BUSINESS NEWS BULLETIN NO 224

BUSINESS NEWS BULLETIN No 224 07th - 13th May 2001 CONTENTS: ? INDUSTRIAL PRODUCTS' PRICES RISE BY 5.1 PERCENT 2 ? NUMBER OF EMPLOYED PERSONS IN CRO'S INDUSTRY IN MARCH DROPS BY 0.1% 2 ? FINANCIAL MARKETS 2 ? CROATIAN NATIONAL BANK COUNCIL HOLDS SESSION 3 ? VARAZDINSKA BANK MAKES USD 4.4 MILLION IN NET PROFIT IN 2000 3 ? FOREIGN OWNERSHIP DOMINATES CROATIAN BANKING SECTOR 3 ? CRO GOVT ACCEPTS TEXT OF STABILISATION AND ASSOCIATION AGREEMENT 3 ? RACAN: ADVERSE ECONOMIC TRENDS ARE BEING HALTED 4 ? GOVERNMENT: CROATIA IS PULLING OUT OF RECESSION 4 ? DISPUTE BETWEEN AGRICULTURE MINISTRY, TOBACCO FACTORY RESUMES 4 ? BIDS FOR 3G MOBILE SYSTEM TO BE INVITED BY YEAR'S END 5 ? UNIONS, MINISTRY AGREE ON PAYMENT OF PART OF SEVERANCE PAYS FOR FORMER 'NAMA' WORKERS 5 ? PLIVA'S PROFIT IN FIRST QUARTER 327.4 MILLION KUNA 5 ? PRIME MINISTER RACAN VISITS GAS FIELD 'IVANA' 5 ? LABOUR MINISTER VISITS RIJEKA SHIPYARD 6 ? INA, EBRD SIGN 36 MILLION EURO LOAN AGREEMENT 6 ? CROATIA AIRLINES FUNCTIONS MOST PROMPTLY IN MUNICH 6 ? PBZ AMERICAN EXPRESS PRESENTS REVOLVING CREDIT CARD 6 ? KONCAR TRANSFORMERS, ENERGOINVEST SIGN TWO CONTRACTS 6 ? INTERNET PROJECT FOR ENTREPRENEURS PRESENTED IN ZAGREB 7 ? PLOCE AIRPORT READY FOR RECEPTION OF SMALL- AND MEDIUM-RANGE PLANES 7 ? RUDJER BOSKOVIC SCIENTIFIC INSTITUITE TO MARK 50TH ANNIVERSARY 7 ? BRITISH AMERICAN TOBACCO CALLS ON PANKRETIC TO PROVE CLAIMS ON BAT, TDZ 7 ? EUROPEAN COMMISSION IN CROATIA MARKS MAY 9 - EUROPE DAY 7 ? CROATIA GRANTED INDEPENDENT MANAGEMENT OF EU RESOURCES 8 ? CROATIA TO JOIN CEFTA BY YEAR'S END? 8 ? CROATIA, WORLD BANK COOPERATING ON 18 PROJECTS 8 ? CROATIAN ECONOMY PRESENTED IN SWEDEN 9 ? CROATIAN CRAFTSMEN TO PARTICIPATE AT BELGRADE FAIR MAY 14-19 9 ? INTERNATIONAL CONSTRUCTION TRADE FAIR 'OSIJEK EXPO 2001' STARTS 9 ? CRO ACADEMY OF SCIENCES AND ARTS ANALYSES STATE ECONOMIC POLICY 9 1. ECONOMIC INDICATORS INDUSTRIAL PRODUCTS' PRICES RISE BY 5.1 PERCENT The prices of industrial products in Aril did not change in relation to the month before, read data of the Croatian Bureau of Statistics. In relation to the same month the year before, the prices rose by 5.1 percent. NUMBER OF EMPLOYED PERSONS IN CRO'S INDUSTRY IN MARCH DROPS BY 0.1% The number of employed persons in industry in Croatia dropped by 0.1 percent in March in relation to the month before, read data of the Croatian Bureau of Statistics. In relation to the same month in 2000, the number of employed persons in industry dropped by 3.8 percent. 2. FINANCIAL MARKETS MOST TRADED STOCKS AT THE ZAGREB STOCK EXCHANGE, May07-11 2001. No Stock Final price (HRK) % change Turnover (HRK) 1. Zagrebačka banka 0 1.860,00 2,48 8.420.661 2. DAB-O5 103,75* - 5.830.737 3. HZZO 104,00* - 5.438.514 4. Pliva 495,00 0,00 5.194.257 5. Zagrebačka banka E 1.792,00 2,40 2.389.637 6. Podravka 152,00 -2,56 1.698.883 7. Riječka banka 125,00 -1.57 595.753 8. Kraš 170,00 0,00 406.460 9. Riviera holding 105,00 -4,55 217.841 10. Croatia osiguranje 850,00 -15,00 213.001 TURNOVER 111,60 32.087.706 CROBEX 0,53 991,10 * per cent of face value MOST TRADED STOCKS AT THE VARAŽDIN OTC MARKET, May07-11 2001. No Stock Final price (HRK) % change Turnover (HRK) 1. Ljudevit Posavski 60,00 430,97 2.611.500 2. PIF Velebit 30,00 -3,23 1.744.634 3. PIF Dom 23,50 -6,00 1.476.516 4. PIF Slavonski 13,00 -3,70 1.035.429 5. PIF Središnji nacionalni 40,00 -4,76 1.029.321 6. PIF Expandia 29,90 -9,12 854.409 7. Kraš 175,57 3,28 473.752 8. Anita 2.150,00 2,22 365.765 9. PIF Sunce 10,70 -2,73 360.111 10. Ericsson-Tesla 126,20 -9,86 253.450 TURNOVER -17,49 10.995.093 VIN 4,59 478,60 * per cent of face value SHORT-TERM SECURITY ISSUES Date Issue Maturity Amount subscribed (kn) Interest rate 05-08-00 Min Fin T-bills 42 days 92.400.000 5,95% 05-08-00 Min Fin T-bills 91 days 354.400.000 7,00% 05-08-00 Min Fin T-bills 182 days 251.200.000 7,30% Total amount of subscribed Min Fin T-bills as of May 08th, 2001 4.833.000.000 kn 3. BANKING AND FINANCE CROATIAN NATIONAL BANK COUNCIL HOLDS SESSION The Croatian National Bank (HNB) Council on Wednesday held a session at which it discussed the latest monetary and economic developments, reports on HNB's work in 2000 and a report on the work of the Croatian Monetary Institute in 2000, and adopted several decisions concerning foreign exchange operations and banking. The session was chaired by HNB Governor Zeljko Rohatinski, the central bank said in a statement. Following last year's increase of Gross Domestic Product by 3.7 percent, this year's available data indicate that economic activities in the most important sectors have continued to perk up. The volume of industrial production in March was 4.6 percent bigger than in the same month last year and the quarterly increase was 5.5 percent in comparison to the same period last year. Reports saying that the production of capital goods has been experiencing the fastest growth rate also herald the livening up of investment activities. This assumption is supported by data on the banks' credit activity, the statement reads. Retail prices in April were 1.4 percent higher than in March and 6.8 percent higher than the year before. Banking experts have estimated on the basis of several indicators that the sustainability of a projected inflation rate of 4.5 percent is not questionable for the time being. However, the HNB warns about the effects increases in the price of oil products could have on the movement of