Sunday, February 25, 2007

Croatia Online - Destination News

After our previous posting, containing somewhat depressing business news, we thought we should cheer ourselves up with a few highlights of the latest developments in tourism.

The biggest news for northern Dalmatia is Ryanair's arrival in Zadar (see earlier posting). That means you will get a chance to take a rowing boat taxi over the water in Zadar (see picture), just 30 minutes after you leave the airport by car. Zadar airport is also a similar distance from the town of Biograd, essentially a resort town but one that is now making the most of its location.

Northern Dalmatia has a great deal to recommend it, for those who want to experience the real Croatia, and a wide diversity of culture, heritage and entertainment. Try the following Croatia Online links for a taste of the region:

Saturday, February 24, 2007

Croatia Online - Business Environment

Following on from our last, somewhat reflective, posting on the business environment, it's a little depressing to read what Balkan Investigative Reporting Network ("BIRN") has to say.
They report on the latest findings of The Heritage Foundation and The Wall Street Journal's recent Index of Economic Freedom and Croatia's reaction to its lowly ranking.
According to BIRN's report, Croatia is in denial about its desperate showing - 109th out of 147 countries worldwide and 37th out of 41 countries in the geographical region of Europe. BIRN seems to suggest that the Croatian Government's ability to "spin" the criticism away rivals New Labour's skills at their best.
The Index of Economic Freedom included the following comments on Croatia:
1. "Mostly unfree" in terms of economic freedom
2. "Repressed" in terms of property rights, rule of law, corruption and freedom from government
3. "Mostly unfree" in terms of investment freedom, labour freedom, and business freedom
What is particularly concerning is the names of some of the countries that have been ranked above Croatia. These include Azerbaijan, Ecuador and Cambodia, to name but a few.
On the plus side, financial freedom was described as "moderately free" and trade freedom, fiscal freedom and monetary freedom were "mostly free"
For the full BIRN article, including Croatia's reaction, go to BIRN - Croatia Resists Reform.
Below are some extracts from the Heritage Foundation Report. You can download the full report, or extracts, by following either of the links above.

Copyright © 2007 by The Heritage Foundation and Dow Jones & Company, Inc.
Croatia’s economy is 55.3 percent free, according to our 2007 assessment, which makes it the world’s 109th freest economy. Its overall score is 0.9 percentage point lower than last year, partially reflecting new methodological detail. Croatia is ranked 37th out of 41 countries in the European region, and its overall score is below the regional average. Croatia scores well in trade freedom and in monetary freedom. Although the top income tax rate is high, the corporate tax rate is low, and total tax revenue is not unreasonably high as a percentage of GDP. Inflation is low, and prices are fairly stable, but Croatia’s monetary freedom score is hurt by lingering government price manipulations.

Croatia is recovering from a decade-long civil war. Freedom from government, investment freedom, property rights, and freedom from corruption are all low-scoring areas. Government expenditures are extremely high, and significant state regulation impedes the easy flow of commerce. The court system is prone to corruption, political interference, and inefficient bureaucracy, and some investors prefer to seek international arbitration. Significant unofficial restrictions on foreign investment, such as highly politicized decision-making, exist for those investors willing to brave Croatia’s regulatory maze.

Starting a business takes an average of 45 days, compared to the world average of 48 days. Entrepreneurship should be easier for maximum job creation. Obtaining a business license is very difficult, and closing a business is difficult. Bureaucratic obstacles remain onerous, as burdensome administrative regulations challenge new entrepreneurs. The overall freedom to start, operate, and close a business is restricted by the national regulatory environment.
Croatia’s weighted average tariff rate was 1.1 percent in 2005. Non-tariff barriers include customs corruption and strict testing and certification requirements for some imports. Consequently, an additional 20 percent is deducted from Croatia’s trade freedom score to account for these non-tariff barriers.
Croatia has a high income tax rate but a low corporate tax rate. The top income tax rate is 45 percent, and the top corporate tax rate is 20 percent. The government also imposes a value-added tax (VAT). In the most recent year, overall tax revenue as a percentage of GDP was 24.2 percent.
Total government expenditures in Croatia, including consumption and transfer payments, are very high. In the most recent year, government spending equaled 51.6 percent of GDP, and the government received 4.1 percent of its total revenues from state-owned enterprises and government ownership of property. Privatization has progressed slowly.
Inflation in Croatia is relatively low, averaging 2.9 percent between 2003 and 2005. Relatively low and stable prices explain most of the monetary freedom score. Many price supports and subsidies have been eliminated, but price changes on some 30 products must be submitted for approval to the Ministry of Economy. For example, the Ministry must be notified two weeks in advance of price changes for milk and bread. Consequently, an additional 10 percent is deducted from Croatia’s monetary freedom score.
Foreign investors have the same rights and status as domestic investors and may invest in nearly every sector of the economy, but unofficial barriers persist. Because of a complex bureaucracy and lack of transparency, personal and political loyalty can trump economic merit when it comes to establishing a new investment. Foreigners may purchase real estate only with permission from the government. Both residents and non-residents are allowed to hold foreign exchange accounts, but numerous limitations exist, and government approval is required in certain instances. Some capital transactions, such as inward portfolio investment, are subject to limitations and conditions set by the Ministry of Finance.
Croatia’s financial system is stable and competitive. There were 34 commercial banks and four savings banks in 2005. Two national commercial banks (Zagrebacka Banka and Privredna Banka Zagreb) are majority foreign-owned and control over 40 percent of banking assets. The government owns over 98 percent of Hrvatska Poštanska Banka (the largest domestic bank) and the Croatian Bank for Reconstruction and Development. Many banking assets are foreign-owned, and newly adopted financial regulations harmonize with European Union standards. The insurance sector is small but highly competitive. The partially stateowned Croatia Osiguranje is the largest player in the insurance sector, accounting for over 40 percent of assets. The stock exchange has been growing rapidly, and securities markets are open to foreign investors.

