VZCZCXRO8494
RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHVB #0026/01 0160731
ZNR UUUUU ZZH
R 160731Z JAN 09
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC 8923
INFO RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPCIM/CIMS NTDB WASHDC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 13 ZAGREB 000026 
 
SIPDIS 
 
DEPARTMENT PLEASE PASS TO EB/IFD/OIA, EUR/SCE, USTR 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB PGOV OPIC KTDB USTR HR
SUBJECT: CROATIA 2009 INVESTMENT CLIMATE STATEMENT 
 
REF: 2008 STATE 123907 
 
¶1.  Summary: Croatia has enjoyed steady growth in foreign investment 
over the last several years, buoyed by a growing economy, low 
inflation, a stable exchange rate and developed infrastructure. 
With progress towards membership in NATO and the European Union well 
advanced, Croatia has taken a leading position in the SE Europe 
region, with the expectation that Euro-Atlantic integration will 
provide further stimulus for investment and growth.  However, 
despite progress in economic and administrative reforms, problems 
remain.  These include a judiciary plagued by case backlogs, overly 
complex bureaucracy, corruption and the country's relatively high 
costs.  Nevertheless, many foreign investors are prospering in this 
growing market. End Summary. 
 
A.1  Openness to Foreign Investment 
 
¶2.  Croatia is open to foreign investment.  The Croatian government 
continues to have as a goal a further increase in foreign 
investment.  Future NATO and EU membership continue to motivate both 
reform and stabilization of the economy, in turn improving the 
investment climate of the country.  The government has also given 
priority to activities related to fighting organized crime and 
corruption by appointing new ministers of interior and justice, as 
well as a new national police chief. 
 
¶3.  Croatia's legal framework accords equal treatment to foreign and 
domestic investors for all types of business.  There are no 
reviewing or screening mechanisms to exclude foreign investment, nor 
are there any restrictions to foreign investment. The Internet 
website of the Croatian Chamber of Economy (www.hgk.hr) provides a 
useful English-language guide, "How to Start Up an Enterprise in 
Croatia," as well as sector-specific and general reports.  The 
Zagreb Stock Exchange's website (www.zse.hr) posts English-language 
translations of key laws in force. 
 
¶4.  Despite recent progress, however, problems remain that dampen 
investment in Croatia.  Of these, the greatest is the country's 
legal system.  Amid a backlog of just under a million pending cases, 
even the simplest cases can take years to resolve.  The result is 
that, in spite of laws that govern the sanctity of contracts, timely 
enforcement is a problem.  The difficulty of obtaining timely 
judicial remedy in a dispute has hindered investment in Croatia. 
Other problem areas include inefficient bureaucracy and the 
country's relatively high labor costs in relation to other locations 
in Central and Eastern Europe. 
 
¶5.  The Agency for Trade and Investment Promotion has a mandate to 
match potential investors with projects in Croatia.  The Agency has 
specialists available in strategic planning, investment support and 
export support (see www.apiu.hr) and is actively seeking projects 
that it can promote to foreign investors.  The Agency is also active 
in advising the government on how to make Croatia's regulatory 
environment more transparent and competitive. 
 
¶6.  The Company Act defines the forms of legal organization for 
domestic and foreign investors.  The following are permitted for 
foreigners: general partnerships, limited partnerships, branches, 
limited liability companies, and joint stock companies.  The 
Obligatory Relations Law regulates commercial contracts. 
 
A.2  Conversion and Transfer Policies 
 
¶7.  The Croatian constitution guarantees the free transfer and 
repatriation of profits and invested capital for foreign 
investments.  Article VI of the U.S. Croatia Bilateral Investment 
Treaty (BIT) establishes protection for American investors from 
government exchange controls that limit current and capital account 
transfers, and limits on inward transfers made by screening 
authorities.  The BIT obliges both countries to permit all transfers 
relating to a covered investment to be made freely and without delay 
into and out of each other's territory.  The Croatian Foreign 
Exchange Law permits foreigners to maintain foreign currency 
accounts and to make external payments. 
 
¶8.  The Foreign Exchange Law also defines foreign direct investment 
(FDI).  For example, use of retained earnings for new 
investments/acquisitions is considered FDI, whereas investments made 
by institutional investors such as insurance, pension and investment 
funds are not considered FDI.  The law also liberalizes foreign 
exchange transactions for Croatian entities and individuals allowing 
them to invest abroad.  Generally, this law liberalized foreign 
exchange transactions, but it also introduced criteria for the 
possible imposition of capital controls. 
 
¶9.  The U.S. Embassy in Zagreb has not received any complaints from 
American companies regarding transfers and remittances. 
 
 
ZAGREB 00000026  002 OF 013 
 
 
 
A.3  Expropriation and Compensation 
 
¶10.  There have been no cases of expropriation of foreign 
investments by the government since Croatia became independent in 
¶1991.  Article III of the BIT covers both direct and indirect 
expropriations.  The BIT bars all expropriations or nationalizations 
except those that are for a public purpose, carried out in a 
non-discriminatory manner, are in accordance with due process of 
law, and are subject to prompt, adequate and effective 
compensation. 
 