prices. VARAZDINSKA BANK MAKES USD 4.4 MILLION IN NET PROFIT IN 2000 Varazdinska Banka wrapped the business year 2000 with a net profit of 36.6 million kuna (approx. $4.4 million), while earnings totalled 191.6 million (approx. $22.8 million), an increase of 15.7 percent as against the year before, sources from the bank said this week ahead of a general assembly meeting convened for May 14. Earning per share amounted to 22.1 kuna (about $2.63) as against 13.8 kuna in 1999. For this year, the bank's management has set ambitious plans both in the business and financial sectors. Business plans include strengthening the position on the market and expanding the banking service offer. The financial plan includes increasing business success indicators. FOREIGN OWNERSHIP DOMINATES CROATIAN BANKING SECTOR Foreign ownership in the Croatian banking sector amounts to some 85 percent and apart from the process of foreign "take-overs", Croatia's banking sector is marked by growing concentration so that the country's two leading banks account for almost one half of assets of all commercial banks in Croatia. According to the latest data from the Croatian National Bank (HNB), there are 43 banks, 20 savings banks, four housing credit banks, one development bank (HBOR) and six foreign bank offices in Croatia. Of the 43 commercial banks, foreigners have majority ownership in 21 banks and hold smaller shares in several other banks, while the majority owners of all leading banks are foreign nationals. The consolidation of the banking sector is characterised by the reduction of the number of banks in the past two years - from 60 in 1998 to 53 in 1999 and 44 in 2000. Since 1996, 12 banks and four savings banks have gone bankrupt. Six banks have been consolidated, and four state banks have been privatised in the past two years. The two leading banks - Zagrebacka Banka (with assets worth 32.6 billion kuna) and Privredna Banka Zagreb (with 20.6 billion kuna) -account for 47.2 percent of the overall assets of commercial banks in Croatia, which amounted to 112.7 billion kuna at the end of last year, according to the HNB. Together with Rijecka Banka (with assets worth 7.9 billion kuna), Splitska Banka (eight billion) and Raiffeisenbank Austria (5.1 billion kuna), they make Croatia's five leading banks which account for 65.8 percent of all assets of the Croatian banking system. The arrival of foreign banks in Croatia's banking market has caused considerable public interest as well as occasional debates. HNB experts have estimated that the arrival of foreign banks has mostly benefited Croatia because those banks have brought significant assets and have mildly stimulated competition and development of new products and services. At the same time, the HNB analysts believe it is yet to be seen whether the current significant share of foreign ownership in the banking sector will yield more significant results on the market. So far, the arrival of foreign banks has intensified competition only to some extent, e.g. as regards interest rates. However, most market competitors expect competition to increase in the coming period and that such trends can already be registered. There is no need to fear that foreign banks "are taking the Croatian money and sending it elsewhere." Moreover, they issue more assets to Croatian subjects than they receive from Croatian depositors, the HNB analysts say. Some experts believe that foreign banks will not function as the moving force of Croatia's economic development. Therefore, they suggest the establishment of two banks with the state as the majority owner or biggest shareholder. One of those banks would be oriented toward tourism and farming. Banks with the state capital, they say, would give the government instruments necessary for the much needed fruitful influence on reconstruction processes and economic revival. 4. ACTIVITIES OF GOVERNMENT, MINISTRIES AND STATE INSTITUTIONS CRO GOVT ACCEPTS TEXT OF STABILISATION AND ASSOCIATION AGREEMENT The Croatian government accepted the text of a Stabilisation and Association Agreement (SAA) with the European Union at a session on Thursday. The government also decided that Foreign Minister Tonino Picula, who is heading a state delegation for negotiations with the EU, would initial the SAA in Brussels on May 14. Along with the text of the SAA, the government adopted a statement regarding the preamble and Article 1 of the SAA which states that EU membership is Croatia's ultimate strategic goal and that Croatia holds the SAA a fundamental instrument in attaining that goal. Croatia's chief negotiator with the EU, Neven Mimica, said at the session that the EU did not accept Croatia's amendment to the SAA preamble which read that the SAA facilitated the accomplishment of Croatia's goal to become an EU member. Mimica therefore suggested that the government adopt a statement which would unambiguously state what Croatia expected from its signing the SAA. Mimica said EU negotiators had incorporated into the SAA preamble Croatia's reference to the Zagreb Summit, which implicitly confirmed individual assessment of countries aspiring to join the EU and stressed the need for regional cooperation, however, only through bilateral agreements. The preamble also includes a so-called evolution clause which confirms Croatia's status as a potential candidate for EU membership. RACAN: ADVERSE ECONOMIC TRENDS ARE BEING HALTED Croatian Prime Minister