CROATIAN CHAMBER OF ECONOMY CROATIA BUSINESS AND INVESTMENT OPPORTUNITIES Argentine-Croatian Business Forum Buenos Aires, November 2006.

CROATIAN CHAMBER OF ECONOMY

CROATIAN CHAMBER OF CROATIAN CHAMBER OF ECONOMYECONOMY

CROATIA CROATIA

BUSINESS AND INVESTMENTBUSINESS AND INVESTMENT

OPPORTUNITIESOPPORTUNITIESArgentine-Croatian Business ForumArgentine-Croatian Business Forum

Buenos Aires, November 2006Buenos Aires, November 2006


CONTENTCONTENT

ECONOMIC SITUATIONPERSPECTIVESGDP STRUCTURE AND SECTORSEXTERNAL RELATIONS

(FOREIGN TRADE AND INVESTMENT)BILATERAL COOPERATION/

PRESENT AND PERSPECTIVES


Area 56,538 km2

Population 4.4 milCoastline 1,778 km

Islands 1,185 Capital City Zagreb

GEOGRAPHIC PROFILEGEOGRAPHIC PROFILE

EUROPEEUROPE

CROATIACROATIAMEDITERRANEAN MEDITERRANEAN SEASEA

CENTRAL CENTRAL EUROPEAN EUROPEAN COUNTRIESCOUNTRIES


Gross Domestic Product (bn USD) 38.5 GDP per capita 8,677 USD GDP, real growth rate 4.3 % international reserves(CNB) 8,801 mil USD average net salary 736 USD inflation 3.3 % industrial output growth 5.1 % unemployment rate 13.1 % (ILO) long term credit rating: BBB, Baa3

(Standard&Poors, Moody’s)

ECONOMIC PROFILEECONOMIC PROFILE(2005)(2005)


THE GOVERNMENT’STHE GOVERNMENT’SPRIORITIESPRIORITIES

Achievements: macroeconomic stability (inflation, exchange rates) moderate growth economic enviroment (HITRO HR) government deficit

Improvements needed: external debt current account deficit unemployment restructuring (shipyards, iron plants, railways) reforms (health, public administration, justice, fiscal system) EXPORTS


GDP STRUCTUREGDP STRUCTURE

20%

4%6%

13%

10% 6%

17%24%

ManufacturingPublic administrationFinancial SectorWholesale&Retail tradeTransport&CommunicationsAgricultureConstructionHotels and restaurants


INDUSTRY SECTORINDUSTRY SECTOR

20% of GDP 25% of total employment main industrial branches: - food and beverages production - electricity, gas and water supply - chemicals and chemical products - refined petroleum products - machinery

- plastic and rubber products - shipbuilding (strongly export-oriented)


TOURISMTOURISM

revenues: 8 bn USD 19% of GDP 10 mil tourists 51 mil overnight stays nautical tourism (47 marinas) 1,185 islands 8 national parks world cultural and natural heritage sites protected by UNESCO


AGRICULTURE AND AGRICULTURE AND FOOD INDUSTRYFOOD INDUSTRY

6% of GDP 7% of total employment wide range of products (fish, cattle,

cereals, wine, olives, sugar beet etc.) 82% of cultivated land - privately owned many well-known export products:

Vegeta, chocolate products, canned fish


BANKING SECTORBANKING SECTOR

Banking – almost entirely privatised, stable and developed sector, highly diversified offer and good quality of financial products and services

36 banks, 5 (building societes) housing savings banks

state owned banks 5%

private domestic banks 3%

foreign owned banks 92%

Croatian National Bank – central financial institution HBOR (CBRD) – Croatian Bank for Reconstruction and

Development – state owned investment bank


EXTERNAL RELATIONSEXTERNAL RELATIONS

Member of the World Trade Organization (2000) 37 Free Trade Agreements (CEFTA, EFTA, etc.) active role in the stabilization of the region Stabilization and Association Agreement (SAA)

with EU (2001) candidate status - June 2004 opening of Croatia's accession negotiations with

the EU - October 2005


COMMODITY COMMODITY EXCHANGEEXCHANGE

Total 27,356 mil USD Export 8,809 mil USD Import 18,546 mil USD

(mil USD) PercentageEU countries (EU-25) 17,630 64%CEFTA countries 558 2%EFTA countries 423 1.5%other countries 8,745 32.5%