¶11.  Croatian law gives the government broad authority to 
expropriate property under various economic and security related 
circumstances.  The law provides for an appellate mechanism to 
challenge expropriation decisions by means of a complaint to the 
Ministry of Justice within 15 days of the expropriation order.  The 
law, however, does not describe the Ministry's adjudication process 
and the fact that the Ministry of Justice represents the government, 
which initiates expropriations, is an area of potential concern for 
investors. 
 
 
A.4  Dispute Settlement 
 
¶12.  There have been few instances of investment disputes involving 
U.S. companies in Croatia.  As a result of the very long timeframes 
involved in obtaining judgments in court, companies often try to 
resolve disputes without seeking judicial remedy.  The government is 
currently working to reduce court backlogs and to encourage the use 
of alternative dispute settlement. 
 
¶13.  The Croatian constitution provides for an independent 
judiciary.  The judicial system consists of courts of general and 
specialized jurisdictions, whose core structure is Supreme Court, 
County Courts, Municipal Courts, and the Magistrate/Petty Crimes 
Courts.  Specialized courts include the Administrative Court and 
High Commercial and Lower Commercial Courts.  There is also a 
Constitutional Court that determines the constitutionality of laws 
and government actions and protects and enforces constitutional 
rights.   Municipal courts exercise original jurisdiction over civil 
and juvenile/criminal cases.  The High Commercial Court is located 
in Zagreb and has appellate review of lower commercial court 
decisions.  Modification of lower court decisions by the High 
Commercial Court may be appealed to the Supreme Court. 
 
¶14.  The Administrative Court has jurisdiction over the decisions of 
administrative bodies of all levels of government.  The Supreme 
Court, under certain circumstances, may review decisions.  The 
Supreme Court is the highest court in the country and, as such, 
enjoys jurisdiction over all civil and criminal cases.  It hears 
appeals from County, High Commercial, and Administrative Courts. 
 
¶15.  The government continues efforts to reform the judiciary, 
including reducing the backlog of cases, reforming the land 
registry, training court officers and reducing the backlog and 
length of bankruptcy procedures.  Alternative dispute resolution has 
been implemented at the High Commercial Court, the Zagreb Commercial 
Court and 6 municipal courts throughout the country.  An important 
move to lessen the backlog of cases is the on-going redistribution 
of non-disputed decisions to public notaries.  During the past year, 
the number of pending cases has decreased to fewer than 950,000, 
down from one million.  The greatest reduction was in the backlog of 
enforcement cases and the enforcement of judgments currently makes 
up 12 percent of all pending cases.  According to the provisions of 
the Law on Enforcement, a judgment made by a judge or panel of 
judges to order payment or direct actions to be taken or ceased must 
be executed immediately per such decision.  Current practice, 
however, delays enforcement until all appeals are exhausted. 
Article 17 of the Law on Enforcement states that foreign judgments 
may be executed only if the "judgment fulfills the conditions for 
recognition and execution as prescribed by an international 
agreement or the law."  The Ministry of Justice's reform plan is 
available on its website at www.pravosudje.hr. 
 
¶16.  The Law on Bankruptcy, internationally harmonized and 
corresponding to the EU regulation on insolvency proceedings and 
United Nations Commission on International Trade Law (UNCITRAL) 
Model Law on Cross-Border Insolvency, establishes timeframes for the 
initiation of bankruptcy proceedings.  Bankruptcy and foreclosures 
have traditionally been slow and inefficient in Croatia.  A World 
Bank funded project, "Technical Assistance Associated with 
Bankruptcy Proceedings," which ended in January 2007, helped the 
advancement of company court administration through the introduction 
of an information and legal system for bankruptcy trustees, which 
was to assist in shortening bankruptcy proceedings.  The World Bank 
has estimated that the recovery rate in Croatia is approximately 
44.5 percent of the Organization for Economic Cooperation and 
 
ZAGREB 00000026  003 OF 013 
 
 
Development (OECD) average, and somewhat better than the regional 
average. 
 
¶17.  The Commercial Court has exclusive jurisdiction over bankruptcy 
matters.  A bankruptcy tribunal decides on initiating formal 
bankruptcy proceedings, appoints the trustee, reviews creditor 
complaints, approves the settlement for creditors, and decides on 
the closing of proceedings.  The bankruptcy judge supervises the 
trustee (who represents the debtor) and the operations of the 
creditors' committee.  A creditors' committee is convened to protect 
the interests of all creditors during the proceedings, to oversee 
the trustee's work and to report back to the creditors.  The law 
establishes the priority of creditor claims, assigning higher 
priority to those related to taxes and revenues of state, local and 
administration budgets.  The law also allows for a debtor or the 
trustee to petition to reorganize the firm, an alternative aimed at 
maximizing asset recovery and providing for fair and equitable 
distribution among all creditors. 
 
