August 16th- 22th 2004
CONTENTS:
AVERAGE NET SALARY IN JUNE 571 EUROS
INDUSTRIAL OUTPUT ON RISE
CONSUMER PRICES ON FALL IN CROATIA
VIENNA INSTITUTE ESTIMATES CROATIA WILL JOIN EU IN 2008 OR 2009
HAGENA: NET ASSETS OF COMPULSORY PENSION FUNDS WORTH 6.22 BILLION KN
FARM MINISTER: ALMOST ENTIRE AMOUNT PAID FOR WHEAT
15 COMPANIES BUY BIDDING DOCUMENTS FOR THIRD MOBILE PHONE NETWORK
SISAK IRONWORKS' MANAGEMENT WANTS TO CHANGE PURCHASE CONTRACT
ONE MILLION PASSENGERS TRANSPORTED BY CROATIA AIRLINES SINCE START OF 2004 CROATIA OSIGURANJE PROFITS GO UP 16.1 PCT
CROATIA'S VINDIJA WINS 25 GOLD PRIZES AT SLOVENE FAIR
IPK CEPIN EDIBLE OIL PLANT REGISTERS PROFIT OF 70,000 KUNA
VARTEKS' LOSS CAME TO 13.9 MILLION KUNA
LOSSES REPORTED BY SUNCANI HVAR COMPANY
CROATIA, SOUTH AFRICA SIGN TRADE AGREEMENT
CROATIAN, GERMAN RAIL REPRESENTATIVES DISCUSS FUTURE COOPERATION
UNIONISTS IN BELJE SAY TENDER FOR COMPANY'S PRIVATISATION UNACCEPTABLE
FARMERS ALLIANCE URGES GOVERNMENT TO REJECT ZITO'S BID TO BUY BELJE
STRUGGLE AGAINST AGRICULTURAL OUTPUT'S BLACK MARKET REQUIRED
CROATIAN AND ITALIAN ENVIRONMENTALISTS AGAINST DRUZBA-ADRIA PROJECT
THE ECONOMIST CONFERENCES: ROUND TABLE DEBATE WITH CROATIAN GOVERNMENT
1. ECONOMIC INDICATORS
AVERAGE NET SALARY IN JUNE 571 EUROS
The average net salary in June was 4,226 kuna, up 1.36 percent from April, Croatia's Central Bureau of Statistics said on Friday. The Bureau said the unemployment rate in July was 17.2 percent, down from the 17.4 percent registered in June and the 18 percent in May. (EUR1 = 7.4 kuna)
INDUSTRIAL OUTPUT ON RISE
Industrial output in Croatia rose by 1.2 percent this July in comparison to July in 2003, the Central Bureau of Statistic reported on Tuesday. Industrial production in the first seven months of 2004 rose by 3.5 percent as against the January-July period last year.
CONSUMER PRICES ON FALL IN CROATIA
Prices of goods and services for consumer consumption measured by the Consumer Price Index (CPI) in July fell by 0.4 percent in comparison to June, the Croatian Central Bureau of Statistics reported on Tuesday. The fall in prices measured by the CPI has been registered for the second consecutive month. An inflation rate measured also by the CPI at the annual level was 1.9 percent in July, falling from 2.5 percent in June. Consumer prices rose by 1.2 percent since December 2003.
