Wednesday, 30 Nov 2011
Croatian flag and parliament
Overseas Business Risk - Croatia
Political and Economic
Croatia proclaimed independence in 1991, and has made significant progress in overcoming the characteristic difficulties of a county in transition and the legacy issues associated with the war which ended in 1995. Croatia was given EU candidacy status in 2005. After successful negotiations EU Member States on 30 June decided to close the accession negotiations with Croatia, which should allow the signature of the Accession Treaty by the end of the year. Following the ratification procedure in all Member States and Croatia, accession is foreseen for 1 July 2013. Croatia joined NATO in April 2009.
Croatian legal framework is based on Austrian and German legal framework and is currently being successfully reformed according to the Acquis Communitaire which is one of the reasons why the World Bank ranked Croatia among the top reformers in the World. The Constitution of the Republic of Croatia guarantees free transfer of capital and free profit repatriation to investors and Croatian laws guarantee equal rights for domestic and foreign private and legal entities
The political environment is stable. A centre-right coalition government that has been in power since January 2008 is not expected to remain in seat after the December 2011 elections. Elections have historically had little impact on Croatia’s priority of achieving EU accession, which has wide cross-party support.
Croatia is not insulated from global financial crisis and the country is currently experiencing an economic downturn with falling GDP, shrinking retail sales, decline in exports and reduced foreign investment. Nonetheless, Croatian economy is one of the most developed in Southeast Europe. Croatia has a very stable currency and a low inflation rate. The structure of the Croatian economy is dominated by the service sector, primarily because of a very well developed tourism industry. More than 10 million tourists visited Croatia in 2010 out of which 9.1 million were foreigners. Tourism industry incomes were USD 8.1 billion in 2010. Other key target sectors include Marine and Leisure, Education, Creative Industries, Security Sector, Food and Drink, Environment Protection and Water, Energy and Ports.
Bribery and Corruption
Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.
In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
The comments that ‘good progress can be reported in the prevention of corruption. Croatia has increased transparency and integrity in its public administration and state owned companies. Substantial progress can be reported in the field of anti-corruption, especially as the law enforcement bodies are addressing the widespread corruption in Croatia. The track record of effective handling of organised crime and corruption cases needs to be further developed, especially in relation to high level corruption, local level corruption and including cases related to public procurement and the judiciary. Further experience is needed in implementing the newly adopted preventive legal framework in practice and the implementing structures remain to be further strengthened. ’.
The reports that, " SMEs are of the perception that the majority of civil servants expect to be bribed when meeting with companies, but in most cases SMEs do not report bribery actually occurring. " and "Although foreign investors are legally entitled to national treatment, Croatia’s ineffective legal system and a lack of transparency within both public and private sectors present the greatest challenges to investors."
There is an underlying threat from terrorism. Attacks, although unlikely, could be indiscriminate including in places frequented by expatriates and foreigners.
Businessman reading newspaper
Protective Security Advice
Croatia has a low crime rate and violent crime is rare. British citizens should be aware that on occasions, customers have been the victims of overcharging in some so-called 'Gentlemen's Club's', sometimes thousands of Euro's, and threatened with violence when they refuse to pay.
Intellectual Property Rights are territorial, that is they only give protection in the countries where they are granted or registered. If you are thinking about trading internationally, you should consider registering your IP rights in your export markets.
Organised crime does exist throughout the region, however people and businesses unconnected with such groups have not been specifically targeted by serious organised crime, but businesses should carefully check the background of potential partners.