at the Westin hotel in Zagreb.

This conference is the second in a series of four conferences as part of the all-year-round multimedia project headed by Croatian news and media outlets Večernji list, Poslovni Dnevnik and 24sata entitled "InvestCro: Kako do ulagača" which discusses how investors can be attracted.

The President of the Republic of Croatia, Kolinda Grabar-Kitarović, stated that the current results of foreign investments don't match the desired image. She said that lessons should be learned from the mistakes alreayd made to avoid repetition.

President Kolinda Grabar-Kitarović said that Croatia was missing out on so-called Greenfield investments and has proposed five specific guidelines to the Croatian Government in order to attempt to tackle that problem.

"The results of direct foreign investment don't match the desired image. In 26 years, 33.5 billion euros has been invested in Croatia, but the problem is that the investments were mostly Brownfield [investments] and focused on ''nontradeable'' sectors. We're missing out on Greenfield investments, investment in the production of goods and services that will create quality jobs and be more export-oriented,'' said the president at the InvestCro conference in Zagreb.

She feels that the direction of development can be directed in the desirable direction if the appropriate lessons learned from the mistakes made are properly taken into consideration. "First of all, I'm thinking of investment woes, the shortage of people involved in attracting investors, the lack of approach planning and coordination," she said.

On their way directly from Pantovčak to the Croatian Government are five key guidelines for the faster and easier growth of investments in Croatia. It is necessary to consolidate the competences of all those responsible for attracting FDI (foreign direct investment) at a single national level, to create an investment attracting strategy aligned with other economic strategies, to focus on new models and soft investment incentives for added value and to constantly create an attractive investment climate.

The five recommendations include the continuation of work on a better overall image of the Republic of Croatia and the promotion of the country as a destination for investment, not just a tourist destination. In this regard, Grabar-Kitarović announced that the working group who deal with branding Croatia will come out with guidelines within a month.

"We decided to do something for our society, as well as for those who will still be here when we're gone. Without healthy investments, we will remain without investors, and for this reason we have just decided to speak [on the subject] through various conferences, just like this one today.

''I hope this conference will contribute to the progress of Croatia,'' Niševic said.

'' the last two years, two-thirds of greenfield investments in the EU took place in just six European countries. I believe that Croatia will raise its rating in 2019 and come over to the side of these six countries, with the help of new laws and a better quality framework for stimulating investment,'' said Minister of Economy Darko Horvat at the InvestCro conference.

"The share of investment in GDP is growing, we're at the average of EU countries. The third quarter in 2018 was, according to current information, optimistic, as there was a 4.9 percent rise. Croatia needs economic growth of five percent. Step by step, we're strengthening competition, there is no instant solution, and changes need to be deeply rooted.

We should help entrepreneurs to retain as much of their own funds as possible for the new investment cycle. We're digitising business and the state, in order to reduce the burden on entrepreneurs. Therefore, I expect growth in production, especially in the private sector. Through the Investment Incentive Act alone we attracted 16 billion kuna, with 12,750 new jobs being planned. We know exactly what kind of educational profile we need, we need to make sure we've got young people who will be employed there. We need a synergistic effect with cities and counties," the minister said, hinting at the need to all be on the same level.

"We want investments with new technologies and added value. Despite the global boom in the digital economy, less than 20 percent of such investments fell into the ICT sector. We are not only looking at the volume, but also the character and type of investment, as well as the quality of jobs which is what our young people who are leaving are looking for abroad. We need a bit of courage and some enthusiasm in order to turn these issues into a chance.

The Ministry of Economy has announced five new tenders, which is an innovation opportunity for domestic entrepreneurs. I'm sure that 303 million euros will be invested in Croatia's investment potential and that this year will end with development,'' concluded Horvat, adding the encouraging fact that this week, the representatives of several Swiss companies are browsing northwestern Croatia and looking for business zones that are ready for them to move part of their business to.

Mladen Fogec, president of the Association of Foreign Investors in Croatia, noted that Croatian pessimism could affect foreign investors very much.

