Greater cooperation is possible on joint projects of environmental protection, energy, infrastructure, and mechanical engineering. However, there ought to be quality sources of funding whether domestic or foreign and, in most cases, government support
Thanks to the joint efforts by Serbia and Croatia, economic cooperation between both of these countries has improved and the trade has grown when compared with previous years. We talked with Luka Burilovi'c, the president from the Croatian Chamber of Economy, about economic cooperation, boosting the existing ties, chamber meetings, and the challenges that both Croatian and Serbian economies will face.
What else can be achieved to improve economic cooperation between Serbia and Croatia?
As neighbouring countries, our trade relations are intertwined, in each and every branch from the economy. The trade keeps growing as well as in 2023, it amounted to EUR1,288 million. Further growth depends upon the price and excellence of goods because the competition today is incredibly stiff. Croatian companies from the food, processing, chemical and wood industries possess the biggest curiosity about this cooperation. The reasons are proximity and understanding the market, product recognition and customer habits.
Greater cooperation can be done on joint projects of environmental protection, energy, infrastructure, and mechanical engineering. However, there ought to be quality causes of funding whether domestic or foreign and, in most cases, government support.
Currently, two such projects are being implemented in the Republic of Croatia – the overhaul from the Zagreb – Vinkovci railroad and the construction and overhaul of the Zagreb – Rijeka rail track, while the second is the construction of the LNG terminal. The first project will expedite the flow of goods to Serbian companies in export and import to and from overseas markets, and the second will provide Serbia by having an alternative gas supply route.
The heads of the Croatian and Serbian chambers of economy are continuously highlighting good mutual cooperation. How can you begin to see the current relations forwards and backwards chambers and to what extent are they now a power behind the cooperation between our countries?
Our businesspeople often meet at trade shows and therefore are members of business delegations created by the Croatian Chamber of Economy and the Chamber of Commerce and Industry of Serbia (CCIS). They don’t only make sales deals, but also exchange experiences, agree with the exchange of technologies and cooperation in investment projects. County and regional chambers also organize such meetings.
With the purpose of better connecting our business communities, the Croatian Chamber of Economy has reopened the Croatian Chamber of Economy’s Representative Office in Serbia, and the CCIS is incorporated in the process of reopening its representative office in Croatia. Earlier this year, prior to the outbreak of the coronavirus-induced crisis, the Croatian Chamber of Economy and also the Chamber of Commerce and Industry of Serbia started preparing a company forum and B2B talks in Belgrade. When the coronavirus situation doesn't stabilize in the future, we will probably choose a virtual choice of the forum.
Croatia is one of the largest investors in Serbia. However, you will find not many Serbian investments in Croatia, which ratio can sometimes be 16:1 in favour of Croatia. Which sectors have experienced improvement in cooperation and much more equal investments?
It is tough to talk about striking an account balance between investments because our countries do not possess this balance even if trading with larger countries. Capital chooses the markets it believes brings it probably the most profit or round from the business.
From 1993 to 2023, Croatia invested as many as EUR869.4 million in Serbia, and Serbia invested EUR6 million in Croatia. According to the structure of Croatian investments, the most important investments happen to be produced in food and beverage production, retail, wholesale and trade intermediation, manufacture of cigarettes and tobacco products and chemicals and chemicals.
In relation to Serbian investments, I have to underline that, unlike Croatian investments in the said period, there was a significant withdrawal of foreign direct investment funds. Recently, Serbian businesspeople show an increasing interest in investing in Croatia. Matijevi'c Meat Industry bought the agricultural cooperatives in Negoslavci and Jankovci in Slavonia, while MK Group became the who owns Skipper Resort and also the Kempinski Hotel Adriatic in Istria.
What you think a special challenge for that Croatian economy this year, the entire year of crisis and pandemic?
The biggest challenge may be the decline within the tourist traffic on which, unfortunately, our economy continues to be too dependent. Most people have been impacted by the crisis and, after the initial supply crisis, we've been experiencing reduced demand. To date, we've largely were able to keep up with the employment rate, however the real challenges are yet in the future.
Reduced budget revenues are extremely prone to affect the state’s business with partners in the private sector within the other half of the year. Government spending is still a powerful factor in economic activity.
The lack of tourism revenue won't affect the strength of this sector, but also general consumption and sectors for example construction and commerce. This applies to creative and entertainment industries, which cannot function normally for the most part.
We are closely monitoring the problem and therefore are planning activities to annul the possible shocks within the global market, which is most gone through by the best area of the economy, that is export-oriented companies.
I am an optimist. We can already see from the quantity of tourists that are holidaying here that situations are less bleak like a month ago. But we must be familiar with the degree of the problem and all sorts of risks if we don’t want our optimism to be unfounded.
Tourism is certainly a business that has been suffering the most from the consequences of the coronavirus crisis. Does Croatia have a strategy on how to overcome the crisis and enhance the situation?
The EU set of assistance measures, devised in May this season, includes a revised EU budget in the quantity of EUR1,850 billion and a new financial instrument called the Next-gen EU, having a total estimated financial budget of EUR750 billion. These funds should be available from 2023 and distributed based on a new key, while taking into account the impact from the crisis.
This financial package recognizes tourism being an important business activities the very first time and also the branch that has been especially hit by the crisis. Common sense says that tourism could record a small amount of over 70% in traffic in the second quarter of 2023. The SURE programme, that covers part-time work, along with other measures to maintain the employment rate, as devised the federal government from the Republic of Croatia, will additionally prevent layoffs.
Still, this sector will need support for any considerably longer period. A brand new allocation and continuation of interest-free or low-interest credit lines are essential, much like grants for those companies that have recorded a decline well over 90% in their activities, especially small , micro-enterprises. We hope that a large part from the budget for tourism will be integrated as part of infrastructure funds, because this approach makes it easier for businesses to gain access to the funds at the national level. Croatia should also use its comparative advantages such as the best epidemiological situation in the Mediterranean countries and the structure of accommodation that ensures social distancing and lower flow of individuals, such as camps, secluded holiday homes and nautical tourism. We also count on domestic tourists, as well as tourists that can drive to our country.
This is an election year for both Serbia and Croatia. Exactly what do you expect in the new Croatian government?
I expect the continuity of the very effective and sound practice of implementing measures and activities carried out in recent months throughout the coronavirus crisis, along with the continuity of economic and financial policies which have led us to a stable budget before following a Euro as our currency. The announced new measures, especially shorter working week, represent an excellent grounds for preserving the economy, with a special emphasis on the need to preserve the liquidity of the entire system. I believe that we can expect an additional easing of business conditions, reduction of the tax burden on businesses and salaries and additional elimination of bureaucratic obstacles.
Also, and that i consider this to become crucial, I have faith that we have the capability and competencies for targeted and quality programming from the use of EU funds within the future years. Large funds await us, I and that i would especially prefer to thank everybody who participated in securing these funds. We have to concentrate on the private sector and the development based on digital and green economies.