Ivica Racan said on Monday he was an optimist regarding the halting of negative trends in economy, particularly employment, and stressed new projects would encourage faster employment. Addressing a regular news conference, Racan said more careful analyses showed that unemployment continued to grow across Croatia this year as well. Individual projects, such as the imminent completion of the consolidation process at the Sisak Ironworks and investment plans of public companies, should also contribute to development and reduction of unemployment, he said. The prime minister dismissed claims that the state budget was being filled poorly, i.e. with loans and not capital income and budgetary revenues. He reminded that the problem of capital revenue was caused by problems in the second stage of privatisation of Croatian Telekom (HT), however, he expected the budget would be executed as planned. Racan dismissed objections that the government was not aware of the social problems and difficult living conditions of the majority of Croatian citizens. We are dealing with a very difficult situation which is not easy to change, he said. Commenting on the "Slobodna Dalmacija" case, Racan said the government had the obligation to complete the financial consolidation of this media company. The government, he said, does not want to interfere in the editorial policy of any paper, including Slobodna Dalmacija, and hopes that the editorial policy would be determined by the daily's journalists as long as the state is its owner. Racan hopes a new page has been opened to the benefit of Slobodna Dalmacija and that "messages of intolerance and hatred and insulting comments about legally elected and democratic state bodies will not be on the pages of any Croatian paper." GOVERNMENT: CROATIA IS PULLING OUT OF RECESSION Finance Minister Mato Crkvenac said on Thursday Croatia was pulling out of recession and expected this year's rate of economic growth to be above four percent. Croatia is leaving the state of depression, however, the current economic growth is still not high enough to reflect on the quality of citizens' living conditions due to a fall in the past decade, Crkvenac said submitting a report on economic developments and prices at today's government session. Crkvenac supports his estimate with data which say that the industrial production in the first three months of this year has increased by 5.5 percent as against the same period last year. Retail trade has increased 15 percent, tourism is expected to rise by 15 percent, and this year's March salaries were 5.1 percent higher than in March last year, he said. Public Works Minister Radimir Cacic announced a sharp turnaround in construction, with an expected growth rate of 10 percent. Although unemployment continues to be the main problem, Crkvenac believes the unemployment rate has been stagnating for five months and that there are indications that employment has been improving. The minister believes there is no reason for more serious concern about the prices and that their stability will be maintained throughout this year. Deputy Economy Minister Maja Brinar presented data which read that the costs of living in April this year increased 2.3 percent in relation to December last year. Retail prices increased by 2.1 percent, with the prices of liquid fuels and lubricants having risen by 13.7 percent. The prices of basic food products have dropped, she said, citing as an example a 9.9 percent drop in the price of long-life milk and the unchanged price of brown bread. The Economy Ministry has devised its own method for the calculation of minimum living costs of a four-member family. Those costs in April this year amounted to 4,747 kuna and were only 1.5 percent higher than last year, she said. DISPUTE BETWEEN AGRICULTURE MINISTRY, TOBACCO FACTORY RESUMES The Croatian Agriculture and Forestry Ministry has refused to register new brands of cigarettes the Zadar Tobacco Factory (TDZ) was to start producing in June this year, TDZ's Zagreb office said in a statement on Thursday. The Ministry has stated that the Zadar factory is not registered in the Register of Tobacco Producers and it therefore cannot register the factory's cigarettes in the Brand Register either. The Ministry previously issued a statement calling on the TDZ to complete its documents and adjust its requests to some regulations of the Rule Book on Tobacco Processing, Production and Tobacco Brands. The TDZ, which is owned by the British American Tobacco (BAT), says in its statement of today it was ready to start the production of tobacco at the beginning of this month and that new cigarette brands were to contain more than 60 percent of Croatian tobacco. The BAT threatens to stop doing business in Croatia due to the misunderstanding with the Ministry while the union of TDZ employees demand that the Ministry approve the start of production although the government and other tobacco factories in the country are opposed to that. BIDS FOR 3G MOBILE SYSTEM TO BE INVITED BY YEAR'S END Croatia will adopt a new law on telecommunications and invite bids for the third GSM network and UMTS (Universal Mobile Telecommunication System) by the end of this year, Croatia's Minister of Maritime Affairs, Transport and Communications Alojz Tusek announced. Although there are some technical limitations as regards those plans, the government is determined to carried them out, he said. Tusek's