The time of the coronavirus has shown like magnifier the many inefficiencies and illogicalities of the current public ecosystem surrounding the economy, while at the same time, it has shown that change for the better is possible and that public apparatus efficiency is not a myth but a possible reality. When there is no alternative, state institutions have proven to be fast, ready to accept digital processes and be goal oriented, among other things for Diplomacy& Commerce says Andrea Doko Jelušić, Executive Director AmCham Croatia.
- The past year, since we have lived in the age of the COVID19 pandemic, has brought many novelties in both thinking and in business. How did AmCham adapt to the new circumstances?
When the epidemic started all AmCham operations switched to home office. Transfer to videoconferencing was smooth and all our committees continued with their regular activities, while at the same time AmCham prepared busy program of webinars where members were sharing their expertise. Our “in person” networking events switched to high level webinars with international and government speakers.
Luckily, in the last couple of months the vaccination has taken off and more than one third of Croatia’s population has received one or both doses of vaccines. In addition, the number or newly infected persons has been steadily declining, so AmCham started bringing back live events respecting all epidemiological recommendations. We have noticed that, although still cautious, people are looking forward to return of personal interactions and live meeting. I believe that in the last year we have all once again learned how important technology is and how much it makes our lives easier, but I also believe that this pandemic has reminded us of the value of human interactions, and we are really looking forward to being able to meet our members face to face again.
I would also like to mention that many companies expect a return to the old without seeing that some new methods have proven successful, and trends have changed. From this crisis will stand out those who may have changed under the pressure of circumstances but have embraced change and in new situation seek an opportunity for themselves in a world of new habits. Those waiting for an end of the crisis to return to the old will realize that the world has changed, and their decision, whatever it may be, will be overdue at that point.
- According to the information available to AmCham, how big is the crisis, how big is the decline in investment, production and business operations in general in both USA and Croatia? What do the numbers say?
If the corona crisis has taught us anything, it is that Croatia can be efficient and orderly, and the biggest fear is to go back to the old way under the pressure of loud people who do not like the changes.
According to the Survey of the Business Environment in Croatia that AmCham conducted at the beginning of the year on a sample of 135 board members of domestic and international companies in Croatia, in 2020 business worsened for 39% of the respondents, and for an approximately equal proportion business got better when compared to 2019. Among those for whom the situation worsened, most of the respondents, 67% of them, record a decline of up to 30%. Most of the companies (52%) managed to keep the same level of employment as in 2019, while 31.6% saw an increase in the number of employees. A considerable number of respondents (55%) rated the business experience in Croatia as good or very good, and 42% of the respondents noticed an improvement in business conditions in the last five years. What the respondents noticed as an improvement were the financing conditions, demand for goods and services, and the level of taxation, whereas the availability and quality of the workforce, the judiciary, and the application of legal rules and procedures were seen as a deterioration. Moreover, 46% of the respondents rated the influence of the Croatian judiciary on business as negative or significantly negative.
- There has been a significant decline in business activity, but in what ways have you, as an institution, helped the business people?
Policy advocacy is our core business and our way to support the companies. With the aim of contributing to economic stability, job preservation and ensuring financial liquidity of all companies doing business in Croatia, AmCham has published three sets of recommendations with additional measures to provide economic relief to companies facing difficulties because of the COVID-19 outbreak. AmCham’s recommendations were aimed at maintaining the liquidity of companies, securing employment, i.e. jobs, ensuring the supply chain, stimulating post-crisis consumption and tax reliefs. The measures proposed by AmCham were designed in line with the measures already adopted by the Croatian Government or they were based on the economic relief measures adopted by other countries in light of the coronavirus outbreak.
As for measures for ensuring liquidity, AmCham proposed, amongst other, establishing state loans and HBOR (Croatian Bank for Reconstruction and Development) guarantees (in the amount of ca. 10% of the GDP in accordance with the experience of other countries); establishing financial funds for those economic sectors primarily affected by the crisis (e.g. tourism); granting new liquidity loans to companies with impaired liquidity with the obligation of repayment within 2 years at a 0% interest rate (like the Czech Republic).