¶18.  Arbitration is available, although underutilized.  Within the 
Croatian Chamber of Economy, there is a permanent arbitration court 
that has been in existence since 1965 (see 
www.hgk.hr/wps/portal/!ut/p/.cmd/cl/.l/hr).  Arbitration is 
voluntary and conforms to UNCITRAL model procedures.  The court 
received 53 new cases in 2008 and is currently reviewing a total of 
153 cases. 
 
¶19.  The English-language text of the Law on Arbitration can be 
found on the website of the Croatian Chamber of Economy 
(www.hgk.hr).  The law covers domestic arbitration, recognition and 
enforcement of arbitration rulings, jurisdictional matters, and 
procedures.  Once a dispute has been arbitrated the decision is 
executed upon notice from the court to the obligatory party.  If no 
payment is made by the established deadline, then the party 
benefiting from the decision notifies the commercial court and the 
commercial court becomes responsible for enforcing compliance. 
Rulings of the arbitration court have the force of a final judgment, 
but can be appealed within three months. 
 
¶20.  Article X of the BIT sets forth several means for resolution of 
investment disputes, defined as any dispute arising out of or 
relating to an investment authorization, an investment agreement, or 
an alleged breach of rights conferred, created, or recognized by the 
BIT with respect to a covered investment.  For more information on 
the BIT arbitration provisions, consult  http://tcc.export.gov. 
 
¶21.  Croatia is a signatory to the following international 
conventions regulating the mutual acceptance and enforcement of 
foreign arbitration:  the 1923 Geneva Protocol on Arbitration 
Clauses, the 1927 Geneva Convention on the Execution of Foreign 
Arbitration Decisions, the 1958 New York Convention on the 
Acceptance and Execution of Foreign Arbitration Decisions, and the 
1961 European Convention on International Business Arbitration.  In 
1998 Croatia ratified the Washington Convention - the International 
Center for the Settlement of Investment Disputes (ICSID), and it 
became effective on October 22, 1998. 
 
 
A.5  Performance Requirements/Incentives 
 
¶22.  Croatia's WTO Trade Related Investment Measures (TRIMs) 
agreement went into effect in 2000.  Croatia has no trade-related 
investment measures in place at the present time, nor does the 
government intend to introduce any such measures in the future. 
Accordingly, Croatia did not seek to list any measures for 
elimination under the provisions of the WTO Agreement on TRIMs. 
Croatia committed to maintaining measures consistent with the TRIMs 
agreement and has applied the TRIMs agreement from the date of 
accession without recourse to any transition period. 
 
¶23.  Croatian law does not impose performance requirements on 
foreign or domestic investors.  Article VII of the BIT prohibits 
mandating or enforcing specified performance requirements as a 
condition for the establishment, acquisition, expansion, management, 
conduct, or operation of a covered investment.  The list of 
prohibited requirements is exhaustive and covers domestic content 
requirements and domestic purchase preferences, the "balancing" of 
imports or sales in relation to exports or foreign exchange 
earnings, requirements to export products or services, technology 
transfer requirements, and requirements relating to the conduct of 
research and development in the host country.  Article VII makes 
clear, however, that a party may impose conditions for the receipt 
or continued receipt of benefits and incentives. 
 
¶24.  In late 2004, the Ministries of Economy and Defense agreed to 
introduce offsets (a requirement for local sourcing of a portion of 
the contract) for defense procurements over 2 million euros, and the 
Ministry of Economy said it was looking at introducing offsets in 
 
ZAGREB 00000026  004 OF 013 
 
 
other areas, however no such action has been undertaken. More 
information on application and regulation of the offset program can 
be found at www.hgk.hr. 
 
¶25.  As of January 1, 2007, the  Investment Promotion Law offers 
potentially significant incentives (the amount of which is dependent 
upon the percentage of unemployment in the respective county) to 
investors, foreign and domestic, such as 1500-3000 EUR incentive per 
new job position, assistance with retraining and tax incentives.  It 
provides for incentives that apply only to investments in production 
based businesses, technological development centers and strategic 
business support activities.  The minimum amount of investment that 
qualifies for incentives is 300,000 EUR.  Tax incentives include 
substantially lower profit tax obligations and customs relief.  The 
text of the law is available on the Croatian National Bank site 
(www.hnb.hr). 
 
¶26. Incentives include 10 percent corporate tax for ten years for 
companies that invest from 2.2 million to 11 million HRK 
(approximately $440,000 - $2.2 million) and create 10 new jobs; 7 
percent corporate tax for ten years for companies that invest from 
11 million to 30 million HRK (approximately $2.2 million to $6 
million) and create 30 new jobs; 3 percent corporate tax for ten 
years for companies that invest 30 million to 58 million HRK 
(approximately $6  million to $11.6 million) and create 50 new jobs; 
0 percent corporate tax for ten years for companies that invest over 
60 million HRK (approximately $11.6 million) and create at least 75 
new jobs. 
 
¶27.  Incentive measures refer to investment in the following: new 
equipment and modern technology, new production processes and new 
products, greater employment and education of workers, modernization 
and growth of business, development of production with a higher 
level processing, an increase in exports, increasing economic 
activity in regions of Croatia in which economic growth and 
employment levels lag behind national averages (in accordance with 
the map of regional areas of special state concern), development of 
new services, energy conservation, strengthening information 
technology, cooperation with foreign financial institutions, and 
harmonizing the Croatian economy with EU standards. 
 