Total 27,356 mil USD Export 8,809 mil USD Import 18,546 mil USD

(mil USD) PercentageEU countries (EU-25) 17,630 64%CEFTA countries 558 2%EFTA countries 423 1.5%other countries 8,745 32.5%

20052005


9%9%

1%1%

3%3%

2%2%

0.1%0.1%

84%84%

FOREIGN TRADE (2005)FOREIGN TRADE (2005)


MAIN EXPORT PARTNERS (200(20055))

2211%% 14%14%

77%%8%8%

1100%% AUSAUS

BiHBiH ITAITA

GERGERSLOSLO

4040%%

OTHER OTHER COUNTRIESCOUNTRIES((ChinaChina, ,

Hungary, USAHungary, USA,, Serbia Serbia and Montenegroand Montenegro))


MAIN IMPORT PARTNERS(200(20055))

5%5%

1166%%

99%% 66%%7%7%

1144%%

AUSAUS

ITAITA

GERGER

SLOSLORUSRUS

PRCPRC

OTHER COUNTRIESOTHER COUNTRIES ((France, France, HungaryHungary,, Czech Czech

Republic, USARepublic, USA))

4433%%


THE MAIN THE MAIN EXPORTEXPORT PRODUCTS 2005PRODUCTS 2005

1. Mineral fuels and oils1. Mineral fuels and oils 13.6% 13.6% 2. Ships and boats2. Ships and boats 11.0 11.0

%%3. Electrical machines, equipment and parts 3. Electrical machines, equipment and parts 9.2 %9.2 %4. Machinery, appliances and parts4. Machinery, appliances and parts 7.4 7.4 %%5. Wood and articles of wood5. Wood and articles of wood 4.1 4.1 %%6. Plastics and articles thereof 4.0 %6. Plastics and articles thereof 4.0 %7. Articles of apparel and clothing accessories, 3.2 %7. Articles of apparel and clothing accessories, 3.2 % knitted or crochetedknitted or crocheted 8. Furniture; bedding, mattresses, lamps 3.0 %8. Furniture; bedding, mattresses, lamps 3.0 %9. Articles of apparel and clothing accessories, 3.0 %9. Articles of apparel and clothing accessories, 3.0 % not knitted or crochetednot knitted or crocheted10. Articles of iron or steel 2.5 %10. Articles of iron or steel 2.5 %


THE MAIN THE MAIN IMPORTIMPORT PRODUCTS 2005PRODUCTS 2005

1. Mineral fuels and oilsMineral fuels and oils 15.1% 15.1%2. Machinery, appliances and parts2. Machinery, appliances and parts 12.3 % 12.3 %3. Vehicles and their parts 3. Vehicles and their parts 9.4 % 9.4 %4. Electrical machines, equipment and parts 4. Electrical machines, equipment and parts 8.5 % 8.5 % 5. Plastics and plastic products 3.7 %5. Plastics and plastic products 3.7 %6. Iron and steel6. Iron and steel 3.5 %7. Articles of iron and steel 3.2 %8. Pharmaceutical products 2.7 %9. Ships, boats and floating structures 2.7 %10. Paper and paperboard, articles of paper 2.4 % pulp, of paper or of paperboard


LEGAL FRAMEWORK LEGAL FRAMEWORK FOR INVESTMENTS AND DOING FOR INVESTMENTS AND DOING

BUSINESS IN CROATIABUSINESS IN CROATIA

The Croatian Constitution guarantees: free transfer of profit and of invested capital equal rights for foreign and domestic investors real estate ownership

Company Law• companies: joint stock company -33,000 USD

limited liability company - 3,300 USD public limited liability company limited partnership One-stop-shop (www.hitro.hr )

Investment Promotion Law


INVESTMENT PROMOTION INVESTMENT PROMOTION LAWLAW

Tax incentives:

Minimuminvestment

No. ofemployees

Durationperiod

Profittax

0,7 mil USD 10 10 10%

1,7 mil USD 30 10 7%

3,3 mil USD 50 10 3%

10 mil USD 75 10 0%


FOREIGN DIRECT FOREIGN DIRECT INVESTMENTSINVESTMENTS

(1993 - June 2006)(1993 - June 2006)