video statement was shown on Thursday at the first Croatian presentation of the third generation of Ericsson's mobile systems, held as part of an international event called "3G Tour Transcontinental Show". Ericsson Nikola Tesla is ready for the third generation of mobile systems, the so-called G3, it was said at the presentation. Over the past year, Ericsson has shown the same programme in some cities of the United States, the Asian-Pacific region and West and Central Europe, said a representative of Ericsson's marketing department, Alen Ludas. UNIONS, MINISTRY AGREE ON PAYMENT OF PART OF SEVERANCE PAYS FOR FORMER 'NAMA' WORKERS Croatian unionists and officials from the Economy Ministry on Friday reached an agreement on the payment of 40 million kuna-worth severance pays for 1,200 former employees of Croatia's "Nama" chain of stores, the Association of Croatian Workers Unions commissioner for Zagreb, Mario Ivekovic, told reporters. The money for the payment of the severance pays should be secured by selling Nama's management building in Zagreb, over which the Economy Ministry holds the right of mortgage. Ivekovic told Hina that Assistant Economy Minister Kamilo Vrana today confirmed that the ministry was willing to let the company's former employees collect their claims first and seek its 65 million kuna-worth of claims from Nama later. Ivekovic said today's agreement solved only part of the problem as former Nama employees demanded 62 million kuna-worth of severance pays. The remaining 22 million should be secured as the bankruptcy procedure goes on, he said. Ivekovic was nevertheless satisfied with the ministry's decision because, he said, it means that although the government disclaimed responsibility for Nama's bankruptcy, it eventually decided to meet the demands of Nama workers, who staged several protest rallies in front of the government building demanding to be given priority in the collection of severance pays. 5. COMPANIES PLIVA'S PROFIT IN FIRST QUARTER 327.4 MILLION KUNA In the first quarter of 2001, the pharmaceutical company Pliva made net profits worth 327.4 million kuna, which is 8.6 percent less than in the same period last year. Profit per share dropped from 18.2 to 17 kuna, the company's representatives said. The total income in the said period amounted to 1.3 billion kuna, which is an 8.1% drop, caused primarily by the slow sale of Azytromycin, a lower income from royalties and the absence of major flue epidemics. However, if the lower income from the sale of Azytromycin and royalties is disregarded, the company increased its income by 4.4%. In the first quarter of this year, Pliva's pharmaceutical sector made an income worth 800.7 million kuna, which is a decrease of 8.8% compared to last year's first quarter. This drop was caused by lower Azytromycin sales (37.5% decrease), which amounted to 193.2 million kuna. The Chemicals sector realised 30.3 million kuna worth of sales, which is an 11.9% drop, whereas the Veterinary Products and Farming sector made sales worth 50.4 million kuna, which is a 3.4% decrease. The sale of the Food sector dropped by 4.1% to 39.6 million kuna while the Cosmetics and Hygiene sector sales dropped by 43.5 percent to 21 million kuna, an expected decrease caused by the discontinued distribution of Beiersdorf products. Pliva's income on the domestic market in the first quarter increased by 5.2 percent to 386.6 million kuna, whereas its income on foreign markets dropped by 12.7 percent to 927.3 million kuna. In the said period, Pliva continued developing new chemical entities and generic medicines. The company's research activities have continued to focus on drugs preventing infections and inflammation. Three new medicines are being tested and a number of products are undergoing different stages of development. Pliva expects five of its generic drugs to be registered in Central and East European countries during this year. The company expects a moderate growth in income and profits this year. The Assembly of Pliva shareholders will hold a session for the year 2000 on June 7, at which it will propose the payment of dividends of 12 kuna per share, which is a 20% increase compared to the year before. PRIME MINISTER RACAN VISITS GAS FIELD 'IVANA' Croatian Prime Minister Ivica Racan and his associates on Tuesday visited the gas platform 'Ivana' in the northern Adriatic Sea at the end of construction works on a facility which will secure maximum daily production of 1.9 million cubic metres of natural gas. The gas field is located some 20 nautical miles off the northern Adriatic port of Pula and it is the biggest gas field in the "North Adriatic" project, which is being carried out by the Croatian oil company Ina and Italy's Eni. The two companies have also been conducting preparations for the exploitation of other recently discovered fields. The total available reserves in this gas field have been estimated at 7.9 billion cubic metres, which is much more than was estimated at the beginning of this project. A total of 187 million US dollars have been invested in the project. The project is important because it opens the possibility of building a gas pipeline to the Croatian coast, Racan said. Gas from this platform currently travels to the northern Croatia from Italy via Slovenia by land. Describing the cooperation with the Italian partner as good, Racan said Croatia's development strategy could not rely solely on