¶28.  Investors may also be eligible to receive assistance from the 
government to offset costs of employee re-training.  The government 
may offer real estate (or permits or infrastructure) to an 
investment either cost-free or on a preferential basis.  Finally, 
the government will allow the duty-free importation of capital 
equipment for the investment. 
 
¶29.  The Croatian government also offers incentives for business 
activities carried out in the areas of special state concern, 
mountain areas and the city of Vukovar.  The laws governing business 
activities in the areas of special state concern have been 
harmonized with EU regulations on state aid. Various categories of 
tax incentives are offered per area and further information can be 
requested from the Trade and Investment Promotion Agency 
(www.apiu.hr). 
 
¶30.  The Trade and Investment Promotion Agency can be helpful in 
identifying and applying for investment incentives.  Also, the 
(separate) Office of Investment and Export Promotion in the Ministry 
of Economy can be helpful in looking for incentive information. 
Further information can be found on their website at www.mingorp.hr. 
 
 
¶31.  Although procedures for obtaining business visas are generally 
clear, they can be cumbersome and time-consuming.  Furthermore, the 
Government amended legislation during the summer of 2007, setting up 
new requirements for temporary residency. Article 56 of the Law on 
Foreigners now requires that a person seeking temporary residency 
for family members must, themselves, have been in Croatia for at 
least two years before such residency would be issued to their 
family members.  Interested parties should inquire regarding the 
status of this law, as it is to be amended during the first quarter 
of 2009.  Questions relating to visas and work permits should be 
directed to a Croatian embassy or consulate.  The U.S. Embassy in 
Zagreb also maintains a website with information on this subject at 
www.usembassy.hr. 
 
 
A.6  The Right to Private Ownership and Establishment 
 
¶32.  Both foreign and domestic legal entities have the right to 
establish and own businesses and engage in remunerative activity. 
Foreign investors can acquire ownership and shares of joint stock 
companies.  The lowest amount of initial capital for establishing a 
joint stock company is 200,000 HRK ($40,000) and the nominal value 
per share cannot be less than 10 HRK ($2.00). Minimum initial 
capital for establishment of a limited liabilities company is 20,000 
 
ZAGREB 00000026  005 OF 013 
 
 
HRK ($4,000), while individual representation per investor cannot be 
less than 200 HRK ($40.00) 
 
As a rule, the import and export of goods are free. Quotas or 
protective levies may be introduced in accordance with WTO rules 
only as an exception if the balance of payments experiences 
disturbances. If the import of certain goods threatens to damage or 
damages domestic industry, import quotas may be introduced. Export 
quotas may also be set in order to protect national non-renewable 
natural resources, accompanied by restrictive measures that limit 
internal trade in these products. 
 
¶33.  Article 49 of the Constitution provides assurances that all 
entrepreneurs have equal legal status and that monopolies are 
forbidden.  The Competition Act defines the rules and methods for 
promoting and protecting competition.  This law and information 
about the Croatian Competition Agency can be found at www.aztn.hr. 
In theory, competitive equality is the standard applied to private 
enterprises in competition with public enterprises with respect to 
market access, credit and other business operations, such as 
licenses and supplies.  In practice, however, state-owned 
enterprises and "strategic" firms continue to receive preferential 
treatment, including government bailouts and subsidies. 
 
¶34.  The Government's e-government initiative "Hitro" (www.hitro.hr) 
has an on-line business registration component that reduces the time 
it takes to register a company to four days.  Business registration 
is the first step in a plan to make more government services 
available on-line in coming years and includes the full digitization 
of Croatia's land records (see www.pravosudje.hr and www.katastar.hr 
to find digitized land records). 
 
 
A.7  Protection of Property Rights 
 
¶35.  The right to ownership of private property is established in 
the Croatian Constitution and numerous acts and regulations 
safeguard this right.  A foreign physical or legal person 
incorporated under Croatian law is considered to be a Croatian legal 
person.  The Law on Ownership and Property Rights establishes 
procedures for foreigners to acquire property by inheritance as well 
as legal transactions such as purchases, deeds, and trusts.  The 
right of foreigners to acquire property in Croatia is based on 
reciprocity.  Reciprocity exists on state-by-state basis with the 
United States.  Croatia's Ministry of Foreign Affairs has confirmed 
the existence of reciprocity for real estate purchases for residents 
of the following states: Alabama, Arizona, Alaska, Arkansas, 
California, Colorado, Connecticut, Delaware, Florida, Georgia, 
Idaho, Louisiana, Maine, Massachusetts, Michigan, Montana, Nevada, 
New Jersey, New York, North Carolina, North Dakota, Rhode Island, 
Tennessee, Texas, Virginia, Washington, West Virginia, Iowa and 
Oklahoma (with a condition of permanent residence).  Residents of 
other states could face longer waiting periods while the Ministry 
confirms that Croatian nationals can purchase real estate in those 
states without restrictions.  However, a foreign investor, 
incorporated as a Croatian legal entity, may acquire and own 
property without ministry approval.  Purchasing by any private party 
of certain types of land (principally land directly adjacent to the 
sea or in certain geographically designated areas) can be 
restricted. Both Croatian and foreign citizens may mortgage property 
and pledge real and tangible property. 
 