Country Country Share in total FDI Share in total FDI

1. Austria1. Austria 21 %21 %2. Germany2. Germany 17 % 17 %3. 3. USAUSA 10 % 10 %4. France4. France 10 % 10 %

5. Italy5. Italy 8 % 8 %6. Hungary 6. Hungary 7 % 7 %7. Netherlands7. Netherlands 7 % 7 %

8. Luxemburg 6 %8. Luxemburg 6 % Source: Croatian National Bank

Edited by: Croatian Chamber of Economy

TOTAL TOTAL == 12,502.9 mil EUR 12,502.9 mil EUR


FOREIGN DIRECT INVESTMENTS FOREIGN DIRECT INVESTMENTS

BY SECTORS (1993 - June 2006)BY SECTORS (1993 - June 2006)

Sector Sector Share in total foreign investmentsShare in total foreign investments

Financial sector 25 %Telecommunications 12 %Pharmaceuticals 8 %Wholesale, commision and retail trade 6 %Production of petroleum products 4 %Production of non-metalic mineral 4 %productsExtraction of crude petroleum 3 %Hotels and restaurants 2 %Source: Croatian National Bank Edited by: Croatian Chamber of Economy


MAIN INVESTORSMAIN INVESTORS

Deutsche Telekom, Germany MOL, Hungary Siemens, Germany Coca-Cola, USA Vetropack,Switzerland RMC Group Ericsson, Sweden Agip, Italy Société Suisse de Ciment Portland, Switzerland Raiffeisenzentralbank AG, Austria Carlsberg


TAX SYSTEMTAX SYSTEM

profit tax (companies) - 20% income tax - 15%, 25%, 35%, 45%

+ city surtax value added tax (VAT) - 22%, 0% excise duties:

– alcohol, beer, tobacco, coffee, cars, petroleum derivatives, non-alcoholic beverages, luxury products

agreements on avoidance of the double taxation


FREE ZONESFREE ZONES

all business activities

without custom duties and VAT retail is NOT permitted profit tax: 10% no profit tax for investments in infrastructure

facilities (164,000 USD - 5 years) Entrepreneurial zones


FREE ZONESFREE ZONES

Buje

Pula

Port Rijeka

KukuljanovoZagreb

Krapina

Varaždin

Obrovac

Osijek

Slavonski Brod

SplitPort SplitPloče

Vukovar

Bjelovar

Karlovac


WHY CROATIA?WHY CROATIA?

steady economic growth Croatia’s location and traditionally good business links with

neighbouring countries FTA with most of the countries in Europe friendly environment and incentives for FDI, over 400

entrepreneurial zones free transfer of profits and invested capital (profits tax 20%) agreements on avoidance of double taxation (55) and protection

and promotion of investments (62) EU – prospects / adjustment of legislation to acquis

communautaire modern infrastructure highly qualified and well-trained labor force (E,D,I)


INVESTMENT RECOMMENDATIONS

green-field investment in export-oriented manufacturing sectorsgreen-field investment in export-oriented manufacturing sectors

co-operation in manufacturing and product development – co-operation in manufacturing and product development –

advantages: tradition, quality and engineering know-howadvantages: tradition, quality and engineering know-how

booming tourism sectorbooming tourism sector

numerous infrastructural projectsnumerous infrastructural projects

privatisation processprivatisation process

production and assembling in free zonesproduction and assembling in free zones

development of new technologiesdevelopment of new technologies

energy sector…energy sector…


COMMODITY EXCHANGE COMMODITY EXCHANGE CROATIA - ARGENTINACROATIA - ARGENTINA

source: Croatian Bureau of Statistics

- mil USD

YEAR EXPORT IMPORT TOTAL BALANCE 2000. 2.1 4.4 6.5 - 2.3 2001. 1.3 10 11.3 - 8.7 2002. 1.2 14 15.2 - 12.8 2003. 0.3 14.8 15.1 - 14.5 2004. 0.3 37.7 38 - 37.4 2005. 3.8 82.7 86.5 - 78.9 2006.I-IX. 0.5 38.6 39.1 - 38.1