Russian gas. According to an agreement between Ina and Agip, each company has the right to one half of the amount of gas produced by the platform. Since there is still no gas pipeline linking the platforms and the Croatian coast, Ina is transporting its share via Agip and Eni systems and via Slovenia. LABOUR MINISTER VISITS RIJEKA SHIPYARD Labour and Welfare Minister Davorko Vidovic said in the northern Adriatic city of Rijeka on Tuesday the import of foreign labour would be okayed only after efforts were taken to exhaust all domestic sources. An employment bill is currently being prepared in an attempt to bring more order into the employment sector, to establish what exactly unemployment means, and to curb grey economy, the minister said. He visited the "Viktor Lenac" shipyard to get a clearer picture into the company's employment, labour and welfare issues. "Viktor Lenac" deputy director Ognjen Antunac said the company wanted to remain one of the three principal shipyards in the Mediterranean as to ship repairs, to increase the number of changes and built off-shore objects, and put more complex small ships on the market. "Viktor Lenac" currently employs 1,104 people, of whom one fourth has a college degree. The average salary in 2000 was 5,117 kuna (about $609), or 54 percent higher than the Croatian average, said Antunac. Over the next five months the company intends to raise the current $70 million income earnings to an annual $290 million. INA, EBRD SIGN 36 MILLION EURO LOAN AGREEMENT Croatia's oil company INA and the European Bank for Reconstruction and Development (EBRD) today signed an agreement on a loan worth 36 million euro, intended for the financing of INA's ecological projects. "Through this loan we will realise 17 ecological projects and thus begin a new investment cycle in INA," the company's management chairman, Tomislav Dragicevic said. The projects will not only preserve the environment, but also improve the quality of INA's products ahead of its privatisation, he said. This is an important loan for the EBRD not only because of the environment, but also because it will assist INA to reach European standards, as well as with its privatisation, EBRD's natural resources department president Kevin Bortz said. "I hope this is a good start where the EBRD will, with this loan, become involved in a wider scale into transformation processes in Croatia, and on behalf of the Croatian government I thank this bank for its cooperation so far," Croatian Finance Minister Mato Crkvenac said. CROATIA AIRLINES FUNCTIONS MOST PROMPTLY IN MUNICH Croatia's air transport company Croatia Airlines registered the least number of delays at the Munich airport during the winter months, and was placed on the top position for accuracy among 26 global air companies who fly via Munich. Croatia Airlines today also reported it was placed as fourth on the list of 59 companies for accuracy in Frankfurt. The Association of European airlines (AEA) which gathers 29 of the largest European air transport companies, has said Croatia Airlines only made 11.8 percent of delays in the first three months of this year, while the average of delays is 23.9 percent. PBZ AMERICAN EXPRESS PRESENTS REVOLVING CREDIT CARD The company PBZ American Express, which is part of the Privredna Banka Zagreb (PBZ) group, last Tuesday presented its first American Express revolving credit card. The owners of this card will be able to make repayments at the pace they chose themselves, said the chairwoman of the PBZ Management Board, Nina Oberiter-Gluhak. The card is used as other credit cards, to the amount of the granted revolving credit, without a previously set repayment deadline. The owner of the card decides on his own whether to repay the minimum obligatory amount of five percent of his bank balance per month, a higher percentage, or the entire amount. Every user is immediately granted his personal credit limit, the minimum amount being 800 euros. In case the used credit is not repaid entirely right away, the bank calculates a monthly interest rate of 1.5 percent on the remaining credit. The debt, the bank says, can be repaid for months and years. The revolving card will be issued and used under the same terms as other American Express cards. According to Oberiter Gluhak, it will be possible to use the new credit card at some 30,000 outlets in Croatia, several million outlets in the world and all automatic tellers which accept other American Express cards. KONCAR TRANSFORMERS, ENERGOINVEST SIGN TWO CONTRACTS Zagreb's Koncar Transformers and the Sarajevo-based Energoinvest company signed two 33-million-kuna-worth contracts on the export of transformers to North Iraq on Thursday. Twenty-two 5 to 63-MVA transformer units will be delivered to equip 11 sub-stations in North Iraq (area under UN patronage), which Energoinvest agreed on with the United Nations Development Program investor. Some transformers will be delivered this December and the entire project is expected to be completed in the first quarter of next year. Koncar Transformers plans to carry out projects worth DEM 75 million this year. INTERNET PROJECT FOR ENTREPRENEURS PRESENTED IN ZAGREB The first European matchmaking project for small and medium-sized entrepreneurs will facilitate communication and save time, projector director Hrvoje Malekovic said in Zagreb presenting it earlier this week. The project may be found on the Internet at