"The rating agencies are constantly positioning us at the end of the second-third on the doing business scale, but they all get their perceptions from talking to our political parties, non-governmental organisations, and we're very inclined to being negative - we have to turn to optimism. When it comes to the perception of corruption... we're not in the best position, but when you ask a person whether or not they bribed someone, the answer is always that they didn't. Please spread optimism because Croatia has a lot of potential. In principle, there's an enormous problem with our mentality, the capacity for change isn't big enough, we're still not ready to start to change, and we're living in the era of digitisation and computerisation,'' Fogec said.

"We've spent far too much time wrestling with the past, we spent an actual minister of economy on Agrokor, and her successor is now spending most of his time trying to deal with Uljanik, which is also grappling with the past. We need to deal with the future. It's good that we have introduced a law on strategic planning. It's not a question of whether foreign investors want to come to Croatia, but whether or not we actually want foreign investors,'' claims Fogec.

He noted that the association he leads didn't issue the so-called ''white book'' for business for 2019 because the problems still remain exactly the same as they were before. "Nothing has changed, or it has changed at a slower rate compared to changes in neighbouring countries, so our latest edition is still valid," he concluded rather sarcastically.

For those of you who understand Croatian, here's a video of what has been said, suggested and discussed at the conference:

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Could Croatia soften its laws on the acquisition of citizenship for foreign investors bringing money, jobs and other benefits with them to Croatia? It's a sensitive topic for many, but more and more people in business circles are beginning to believe that this could be one answer to Croatia's increasingly bleak demographic picture.

As Boris Oresic/Novac writes on the 17th of March, 2019, the value of a passport is measured by the number of countries to which its owner can travel without the need for a visa. On the World Passport Index, the Republic of Croatia holds a high ranking of sixteen because the owners of its travel documents enjoy visa-free travel to 169 countries across the world.

According to the latest research by the Swiss agency Henley & Partners, which helps individuals who want to acquire the nationality of a country, the most powerful passports are Japan and Singapore, which allows visa-free access to 189 countries, with Germany coming second with just one number less. Following that come Finland, France, Italy, South Korea, Spain, Sweden, and Denmark.

From year to year, more and more countries abolish visas for Croatian passport holders, making the blue passport with the Croatian coat of arms more and more sought after in general. However, unlike some European countries, the Croatian state has not yet decided on what is considered by many to be a controversial move - selling its citizenship to those who want to pay good money for it and don't pose a risk to national security.

Portugal, Austria, Malta, Spain, Latvia, Lithuania, Greece, Cyprus and Bulgaria are some of the EU countries which, under varying conditions, do offer such opportunities to foreigners. By selling their passports or permanent residence permits, these countries manage to earn significant income from East Asia, Russia and the Middle East who aren't lacking money and who want EU documents which automatically enable them to move freely and operate in 28 member states, some of which fall into the most powerful countries of the world.

The European Commission doesn't take such a bright view at such practices, and at the end of January it warned EU member states that third-country investors seeking such so-called ''golden passports'' and ''golden visas'' increase the security risk throughout the EU. This criticism is mostly related to Malta, Cyprus and Bulgaria, which have the most liberal laws on the matter. For example, Malta charges 650,000 euros for its passport, and the applicant must have possessed 350,000 euros worth of real estate on its territory for five years. Cyprus offers its citizenship to those who invest 2 million euros and have real estate worth more than 500,000 euros. As one of its arguments for deterring the practice of selling citizenship, the European Commission cites the potential problems of Russian capital of suspect origin.

The former government of SDP's Zoran Milanović discussed the idea of major investors being allowed to acquire citizenship back in 2015, but such notions appear to have been quickly given up on and there is no indication, at least at the moment, that these regulations could change significantly. In business circles however, there are plenty of people who think that it's high time that Croatia softens its rigid attitude, because by selling a certain number of passports, it would not have lost anything and could in turn gain many benefits. With the country's demographic image becoming more and more bleak, many believe a softened stance wouldn't hurt.

Globus's interlocutor, who is otherwise very well-versed in this topic, argues that when looking for security and business opportunities, the Croatian passport is most likely to be sought after by businessmen from Asia and Russia.

''The Agency conducts an investigation to make sure the applicant isn't a criminal, that he isn't in political asylum, that he doesn't abuse taxation... Then it's handed over to the country whose official services also do their part before deciding whether or not to comply with the request,'' says Globus's source, adding that this year alone, Croatia has raised its quota for the employment of foreign workers from non-EU countries to as high a figure as 65,000.