¶36.  In order to acquire property by means other than inheritance or 
as an incorporated Croatian legal entity, foreign investors require 
the approval of the Ministry of Justice.  Approval often takes 
several months or longer owing to a lengthy interagency clearance 
process.  When purchasing land for construction purposes, potential 
buyers should determine whether the property is classified as 
agricultural land or construction land.  Two controversial laws 
passed in December of 2008 should be considered when purchasing 
land.  The Arable Land Law allows for additional fees of 25 percent 
or more to be added to the initial cost of land that is to be 
converted from agricultural into construction land. The Law on Golf 
Terrains allows investors to expropriate land from private owners 
and local governments in order to build golf courses. 
 
¶37.  Clarifying Croatia's land registry system is an on-going 
process.  Although Croatia has made progress resolving a backlog of 
cases, potential investors should seek a full explanation of land 
ownership rights before purchasing property.  It is highly advisable 
to seek competent, independent legal advice in this area (see 
www.usembassy.hr, Consular section for a list of English-speaking 
attorneys), as there are sometimes ambiguous and conflicting claims 
to property, making it necessary to verify that the seller possesses 
clear title to both land and buildings, which can be titled and 
owned separately.  Inheritance laws have led to a situation in which 
some properties can have dozens of legal owners, some of whom are 
long since deceased and others of whom emigrated and cannot be 
 
ZAGREB 00000026  006 OF 013 
 
 
found.  It is also important to verify the existence of necessary 
building permits, as some newer structures in coastal areas have 
been subject to destruction at owner's expense and without 
compensation for not conforming with local zoning regulations. 
Investors should be particularly wary of promises that structures 
built without permits will be regularized retroactively. 
 
¶38.  Some aspects of land ownership, as distinct from ownership of 
objects, are not clear.  Investors interested in acquiring companies 
from the Croatian Privatization Fund should seek expert legal advice 
to determine whether any deal also includes the right to ownership 
of the land on which an object is located, or merely the right to 
lease the land through a concession.  The various Croatian laws on 
privatization are not clear on this point. 
 
¶39.  Inconsistent regulations and restrictions on coastal property 
ownership and construction have in the past provided challenges for 
foreign investors.  Legislation restricts coastal construction and 
commercial use within 70 meters of the coastline. 
 
¶40.  Croatia has intellectual property rights legislation, including 
the Patent Law, Trademark Law, Industrial Design Law, Law on the 
Geographical Indications of Products and Services, Law on the 
Protection of Layout Design of Integrated Circuits, and Law on 
Copyrights and Related Rights.  Although some areas of IPR 
protection remain problematic, Croatia is currently not on the U.S. 
Special 301 Watch List in 2007.  Problem areas continue to be 
concentrated in piracy of digital media and counterfeiting. 
 
Due to its geographical position, Croatia is also one of the transit 
routes for various contraband products bound for other countries in 
the region. 
 
¶41.  As a full WTO member, Croatia is a party to the Uruguay Round 
Agreement on Trade-Related Intellectual Property Rights (TRIPS).  A 
WTO/TRIPS Working Group in June 2001 accepted Croatia's IPR 
legislation.  Texts of these laws are available on the website of 
the State Intellectual Property Office: www.dziv.hr.  Croatia is 
also a member of the World Intellectual Property Organization 
(WIPO).  For a list of international conventions to which Croatia is 
a signatory, consult the State Intellectual Property Office's 
website. 
 
 
A.8  Transparency of the Regulatory System 
 
¶42.  Croatia is under pressure to increase transparency and its 
commitments to adopt EU laws, norms, and practices, provide steady 
pressure for reform.  Nevertheless, bureaucracy and regulation 
continue to be overly complex and time consuming. 
 
¶43.  In 2006, the Croatian government, with the assistance of USAID, 
began the Hitrorez project, which aims to remove needlessly complex 
bureaucracy as an obstacle to investment, targeting the 1451 laws 
and regulations that affect business in Croatia.  At the end of its 
first phase in mid-2007, Hitrorez identified 799 regulations for 
simplification or elimination. Hitrorez recommendations for 500 of 
the regulations were accepted and 359 were implemented as of January 
2009, with plans to implement the remaining recommendations by the 
end of 2009. 
 
¶44.  Legislation on public procurement, accounting and financial 
security was passed in 2007 with the intent to increase 
transparency. An amended Company Law was passed in December 2008. 
The procurement law provides for greater transparency with the 
introduction of electronic auctions, definitions of special 
procurement procedures and framework agreements, as well as 
publication of all procurement procedures over 70,000 HRK ($14,000). 
The new Accounting Law includes reporting provisions according to 
which large companies will apply International Financial Reporting 
Standards, while small and medium businesses will apply Croatian 
Financial Reporting Standards. Progress, however, is still necessary 
in this area. 
 
