Croatian tourism news is often headlined by numbers – revenues, tourist arrivals – but there are many issues related to tourism which deserve wider coverage. TCN’s Danni Matijaca recently sat with Minister of Tourism Darko Lorencin for an extended interview looking at tourism issues beyond the numbers. In the first of a four-part interview, Danni talks to Minister Lorencin about investments in Croatian tourism and efforts to break through the bureaucracy.
This is the year of great tourist investments. After years of stagnation, Croatia entered this tourist season with 25 new hotels and tourist project, including the recently opened D-Resort in Šibenik, ValamarIsabella Island Resort, Hotel Park in Split and various additional projects like the Aquaparks in Poreč and Krapinske Toplice. When we add it all up, we are talking about almost half a billion euros in investments. So, instead of chasing numbers of overnight stays and arrivals, during our one-on-one with Minister of tourism Darko Lorencin, we wanted to find out just what is behind this new surge of investments.
During the recent opening of Valamar Isabella Island Resort, the CEO of Valamar Riviera, Željko Kukurin clearly stated that, even though they are the first to criticize the government when it comes to tourist land regulations, taxation and slow administration, in the case of Valamar Isabella Island Resort they have to express gratitude both to the government and HBOR for coming together with excellent tax incentives and loan packages for strategic projects without which an investment of this scale would have never been possible. What exactly is the current ministry doing, along with the tax shields and loan packages to speed up and enable new investments in Croatia?
There are several reasons why these incentives were finally implemented; one of them certainly is the fact that I was the assistant to the minister of economy before I became minister of tourism. Ministries finally started communicating and we opened a dialogue with all potential investors to pinpoint the exact problems they were facing, the response time was shortened drastically and by involving other ministries such as the Ministry of Justice we started developing frameworks to help all potential investors. First results can already be seen, D-Resort and Valamar Isabella Island Resort are already open, as well as Hotel Park in Split which was refurbished using funds from the EU, Mlini and Srebreno, hotel Kompas in Dubrovnik, Adriatic in Rovinj etc… Also, some projects which were on hold for a very long time, take ECA (European Coastal Airlines) for instance, were finally given the green light after 13 years of red tape.
I am guessing it is a lot easier to tackle new projects than to try and untangle the web around projects that have been trying to go ahead for a long time, such as the much disputed Nikki Beach Resort on island Hvar where the process of purchasing land turned out to be a nightmare with local governments selling land which was not theirs in the first place.
This takes us back to the tourist land problem, something that is holding up many projects and that was inherited from previous governments. It is an extremely difficult problem to solve, especially when they are complicated further with situations like the one we have on island Hvar. The only solution I see here is to take it into a completely new direction in order to bridge this gap. This is a dispute between the local governments and the State, and the investor should not have to wait for the dispute to be resolved. Instead, if the local government has the rights to the land and they decide to sell it or issue a long term concession, all proceeds from the sale or concession should be placed into one escrow account until all disputes are resolved. After the court reaches its decision, the funds will be transferred to the rightful owner, as decided by the court.
We still haven’t gone public with too many details about the new tourist land legislation, but this kind of a resolution is also suggested in the new legislation, we discussed this option with the Ministry of Justice and not only did we get their approval, they also think this kind of a solution is extremely desirable. This method will unblock many projects that are currently on hold and the State will be able to start making material gain from State owned land.
Kupari was another hot potato, again because of tourist land issues, even though former government stated that this project was ready to go. What happened there and why is it taking so long to get the green light?
This is very visible in the Kupari, which we inherited as a “finished” project and it turned out to be a logistical nightmare. It took two years of intensive work and daily communication between local authorities and the state to resolve some of the issues we were facing. In this project we were trying to think as an investor. We wanted to do everything possible for the final investor to receive an attractive, complete package because the higher the quality of the offered project, the higher the quality of the final investor and the end product. In many ways, Kupari project allowed us to come up with the framework of preparation procedures and resolution of ownership problems that will now be used in many future projects. Public sector, whether it is the State, regional or local administration, we are the ones that have to secure the vertical chain of command and enable faster resolution of all problems. The investor is not the one who should be forced to lose time and money resolving these issues. With Kupari, we published a public tender for letters of intent; at the same time we finished the geodesic framework to update the cadastral books. It was a massive process and we had an exceptional cooperation with the Ministry of justice, all courts, Municipality Župa Dubrovačka, Ministry of defence and all other Ministries involved with jurisdiction in this project. We managed to establish communication between all the ministries and they were resolving all issues within their own ranks, following all regulations and legislations because we have to guarantee complete transparency and safety to all future investors. This is why the preparation for Kupari project took so long. Not to mention that this was the first time we ever published a tender that allows the investor to gain three different concession types: concession on cultural goods, maritime domain and construction rights on 70% of the remaining land. Kupari project, in my opinion, is now an example of how similar projects should be prepared and dealt with, among other things, I think this was the first project that, along with the published public tender for three types of concessions for the period of 99 years, Croatian Parliament agreed to allow a 99 concession period for maritime domain and the beach.
All these things we talked about are creating a positive effect on the investment climate in Croatia. We can debate and talk all we want, but in the end, investors are guided by concrete examples. So, in the past three and a half years we literally had to stop talking about what should be done, start working, create security and come up with finalized projects in order to show everyone that yes, this is possible, it can be done.
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