The business community is not satisfied with the pace of the reforms in Croatia, and it is necessary to expedite them reforms at all levels. For years, Germany has been Croatia‘s most important foreign trade partner and officially the fourth biggest foreign investor in Croatia after the Netherlands, Austria and Italy, with a total of 3.2 billion in direct investments since 1993, reminds Ralf Blomberg, President of the German-Croatian Chamber of Industry and Commerce.
1. A while ago, at the time when reforms in Croatia were moving at a slow pace, you sent to the Croatian government a strategic document that you drafted together with the embassies of Germany, Austria and Switzerland, business organizations and the Croatian Chamber of Economy. How many of these initiatives have been adopted and which ones are still awaiting implementation?
There have been some improvements as well as discernible efforts to improve the business climate in the country, one cannot deny this, such as the tax reform, some new e-business services, changes to the law on investment promotion or the new law on the promotion of research and development. But given not only the general public sentiment, but also the hard facts, the key reforms are still missing. How else would one account for the fact that there has been a big percentage decline of companies willing to reinvest in Croatia, from around 80 per cent in the past several years to 68 per cent in the last economic survey my Chamber conducted? Why is it that when companies in Croatia are talking detriments to doing business they are always talking tax burden, tax system, bureaucracy, legal security or public administration?
2. Is there any need for a new document of this type, or are Croatia’s reforms going at a rate and in a direction that you consider good for the economy?
As indicated in the previous question, we are not, the business community ist not satisfied with the pace of the reforms in Croatia. I am not certain whether there is truly a need for another document of this type. Perhaps there is. Perhaps what we and the other chambers active in Croatia have been incessantly repeating over the years needs to be said again. The Chamber indeed does provide huge support and a plethora of services that can make an entry into Croatian market seem like a walk in the park. But we can by no stretch of the imagination convince a company to invest here if it percieves the environment for doing business in this country as complicated, instable and riddled with pointless and sluggish bureaucratic procedures. It is simply less likely to opt for Croatia as a business location if it estimates that the outcome of its operations is rather uncertain or doomed to failure because, for instance, it will be discriminated against when participating in a public tender. Things are pretty simple here – this country has excellent prerequisites to be an attractive business location and a prosperous economy, but so do many other countries, and if Croatia fails to attract investments, they will go elsewhere. And Croatia could miss a really important boat here.
3. How much did the consequences of the financial crisis, which have been strongly felt in Croatia, affect the Chamber’s work and do you see any visible progress now in the volume of work of the companies here and in the arrival of new ones?
Well, we have always been a very busy and active chamber, regardless of the economic circumstances, so the crisis accordingly didn’t have that much of an impact on our work. The interest of German companies in the Croatian market has been growing continuously and the crisis was no exception. It was always a challenge for my Chamber to provide services and information to this ever rising number of businesses seeking to enter the Croatian market, especially after Croatia’s accession to the European Union. It is also interesting that during the recession most of the companies which participated in our yearly economic survey evaluated their own business operations as succesful and that, just until last year, eight out of ten of them were ready to reinvest in Croatia – despite the crisis! In the last two years there has been a big increase of German companies’ activities in several sectors, we’re talking here some twenty to fifty per cent export growth of motor vehicles and their parts, machines, food and feed as well as chemical products. Since my Chamber was founded in 2003 the number of its member companies has been rising each year and today, at the end of 2018 we are bigger than ever and are still the biggest bilateral economic organization in Croatia with 415 members. The only exception was a slight drop in the number of members at the beginning of 2012, but this had been immediately preceeded by Croatia’s repeated slip back into recession in the last quarter of 2011. But then at the beginning of 2013 we then registered a big increase in new members.
4. Given the strong technological development of German companies, are you able to find partners in Croatia, or new interesting investment areas to coincide with the needs of the digital revolution?
Certainly. German road vehicle manufacturers, agricultural machinery manufacturers or construction machinery and equipment manufacturers have been present here for years. They make up the bulk of Croatia’s imports from Germany. And, of course, they cooperate here with their local partners, representatives, importers, retailers, wholesalers and so on. EU funds and projects have played an important role for some of the cooperations. For example, our member Siemens has just recently signed an agreement with the Croatian Transmission System Operator, the HOPS, within a smart grid investment project of European importance in the territory of Slovenia and Croatia. Many German producers of cooling and heating technology like our members Viessmann and Bosch have been, among others, supplying the Croatian tourism sector with products and solutions required for increasing the energy efficiency of buildings. A very interesting, important and big investment area in Croatia which is also inseparable from the digital revolution are without a doubt the so called smart cities. There will be a big demand for 21st century technology in the near future if Croatian cities and municipalities are to implement electromobility, smart waste management and communal services or smart grids and other aspects of smart urban development. One also shouldn’t forget that Croatia has an interesting and vibrant start-up scene. Look at Rimac or the logistics and mobility start-ups Gideon Brothers and Orqa.FPV. Our Chamber sent the latter two to a big international start-up competition in Germany last month and they dominated their category winning 1st and 2nd place, respectively. We have recognized this potential and have introduced new event formats to promote start-ups, give them some form of boost and connect them with established companies.
5. In what areas do you think German companies have made a special contribution to the development of the Croatian economy? In which way are you present in the green energy and energy efficiency segments?
It is known that Germany has for years been Croatia‘s most important foreign trade partner and officially the fourth biggest foreign investor in Croatia behind the Netherlands, Austria and Italy, with a total of 3.2 billion in direct investments since 1993. Here we must also note that Germany is in reality possibly the number one foreign investor in Croatia, because many large German companies have their headquarters in the Netherlands. This is unfortunately not visible in the official statistics. German companies have with their investments made notable contributions to Croatia’s industry and production. Croatia’s economy is still highly dependent on imports, and German road vehicles, machines, food and drinks, feed or chemical products play an important role in supplying the domestic demand Croatia is unable to cover because of insufficient production capacities.
As for the green energy and energy efficiency, we are here most notably a partner of two respective initiatives of the German government. The first one is mainly intended for small and medium-sized enterprises offering energy solutions in the fields of renewable energy, energy efficiency, smart grids and storage technologies. We thus help companies enter the Croatian market with the aim to spread German energy technologies. We offer them matchmaking services and consultancy on export and project financing. The second one is about environmental technologies in areas related related to public services, such as water supply and wastewater and waste management. In this context we also support the projects of German businesses and institutions with the goal of disseminating environmental knowledge, awareness and technical know-how in Croatia.