¶45.  Bureaucracy is still a major challenge for foreign investors, 
although the government has made progress in this area, particularly 
through the development of its e-government initiatives (see 
paragraph 34).  Property registration, for example, has 
traditionally been notoriously inefficient, sometimes taking up to 
several years.  However, recent reforms and the digitization of the 
land registers are hopeful signs that this problem will be mitigated 
in the near future (see paragraph 34).  A valuable source of 
analysis is located on the website of the Croatian office of the 
World Bank, at www.worldbank.hr.  Click on the link for the "Doing 
Business in Croatia Forum." 
 
¶46. The regulatory system does not specifically discriminate against 
foreign investors.  However, transparency in developing legislation 
 
ZAGREB 00000026  007 OF 013 
 
 
and regulation is often hampered by an inefficient public 
administration, a lack of intra-governmental coordination, and 
reliance on expert advice from national champions, sometimes giving 
the latter a privileged position in influencing new regulations. 
 
¶47.  Tax on corporate income is a flat 20 percent.  There is a 15 
percent tax on interest revenue and royalties.   In 2005, tax on 
dividends was eliminated as a spur to investment.  For a detailed 
description of extant tax legislation, please consult the Tax 
Administration's website at www.porezna-uprava.hr/en/index.asp. 
Detailed information about customs can be found at www.carina.hr. 
 
¶48.  The Institute of Public Finance maintains a useful table of 
Croatian taxes at www.ijf.hr/eng/taxguide/08_05/taxtable.pdf. 
Croatia also maintains a 22 percent value-added tax (VAT).  Some 
companies have had difficulty with the tax authorities due to 
differing understandings of how certain goods and services are 
affected by the VAT. 
 
 
A.9  Efficient Capital Markets and Portfolio Investments 
 
¶49.  Croatia's markets are open to both domestic and foreign 
investment equally.  There are no restrictions that would disrupt 
foreign investment in the securities market and other markets in 
Croatia.  Foreign residents may open non-resident accounts and may 
do business both domestically and abroad.  Article 24 of the Foreign 
Currency act states that non-residents may subscribe, pay in, 
purchase or sell securities in the Republic of Croatia in accordance 
with regulations governing securities transactions.  Non-residents 
and residents are afforded the same treatment in spending and 
borrowing.  These and other non-resident financial activities 
regarding securities are covered by Articles 24, 25 and 27 of the 
Foreign Currency Act, which can be viewed on the Central Bank 
website (www.hnb.hr). 
 
¶50. The government passed a new Capital Market Act in July 2008. It 
entered into force on January 1, 2009. The new Act focuses on (1) 
the regulation of establishment of activities, supervision and 
cessation of investment companies, market operators and operators of 
payment and settlement systems; (2) the offering of investment 
services and the performance of investment activities; (3) the rules 
of trading on the organized market; (4) the offering and quotation 
of securities on the organized market; (5) the reporting 
requirements on connection with securities quoted on the organized 
market; (6) market abuse; (7) the deposit of financial instruments 
and the settlement and payment of transactions with financial 
instruments; and (8) the authority and activities of the Croatian 
Financial Services Supervisory Agency (HANFA) in connection with 
implementation (see paragraph 53).  The new Act will improve 
securities regulation and will increase transparency.  Experts have 
said that it will cause some investment companies to disappear while 
making others stronger. 
 
¶51.  Croatia's capital markets did not do as well in 2008, after 
record levels of trading in 2007. Share values declined by 67 
percent, from HRK 350 billion ($ 70 billion) to 140 billion ($20 
billion)  making 2008 the worst ever trading year since the 
establishment of the Zagreb Stock Exchange.  According to the 
Central Depository Agency records, approximately 856,000 Croatian 
citizens now own stocks. 
 
¶52.  The Investment Fund Law provides for the establishment of 
derivative funds, index funds and other funds in accordance with EU 
legislation. 
 
¶53.  The Agency for Supervision of Financial Services (HANFA), 
headed by the Directorate for Supervision of Agencies oversees the 
capital market in Croatia. See www.hanfa.hr for all legislation and 
information relative to capital markets. Only an authorized company 
(brokerage houses and banks) 
may deal in securities in Croatia.  Such activity must be licensed 
by the Croatian Financial Services Supervisory Agency and entered in 
a court register. 
A brokerage company may only be a private or public 
limited company based in the Republic of Croatia.  Its only 
permitted activity is transactions in securities. The type of 
permitted activity depends on the amount of share capital.  In 
accordance with national law, a brokerage company may establish a 
branch abroad in order to deal in securities in the respective 
country.  Foreign brokerage companies authorized for transactions in 
securities may establish a branch in the Republic of Croatia, 
provided they obtain a license from HANFA. 
 
