Although being a comparatively small market with only 4.1 million inhabitants, Croatia has attracted many German investors – especially since the country´s accession to the European Union in July 2013, says Volker Treier Deputy CEO of the Association of German Chambers of Commerce and Industry for Diplomacy&Commerce.
1.Which place does Croatia occupy on the map of German investors? What are Croatia’s trump cards?
Croatia is doubtlessly one of the most important partners for German businesses in Southeast-Europe. Croatia´s EU-membership which implies the access to the EU domestic market has proved to be one of Croatia´s biggest advantages in comparison to competitors in the region. Besides this, Croatia has a well-developed infrastructure as well as a relatively large pool of qualified workforce. Both factors are essential for investment decisions of German companies.
2. Considering its capacities, which EU’s production chains could Croatia fit in best?
German investors see potential within Croatia´s pharmaceutical sector, for example. Here, Croatia did already enhance its capacities and increase its exports significantly. Moreover, there are several examples of successful Croatian companies that positioned themselves as competitive suppliers for the automotive sector. This is also reflected in the positive development of Croatia´s foreign trade volume. In 2017, Croatia´s overall trade volume reached a new all-time high with 36.1 billion Euros. This is an increase of 50 per cent compared to the crisis year of 2009. Similarly, the German-Croatian trade volume has developed very positively. In particular, Croatian exports to Germany increased by almost 20 per cent in the previous year.
3.What kind of new dimension does digitization bring in terms of the interests of German companies and is Croatia considered in this context?
Digitalization is indeed a huge chance for German businesses – also with regard to establishing closer ties with Croatia. Possible areas of enhanced cooperation in the future are „smart cities“, meaning intelligent transport, waste management, energy supply and energy efficiency. But also in public administration German digital technologies could contribute to solving the existing challenges. From our German-Croatian Chamber of Commerce and Industry (AHK Croatia) we know that Croatia is particularly interested in German investments in a network of charging stations for electrical cars. Here, we hope to establish synergy effects in the near future.
4.Business communities had a lot of hope for the Croatian government, with PM Plenković at its helm. How visible are the results of the reforms that the government has promised to implement?
German companies definitely see and appreciate the efforts of the Croatian government in improving the country´s investment climate. Much has been achieved in this regard already. But of course, German investors still have some issues on their agenda – first and foremost, the reform of the tax system that still places considerable burdens on the employers´ side. Moreover, recent polls among the AHK members show that there is also room for improvement regarding the rule of law as well as the efficiency and transparency of the public administration in Croatia.
5.Are you satisfied with the dialogue between the German business community and the Croatian government?
2018 was definitely a good year for the German-Croatian business relations. First of all, there was the visit of Prime Minister Andrej Plenković to Germany in August 2018. Andrej Plenković did not only meet with Chancellor Angela Merkel during his visit, but explicitly articulated the desire to meet representatives of the German business community. Therefore, the DIHK together with the AHK Croatia organized an exclusive roundtable format. This format enabled a very open and fruitful dialogue on the current state of the bilateral economic relations between German and Croatia and provided the opportunity to the business representatives to address their most urgent issues regarding their business activities in Croatia. This exchange was continued on November 29th at the celebration of the 15th anniversary of the AHK Croatia where we had again the honour to welcome Prime Minister Plenković. We hope to continue and even intensify this dialogue in 2019.
7.Croatia has joined a number of countries that have introduced dual education to reflect the German model. Will this alleviate the problem of the lack of quality workforce that employers have been facing?
The more successful the Croatian economy is, the bigger the lack of qualified workforce will become a problem in the future. Consequently, to secure Croatia´s attractiveness for investors in the years to come, developing and implementing programs to qualify people to the needs of the companies will be one of the crucial duties. Here, the companies can count on the expertise and support of the AHK Croatia which has made the promotion of the dual education system to one of their top priorities.
8.How much does this impede trade and investments?
Without doubt, Croatia´s accession to the Schengen and Eurozone could have very positive effects on business activities. However, this is a political decision. Of course, we as the business community will continue to address these issues towards political decision-makers by showing the costs of the existing arrangements – also with regard to Croatia´s most important sector, the tourism industry.