''How can we know that there are no criminals among these people? It's hard to believe that some rich man would come to Croatia with the intent of blowing it up with explosives. It's not known that anyone with a Maltese passport is linked to some terrorist attack. Security risks don't exist,'' explains a Croatian entrepreneur who is well acquainted with some very wealthy business people and others who would like to spread their wings, their work and their money into Croatia if they were to gain citizenship.

The number of people who can be granted citizenship can be limited by each country or by set quotas. Globus's source believes that a quota of the first thousand passports offered for sale would be completed within a year to a year and a half. This would mean that 300 million euros would be pumped directly into the state budget, which roughly covers the entire value of Pelješac bridge. Advocates of such ideas believe that several thousand wealthy foreigners would acquire all of the rights and obligations of all other Croatian citizens, and would not undermine the demographic picture of Croatia, which is already as grim as grim can be. Most of them, however, would probably not spend much time here in Croatia, and they would certainly not vote in national elections.

The Ministry of the Interior (MUP) is responsible for all issues related to the acquisition of Croatian citizenship, yet most member states do have rather vague legislation, however difficult it might be to come across, that points to discretionary procedures for naturalisation. In such proceedings, a state may freely grant nationality to a foreigner based on its national interests, that is typically related to outstanding achievements such as those in the field of culture, science or sport, but it can also be equated with economic interest.

There is a legal possibility for a foreign entrepreneur or an investor to acquire Croatian citizenship in a more privileged manner if the competent ministry feels that it is in the interest of the state to grant it. The Ministry of the Interior notes that the process of amendment to the Law on Croatian Citizenship is indeed in progress, but it does not foresee an amendment to Article 12 in order to facilitate the acquisition of citizenship for foreigners who want Croatian nationality purely for investing in Croatia.

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Click here for the original article by Boris Oresic for Novac/Jutarnji

''Croats should be more concerned with the economy, and with the future too, rather than with topics that have failed to be solved over the past twenty years,'' stated Mladen Fogec.

As Ana Blaskovic/Poslovni Dnevnik writes on the 10th of March, 2019, you could enter the Olympics and break your own personal record in running, but if you're slower than the others, you'll still come last, this is the creative way in which Mladen Fogec, president of the Association of Foreign Investors in Croatia, described the country's huge problems with its current investment climate.

After a highly successful career in business, Fogec still believes that the biggest problem in Croatia is the mentality of the Croats: the tendency to moan and the reluctance to actually work to change anything.

Mladen Fogec talked about just how it has happened that even today, it still doesn't ''sit'' well with many Croats for investors to make a profit, and just why Uljanik is a notorious example of market economy rejection. Fogec spoke in an interview before the InvestCro investment conference, which is set to be held on March the 18th in Zagreb.

For years, you've been working on the white book of business climate recommendations, but you recently announced that you'll just stick a 2018 sticker on it?

It was a statement through which I wanted to reinforce an impression, but it didn't change the fact that there still weren't enough significant changes in the business environment to need to write a new book. Whoever needs it can get the 2017 issue, we'll just put a 2018 sticker on it.

The government is bragging about tax reductions, less barriers and faster procedures. Do you actually see that out in the field?

We do see it, but nothing is quick enough and it isn't to a great enough extent. If we look at Croatia alone, then yes, they're good moves. However, you could go to the Olympics and run faster than you've ever done before, but if your competition is progressing faster, then it's irrelevant that you've topped your personal record - you're still among the last. It's not a question of whether or not reforms work, the question is whether or not they're efficient. You have to look at the other side of the medal - the situation as it's seen by the entrepreneurs. We should be taking into account when changes are being made more. I believe that in life and politics, there is an important compromise in which sides need to come together, otherwise there will be no progress.

You said the problem is the mentality. Jako Andabak, let's say, says that it isn't uncommon in Dalmatia to have problems with permits for hotels because some local responsible for the permits is wanting to make sure that situation doesn't negatively affect his apartments...