Regarding measures for preserving job positions, they referred to introduction of a shorter working hours model; implementing obligatory vacation time during the crisis; subsidizing employee salaries in the private sector (like Austria and Slovenia) and implementation of income tax and tax contribution write-offs during the period of coronavirus outbreak.
In addition, in order to protect jobs in all companies regardless of their sector of industry, AmCham proposed the introduction of a number of new legal categories of employment such as “furlough leave”, a model successfully implemented in Slovenia.
AmCham representatives presented the recommendations for economic relief to the Ministry of Labour and Pension System and discussed further plans of the Government and Ministry aimed at securing employment.
AmCham has, among others, advocated waiving VAT on donations to hospitals and science/education institutions as one of its recommendations for economic relief during the COVID-19 outbreak. Therefore, we are extremely glad that by the decision of the Croatian Government, VAT on donations has been waived.
- What are the most common issues and what are the needs of the business people when they address you? How is the communication with decision makers?
American Chamber of Commerce in Croatia is an independent, nonprofit and nongovernmental business association founded in 1998 that today gathers more than 260 American, Croatian and International companies that employ more than 91.000 people in Croatia. As the oldest foreign Chamber in Croatia, AmCham strongly contributes to the improvement of the business environment through advocating the best business practices and recommendations for positioning Croatia as an attractive destination for investments. We believe our members recognize our efforts in achieving this.
The most important goal is to make sure that AmCham’s members have the opportunity to participate in the political process and contribute to the development of the Croatian economy and society as a whole. We do this through policy advocacy activities which are primarily conducted through expert Committees and Task Forces formed by AmCham’s members. Policy advocacy initiatives include, among other things, meetings with Government ministers and officials and events targeted at main stakeholders. Throughout the years we have developed very good relations with many decision makers and we managed to position AmCham as a reliable and trustworthy partner when it comes to many challenges that concern business community in Croatia.
When talking about key topics for business people, we help newcomers to navigate Croatian regulatory environment while companies with mature operations in Croatia would like to see improvements in business climate and potentially expand their operations locally. We are pleased to see that large share of AmCham members grow their operations and employ more people every year in Croatia.
- We all switched to digital platforms, online events. How long will that remain a way of communication and business and what do you prefer – online or communication in person?
Last year’s lockdown set the direction for the new normal. Digital and dislocated at that time were recognized as a direction that would enable company’s survival. Digital channels of access to users and work, however, have set a direction that will, to a greater or lesser extent, remain a part of our regular life regardless of the pandemic.
As mentioned above, many companies expect a return to the old without seeing that some new methods have proven successful, and trends have changed.
Working from home will remain a practice to a greater or lesser extent depending on the industry and the needs of the company. Not because of the costs of the company, but because of the flexibility it provides to workers by enabling them to have, until now unattainable, balance of private and business life. The experience of this crisis has shown that workers who have the conditions to work from home expect this possibility in the future either occasionally/on demand or in a more permanent form, given that it is a standard in the business framework of most EU countries. Having that in mind, digital platforms and digital ways of communication will remain part of our lives. I believe that a mix of both online and in person is ideal.
- The year 2021 was supposed to be a year of recovery. When is the recovery expected to begin and what are AmCham’s plans for the upcoming period?
Despite the challenges faced in the last year, when, according to AmCham’s survey, business worsened for a considerable number of companies, most of the AmCham members plan to expand their business operations (74%) and to employ an additional number of people (64%). Also, 60% of the respondents intend to make it possible for their employees to continue working from home even after the coronavirus pandemic is over.
While the coronavirus has mostly had an impact on the transformation of business processes (digitalization), short-term strategic goals, and finances and liquidity, it is expected that it will continue to have a negative impact on business in the next two years.