Luka Burilović, President of the Croatian Chamber of Commerce, Contemporary Chamber For New Economic Challenges

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All of the future activities of the Croatian Chamber of Commerce (CCC) will be directed towards creating simpler, easier and more competitive business conditions for our members, and providing assistance in creating new values

The Croatian Chamber of Commerce has been constantly cutting back on its costs while, at the same time, introducing new services for its members. We are talking to the Chamber’s President, Luka Burilović about the CCC’s plans.

Despite Croatia’s anticipated economic growth, you still think that 2017 is going to be a challenging year for the Croatian economy. Why is that so?

− Croatian economy is on the road to recovery and still vulnerable. Our GDP still hasn’t reached the pre-crisis level, and the same can be said for our industrial production, construction activity, and employment rate. Although, a step forward has been made, companies, the population and the state are still heavily in debt, and we are not happy with how fast the business environment has been progressing, or with our rank on the Doing Business list. Furthermore, our credit rating is two grades lower than our investment rating. Hence, we need to use this and the years to come to make more significant progress, implement structural reforms, improve our business climate, and reduce indebtness and budget deficit in order to ensure that we are out of the excessive deficit procedure, as established by the EU, and that we have improved the country’s credit rating. At the same time, it goes without saying that the situation in which it is vital to secure an economic growth of 3% or more, and implement fiscal consolidation is a great challenge, and that it requires companies to adapt in a sense of boosting their competitiveness, and making their business more international. On top of that, the additional incentives like last year’s low oil and raw material prices, the lowest interest rates and borrowing costs ever are not going to be as strong. When the economic growth is insufficient, the problem with the young and educated people emigrating becomes even more pronounced, while companies in certain segments, like tourism, ship building and construction, cannot find enough workers. Additionally, Croatia has a strong foreign trade ties with the European Union so any disturbance in the countries that we trade with the most could reflect badly on the trends in the Croatian economy, especially if the problems that the EU has been dealing with have never been fully resolved. I am primarily referring to the consequences of Brexit, the problems of peripheral countries, the issues in the Italian banking sector, and the possibility of the refugee crisis escalating. Add to this geo-political tensions in the world and terrorist threats, and we can be almost sure that our economy will have to deal with challenges this year too, despite the economic growth.

How much have the business people from both countries managed to maintain and possibly even increase trading volume despite difficult economic conditions?

− After the trade between our two countries dropped in 2013, as a result of the Republic of Croatia joining the EU and the decades-long recession, in 2014, the trade between Croatia and Serbia grew by 53.8% relative to 2013. In 2015, it grew by 21.8% compared to 2014. The indicators for the first eight months of 2016, show further growth of 12.8% relative to the same period in 2015. Last year’s positive industrial trends in Serbia, and especially in Croatia, herald positive trends in 2017 too.

You recently spoke highly of the programme devised by the new Croatian Prime Minister, saying it was more in line with the economy’s needs. What are your expectations from the new government?

− In short, I expect the new government to implement whatever has been laid down in its agenda for the period from 2016 to 2020. The agenda states that achieving a stable and permanent economic growth is one of the four fundamental goals. Internally, I expect reforms, like the recent tax reform, to facilitate doing business, and generally create a much better business environment. Externally, I expect Croatia to have a better political position, for its companies to have it easier on existing markets, and for new markets to open up. Once its term expires, the government’s results will be judged against the production and employment level, and the country’s growth, including the structure of this growth.

How much would reducing corporate taxes facilitate investments in the country and abroad, and how interested is Croatia in continuing to invest in Serbia in this context?

− Croatia is one of the biggest investors in the Republic of Serbia. According to the data collated by the Croatian National Bank for the period from 1993 to the Q3 of 2016, Croatia invested 737.6 million EUR in Serbia. According to this indicator, Serbia ranked fourth on the list of the countries in which Croatia has invested the most. Further investments will depend on the interest and financial capacity of Croatian companies. I believe that those companies that have been exporting to the Commonwealth of Independent States (CIS), Kazakhstan, Belarus, and members of the CEFTA would be more interested since they could benefit from the duty-free regime, or at least, reduced customs duty when exporting their goods. They cannot use these benefits if they manufacture their products in Croatia. Also, improving political relations could facilitate bigger investments. Last year, the Chamber reduced its operating costs, and decided to participate in fewer fairs and conferences.

On the other hand, you also decided to increase the number of your offices. What results could these changes in the Chamber bring?

− One of the Chamber’s key development areas is digitalization of its activities through developing an e-business platform which enables us to carry out and deliver all of our services online (the so-called Digital Chamber project), and make our activities more international. In that respect, the Chamber will develop a concept of virtual fairs, and select the most important fairs to participate in a recognizable and appropriate fashion, all in accordance with the interests and wishes of its members. In other words, you could say that we now favour quality over quantity. In terms of increasing the number of our offices, that was implied by the internationalization process because without providing systemic and organized support to our economy, and securing presence on the most important markets for us, there will be no higher export, or bigger competitiveness of the Croatian economy. When devising the Chamber’s strategy and our future key development areas and services, we had one goal in mind – adapt our products and services to the real need of our economy, and develop services that will be equally accessible to all our members.

You have adopted the 2017-2022 Development Strategy which entails relying less on membership fees, and more on revenue from European projects. Could you elaborate on your vision of how Chamber’s activities should be developed?

− All of the future activities of the Croatian Chamber of Commerce (CCC) will be directed towards creating simpler, easier and more competitive business conditions for our members, and providing assistance in creating new values. The following are the key development areas that we will focus our new projects, products and services on: information, market (internationalization), education, promotion, finance, and legislation. The Chamber’s future activities will be directed towards improving the education system, developing a system of innovation, promoting the transfer of innovation and know-how, better utilization of information and communication technologies, developing support system for companies (funding, finding new markets, education), and transforming innovative ideas into new products and services.

How does this pro-active attitude reflect on the cooperation with other chambers of commerce, especially the Serbian Chamber of Commerce, in terms of finding new avenues for boosting economic cooperation?

− By having such attitude, we are going to create additional space for stronger cooperation with our partner institutions, including the Serbian Chamber of Commerce. We especially advocate cooperation on projects through which we can additionally improve our cooperation to the benefit of our respective members, and further develop our bilateral relations by participating in the projects of mutual interest, and co-funding some of the costs with the help of the EU funds and programmes.

How big is the development potential of the economic cooperation between our two countries?

− As neighbouring countries, we have a very diverse trade. We can say that there are no goods and services that our countries haven’t exchanged in trade. The trading activities between Croatia and Serbia will grow depending on the price and the quality of offered goods. Also, we should not forget that our markets are opened to the products from all over the world, hence the competition is quite fierce. Bigger cooperation is definitely possible on projects relating to environmental protection, energy, infrastructure and machine building. However, we need to secure good funding sources for such projects, be it from domestic or foreign sources, and in most cases, secure support from our respective governments.

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