Foreign Chambers of Commerce Call on Croatia to Improve Business Climate

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ZAGREB, November 15, 2018 – An inefficient public administration, legal insecurity, excessive taxes, lack of skilled labour force and the government’s performance are the key obstacles to doing business in Croatia, it was said on Thursday at a presentation of a survey by six bilateral chambers of commerce, containing recommendations on how to improve the business climate.

The initiative to improve the business environment in Croatia and bilateral trade was launched by the American Chamber of Commerce (AmCham), the Association of Italian Entrepreneurs in Croatia Business Party, the Austrian Foreign Trade Office, the Canadian-Croatian Business Network (CCBN), the German-Croatian Chamber of Industry and Commerce, and the Nordic Chamber of Commerce in Croatia.

Addressing the press, CCBN president Joe Bašić explained that the six chambers currently comprised more than 1,200 companies in Croatia employing more than 150,000 people and accounting for more than 50% of foreign investments in Croatia.

The survey covered 473 companies and its combined results show that despite some significant changes for the better, companies and potential investors are still faced with numerous obstacles, and that the changes occurring in Croatia are too slow and insufficient in comparison to the rest of Europe.

Complex and time-consuming administrative procedures are among the main limiting factors to doing business. The implementation of legal regulations and procedures by authorities is the area where the greatest deterioration has occurred in the past five years. On the other hand, companies did not recognise improvements, where they did happen, as being directly connected to the government.

Some chambers said the unstable regulatory framework was the greatest problem while others considered the judiciary as the greatest problem. Some of the critical problems identified by the foreign chambers of commerce include the lack of legal security, labour taxation and the lack of the labour force.

Asked about the role of the government in improving the business climate, 42% of companies – members of the American, Canadian and Nordic chambers of commerce – considered the government’s work as negative while 46% said that the government’s work did not have any impact. As many as 56% of Italian companies assessed the government’s work as poor, 33% said it was average and 6% assessed it as good.

In conclusion, only 13% of American, Canadian and Nordic companies consider that conditions for doing business in Croatia are among the best in central and eastern Europe while 36% consider them to be among the worst or worst.

The survey also shows that 27% of companies-members of the German and Italian chambers would not choose Croatia again as a preferred investment destination.

Some of the recommendations heard at the presentation include the introduction of penalties in situations when public servants do their job inefficiently, while employees whose work excels should be rewarded. Representatives of the foreign chambers called for digitisation of public institutions and services, which, they said, would result in faster and more transparent public services.

They underscored that the Agency for Investments and Competitiveness (AIK) should remain independent and consider it to be the key institution for investors who are considering doing business in Croatia.

For more on doing business in Croatia, click here.

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