VIENNA INSTITUTE ESTIMATES CROATIA WILL JOIN EU IN 2008 OR 2009
Croatia will most likely join the EU in 2008 or 2009, while the euro might replace the national currency in 2010 or 2012, according to a forecast by the Vienna Institute for International Economic Studies, Southeast European Times said on its web site on Friday. Estimates of the dates when Croatia and other countries in the region might enter the European Union were given in a report the Institute drafted on countries in transition. The Institute estimates that Croatia probably will not join the EU together with Bulgaria and Romania in 2007, and that it is more realistic to expect that 2007 will see the conclusion of entry negotiations and the announcement of the year Croatia will join the Union. Other countries in the region will have to wait longer to become EU members, according to the Institute. Only Macedonia stands a reasonable chance of joining by 2013, provided that entry talks begin in 2006 or 2007. The membership of Albania, Bosnia-Herzegovina and Serbia-Montenegro will most likely be considered after 2013, but they might sign Stabilisation and Association Agreements by 2007. As regards the introduction of the euro, the Vienna Institute estimates Bulgaria stands the biggest chance of having the euro replace its national currency as early as 2009. Croatia might replace the kuna with the euro between 2010 and 2012, depending on the year of its EU entry, Southeast European Times said. It added Croatia had met nearly every Maastricht criterion for the introduction of the euro, that the Institute report said Croatia's economy was on the level of those countries which joined the Union on May 1, and that Croatia was the most developed country in Southeast Europe.
2. BANKING AND FINANCE
HAGENA: NET ASSETS OF COMPULSORY PENSION FUNDS WORTH 6.22 BILLION KN
The value of net assets of the four compulsory pension funds in Croatia came to over 6.22 billion kuna at the end of July, a rise of 5.23 percent (namely by 309.54 million kuna) since the end of June, according figures released in a monthly report which the agency for supervision of the said funds (HAGENA) issued recently. The net assets of the AZ Fund, worth over 2.6 billion kuna, made up 42.48 percent. It was followed by the Raiffeisen OMF Fund with a share of 30.39 percent in 6.22 billion kuna (its net assets were worth 1.9 billion). The assets of the PBZ/CO Fund (Privredna Bank/Croatia Osiguranje Fund) came to 1.07 billion kuna (a share of 17.28 percent). The fourth-ranked was the Erste Plavi Fund with 613.26 million kuna (a 9.85 percent).
3. ACTIVITIES OF GOVERNMENT, MINISTRIES AND STATE INSTITUTIONS
FARM MINISTER: ALMOST ENTIRE AMOUNT PAID FOR WHEAT
This year's wheat crop was 850,000 tones, and 820,00 tonnes have so far been stored in grain silos, and some 30,000 have been retained in farms, Croatian Agriculture Minister said last Thursday when he held a meeting with representatives of farmers and organisers of wheat purchasing. The minister assessed that this year's harvest was one o very well organised. Almost all the purchased wheat has been also paid. The Commodity Stockpiles Administration purchased 320,000 tonnes and paid the full amount within seven days after concluding contracts with farmers. Companies within the 'Zitozajednica' group purchased some 280,000 and paid until now 90 percent of the sum, the minister said. Cobankovic was also satisfied with this summer's yield an quality of wheat which was better than the wheat quality in neighbouring countries Hungary and Serbia-Montenegro. The government has allocated 180 million kuna as support to wheat producers.
4. COMPANIES
15 COMPANIES BUY BIDDING DOCUMENTS FOR THIRD MOBILE PHONE NETWORK
A total of 15 companies have purchased bidding documents for the concession which Croatia intends to give to the third mobile phone operator, and this was a higher number than expected, the national telecommunications council's chairman, Zeljko Debaic told a news conference on Monday. Declining to reveal names of the tenderers or any information about how many foreign and how many domestic companies purchased the documentation, Debanic said that the tenderers wanted to remain unnamed in this stage. He only confirmed that the two current mobile phone operators -- HTmobile and VIPnet -- had also purchased the documentation. Unit 20 August, potential tenderers can ask additional questions about the matter, and until 30 August, the council will answer them, Debanic said. The deadline for offering final bids is at noon on 14 September. On that date, all bids will be opened and the public will be informed about the ownership structure of bidders and their bids, he said. A decision on the selection of the best tender is expected to be made by 14 October. According to the regulations, the two existing operators will have to provide national roaming to the third operator at an agreed price. Asked by reporters about VIPnet's appeal against this obligation which the company lodged with the Constitutional Court this summer, Debanic said that appeal could not slow down the ongoing process of selecting the best bidder for the third operator.
