CROATIA

B u s i n e s s c l i m a t e a n d o p p o r t u n i t i e s i n C ro a t i a

P o l i s h - C r o a t i a n B u s i n e s s F o r u m

Warsaw, 28 January 2016

CROATIA ...

... in numbers

GDP (2014): 43.1 bn EURGDP per capita (2014): 10,158 EURGDP growth rate forecast (EC): 1.1% (2015); 1.4% (2016)Inflation (2014): - 0.2 %Unemployment rate (ILO, 2014): 17.3 %Average net salary (Oct. 2015): 749 EUR

Export (2014): 10.37 bn EURImport (2014): 17.1 bn EURFDI: 30.1 bn EUR (1993-2015 Q3)

CROATIA 2014

Source: EUROSTAT

Area: 56,594 km² Population: 4.3 million Capital: Zagreb (800,000 inhabitants)Currency: Croatian Kuna (HRK)1 EUR = 7.606 HRK, 1 USD = 7.64 HRK (January 2016)

0 200000 400000 600000 800000

Zadar

Osijek

Rijeka

Split

Zagreb

Major cities (population)

GDP per capita(EU 28=100)

0 50 100 150

EU (28 countries)

Hungary

Poland

Latvia

Croatia

Romania

Turkey

Bulgaria

Montenegro

Macedonia

Serbia

Albania

Bosnia and…

GDP per capita in PPS

Foreign trade 2014

89,5%

1,6%

TOTAL TRADE = 27.44 bn Eur Export 10.34 bn Eur Import 17.1 bn Eur

5,8%

0,6%

0,1%

1,7%

Main partners: 1. Italy, 2. Germany, 3. Slovenia, 4. Austria, 5. Bosnia&Herzegovina… 11. Poland (2.1%)

CROATIA - POLAND

• Trade (2014) = 568 million EUR

Cro export to Poland: 140 m EUR (+39%)• 1.4% of total Croatian export (15th export partner)

Cro import from Poland: 428 m EUR (+24,5%)• 2.5% of total Croatian import (10th import partner)

Croatian exports to Poland:

Medicaments (10.05%); aluminium foil (4.20%); sauces & prep,mixed condiments (3.92%); mattress supports, articles of bedding (3.89%); pantyhose, socks (3.85%)

Croatian imports from Poland:

Cigars, cigarettes (8.24%); sanitary napkins and tampons, diapers (3.97%); chocolate & other food products containing cocoa (3.14%); bread, pastry cakes (2.7%); furniture nesoi and parts (2.54%)

Economic relations – trade

Poland = Croatia’s: 11th foreign trade partner 15th export partner 10th import partner 32nd biggest investor

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Export Import Saldo

CROATIA - POLANDEconomic relations –tourism

Tourism (I-VIII 2015)

701,735 Polish tourists = +5.3% 4.5 mil. overnight stays = +5.2% 6th place in the overall stucture of foreign

overnight stays (6.6%)

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Some of foreign companies active in Croatia...

FDI = 30.1 bn EUR(1993-2015 Q3)

Leading investors:

Source: CNB4%

4%

4%

5%

5%

7%

7%

9%

20%

20%

UNITED KINGDOM

SWITZERLAND

SLOVENIA

FRANCE

ITALY

LUXEMBOURG

HUNGARY

GERMANY

AUSTRIA

NETHERLANDS

3%

4%

5%

5%

6%

6%

8%

9%

11%

22%

Hotels and restaurants

Real estate investments

Prod. of coke, petroleum

Manufacture of chemicals

Retail trade

Telecommunications

Real estate activities

Wholesale trade

Other business activities

Financial intermediation

FDI per capita (1994-2013): • Czech Rep. = 10.938 USD• Bulgaria = 7.934 USD• Croatia = 7.863 USD• Slovak Rep. = 6.971 USD• Poland = 5.105 USD• Slovenia = 4.917 USD

FOREIGN INVESTMENTS

Foreign direct investment

Poland:

1993- 3Q 2015= 73.1 m EUR 32nd biggest investor (0.24%) FDI in 2014 = 5.5 m EUR FDI in 1Q-3Q 2015 = 34.3 m EUR

141

3419 100

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Poland Hungary Slovakia CzechRepublic

Croatian investments to V4(1993-Q3 2015; mil EUR)

2.177

320 148 730

500

1.000

1.500

2.000

2.500

Hungary CzechRepublic

Slovakia Poland

FDI of V4 to Croatia(1993-Q3 2015; mil EUR)

CROATIA ...

