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Croatia needs more greenfield foreign investment, experts warn

26. May 2011. | 06:23

Source: Croatian Times

Foreign investment hit the lowest point since 1996, with only 440 million Euros invested in Croatia, the daily Jutarnji List writes.

Foreign investment hit the lowest point since 1996, with only 440 million Euros invested in Croatia, the daily Jutarnji List writes.

That makes the total value of foreign investments in Croatia, between years 1993 and 2011, 24.5 billion Euros or 5,419 Euros per capita.

Compared to other Eastern European states, the numbers are not devastating - only Estonia, Czech Republic and Hungary are ahead of Croatia. The problem is however the unfavourable structure of investments.

There are few greenfield investments in Croatia, or investments that would encourage production and exports and lead to new jobs. The majority of current investment is focused on existing properties or firm takeovers. These usually lead to restructuring and subsequently, layoffs.

The macroeconomist from SG Split Bank, Zdeslav Santic says that some 800,000 Euros of investments could be expected in 2011.

"In order to change the structure of foreign investment, it is necessary to reduce labour costs and increase productivity, lower administrative barriers and encourage investment more efficiently," says Santic.

Setting the deadline for the EU accession would also increase foreign investment, says Santic.

Former executive director of American Chamber of Commerce (AmCham) Damir Vucic, says that Croatia is too small a market on its own and that potential investors are looking at the entire region.

They both point to administrative barriers as big hurdles for potential investors.

The government has committed to implement some measures by 15 June that would ease some of the hurdles.


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