SISAK IRONWORKS' MANAGEMENT WANTS TO CHANGE PURCHASE CONTRACT
Representatives of the management of the Mecelj ironworks in Sisak have requested changing the purchase contract, which was the main topic of a meeting held at the Social Partnership Office on Thursday. The meeting was attended by the Russian representatives of the ironworks' management board, representatives of the Croatian Metal Workers Union, the Croatian Association of Trade Unions, the Economy Ministry and the local government. According to Social Partnership Office head Vitomir Begovic, all agreed Mecelj is having deep business problems and expressed willingness for cooperation and talks on the restructuring of the ironworks to continue. Begovic said the management board was asked to submit by the end of next week a complete financial report for the 18 months Mecelj was active in Croatia, as well as a development plan for the ironworks, which he added were required if talks were to continue. Begovic said the Russian owners wished to stay in the ironworks but demanded some changes to the purchase contract, notably a condition under which they must keep the current number of employees for the next five years, which they say is untenable. They also wish to provide for surplus labour by using a EUR3.6 million guarantee, and have asked to be enabled to use the ironworks' assets so as to take loans and invest in business, he said. The owners have mentioned the possibility of forming a partnership with some other Russian companies, one Swiss or one Ukrainian company in order to overcome the current problems. Asked what would happen if the Russian terms were not accepted, Begovic said the contract would be cancelled and the search for a new partner launched.
ONE MILLION PASSENGERS TRANSPORTED BY CROATIA AIRLINES SINCE START OF 2004 Croatia's national air carrier reported on Friday that it had transported one million passengers from the start of the year to 20 August, a figure achieved two weeks earlier than in 2003. Croatia Airlines added that excellent results from July when 188,000 passengers flew aboard their planes (a record number for July in the company's history) contributed to this outcome. The company expects that the number of transported passengers in 2004 will increase to 1.56 million by the end of this year. Croatia Airlines's fleet consists of 11 planes: five Airbus A319, three A320 and three ATR 42.
CROATIA OSIGURANJE PROFITS GO UP 16.1 PCT
Croatia's biggest insurance company, Croatia Osiguranje, grossed 59.6 million kuna in in this year's first six months, up 16.1 percent from the same time in 2003. According to a consolidated financial report, the Croatia Osiguranje Group netted 55.9 million kuna in this year's first six months, up 3.7 percent from the same time the previous year. (EUR1 = 7.4 kuna)
CROATIA'S VINDIJA WINS 25 GOLD PRIZES AT SLOVENE FAIR
The Vindija beverage manufacturer from Varazdin, Croatia, won five gold medals, 20 gold, 14 silver and six bronze awards at an assessment ceremony held ahead of the 42nd Pomurski Sejm fair in Gornja Radgona, Slovenia. The best wine prize went to the 1998 Traminac of the Zagreb-based company Petrac.
IPK CEPIN EDIBLE OIL PLANT REGISTERS PROFIT OF 70,000 KUNA
The edible oil plant in the eastern town of Cepin had a net profit of 70,000 kuna in the first six months of 2004, a twofold drop from the profit of 152,000 in the first six months of 2003, according to a financial report which the company sent to the Varazdin Stock Exchange. The plant's earnings totalled 70.45 million kuna rising by 117.9 percent as against the first half of 2003, while spending mounted by 118.7 percent to 70.38 million kuna.
VARTEKS' LOSS CAME TO 13.9 MILLION KUNA
Croatia's leading clothes company Varteks registered a loss of 13.9 million kuna in the first six months of this year, a rise by 6.8 million kuna in comparison to the loss it had in the first six months of 2003, according to figures released in the company's financial report for the first half of 2004. Managers of the company, based in the northern city of Varazdin, explain that the loss of 13.9 million kuna was, however, lower, than expected in the first half of this year against the backdrop of current trends in the textile industry in Croatia and the world and the ongoing comprehensive restructuring of Varteks. In the first half of this year, the company's revenues were 211.6 million kuna, falling by 9.2 percent as against the same period in 2003, but they were higher by 1.8 million kuna (0.9 percent) than planned. Lower revenues are connected to a cut in orders by some five million euros from Levi's European headquarters in Brussels. On the other hand, Varteks increased by eight percent its revenues from Croatia and some foreign countries. Varteks is aware that negative trends in the national and global textile industries have been caused by a recession in Europe as well as by the arrival of competition from China and the Far East. The revenues of 12.6 million euros from the export in the first half of this year dropped by 25.9 percent as against the same period in 2003.