... why do business

CROATIA - Your reliable business partner

Unique geostrategic location in Europe - linking CEE to Adriatic

Stability & safety of business activity

Stimulating investment climate

Highly educated, multilingual & competent workforce

Long tradition in industrial production

Modern transport infrastructure

EU member

Possibility of using EU funds

MODERN INFRASTRUCTURE

• 3 Pan-European corridors passing through Croatia (V, Vb,Vc; VII; X)

• Croatia – a part of the future Trans – European Network –Transport (TEN – T)

• 26,958 km of roads• 2,722 km of railroads• 7 international airports and 2 airfields• 3 intermodal terminals

• Internationally important seaports – Port of Rijeka (among main European sea ports), Port of Ploče

IMPROVING BUSINESS ENVIRONMENT

World Bank – Doing Business 2016 Report:

CRO 40/189

Recognized improvements:Starting up businessCrossaboarder trade

More efficient enforcement ofjudgment

Registering property

The Global Competitiveness Report 2015–2016

CRO 77/144

Act on Investment Promotion Act on Strategic Investment Projects New legal framework in construction and

physical planning) E-Construction permit Obligatory e-contrigution payment

e-Consultations e-Court Case Fiscalisation e-Construction permit Open data portal e-Class register

e-Employment records & e-Employee registration

e-Medical Appointments e- Polling Place Registration e-Craft e- Residence Registration

STIMULATING INVESTMENT ENVIRONMENT

Equal rights for foreign and domestic

investors

Free transfer of return on equity from the

country

Avoidance of double taxation 0% profit tax on reinvested capital Numerous incentives for business activities to investors

INVESTMENT PROMOTION ACT:

• Tax incentives (reduction of profit tax to 10-0%; regularprofit tax 20%)

• Employment grants (up to 18,000 EUR)

• Education grants

• initial and capital expenses

• labor intensive investment projects

REQUIREMENT: Minimum investment: 150,000 EUR + 5 new workplaces

Micro entrepreneurs: 50,000 EUR + 3 new workplaces

Incentives for:

• manufacturing activities, technology centers, strategic business support and high value-added services, tourist activities (4 plus star hotels..)

Stimulating investment environment

Source: Eurostat

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Mainly non-business

CROATIA ...

...business possibilities

INDUSTRY 17.8% of GDP (2014) 18.5% of total employment (2014) Industrial production growth rate: 1.2% (2014);

1.5% (I-VII 2015)

Main industrial branches (export-oriented): refined petroleum products; manufacture of other transport equipment; electrical equipment; chemicals and chemical products; food products; manufacture of fabricated metal products; pharmaceuticals

Investment possibilities:

Pharmaceutical, ICT, wood, textile & leather processing, metal, automotive, electrical, chemical, plastic & rubber industry

23%

17%

10%9%

7%

6%

5%

5%

18%

food processing and beveragesoil & refined petroleum productschemicals, plastics & pharmaceuticalselectronic, ICT & optical productsmetal productswood processing, furniture & paper industrytransport equipmenttextiles & leather

Industry total

income

Croatian companies - suppliers & contractors supporting the investment:

tradition & quality in manufacturing

educated workforce

experienced with extensive track record on foreign markets

Business possibility 1/4

TOURISMCharacterictics: Natural beauties Climate Geographical location Cultural and historical heritage

Tourism in numbers: Revenue: 7.4 bn EUR (17.2% of GDP; +2.8%) 13.1 mil tourists (+5.6%), increase in tourist traffic in all counties 66.5 mil overnight stays (+2.6%) More than 15,500 registered companies 85,000 employees (6.4%); average gross salary: 911 EUR (2014)

