Nadan Vidošević, President of the Croatian Chamber of Economy (CCE), speaks with PM Communications about investments in tourism and the maritime sector, his country’s upcoming accession to the EU and the campaign to promote high-quality domestic products
To become an EU member state, a country has to meet the Copenhagen criteria, rating itself in a number of different fields. Bearing in mind that Croatia has undergone impressive development over the past two decades, what aspects do you believe make you and your country the example to follow in the region?
It was very difficult for us in the 1990s, particularly during the war. It was not good for our image, and especially for business. After the war, there were so many expectations and disappointments. We are ready to become an EU member, but it is very important for us to conserve the good relations that we are constantly trying to develop with our neighbours. When I talk about our neighbours, I am not talking about ex-Yugoslav republics, but also about our northern and western neighbours, which are already EU members.
On the one hand, we are coming from an environment that we used to participate in, and on the other hand we are trying to preserve the relations we established during the Yugoslav period. It is difficult to measure it. We are starting from nothing. Croatia has a significant role in the economic sense. The port of Rijeka was one of the most important in the Hungarian empire. But also during the Yugoslav period, Croatian ports played a significant role in the cooperation of Yugoslavia. Yugoslavia used to be a buffer between the east and west. We are trying to avoid making mistakes and use our advantages in a challenging world.
As you can see on my table, all countries in Oceania and East Asia are under the spotlight, and everybody is looking at what will happen in that part of the world. The global economy is witnessing unprecedented growth, and this mostly depends on growth in Asia and Oceania. Why is this relevant to our historical experience? If you look at the map of the world, it is obvious that the shortest route from these emerging powers to Europe is through the Adriatic Coast (through Croatia). I think this is really important for your readers to understand. We are very poor in terms of raw materials and oil and gas, but we are one of the top countries in terms of our location. As a result, it is important to maintain relations with our neighbours which are still applying for EU membership, and continue with our relations with EU member states.
The EU has set certain requirements for Croatia in terms of its maritime industry, including the privatisation of major ship yards. The prime minister was quoted recently saying that the shipping industry will remain in Croatia, but the rules will be different. What is your view on the future growth of the maritime sector?
It is definitely important. At the end of Yugoslavian times before independence, Croatian shipyards were number three in the world. Today, that seems unimaginable. Even in the late 1990s we were among the top six. Unfortunately, the shipyards faced serious problems. The main issue concerned the future of Croatian industrial policy and how industry will grow here in the future. I am optimistic about shipyards if we have to reindustrialise Croatia, mainly because of the skills our workforce has. We are in a good position in this industry. It was a sensitive political issue like in Poland and Germany, but I hope that we will soon have a clear position in the shipyard industry. The industry will be privatised so we can produce high value-added vessels and units and increase activity in other industrial projects that are related to shipyard activity. That is how I view the future of industrial development in Croatia.
The tourism industry is also very important. This has significant growth potential. It is expected to continue to grow thanks to the arrival of budget airlines and the expectation of EU membership. What is your view on the opportunities that this industry has for British investors, and what obstacles are being addressed in order to secure the future of this industry?
I am absolutely sure that investments in Croatian tourism will be secure. I think it is reasonable to invest. We have a coastline of less than 2,000 km, but we have half of Europe’s population behind us – most of the German population, Baltic countries, central and eastern European countries, including Russia and Ukraine. All of them come to the Croatian coast. The figures are obvious – our ministers used to say that we were the winners of the season in the Mediterranean. But we will face a shortage in hotel capacity, particularly high-end hotels. So there is a lot of room to invest in these projects. You may be interested to know that we have investments from as far as Chile. Turkish investors are also coming here. They are very willing to invest in the marina and the hotel business. The interest is there.
I think this year we will use areas that were previously used by the military. They are ready to sell, and we have a lot of expectations. There are also greenfield projects that we are trying to develop in the south. We are working together with the Government. Here at the Chamber we have a centre for investments, and we are trying to help investors and local communities assist the Government. We are not involved in huge energy investments, but we are planning to push for lots of small investments. I am happy with what we are doing. New circumstances are pushing us to be even braver when it comes to supporting different projects.
The European Bank for Construction and Development has recently accorded an 18.8 billion euro loan for the Split Port Authority for an upgrade. What opportunities will foreign companies be able to find as a result of these types of loans and the privatisation process?
Relying on loans is not the only way to fund our future economic activities. We want to open the door for investments funded by international capital, because we have a shortage of local capital. We want larger scale financiers for our projects so as not to put pressure on domestic finance. In that context, EU financing is very beneficial. Foreign investors will be benefiting from these opportunities, and they will not be treated any different to local investors.
Could you comment on the CCE’s role in starting an investment cycle that will support private investors, encourage entrepreneurs and create jobs?
The Chamber has done a great job over the past fifteen years. We opened up southeast Europe to economic activity after the war. Ex-Yugoslavia had a high level of growth in the region, with a 300% increase in intra-state exchanges. Unfortunately the crisis affected our economic operations in countries in the region, but we opened up the markets we dealt with before the war, and we worked on economic relations. I think this was the best thing we did. We also invested a lot in educating our members to prepare them to work. We opened an office in Brussels and we organised an education system for entrepreneurs, and we have been named as the best education programme outside of the EU.
As I mentioned before, we established a centre for investments here in the Chamber of Commerce, but we also opened a centre for strategy planning and programming, which enabled our members to obtain funding from European funds. The most important issue for us was getting our members to adapt to the new circumstances in the EU markets. There is a lot of competition in the EU markets. So we invested a lot in education and health and we tried to attract the best experts to help us in these areas. We were ready to cooperate with countries that had past experience in the issues we were facing. Croatia has a highly developed regional structure, which means that if you ask any investor for assistance in an area of the country, the entire system will help them.