I said the same thing a year ago on a radio show and that wasn't exactly welcomed with sympathies. I'm glad it was repeated by Mr. Andabak because he is Dalmatian and he's doing business there. Looking back at my 30-year career, I think it is a general problem in the state of mind of Croats. We're heavily burdened with the former system, with socialism, to be more specific. It's difficult to accept the market economy, it carries a lot of good but some bad stuff. We'd prefer to take everything that's good from the market economy and at the same time keep everything that's good from socialism as well. Unfortunately, such a utopia doesn't exist. The legacy of the old system is still very present, especially in the part of the state-owned economy, and that isn't small.

A good example is Uljanik, which is largely owned by its workers. They're actually striking against themselves, de facto. There are subsidies which exist in all countries, but if you take up to 30 billion kuna in the shipbuilding industry, each employer has given 23,000 kuna from his pocket, the question is whether [it's wise] to continue subsidising something that creates losses for years? Croatia should be more concerned with the economy, as well as with the future, rather than with topics that have failed to be solved over the past twenty years. I think we should invest in modern technology and industries related to digitisation and information technology, and not shipbuilding which has a very low level of added value.

What would trigger an investment wave?

I think it would help us to begin to change, especially our mentality. Croats like to complain a lot, to latch onto problems that are largely pushed by the media. Good news is just bad news, there's no optimism. One foreign ambassador who recently came to Croatia told me that people came to him with various issues and just complained, complained, and complained some more. It's impossible for everything to be so bad. Surveys from Doing Business or rating agency reports are based largely on perception, similar to the corruption index. The same applies to others, but in more developed countries, society fights for it to be a rule rather than an exception. It's the easiest thing in the world to be loud when being critical, we should turn to optimism in order for foreign investors to see that, too.

Have you noticed a change of attitude towards investors?

Unfortunately, I've got to say no. Indeed, and I have to repeat the words of one of our members saying that it isn't a question of whether foreign investors want to come and invest in Croatia, but whether Croatia actually wants foreign investors. It's still a big problem for us to accept a foreigner who comes here with capital, wants to buy land, build a production plant, and hire a workforce because inevitably we come to those [types of conclusions such as] "he will profit and make money on us." We haven't felt that it's normal and expected that someone who invests earns a profit, naturally, in a transparent manner and in accordance with the laws.

Should politics be focused on the growth of companies, and not on EU funds which only fund 20 percent of investments?

This is the core of the problem: to deter entrepreneurs from all hidden, parafiscal impositions. Their number has been reduced over the past ten years but they're so concentrated so instead of four, you have one, but the load is almost the same. This would have made a significant contribution to the growth of the economy. When things start going that way, someone always says that it's beneficial to large foreign capital. It doesn't matter whether the capital is domestic or foreign; If a company operates in Croatia and pays all of its taxes then it's a Croatian company and whoever actually owns it is of nobody's interest.

The owners of Volvo are Chinese and still we all think that Volvo is a Swedish car, not a Chinese one. That was also the case with the change in personal income tax when the criticism was about [the change] going hand in hand with those with higher wages, and not those who earn less. This is turning that thesis around. Those with low wages have so far not been included in the payment of income tax, nor will they be in the future. Those who have higher incomes and pay relatively more taxes will now pay less, but this isn't giving anything to them, they'll just have to pay less. Then we return to the beginning of the story of the traces of socialism because the wages must be viewed as gross, and tax is an individual category.

What do you say about Minister Horvat's plan to compile a list of the most desirable investors who will visit and have the benefits of investing in the Republic of Croatia presented to them?

There are countless potential investors, but I think this is a good move purely because of the reason that it's proactive. The government shouldn't sit around and wait for someone to come and knock at the door, but go to the investors and say: we're offering you this, that is, come to Croatia. I think that's a good idea.

Why is Croatia so far behind other countries, what is it that they're doing better?

It's because as a society, we're not changing, the capacity for change is not at a sufficient level. I'm not just thinking about the economy [when I say this], that's just a consequence. Recently, in the German-Croatian Chamber of Commerce, we had conversations with companies that had apostrophed (especially those who have production in Croatia) that they don't have enough qualified skilled labour, and that they need longer than a year to teach the students who have completed their secondary vocational education. We're returning to the beginning, back to education and the lack of a dual education system. These students should spend at least half of their education in practice so that they can start work immediately when they come to the real sector. We still have the problem of not changing anything in our curriculum. Now we're talking about history instead of turning to STEM areas, computing and digitisation, the things that are pulling society forward. If we had any chance for... let's say, the auto industry with a large factory to come to us, I'm not sure we'd have 5,000 skilled workers for it. We must start to change in all segments, from education onwards, which once again calls for much greater investment, research and development.