Most important products/services:• Accomodation services: hotels, camps, private accomodation,

hostels• Food&beverage preparation and catering services: restaurants,

caffe bars• Special forms of tourism: holiday, nautical, health, cultural,

business, adventure, eno-gastro tourism

Export markets:Germany, Slovenia, Austria, Italy, Czech Republic, Poland, France, UK, Hungary, Slovakia

Business possibility 2/4

TOURISM

Investment possibilities:

Priority - Investments in high quality tourist facilities

Greenfield/brownfield projects

Nautical tourism Health tourism Congress tourism

No. of overnight stays Revenue (Mil. Eur)

Business possibility 2/4

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AGRICULTURE & FOOD PRODUCTION

6.5% of GDP; 4.8% of total employment (2014) 1.3 million hectares of utilized agricultural area Wide range of products (wine, cereals, fish, olives,fruits,

vegetables etc); internationally known food products –confectionary, diary products, olive oil, mediteranean fruits

Investment possibilities:

Aquaculture Healthy food production

FOOD PROCESSING INDUSTRY(in relation to the overall processing industry):

21% of employees 28.1% exchange 23.7% added-value 25.5% gross operating surplus 14% share in number of companies

Business activities conducted according to the highest food quality and safety standards (ISO 9001,

ISO 14001, ISO 22000, HACCP, Halal, Kosher, IFS, BRC, OHSAS 18001 etc.)

2,500 year old wine producing tradition

Prize-winning top quality olive oil & wine

Business possibility 3/4

ENERGY

• Favourable climate & unpolluted natural environment:

Over 2,700 hours of sunshine per year

Windy regions by the Adriatic sea and East Slavonia

Geothermal energy from natural sources on the continent

Access to vast amounty of biomass

substantial, mostly already engaged, hydro-power potential

Investment possibilities: planned increase in capacity – modernisation andconstruction of new powerplants (hydro power plants, thermal power plants, LNG terminal); RES; environment protection & production of clean energy

INFRASTRUCTURE

• 3 Pan-European corridors passing through Croatia, a part of future TEN-T

• 7 inter. airports, 6 seaports, 4 riverports

• 26,958 km of roads, 2,722 km of rail network

• Investment possibilities: sea ports - construction of new terminals (Port of Dubrovnik, Port of Ploče); airports -reconstruction and modernisation (Osijek Airport, Rijeka Airport)

Business possibility 4/4

INVESTMENT SITES

• More than 100 ready entrepreneurial zones- utility services, clear ownership, good logistic & traffic connection

• Strong support form local communities

• Additional tax reliefs: relief from utility tax lower payments for municipal services lower land prices

POLAND AND CROATIA – POSSIBILITIES OF COOPERATION

Energy sector Infrastructure, transport & logistics Tourism Food industry Pharmaceutical industry Construction

Joint cooperation on third markets

EU Structural & investment funds

CROATIA

... how to proceed

CROATIAN CHAMBER OF ECONOMY

modern, professional institution with a 164 year old tradition

represents, promotes and protects economic interests of its members

a reliable source of information to companies

110,000 member

companies

Professional associations

20 county chambers in

Croatia

Representative offices abroad

(Bruxelles, Moscow)

WHAT WE OFFER...

Numerous databases

Online catalogue of investment projects

Croatian company directory – more than 110,000 active members

Business opportunities exchange

Business zones

Croatian export directory

Croatian Waste Materials Exchange

Information On relevant regulations and laws in the field of investment and economics

On current economic situation in Croatia

On how to start-up business in Croatia

On national and local investment incentives and opportunities

Assistance Linking investors with project holders

Facilitating communication with institutions on national and local level

Support in dealing with administrative procedures on all levels

Providing suppliers’ database & facilitating contact with potential business partners

Organizing tailor-made vistits of potential investors to Croatia

CROATIAN CHAMBER OF ECONOMY

We promote, we connect, we can help!

INTERNATIONAL AFFAIRS SECTOR

Tel.:+385 1 4828 382

Fax:+385 1 4828 379

Rooseveltov trg 2

10000 Zagreb, Croatia

e-mail: eoi@hgk.hr

www.investincroatia.hrwww.hgk.hr