www.internetsajam.com. Malekovic said the aim of the project was to make it the premier matchmaking portal for countries in transition. The project will be presented in all Croatian counties by the end of the year, as well as open branches in Belgrade, Budapest, Ljubljana, and Moscow. Some of the options that will facilitate business communication include database searches on three levels, namely by county, by county and activity, and by county, activity and sub-activity. Other services also include an online electronic competition site, and a list of entrepreneurs not paying their bills. Entrepreneurs not using the Internet will be offered a free course in its basic aspects, and a cost-effective purchase of computers and Internet access. The aim of the project is to link offer and demand and to provide a meeting place for all who are interested, namely craftsmen, banks, insurance companies, shipping agents, and all participating in manufacturing, sales, and economic progress, said Malekovic. The project will also enable Croatian craftsmen to compete on foreign markets and provide foreign entrepreneurs with a full insight into Croatia's trade and crafts, thus expediting cooperation. PLOCE AIRPORT READY FOR RECEPTION OF SMALL- AND MEDIUM-RANGE PLANES The airport 'Ploce' meets all international standards and is one of the safest in its category; its has a 1,350 metre-long and 23-metre- wide runway, which can receive medium-range planes with up to 50 seats, Ploce airport director Zdenko Jelavic said on Thursday. The construction of the airport cost only one million German marks, he said. Although it still does not have a set timetable, the airport will be very important for Ploce, the Neretva River basin area and the coastal region as well as for towns in neighbouring Bosnia- Herzegovina. It is expected a small transport company or agency will be established to complement the airport service. RUDJER BOSKOVIC SCIENTIFIC INSTITUITE TO MARK 50TH ANNIVERSARY The Rudjer Boskovic Institute (IRB) is the biggest multidisciplinary scientific institution in Croatia and the 50th anniversary of its establishment is a good opportunity to stress the need to make it one of Europe's leading scientific institutes again, Ivo Slaus, chairman of the IRB Governing Council, said on Wednesday. Today the IRB hosted a conference which briefed the press about an upcoming 50th anniversary celebration which should feature talks on the science-economy and politics-education relationships. Krunoslav Pisk, chairman of the IRB Scientific Council, believes the institute plays a big role in European science and that it must compete with scientifically more developed regions, like the United States and the Far East. The IRB was founded on 8 June 1950. Its first director was the scholar Ivan Supek. Milivoj Boranic, incumbent IRB acting manager, said the IRB today covers an area the size of 12 soccer fields and employs 750 people, including about 500 scientists, five percent of all scientists in Croatia. The institute's scientists produce 35 percent of all scientific works produced in Croatia, Boranic added. BRITISH AMERICAN TOBACCO CALLS ON PANKRETIC TO PROVE CLAIMS ON BAT, TDZ British American Tobacco (BAT) and the Zadar Tobacco Factory (TDZ) on Monday called on Croatian Agriculture and Forestry Minister Bozidar Pankretic to submit evidence for his claims directed against BAT and TDZ. A statement issued by TDZ's Zagreb office said TDZ was not only a plant for cigarette packaging but had a fully equipped unit for the processing of tobacco, which, it said, was ready for the start of production. Minister Pankretic is fully aware of this, the statement reads, adding TDZ had never packaged or sold Hungarian tobacco. The claim saying that TDZ will be using Hungarian tobacco in the production of cigarettes is not true and cigarettes will contain more than 60 percent of Croatian tobacco, in line with the Croatian Law on Tobacco, the statement said. A total of 550 tonnes of domestic tobacco has already been purchased and has been waiting for production to begin for more than a year, TDZ said. TDZ has been aware for months that false information about BAT and TDZ has been disseminated in the Croatian government and that Minister Pankretic, despite the fact that BAT and TDZ has provided complete and correct information, is not relaying the true state of affairs, reads the statement. The factory further describes instances where wrong information on TDZ and BAT was communicated. BAT's arrival on the Croatian market will not jeopardise domestic tobacco growing or decrease state revenues from the sale of tobacco, TDZ said. 6. INTERNATIONAL COOPERATION EUROPEAN COMMISSION IN CROATIA MARKS MAY 9 - EUROPE DAY A European Commission delegation in Croatia marked the annual Europe Day last weekend in the southern town of Knin, in whose reconstruction it will invest EUR2 million, the delegation said in a statement on Monday. Issued on the occasion of May 9, Europe Day, the delegation reminds Europe Day is celebrated in memory of 9 May 1950, when then French Foreign Minister Robert Schuman unveiled a plan for a limited integration of European countries which resulted with the establishment of the European Coal and Steel Community in 1952. This community united France, Germany, Italy and the Benelux. spurred by bad experience in the past, France intended to put Germany's coal and steel industry under a joint administration