One of the most important tasks that you have is improving economic cooperation with foreign countries. In this regard you received the Minister of Foreign Affairs of the Republic of Macedonia last year. How successful have these bilateral meetings been, and what would you like to include in your agenda regarding closer relations with the UK?
Things are going really well with the UK. We have excellent relations with the UK Embassy here, especially when it comes to how to develop public-private partnerships (PPP). The UK has a lot of experience in this area. We also spoke about the efficient use of European funds, which is a great challenge. We are so afraid of any mention of instability, because we have not had good experience with instability in the past. We are responsible for Croatian economic development but of course we need the help of people who are willing to invest here. These are very exciting times. Many people are still not aware of Croatia’s position. It is not just because of the size of our population – we have very small figures, but in spite of this, we are very important because we are covering the east coast of the Adriatic.
The Chamber also pays special attention to international promotional activities in different countries. Please elaborate on activities such as Be Croative.
It is not that original. The British Prime Minister said “Buy British” a few years ago, and Obama has said “Buy American”. We started with this project many years ago, but we were aware that it was not healthy for the economy to close our doors. So we said do not just buy any Croatian products, but buy high quality ones. So we promoted Croatian quality and creation at the beginning. What is the difference? These defined our mission not to be closed off to others, but to support new areas, a new marketing approach etc.
After our approach to the EU sped up, we decided to extend our promotion to the international market, firstly to our friends and allies in Europe and countries where we have significant diaspora, like Australia, and where there are tourists, like Japan for example. We started with the play on words “Be Croative”, but it concerns promoting products with Croatian quality and creation. We have certain experience in science in Croatia with inventions. We have a Croatian mathematician for example who spent most of his life in the UK. We are promoting our products and our environment, and we are gradually promoting science. It is part of our communication strategy, and I am very proud that we are doing this.
The Chamber also assists in efforts to follow liberalisation trends. Your philosophy is to create economic growth and wealth. Could you explain the Chamber’s role in WTO membership, EU accession CEFTA membership and free trade negotiations with other countries?
We have participated with our experts in areas such as negotiations between the EU Commission in Brussels and Croatia. We estimate that something like 15% of our entire workforce work directly in the WTO negotiation process and the EU accession process. I think it is our role and good for our members in a way because we are bringing Croatian standards in line with EU standards. It is possible in some fields. We were also heavily involved in negotiations concentring the central Europe free trade zone, all because of the intellectual capacity of people here in the Chamber.
You are also a pillar of Croatian politics, with extensive experience in the public sector. Can you tell us more about how Croatia has evolved since independence to EU accession, and your role in this process?
I was a member of the cabinet during the war – I was the minister of economy. It was incomparable with what we are facing today. For example, we could not even imagine foreign presence in the country, apart from foreign military observers. We were isolated on the international political scene and we were wrestling with the remains of Yugoslav structures and promoting and preserving the good things from Yugoslav times, but also fighting against Serbian dominance. We were really isolated at times, and we felt very frustrated. As minister of economy, I was trying to explain that we had potential and we could operate on the international arena, but on the other hand, somebody would say that they could not speak openly with us because we were under an embargo. It was very complicated. I am trying to forget that time.
But now we are in an excellent position. We are a member of NATO and the EU, and we have stable relations with our allies and they are ready to come over and invest and support us, not just in terms of capital, but also in terms of experience and knowledge. We have gone from frustration to being proud of being a Croat. Any citizen of this country is proud of this progress. Although of course, we are in an economic crisis at the moment, but it is incomparable with any other time.
In your view, how important is the UK for Croatia’s future economic progress, and how can UK companies find partners or invest in Croatia?
I think it is very important to promote the potential of business cooperation between two countries. In the tourism sense, we expanded a lot over the past decade, but we are still not satisfied with the level of investments here in Croatia. It is important to have a strong presence of British capital here in Croatia, including financial capital, not only investors in the so-called real sector. Austrian capital came over here first, and if you look at the figures, you will see how much capital has come from neighbouring countries. But I think now is the time for British capital. We have some experience in the British market, but we are a small economy that is trying to find its way. We want to know what will happen after the shipyards are privatised. Some industries disappeared during the transition, and I think it is impossible to think about future development without evaluating our position and starting with a new industrial cycle in Croatia.
If you have investors in the industrial sector, you have reasons to invest in education. You have a chance to develop technical skills and increase intellectual and technical capital, which is important. If you look globally, you will see that countries that are ready to produce are more able to survive should circumstances change. British experience in restructuring the economy (during the Thatcher era) is really important for us if we are thinking about restructuring important companies here. I think it is important to make the most of any opportunity to communicate with investors. We have centres that have been established to assist investors who intend to come over to Croatia and overcome the obstacles and become successful.
In line with your Be Croative programme, what message would you like to send to the British public regarding Croatia and enterprising products?
Creativity is the heart and soul of Croatian people, and organisation is the British Empire’s main advantage, and we desperately need this. Our creativity and British organisation is a perfect match, and I hope that we will learn from past and present British experience in being organised, and how to work in the long run. Our diaspora around the world are hugely creative, they are very successful and they can adapt to new circumstances. They are very loyal citizens, but they also preserve the values they have brought from Croatia. But being creative is not enough – you need to be organised in order to be successful. I hope that we will learn a lot of things from British experience.