Croatia

Print article

Panorama of Dubrovnik

Croatia, lying to the south of Slovenia on the Adriatic coast, is amongst the next round of countries applying for entry to the EU. With an annual growth rate predicted to be around 4% in 2006, an ongoing privatisation scheme, and an economic system that is rapidly being brought into line with EU norms, it offers an attractive entrance point to the CEE market. The transport infrastructure is being updated to give Croatia a role as an East/West transit corridor.

Government support for FDI

A recent conference on foreign investment in Croatia concluded that FDI was essential to creating a stable, sustainable economy, and that therefore it was vital to attract export-oriented investments to both the manufacturing and service sectors. The government is keen to attract FDI, and is undertaking legislative reform to reduce the administrative and fiscal burden on investors. In addition, the Croatian Bank for Reconstruction and Development offers preferential loans to companies involved in the renewal and redevelopment of the infrastructure.

Privatisation

Privatisation of state-owned businesses is still underway, with the government inviting bids in a number of sectors. The telephone infrastructure is due for a major overhaul, offering opportunities for equipment providers, as the new fixed-line providers are expected to invest at least €50 million as a condition of their licences.

An unconventional soccer field in Dubrovnik’s historical centre, inside the fotification

Renewal of infrastructure

Croatia has received significant funds from the EU, World Bank and EBD to finance infrastructure renewal. As a result, even where privatisation contracts have already been awarded, the transport, education, health and waste management sectors all offer opportunities for developing sales in Croatia. For example, the Croatian press reports that more than half a billion dollars will be spent in extending and updating the port network. Further investment in all these areas will be needed as the country continues to modernise.

Tourism

Tourism and leisure is likely to be a major source of FDI, as the country is already established as a tourist destination, but there is still plenty of scope for development of the necessary infrastructure. The government is keen to support the sector — in fact, tourism is the only area where investment support is available for foreign companies already established in Croatia as well as for new investments. It is likely to sell off the remaining state-owned hotels and resorts in 2006, opening up the sector fully to private investment. Croatia has one of the fastest-growing tourist sectors in Europe.

Doing business

Foreign companies receive national treatment, and full repatriation of profits is possible. The business climate in Croatia is still developing — the World Bank’s Doing Business review rated Croatia poorly on the ease of starting business, for example — but a new egovernment initiative is underway to allow companies to be registered online. The government hopes this will cut not only the time required for registration of a company, but also the cost and the bureaucracy.

One of the greatest challenges to face potential investors is apparently the lack of transparency and large amount of bureaucracy involved in both the judicial and government systems. Legislation is underway to improve matters in both cases, and, for companies looking for a quick resolution to court cases, arbitration is available. For the moment, laws on property purchase and land registry are particularly complex.

Facts in brief

Croatia’s location is South-Eastern Europe, bordering the Adriatic Sea, between Bosnia and Herzegovina and Slovenia. Controls most land routes from Western Europe to Aegean Sea and Turkish Straits

View of the port town of Hvar, Croatia

Its climate is Mediterranean and continental with hot summers and cold winters; mild winters, dry summers along coast

Natural resources include oil, some coal, bauxite, low-grade iron ore, calcium, gypsum, natural asphalt, silica, mica, clays, salt, hydropower

Agricultural products are wheat, corn, sugar beets, sunflower seed, barley, alfalfa, clover, olives, citrus, grapes, soybeans, potatoes; livestock, dairy products

Industries include chemicals and plastics, machine tools, fabricated metal, electronics, pig iron and rolled steel products, aluminium, paper, wood products, construction materials, textiles, shipbuilding, petroleum and petroleum refining, food and beverages, tourism

Diplomatic representation in the US — Ambassador Neven Jurica

Diplomatic representation from the US — Ambassador Ralph Frank

Contact Information

American Chamber of
Commerce in Croatia
Krsnjavoga 1
10000 Zagreb
Croatia
Tel: +385 1483 6777
E-mail: execdir@amcham.hr
Website: www.amcham.hr

Useful websites

All pages are copyright of © Roxby Media Ltd - European American Business is a Roxby Media publication.