¶54.  The privatized and consolidated banking sector is advanced and 
is becoming more competitive.  More than 90 percent of the total 
assets of the banking sector are foreign owned.  By the 3rd quarter 
of 2008, there were 33 commercial banks and five savings banks, 
 
ZAGREB 00000026  008 OF 013 
 
 
whose assets totaled 354.2 billion HRK ($71 billion).  Italian-owned 
Zagrebacka Bank (23.19 percent) and Privredna Bank (17.04 percent) 
are the two largest banks per percentage of total bank assets in 
Croatia. 
 
¶55.  The government uses the market to finance government 
expenditure.  Government debt instruments must be bought through an 
intermediary such as a commercial bank, and are tradable on 
exchanges. 
 
¶56.  Currently, securities are traded on the Zagreb Stock Exchange 
(ZSE), established in 1991. The Varazdin Stock Exchange (VSE), which 
was established in 1993 as an over-the-counter (OTC) merged into the 
ZSE in 2007. The OMX X-Stream trading system is now used on the ZSE. 
 
 
¶57.  The Securities Law requires that all companies with more than 
100 shareholders and with share capital of at least HRK 30 million 
(approximately $5.4 million) be listed on the newly established 
quotation for public stock companies (JDDs).  The intention was to 
increase transparency and encourage companies to obtain low cost 
equity financing, which would result in increased turnover and trade 
volumes. 
 
¶58.  All Croatian workers under age 40 are required to pay five 
percent of their gross salary into a pension fund of their choice. 
EU Pillar III (additional voluntary savings with government matching 
of 25 percent) has also been introduced.  Croatian financial markets 
are benefiting from this infusion of capital. 
 
¶59.  In 2008, transactions on the Zagreb Stock Exchange totaled 
31.06 billion HRK (approximately $6.03 billion), of which 11.69 
billion HRK (approximately $2.27 billion) was institutional 
turnover. Transactions in 2007 were 66.49 billion HRK (approximately 
$13.34 billion), of which 39.05 billion HRK (approximately $7.83 
billion) was in institutional turnover. 
 
¶60.  There are three tiers of securities traded on the ZSE. 
Companies must meet high disclosure and operating requirements to be 
fully listed (quotation I).  A detailed explanation of all 
requirements is provided at www.zse.hr in English. 
 
¶61.  The Croatian Chamber of Economy provides a useful summary of 
the capital markets in Croatia at www.hgk.hr. 
 
 
A.10  Political Violence 
 
¶62.  The risk of political violence in Croatia is low.  Following 
the break up of Yugoslavia and the subsequent wars in the region, 
Croatia has emerged as a stable, democratic country on the threshold 
of NATO membership.  Membership in the European Union is also likely 
in the coming years.  Relations with neighboring countries are 
generally good and improving, although some disagreements regarding 
border demarcation remain. 
 
¶63.  There is little domestic anti-American sentiment.  There have 
been no incidents involving politically motivated damage to American 
projects or installations in Croatia. 
 
 
A.11.a  Corruption 
 
¶64. Corruption remains a problem in Croatia.  The EU highlighted 
corruption as a major challenge in its November 2008 progress report 
on Croatia's accession negotiations and citizens continue to cite 
corruption as one of the most important problems plaguing their 
society. 
 
The Croatian government recognizes corruption as a problem and has 
made statements of will to combat corruption.  The government has 
been working to implement the anti-corruption strategy adopted on 
June 19, 2008, and the action plan accompanying the strategy, 
adopted on June 25, 2008.  The strategy defines the anti-corruption 
policy over an extended period of time and targets several key 
areas.  The action plan includes specific measures with clearly 
defined deadlines for implementation.  While the will to fight 
corruption has been expressed by the government, high level 
prosecution and sentencing for corruption are still lacking. There 
are cases of alleged corruption involving city officials and 
businessmen, but none have yet resulted in convictions. 
 
¶65. Croatian laws and provisions regarding corruption apply equally 
for both domestic and foreign investors.  According to the head of 
the state prosecutor's office for the suppression of corruption and 
organized crime (USKOK), the most recent prosecutions for corruption 
involve mostly Croatian citizens. 
 
 
ZAGREB 00000026  009 OF 013 
 
 
¶66. Croatia has ratified the Council of Europe Criminal Law 
Convention on Corruption, the Council of Europe Civil Law Convention 
on Corruption, and the United Nations Convention Against 
Transnational Organized Crime and has signed and ratified the United 
Nations Convention Against Corruption.  Croatia has not ratified The 
OECD Convention on Bribery. 
 
¶67. Croatia is a member of the Group of States Against Corruption 
(GRECO), a peer monitoring organization that allows members to 
assess anticorruption efforts on a continuing basis.  An evaluation 
of Croatia, including suggestions and opinions on Croatia's progress 
in its fight against corruption, can be found on GRECO's website 
In terms of regional co-operation, Croatia is engaged in the 
regional anti-corruption initiative (RAI--formerly SPAI), the 
Program Against Corruption and Organized Crime in South-Eastern 
Europe (PACO), and the PACO impact project for the implementation of 
anti-corruption plans.  Croatia has been a member of Interpol since 
¶1992.  Croatia also cooperates regionally through the Southeast 
European Co-operative Initiative (SECI), the Adriatic Ionian 
Initiative, the Southeast Europe Police Chiefs Association (SEPCA), 
and the Central European Initiative (CEI). 
 