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Click here for the original article/interview in its entirety by Ana Blaskovic for Poslovni Dnevnik

One of the most famous symbols of Krapinske Toplice has been stood neglected and entirely abandoned for years, but could a young German who is partly of Croatian origin who moved to the area a couple of years ago be the solution this old continental gem needs?

As Poslovni Dnevnik writes on the 5th of March, 2019, David Krauss (35) moved to Croatia, more specifically to beautiful Krapinske Toplice in the continental part of the country, just over two years ago. He decided to invest in the renewal of the long abandoned Bellevue and restore its former glory. The technical review has been announced for March the 7th, after which, Zagorje will get a new face in its blossoming tourism story, according to a report from Zagorje portal.

A relatively short (at least by Croatian standards) fifteen months of construction work and two years of preparation of the project saw one of the most famous symbols of Krapinske Toplice, Restaurant Bellevue, get some new life breathed into it and a brand new beginning. A young German of the Croatian Roots, 35 year old David Kraus has been coming to Krapinske Toplice for years to the property once owned by his parents.

"My mother is Croatian and my father is a German, and we always said that we were so sorry that such a beautiful building is collapsing, so I decided to start investing," Krauss told the Zagorje portal, adding that they wanted to give the building a modern twist but remain loyal to the facility's old outlines.

The old facility, due to the very poor condition it has been in for a long time, unfortunately had to be completely demolished, even though that certainly wasn't the original plan. Namely, during construction, the walls they thought they would endure the process began to fail, so the decision to demolish everything for safety reasons was reached. Despite this, some of the old material and clay were preserved to fit into the new facility.

Restaurant Bellevue's investment was realised entirely by the Krauss family alone, and although the young investor didn't want to talk too much about the exact amount he invested, he noted that it was a large figure. He is not sorry for the move, having replaced his life in Germany for that in the beautiful rolling hills of green Zagorje, where he has been living for more than two years. He is also trained and experienced in the hospitality industry and is more than happy to work a job in the profession in which he was educated here in Croatia, too.

"For the time being, we have thirteen employees, mostly made up of the local population, which I think is very important if you're in the hospitality industry because they know the area you're in well, the customs, gastronomy, the people... The capacity is about 150 to 200 places, and we have a large outdoor terrace of almost the same capacity,'' Krauss said, astonished that people had already begun asking about their offer for weddings.

He is particularly pleased about the great reactions to the restoration of Bellevue the local population, with whom he communicates daily, have had. The older people remember that they once went to school right here.

"It's really nice when people tell me that they were once taught here, and now in their older days they intend to come here for a coffee or a beer," he said, pointing out that the project was supported by the municipal government.

When it comes to Bellevue's gastronomic offer, Krauss says the facility will offer dishes made from old Zagorje recipes, but crafted in a somewhat more modern way. They're planning and organising evenings full of live music performances, and access to their facility is specially tailored for the disabled.

"The Toplički pedestrian ring is near us for the people who are on rehabilitation to walk on, so we're glad to be here for when they're walking to come and have a bit of cake and some rest. I think we'll really have something for everyone,'' Krauss, who has always been madly in love with Zagorje, stated.

His only regret is that tourism in Zagorje and Krapinske Toplice is still not yet sufficiently developed, but fortunately, foreign tourists are increasingly recognising it as an interesting and different type of destination.

"Austrians and Slovenes increasingly choose rural tourism as a form of holiday, not just the sea. I'm sure that in a couple of years, our Zagorje will be dominated by such tourism,'' Krauss said, feel optimistic, announcing that the technical review of Bellevue will be on March the 7th, after which the grand opening will take place.

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Investment in Croatia is at an all time low. With the phrase ''ABC'' having become the term for ''Anything But Croatia'' in investor circles, the country needs to do some serious work in order to redeem itself. In order for Croatia to become much more attractive to foreign strategic investors, more concrete and clear steps need to be taken, and high on the agenda lie the proper preparation of public finances and more legal security.