The court system is cumbersome and inefficient. Very long case backlogs mean that business disputes can go unresolved for years; some investors have chosen to insist that contract arbitration take place outside of Croatia. The government of Croatia has made a commitment to reinvigorate its efforts to reform the judiciary, but much remains to be done. The judicial system is one of the areas that are most affected by corruption.

Corruption is perceived as significant. Croatia ranks 70th out of 158 countries in Transparency International’s Corruption Perceptions Index for 2005.

The labor market operates under restrictive employment regulations that hinder employment and productivity growth. The non-salary cost of employing a worker is high, and dismissing a redundant employee is relatively costly. High wage costs and rigid labor laws impede business activities. The labor code mandates retraining or replacement before firing a worker.

Thursday, February 22, 2007

Croatia Online - Business

A recurring theme, amongst those that are successful in Croatia, Croatian nationals, or foreigners alike, is the need for a portfolio career. This is particularly important in the challenging but ultimately rewarding region of Dalmatia. Foreigners in Dalmatia have an extra challenge – Dalmatia has a very independent spirit of its own and seems prepared to voice/enact it tacitly or otherwise, as necessary. Croatia, as a nation, is young; Dalmatia is timeless when it wants to be.

In business you can either ignore Dalmatia or try and engage with it. You may be at your peril whichever way you turn. If you want to engage with it, be prepared to spend some time in the process. If you can afford to ignore it then you’re probably in for less angst and more short term profits. If you want to flit in and out then you may get the best and worst of both worlds.


Philosophy aside, this week has been somewhat inspirational to Croatia Online with a number of associated projects coming to fruition. Lessons that continue to be learnt are:

1. Understand the business environment - it’s hard to do business here but the better you understand it, the easier it gets
2. Recognise the good from the bad – if it feels’s like a breath of fresh air it normally is but, as a foreigner, you have to work a bit harder for reciprocal trust
3. If it smells fishy then it probably doesn’t deserve to be on the menu in the first place
4. If you understand the customs of your host nation then you know whether you are being treated with respect and you will know how to treat your hosts with respect
5. Seek the best of help and support and put something back into the environment you work in

Above all, don’t generalise (!).Doing business is about people. The wider you cast your metaphorical net, the more likely you are to find a fish to eat, a dolphin to play with, or a hopefully friendly predator. The Adriatic may be “fished out” but Dalmatia, on land, arguably has a rich and balanced food chain.

We’d like to spare a lot of blushes but for a gasp of fresh air continue to read these pages. When we find something good, we like to share it.

And for those of you, who quite rightly expect us to inform rather than pontificate, please go to the following earlier business pages on our site:

Croatia's Ship Building Industry
Croatia's Banking System
Croatia Boat Shows
Doing Business in Croatia- A Personal View
Nautical Tourism In Croatia
Croatia - Hotel Industry

Our site is just over a year old but content, in Croatia, is quickly dated. Bear that in mind as you read old postings! Expect a lot of new content on business in Croatia, on these pages from April 2007.

Thanks to :

Life Jacket Adventures for today's photo

and to the following for this week's dose of fresh air:

Portal - Trogir Travel Agency

Hotel Globo Split

Hoteli Vodice

Sunday, February 18, 2007

Croatia Online - Lifestyle

Our roving reporters, Diane and Roger Brown, have been exploring Kaštela, near Split. Here’s their report.
Having heard the news that the Royal Navy’s HMS Cornwall was about to visit Split, we were excited to see her approach on Tuesday 6th February, from the vantage point afforded from our house in Slatine, on Čiovo Island. One of the many advantages of our relatively new Croatian lifestyle and home is the commanding view we have of the maritime traffic passing in and out of Split’s busy port. We were able to follow HMS Cornwall's progress to a berth at the Lora Naval Yard, escorted by two local tugs, who, fussed around her like mother hens. During the ship’s visit, it was planned to re-enact a 'pulling race' that took place in 1933 between HMS Ceres and the Vela Luka Rowing Club. It seems that this event has never been forgotten.