to avert any possibility of a war in the future. The construction of Europe has since then moved forward every year, to the present European Union in which former enemies share common values, a common currency, and economic interests within a framework of joint institutions. CROATIA GRANTED INDEPENDENT MANAGEMENT OF EU RESOURCES Croatia is the first among numerous countries-candidates for joining the European Union, as well as those who are only just starting the process, to be granted the status of independent management of financial resources intended for various projects donated by the EU and member-countries, assistant finance minister Tihomir Domazet said today after a meeting with the EuropeAid coordinator for Croatia, Pierre Lejeune and a EU delegation secretary in Croatia, Laura Garagnani. The principle of decentralisation of managing the financial resources means that decisions on the issue will not be made by the EU, but rather the Croatian Finance Ministry (that is, the EU programme and project financing assistance department) will make all decisions starting with programme and project applications, Domazet said. The EU last year established the CARDS programme for the realisation of such projects. The Finance Ministry expects 63 million euro will be allocated for this year's projects intended for several priority areas, such as the return of refugees, economic development, financing commitments towards the Stabilisation and Association Agreement, etc. CROATIA TO JOIN CEFTA BY YEAR'S END? Croatia hopes to become a member of CEFTA by the end of the year, a Croatian government source said on Friday after Romania's prime minister said in Bratislava that his country was willing to sign a free trade agreement with Croatia in the near future. Romanian PM Adrian Nastase held talks with Croatian counterpart Ivica Racan on the margins of an international conference, "Europe's New Democracies: Leadership and Responsibility." To become a member of the Central European Free Trade Agreement, Croatia has to sign bilateral free trade agreements with each of the members. Croatia has signed them with Hungary and Slovenia, initialled them with the Czech Republic and Slovakia, and completed negotiations with Poland. Croatia has wrapped a second negotiating round with Bulgaria and should commence negotiations with Romania, the last member, on June 18. The government source said the Romanian prime minister had been invited to visit Croatia in the autumn and agreed to sign a free trade agreement on that occasion. Croatia could submit a membership request in September, at a conference of CEFTA foreign ministers, and become a member by year's end. CROATIA, WORLD BANK COOPERATING ON 18 PROJECTS Croatia, a World Bank member since 1993, has been implementing 18 projects in cooperation with the World Bank. The value of these projects, depending on the currency in which they have been granted, amounts to USD 376.9 million, EUR 100.2 million and DEM 514.2 million. According to the Finance Ministry's monthly bulletin 'Riznica', since 1994 Croatia and the World Bank have signed contracts on 14 long-term loans, advance on one loan (for preparations for the pension system reform) and two guarantees (a loan to the Croatian Reconstruction and Development Bank for municipal infrastructure and environmental protection in Split and a loan to commercial banks). The projects also include a project the Istrian Water Management agreed with the World Bank in 1993. Other contracts Croatia has been implementing include loans for reconstruction, health, roads, the private farming sector, capital market development, demining, railways, the reforestation of coastal areas, an Enterprise and Financial Adjustment Loan, and a project for facilitating trade and transport in South-East Europe. On the last day of last year, USD 55 of USD 376.9 million, EUR 85.9 million of 100.2 million and DEM 250.1 million of 514.2 million worth of loans was not used yet. The Ministry reminds that in late April this year talks were wrapped up on a loan for technical assistance in bankruptcy proceedings (worth five million dollars) and that preparations for a structural adjustment loan (SAL) are underway. The loan will be an addition to IMF's stand-by arrangement and is intended for economic revival and the opening of new jobs. It has also been announced that the World Bank will draw up a study on public spending this year. Since 1995, the World Bank has given Croatia 22 deeds of donation, non-repayable funds intended primarily for the financing of consultants and the drawing up of studies needed for projects to be financed with World Bank loans. On December 31, 2000, non-repayable aid amounted to USD 5.8 million and 241.4 million yen. The aid is intended for agriculture, environmental protection, the development of the private sector, the adjustment of the public sector, the restructuring of the Croatian Railway, the modernisation of the Rijeka port, health, etc. Along with these donations, the World Bank last year gave a deed of donation worth one million US dollars for the return of refugees to Zadar and Sibenik-Knin counties. The Finance Ministry has announced new projects in cooperation with the World Bank in 2002 and 2003, including loans for the modernisation of the land register, the Rijeka port, the reform of the welfare system, road maintenance and demining. The World Bank is expected to provide technical