As Ana Blaskovic/Poslovni Dnevnik writes on the 21st of February, 2019, despite dramatic headlines, the economy is growing and Croatia's level of public debt is falling. It is commonly forgotten that Croatia is growing at a pace below three percent - the slowest of all. Neighbouring Slovenia experienced 4.9 percent GDP growth, Hungary experienced growth of 4.1 percent, and Bulgaria saw 3.8 percent growth. There's no such great wisdom to be spoken of in Croatia's case here, the economy will grow as much as it has, or is given, the power to do so, and its momentum is the only thing that can make Croatia look much more friendly to investors, a move it desperately needs to make.

Even if there was a real willingness and the capacity for proper reforms existed, which are both evidently lacking, the key question is what moves should be made first to garner the fastest results in terms of investment in Croatia.

In that regard, there are no real dilemmas in the mind of respected economist Velimir Šonje, and what needs to be ensured are business climate reforms which include the Doing Business Report of the World Bank's recommendations for Croatia.

"By moving to around number 30 on the Doing Business Report, we've entered the club of countries like Poland, we're visible on the Eastern European map (which isn't the case today) and we have a marketing tool to attract investors," said Šonje, adding that these concrete measures would have a direct impact on Croatia's ability to properly facilitate business and investment, such as issuing building permits or reducing the number of steps required when paying taxes.

At the very top of the Croatian Government's priorities lies the transparent privatisation of state-owned companies through their listing on the stock market within the wider revitalisation plan of the capital market in order to better stimulate foreign investment in Croatia.

"It's no accident that investments are at a relatively low level since the capital market has died in Croatia. Without its revival through several major privatisations and listing and strengthening programs to attract medium-sized businesses in some of the simpler stock quotes, there will be no better investments, as capital market development has positive spill-over effects and attracts the interest of foreign investors,'' stated the esteemed economist.

Following the liberalisation of the internal market, the strengthening of the protection of equal market competition (so that there are no already protected existing players), the transparency of public procurement and the abolition of parafiscal charges and other obstacles to strengthening competition, especially in the service sectors where there are significant area of potential such as the health, education and IT industries,''

When it comes to better attracting investment in Croatia, the proper and decent handling of public finances also ranks very high on the list of consultant Andrej Grubišić from Grubišić and partners, with a very specific goal.

"It's necessary to reduce government spending, ie, a 30 billion kuna budget over a five-year period, and thus leave more money to a private initiative that will drive the development of small and medium-sized enterprises for their own economic interests (independently and without the help of the state),'' said Grubišić. This would become more attractive for investment by foreign strategic investors through takeovers and/or recapitalisations through which intensified internationalisation would continue.

The hope is that the state will cease their classic style of favouring particular sectors or industries, such as IT or renewable energy sources, as this approach almost always promotes unwanted crony capitalism. Moreover, treating everyone in the same way is a clear signal to a foreign investor that he does not have to fear that his industry will be considered less desirable tomorrow and lose his privileged status to someone else who is deemed closer to the wishes of the political elites and those who are better lobbied.

In this context, there is a real need for adequate judicial protection. In the Croatian Chamber of Commerce (HGK), the emphasis is placed on attracting investors to production and opening up an investment space that would be geared towards the design of high value added products, investments in research, and in development and exports.

"We need to create a business climate that will stimulate domestic entrepreneurs, thus creating the conditions for the stronger engagement of foreign entrepreneurs and investments in Croatia," stated HGK's Luka Burilović.

He added that entrepreneurs have the most objections in the area of ​​legal certainty, justice, taxation and public administration.

"Here we can take the appropriate concrete measures that could immediately show results. Investors are becoming more demanding, they're looking for solutions, not just locations. One of the options for a change of approach is to put the focus on Croatia's "portfolio", and not on the entire territory,'' Burilović stated.

When asked how Croatia will look in the eyes of an investor, the answer remains very the same according to Burilović: "We're relatively unknown to investors, we don't have a brand built, and we're mostly recognised as a tourist destination,''

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Click here for the original article by Ana Blaskovic for Poslovni Dnevnik