The next day we decided to drive to Split and take photos of the ship but could not a get a good view into the confines of the Naval base. On our return from Split we stopped at Kastel Sučurac, where we were able to see HMS Cornwall from across Kaštela Bay. Whilst there, we decided to explore the old town and were well rewarded - as we climbed the steps to the old town wall, we stumbled across a children’s art exhibition from local mainland and island schools. We were given a warm welcome by Dragan Delić who told us much of the local history of “Little Dubrovnik” as he called the town. On our departure he told us that we were his first English visitors and presented us with a book on the history of Kastel Sučurac, which, he signed for us. Such hospitality.
Kaštel Sućurac is well worth a visit, the old town being comprised of a warren of narrow streets and historical buildings.
You’ll find Kaštel Sučurac on the back road from Trogir, via Split Airport, to Split Town. It’s the last of the seven Kaštel villages, each with at least one castle. From the main road you’d just guess it was an uninspiring industrial area but that’s part of the charm of Croatia and its many undiscovered gems.

Roger and Diane are good friends of Croatia Online and have a superbly located house, with a self contained holiday apartment to let, in Slatine on Čiovo Island, near Trogir. Just a three minute walk from a great beach, with its own bar and restaurant, the apartment is tastefully and generously fitted out with all mod cons and comfortable furnishings. And you couldn’t ask for better hosts!

For more information on HMS Cornwall and Kaštela, see our recent earlier postings.
For more information on Roger and Diane’s apartment go to Holiday Accomodation Trogir.
Thanks to the RN website for today's photo of HMS Cornwall. She was built in BAE System's yard at Scotstoun Glasgow. Go to BAE Systems for more information on them.

Sunday, February 11, 2007

Croatia Online - News

The editor can best be compared to a child in a sweetshop at the moment. We've a number of projects on the go and Croatia is one of those countries that the more you explore, the more you find there is to discover. Our roving reporters have been delving into the hidden delights of Kaštel Sučurac and closely following the movements of HMS Cornwall who made a brief visit to Split this week. More news on that below. In the meantime we've also been researching the latest tourism news in Split and Biograd and will be reporting in depth in the next couple of weeks. Here's the main news of the week.
Ryanair flies to Zadar
The formal announcement has been a long time coming but, at last, low cost flights are available between Zadar and the UK. From 23rd April Ryanair will be flying to the heart of northern Dalmatia three times a week - Wednesday, Saturday and Monday. Flights leave Zadar at 9pm, arriving in Stansted at 10.30pm. Flights depart from Stansted at 5.10pm arriving in Zadar at 8.35pm. It's a 20 minute drive from the airport to Zadar or Biograd. You can read plenty about the attractions on the Zadar region on these pages. It's not so easy to find a good hotel in Zadar itself so try nearby Biograd as a base. Watch this space for an idea of how to make the most of this new route. For more information on flights go to
British Navy in Split
HMS Cornwall arrived at the Lora base in Split on Wednesday and departed yesterday after a hectic schedule. The reception was carried out with the taken for granted Royal Navy panache - blink and there's a drink in your hand and a canape in front of you. Look around briefly and there's an officer to introduce you to another guest or answer your questions. The ceremonial sunset is enough to bring a small tear to a patriotic eye and quite the politest of ways to bring the proceedings to a leisurely close.
Below is an extract from the RN website that tells you a little more about HMS Cornwall. Go to About HMS Cornwall for the latest news.
Ship's Motto: Unus et Omnes - One and All
HMS Cornwall is a Type 22 frigate, "stretched" approximately 17 m longer than the original Broadsword Class. She was launched in October 1985 and commissioned at Falmouth, Cornwall in 1988 by the Ship's sponsor, Diana Princess of Wales. Following the untimely death of Princess Diana, Lady Mary Holborow, Lord Lieutenant of the County of Cornwall assumed responsibilities. The Ship is the first of the Batch 3 Type 22 Frigates and is part of Devonport Flotilla, under Commander Jeremy Woods. HMS Cornwall has battle honours from Barfleur in 1692, the Falkland Islands in 1914 and the Dardanelles in 1915. She is affiliated to the County of Cornwall, The Light Infantry and the Worshipful Guild of Leathersellers amongst others.
Please note that today's photo is NOT HMS Cornwall! It's a picture taken on the way from Trogir to Split, past the industrialised part of Kaštela. We're hoping to bring you a photo of the real thing next week.