LOSSES REPORTED BY SUNCANI HVAR COMPANY
The hotel company called Suncani Hvar had a loss of 12.5 million kuna in the first half of 2004, a rise of 6.8 percent from the loss it registered in the first half of 2003. According to a financial report it sent to the Varazdin Stock Exchange, the revenues came to 13.9 million kuna in the first half of 2004 and were lower by 16.2 percent than the revenues in the first half of last year. The company said the results in the first three months of this year were satisfactory against the backdrop of the fact that it was an off-season period.
5. INTERNATIONAL COOPERATION
CROATIA, SOUTH AFRICA SIGN TRADE AGREEMENT
Croatian Foreign Minister Miomir Zuzul and South African Trade and Industry Minister Mandisi Mpahlwa signed in Pretoria on Friday a trade agreement between the two countries which represents a legal framework for trade and economic cooperation and enables business relations between the two countries' companies. The signing of the agreement is part of the Croatian Foreign Ministry's economic diplomacy programme, the ministry said in a press release, adding Zuzul announced the signing of a cooperation agreement between the Croatian port of Rijeka and South Africa's Cape Town. Mpahlwa wished Croatia success in its European Union integration.
CROATIAN, GERMAN RAIL REPRESENTATIVES DISCUSS FUTURE COOPERATION
Croatian and German railway representatives met in Zagreb on Wednesday to discuss the possibility of cooperation in the restructuring of Croatian Railways, ways of revitalising the pan-European corridor 10, and the possibility of introducing trains from Germany to the Adriatic coast. Participating in the talks at the government building were the state secretary for the economy at the Croatian Economy Ministry, Vladimir Vrankovic, Croatian Railways CEO Tomislav Mlinaric, and German Railways CEO Hartmund Mehdorn. Germany has plenty of experience in the restructuring, organisation and privatisation of railways, a process for which Croatia has to choose a model that is compatible to European standards, Vrankovic told reporters after the talks. He said German Railways expressed willingness to cooperate, but added the German model was not the only one. The talks also addressed technical aspects of cooperation, including the use of tilting trains. Asked about a recently cracked axle of a German Railways tilting train, Mlinaric said it was probably the result of dynamics problems which might occur due to wear and tear. He recalled the train in question had crossed nearly 500,000 km. Croatian Railways representatives said German Railways CEO Mehdorn pledged to send a written report after axles on all 192 German Railways trains of the VT 162 series, the same as the tilting trains used in Croatia, were examined. Mlinaric added the ultrasound inspection of Croatian Railways tilting trains' axles would start on Friday.
6. UNIONS
UNIONISTS IN BELJE SAY TENDER FOR COMPANY'S PRIVATISATION UNACCEPTABLE
Trade union representatives in the Belje agribusiness have said the tender submitted by the Osijek-based company Zito and Mr and Mrs Bubalo does not meet the terms of the bid invitation for the purchase of Belje shares, and is therefore invalid and unacceptable. The unionists maintain the tender does not honour the invitation's terms under which the new owner would have to keep the current number of employees for a period of one year after the signing of the purchase contract and the transfer of shares, or provide for a possible surplus labour in accordance with the collective agreement and Croatian regulations. The unionists have urged all bidders to honour all bid invitation terms and conditions, and those choosing the final bidder to reject the aforementioned tender. If said tender is accepted, the unionists believe it could have far-reaching consequences.