assistance in the drawing up of studies on export stimulation, the financing of the health system, the modernisation of the state administration and the prevention of corruption. Late this year, the Global Fund for Environment is expected to give Croatia a donation worth five million dollars for the protection of karst ecosystems, which is the most valuable donation so far. CROATIAN ECONOMY PRESENTED IN SWEDEN A Croatian economy delegation, led by Economy Minister Goranko Fizulic, which was in a working visit to Sweden between May 7 and 9, held a presentation on Croatia's economy and possibilities of investing in Croatia in Swedish Chamber of Commerce, the Croatian Economy Ministry said in a statement on Thursday. Fizulic said that some companies, such as Ericsson and ABB, were already present on the Croatian market. The Croatian Economy Minister called upon foreign investors to invest in Croatia, particularly in tourism. Given that Swedish tourists are interested in Croatian tourist destination, a branch office of the Croatian Tourism Association will be opened in Sweden. Fizulic held talks with the Swedish Finance Minister, Bosse Ringholm, on the signing of an agreement on avoiding double taxation. The Croatian Economy Minister also held talks with Secretary of State in the Foreign Ministry Sven Eric and State Secretary for Industry, Employment and Communications Lars Rekke and informed them of the current situation in Croatia's economy. Fizulic told the Swedish officials Croatia was soon to initial A Stabilisation and Association agreement with the European Union. The presentation of Croatia's economy was attended by about 30 Swedish economists, bankers and diplomats. 7. FAIRS AND EXHIBITIONS CROATIAN CRAFTSMEN TO PARTICIPATE AT BELGRADE FAIR MAY 14-19 Croatian craftsmen will participate at a May 14-19 international fair of technology and technological achievements in Belgrade, in the organisation of the Croatian Chamber of Trades and Crafts (HOK). Twenty-four Croatian craftsmen will present their products and services at a joint exhibition featuring metal products, hand tools, hauling equipment, food-processing equipment, car industry equipment, metal-processing machinery, measuring equipment, construction tools, and sheet-metal machinery. Representatives of the HOK are expected to hold talks with counterparts from the Yugoslav Chamber of Commerce on possibilities of cooperation between Croatian craftsmen and Yugoslav businessmen and major companies. The Belgrade fair features 750 exhibitors from 26 countries. INTERNATIONAL CONSTRUCTION TRADE FAIR 'OSIJEK EXPO 2001' STARTS The ninth international fair of building trade and entrepreneurship, Osijek Expo 2001, started in the eastern Croatian city of Osijek on Wednesday. The fair will be held on 8,000 square metres and attended by 130 foreign and domestic exhibitors. Osijek Expo 2001 was opened by Croatian Public Works, Reconstruction and Building Minister Radimir Cacic. Present at the opening were Osijek mayor Zlatko Kramaric, Budapest mayor Gabor Demsky, as well as the mayors of Pecs and Tuzla, Laslo Toller and Jasmin Imamovic. 8. SUNDRIES CRO ACADEMY OF SCIENCES AND ARTS ANALYSES STATE ECONOMIC POLICY The Scientific Council for Economic Research and Croatian Economy of the Croatian Academy of Sciences and Arts (HAZU) believes Croatia's economy cannot leave the state of crisis unless the state authorities make a sharp turnaround in the current and proclaimed medium-term policy, reads a document entitled "Croatian Economic Crisis and Directions of a Turnaround from a Pro-Recession Economic Policy Into a Development-Oriented One." The document, which was drawn up by the Scientific Council on the basis of extensive analyses, will be presented late this month at the seminar "Croatian Economic Crisis and Directions of a Turnaround from Recession to Economic Development." An analysis of the state economic policy from the beginning of 2000 to the present shows that it is not based on a comprehensive, consistent, theoretically and scientifically founded programme, but that some of its important segments rely on rash solutions and that there is a tendency towards compromises. The state authorities are not critical enough toward the actions of the former authorities or its own policy, the Council says. It also believes the authorities lack understanding for the state of economy, the state bodies are extremely uncritical toward the former and current monetary policies and activities of the Croatian National Bank (HNB) and that permanent damage has been done to the banking sector by encouraging the arrival of inappropriately high amounts of foreign capital. Compared to the former authorities, the current authority has failed to make any significant progress in its development and current policies and a significant limitation in the development policy is linked to the inadmissibly low investments in science, which are among the lowest in Europe, the Council says. Particularly worrying is the fact that investments continue to decrease despite increased bank credit potential and a slightly decreased difference in the prices of domestic and foreign money. The HAZU Scientific Council for Economic Research and Croatian Economy has forwarded this assessment to state bodies and experts, suggesting, among else, the setting up of a multidisciplinary advisory team of experts, who would help draw up Croatia's development strategy.