INVESTING IN CROATIA: GENERAL INFORMATIONS

These days investing became a topic of interest to most of the media, politicians, and business people. Many foreign investors come stating they want to invest in Croatia. They often encounter bureaucratic obstacles and difficulties when trying to grasp the Croatian legislation that constantly changes and is supplemented by new regulations, the differences in methods of carrying out business, tax system and accounting standards. But without assistance from competent and reliable local consultants this can be a demanding task even if persons in charge to understand all this are adept and adaptable experts who know the details of business problematic.

If one wanted to list reasons why foreign investors should invest in Croatia, a whole range of subsidies and government programs started in these last few years comes to one's mind. But, the fact that all our neighboring countries offer the same is also true. Probably we could not point out one specific reason to invest in Croatia, but we can definitely state that Croatia offers lot of opportunities far more complex and substantial than those in other neighboring countries.

Territorial organization, adapted legislation, varied relief attractive for economy and tourism, large number of market independent economic entities, traffic location on the crossroads of routes from east to west and from south to north, large potential of working people the age and educational structure of which are similar to those in other European countries are conditions creating situation favorable to investments. The models of investment in Croatian economy have also been adapted to potential investors' interests.

What Croatia has to offer to investors?

. Croatia has a well organized institutional legal framework that is at the moment being harmonized with the European standards. . The Government is resolute to maintain the macro-economic stability (stability of prices, the decrease of inflation, the 0.6% increase in number of employed people for the first time in the last decade - limitation of fluctuation of Kuna) . The Government actively encourages direct foreign investments through different incentives in order to stimulate the economy (the 5% increase in trade exchange; i.e. total export equals 4.9 billion dollars, and total import 10.7 billion dollars, 17.1% increase) - credit growth encourages import . Croatia proceeds with haste in all integration processes - Croatia has joined the NATO program «Partnership for Peace», became the member of the WTO and EFTA (European Free Trade Association), and concluded the Agreement on Stabilization and Association with the European Union . All foreign investors have same rights, obligations and legal status in the founded companies as domestic investors . Foreign investors are entitled to different types of tax exemptions depending on the nature of their investment and the activities they carry out in Croatia . Croatia offers tradition in manufacture, highly educated labor, modern communication systems and high standards of traffic infrastructure which can be very advantageous to investors . The geographic location of a growing, dynamic market with good connection to the European and world markets offers possibilities of even larger regional influence . The growth of the GDP to 76 billion kunas, which is an increase of 13, 5 billion kunas in comparison to previous years (personal consumption and gross investment).

Tourism

. Croatia has long tradition in tourism based on the very attractive Adriatic Sea coast, 5 protected UNESCO world heritage sites and eight national parks. . The tourism sector in Croatia has significantly grown in the last several years. Croatia has had a 4% increase in visits of foreign clientele during the summer season 2002 (44.7 million of overnights). . Most tourists that come to Croatia come from Germany, Italy, Austria and Slovenia. . Rapid growth of the tourism sector provides investors with a unique opportunity to invest in a dynamic industry that constantly grows.

Agriculture

. The climate in Croatia is favorable to production of many different agricultural products including food and industry crops, vineyards, fruit and vegetables, meat, diary products and fish. . The agriculture on the average represents 10.5% of the Croatian gross domestic product. . The Croatian Privatization Fund cooperates with the Ministry of Agriculture, Forestry and Water Management in the process of privatization of several agribusinesses or of a part of their assets or production units. . Croatia offer high quality products of renowned brands with international distribution.

Industry

. Croatia has had a 6% increase in industry sector in 2001.Industry goods make for 95% of total Croatian export. . Croatia has highly educated labor in industry sector and well-developed technical institutes . Company managements are quality and market oriented. Many institutions have undergone additional investments programs which have strengthened this sector and made it suitable for further investments. . Croatian industry companies offer quality production resources with internationally recognized quality standards

Shipbuilding industry, engineering industry and other industries

. Croatia has been active in the world shipbuilding and ship overhaul and repair market for more than 40 years now. At the moment, it is the fifth country in the world by number of delivered DWT ships, and also produces 2.5% of world production of large ships . The growth of the Croatian metal industry is higher than the average growth rate for total industry . Croatian textile and clothing industry exports 14% of total export. Export mainly consists of 'lohn' deals (import-related export contracts) . The State has invested significant funds in renewal of technology in particular companies that have great opportunities for profitable business operations (TLM (Light Metals Company) and Zeljezara Split )

Telecommunications

. The 38.1% increase in number of minutes spent in conversation

Infrastructure

. Building of a state highway . Modernization of Croatian Railways . Increase in investments in public infrastructure

And in the end, why not? There are so many things, and again there is still so much missing......

This document originates from www.investments.hr website.

BROKER, real estate agency team.