7. ASSOCIATIONS
FARMERS ALLIANCE URGES GOVERNMENT TO REJECT ZITO'S BID TO BUY BELJE
The Croatian Farmers Alliance has urged the government to reject a bid submitted by a group of potential buyers interested in the Belje agribusiness, saying that granting a 35-year licence on farmland would be illegal. So far only one bidder has submitted its offer for a majority share in Belje, the Osijek-based company Zito, offering 260 million kuna for refinancing over the next two years and committing to keeping all current employees for a period of one year. The bidder has, however, asked to be allowed to lay off some employees if it estimates that their current number jeopardises the company's business, and to be given a 35-year licence for the undisturbed use of farmland if it becomes the company's majority owner. The Farmers Alliance claims that under the law on farmland, farmland may be licensed for a maximum period of 30 years. The Alliance says a privatisation of this kind would leave farmers without land, workers without jobs and the region without new investments.
STRUGGLE AGAINST AGRICULTURAL OUTPUT'S BLACK MARKET REQUIRED
Representatives of associations of vegetable farmers and fruit growers have urged competent state bodies to take every measure necessary and launch a campaign against the agricultural products' black market in order to stop the destruction of domestic output. At a meeting with Agriculture Minister Petar Cobankovic, fruit growers also proposed stepping up the control of customs warehouses, importing on two or three border crossings at the most, defining a referral price during import, and drafting a national wholesale market and refrigeration plant project as soon as possible. Representatives of vegetable farmers and fruit growers also cautioned about the rampant import of recent years which they claim will destroy domestic production. They maintain that competent inspection services are not doing their job properly, as seen in the fact that trucks from Bosnia-Herzegovina and Macedonia sell fresh fruit and vegetables on Croatian wholesale markets undisturbed. Minister Cobankovic said the removal of the black and grey markets of agricultural products was one of the government's priorities. He added, however, the problem could not be sold overnight and that all-round action was required. He recalled that the development of vegetable-, fruit- and flower-growing was a national priority, but added it was necessary to increase output and solve the problem of storage.
CROATIAN AND ITALIAN ENVIRONMENTALISTS AGAINST DRUZBA-ADRIA PROJECT
Representatives of the leading Italian environmental organisation Legambiente, who arrived at the port of Omisalj on the northern Croatian island of Krk aboard a sail boat, held a news conference on Saturday together with two Croatian Green societies: Eko Kvarner and Zelena Istra to warn about the threats which the Druzba Adria project poses to the environment. The Druzba Adria project envisages the transport of oil from Russia via several European countries to the oil terminal of Omisalj. A spokeswoman for Legambiente, Allesandra Bonfanti, urged ecological societies to draw up a joint strategy so as to protect more efficiently the Adriatic. Bonfanti told the news conference in Omisalj that Croatia could not increase the number tankers sailing on the sea and at the same time promote its tourism to higher levels. She said that this ecological organisation was against the Druzba Adria project, and that it was necessary to draw up a study on the project's impact on the environment. Legambiente has already officially asked the Italian government to initiate procedure for the assessment how much the project would affect the environment, she added. The Eko Kvarner society's head, Vjeran Pirsic, said that this society had recently received an answer from Slavko Linic, the chairman of the Croatian parliament's zoning and environment protection committee, that the Sabor could not hold a discussion on the Druzba Adria inter-state agreement as legal provisions for such a debate had not been fulfilled. Eko Kvarner labelled the answer as unacceptable, and announced a strong campaign against the project this autumn.
8. FAIRS, CONFERENCES
THE ECONOMIST CONFERENCES: ROUND TABLE DEBATE WITH CROATIAN GOVERNMENT
The fifth round table debate with the Croatian government, organised by The Economist Conferences, will be held on September 3 in Zagreb. The organisers expect the event to pool many representatives of the international and Croatian business community who will discuss topics related to economic and political development of Croatia and the region. Organisers also expect the presence of Croatian government representatives, representatives of the Croatian National Bank, the Central State Office for Development Strategy and Croatian President Stjepan Mesic.
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Editor: Slavica Cvitanić