COMMODITY EXCHANGECOMMODITY EXCHANGECROATIA - ARGENTINACROATIA - ARGENTINA

in 000 USD

-80.000-60.000-40.000-20.000

020.00040.00060.00080.000

100.000

EXPORT

IMPORT

TOTAL

SALDO


EXPORT STRUCTUREEXPORT STRUCTURECROATIA - ARGENTINACROATIA - ARGENTINA

Export in Export in 20052005 source: Croatian Bureau of Statistics

PRODUCTS mil USD %

• Turbojets, turbopropellers 3.2 85

• Machinery for working rubber or plastics 0.2 6• Moulding boxes for metal foundry 0.08 2

• Antibiotics 0.06 2


source: Croatian Bureau of Statistics

PRODUCTS mil USD %

• Leather further prepared after tanning 56.6 68

or crusting, of bovine or equine animals

• Cheese and curd 8 10

• Fish fillets and other fish meat 3.6 4• Aluminium wire 3 3

IMPORT STRUCTUREIMPORT STRUCTURECROATIA - ARGENTINACROATIA - ARGENTINA

Import in Import in 20052005


BUSINESS IMPROVEMENT BUSINESS IMPROVEMENT POSSIBILITIESPOSSIBILITIES

TRANSPORT – PORT OF RIJEKA, PORT OF PLOCE

AIRPORT ZAGREB

FREE ZONES INFRASTRUCTURAL PROJECTS (ROADS, ENERGY

SECTOR) SHIPBUILDING EXPLORATION OF OIL AND GAS MACHINE-BUILDING INDUSTRY CHEMICAL AND PHARMACEUTICAL INDUSTRY FOOD INDUSTRY AGRICULTURE


CROATIAN COMPANIES CROATIAN COMPANIES PRESENTED BY CATALOGUESPRESENTED BY CATALOGUES

ALTPRO d.o.o., Zagreb Research, development and production of the safety signalling

systems for the railway infrastructure and rolling stock ATLANTIC GROUP, Zagreb Production of cosmetics, instant vitamin drinks FERO-LEKO d.o.o., Pozega Production and trade of food supplements (antidiabetic, liver

disease) INSTITUTE OF IMMUNOLOGY Inc., Zagreb Production of viral and bacterial vaccines, plasma derivatives PORT OF RIJEKA, Rijeka Port activity: loading, unloading, warehousing, transportation of

cargo


CROATIAN COMPANIES CROATIAN COMPANIES PRESENTED BY CATALOGUESPRESENTED BY CATALOGUES

PECON d.o.o., Zagreb

Engineering, production and trade in process industry (food processing industry, chemical industry, pharmaceutical industry)

RIZ-TRANSMITTERS Co., Zagreb

Design, manufacturing and supply of radio broadcasting transmitters and watthour meters

ZAGREB FAIR, Zagreb Organising international fairs and congresses GENERALTURIST d.o.o., Zagreb Tourism – inbound, outbound, air ticketing



established in 1852 since 1991 public law institution with

obligatory membership 20 county chambers 7 Representative Offices abroad 9 departments, 5 centres, 42 professional associations, 73

groups, 21 affiliations Euro Info Correspondence Centre member of ICC, Eurochambres, CEI, Alpe-Adria Chambers,

UNECE, ASCAME, UEAPME, ECSB, TII, FIATA, OICA, EMEC ISO 9001/2000


HOW THE CHAMBER HOW THE CHAMBER CAN HELP YOU?CAN HELP YOU?

Biznet - simple and quick access to information and the companies database via Internet (www.hgk.hr)

register of Croatian companies information about regulations and laws in the

field of economics business opportunities exchange The Permanent Court of Arbitration - efficient

system for resolving commercial disputes



International Relations Department

phone: + 385 1 4828 382fax: + 385 1 4828 380Rooseveltov trg 210000 Zagreb Croatia, Europewww.hgk.hre-mail: [email protected]

Thank you for Thank you for your attention!your attention!

CROATIAN CHAMBER OF ECONOMY CROATIA BUSINESS AND INVESTMENT OPPORTUNITIES Argentine-Croatian Business Forum Buenos Aires, November 2006.

Documents

mil usd export

usd gdp

montenegro slide

paperboard slide

unesco slide

oriented slide

usd inflation

main export products