With a solid background in economics, gained through his teaching and business experience, Ljubo Jurcic was appointed Minister of Economy last July. Specializing in foreign trade and industrial policy, the Minister emphasizes the importance of foreign investment for Croatia's future development in sectors such as tourism and agriculture, and is also a proponent of the gradual privatization of the energy sector.
– Considering the success of the economic reforms carried out in Croatia over the last decade, at what stage of the reform process is the country's current economic situation?
Croatia has successfully passed the most difficult part of the transition path and all efforts continue to be directed towards its entry into the EU, which is expected in 2007. Therefore, most of the actions of the Croatian Government until that date will be concentrated on aligning the country's economy with that of the EU.
The main tasks of the Government's economic policy are to build a democratic and free market integrated into the EU, reduce unemployment, increase activity in the export sector, attract foreign investment, and thereby consolidate the economy. Furthermore, efforts will be made to accelerate the restructuring and privatization of state-owned companies, align the legal system with EU standards, and maintain and ensure long-term political, economic, and social stability, including price stability and other key indicators, as well as low inflation.
– In which sectors of economic activity is the privatization process currently taking place, and which of these are priorities for the Ministry of Economy?
Today, the Croatian government's priority is the privatization of the agricultural, food, and tourism sectors. The government is implementing an operational plan for state privatization through public auctions and the sale of shares. This plan includes more than 1.000 companies, of which 700 are ready for privatization.
The Ministry of Economy has to carry out the privatization of large state-owned companies, such as the oil company "Ina", whose 25% plus one share has recently been sold to a foreign strategic investor; "Hrvatska elektroprivreda", an electricity company, whose privatization is planned for 2004; "Croatia osiguranje", an insurance company, and the entire industry.
– Which sectors offer the most opportunities for foreign investment?
Foreign investment is welcome in any sector. As I've already mentioned, the priority for privatization lies in agriculture and tourism, but it's also worth mentioning the investment opportunities in the metallurgical and timber industries.
Government programs are aimed at stimulating foreign direct investment through tax breaks and the maintenance of "greenfield" investments.
From 1993 to 2002, Croatia received $7,5 billion in investment, mostly in the telecommunications, financial, pharmaceutical, cement, hospitality, and other sectors. Attracting foreign direct investment is a key government priority.
To help increase investment, an Export and Investment Promotion Agency has just been created. This agency will encourage Croatian companies to sell in foreign markets, establish agreements and partnerships with international partners, participate in international trade fairs, and conduct market research with up-to-date studies. Through this agency, all potential investors will be able to obtain assistance and information about opportunities in Croatia.
I hope the Agency can make Croatia an even more attractive and active destination for investors, in relation to other countries in Central and Eastern Europe.
– What are the main actions carried out by your Ministry in the economic and business fields during the current year 2003?
Among other things, to carry out the privatization of 25% plus one share of our oil company "Ina", the sale of "Željezara Sisak" and the stabilization of the businesses of "Željezara Split", both steel industries, and of TLM of Šibenik, light metals industry.
In short, the aim is to stabilize the entire basic industry, a process that could be completed by the end of the year, and also to define measures to improve the state of the metallurgical and wood industries.
The Ministry has prepared a comprehensive set of laws that have already been submitted to the Senate. Some of them have even passed that stage, such as the Consumer Protection Act and the Business Corporations Act, which are important parts of the process of aligning the economy with EU standards.
– What advice would you give to a Spanish businessman who would direct his capital to Croatia?
The main gateway to the Croatian market for investors should be the aforementioned and newly established Agency for the Promotion of Investments and Exports, which will begin operations this fall. Therefore, I recommend that Spanish businesspeople wishing to invest in Croatia first contact this Agency.
The Croatian government is continuously working to improve the conditions and legal framework for investment in order to attract foreign capital and become more competitive. It is worth mentioning the numerous incentives already in place to support this.
Direct investment from Spain in Croatia has reached approximately US$5,9 million since 1993. Furthermore, trade between the two countries has grown considerably in recent years. In the first five months of this year alone, trade totaled US$128,6 million, a 70% increase compared to the same period last year.
All of this highlights the opportunities that exist between the two countries to develop a fruitful collaboration.
Finally, I reiterate that the Croatian government's priority tasks are maintaining macroeconomic stability and economic growth, which increased by 5,2% last year, and which we estimate will increase by 5,0% this year.
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