¶68. Corruption is perceived to be pervasive in the health sector, 
universities, public procurement, construction sector, land registry 
offices, and the privatization fund. 
 
¶69. The Croatian Criminal Code and the Criminal Procedure Act 
provide for the prosecution of different forms of corruption and 
similar criminal acts. 
 
Additional laws that deal with suppression of corruption include the 
Act on the Office for the Prevention of Corruption and Organized 
Crime (Law on USKOK), the State's Attorney Office Act, the Public 
Procurement Act, the Budget Act, the Courts Act, the Conflict of 
Interest Prevention Act, the Corporate Criminal Liability Act, the 
Money Laundering Prevention Act, the Witness Protection act, the 
Personal Data Protection Act, the Right to Access to Information 
Act, the Act on Public Services, the Code of Conduct for Public 
Officials, the Code of Conduct for Judges.  The Croatian Criminal 
Code covers such acts as trading in influence, abuse of functions, 
bribery in the private sector, embezzlement of property in the 
private sector, and concealment and obstruction of justice. 
 
¶70. Giving or accepting bribes is a criminal act. The minimum prison 
sentence for an act of bribery (Articles 348(1) and 294b (1), 
Criminal Code) is six months and the maximum sentence is three 
years.  In two forms of passive bribery (Articles 347 and 294 (A), 
Criminal Code), sentences range from one to eight years 
imprisonment, depending on the crime. 
 
Bribes by a local company to a foreign official are punishable under 
Croatian law.  If it is established that a local company is the 
legal entity committing crimes, that company might receive a ban for 
conducting operations, depending on the gravity of the crime. 
 
¶71. The Office for the Prevention of Corruption and Organized Crime 
(USKOK), which is the agency responsible for battling corruption, is 
currently staffed by 36 employees and participates in joint task 
forces with the Ministry of Finance and the police.  USKOK is 
mandated to direct police investigations and conduct prosecutions in 
corruption and organized crimes cases.  The criminal offenses under 
USKOK are strictly enumerated in the USKOK law.  USKOK headquarters 
are in Zagreb with branch offices in Split, Rijeka and Osijek. 
 
The Ministry of Interior, the Office for Suppression of Money 
Laundering, the Tax Administration, the Anti-Corruption Unit of the 
Ministry Of Justice and the National Council for Monitoring the 
Implementation of the National Program for Suppression of Corruption 
all have a proactive role in combating corruption. 
 
¶72. Transparency International Croatia is the main non-governmental 
agency watchdog in Croatia. 
GONG, a non-partisan citizens' organization founded in 1997, 
conducts non-partisan monitoring of the election process, educates 
citizens about their rights and duties, encourages mutual 
communication between citizens and their elected representatives, 
promotes transparency of work within public services, and manages 
public advocacy campaigns and encourages and helps citizens in 
self-organizing initiatives. Partnership for Social Development is 
another NGO that deals with the suppression of corruption. 
 
A.11.b  Bilateral Investment Agreements 
 
¶73.  Croatia does not have a foreign investment law; foreigners 
receive national treatment under existing legislation.  In addition, 
investments by American citizens are covered by the U.S. Croatian 
Bilateral Investment Treaty (BIT), which entered into force in June 
¶2001.  The treaty fulfills the principal U.S. objectives for 
 
ZAGREB 00000026  010 OF 013 
 
 
agreements of this type: 
 
--  All forms of U.S. investment in the territory of Croatia are 
covered; 
 
--  Covered investments receive the better of national treatment or 
most-favored-nation (MFN) treatment, both while they are being 
established and thereafter, subject to certain specified 
exceptions; 
 
--  Specified performance requirements may not be imposed upon or 
enforced against covered investments; 
 
--  Expropriation is permitted only in accordance with customary 
international law standards; 
 
--  Parties are obligated to permit the transfer, in a freely usable 
currency, of all funds related to a covered investment, subject to 
exceptions for specified purposes; 
 
--  Investment disputes with the host government may be brought by 
investors, or by their covered investments, to binding international 
arbitration as an alternative to domestic courts. 
 
¶74.  For further information about BITs and for the text of the 
U.S.-Croatian BIT please see www.mac.doc.gov/Tcc/e-guides/eg_bits 
(under "Croatia"). 
 
¶75.  Croatia has signed investment protection treaties/agreements 
with the following countries, however, not all have entered into 
force: 
 
Albania, Argentina, Austria, Belgium, Belarus**, Bulgaria, Bosnia 
and Herzegovina, Czech Republic, Chile, Denmark, Egypt, Finland, 
France, Greece, Germany, India, Indonesia**, Iran, Italy, Israel, 
Jordan, Kuwait, Cambodia, Canada, Qatar*, China*, Cuba**, Latvia, 
Libya, Hungary, Macedonia, Malaysia*, Malta, Republic of Moldova**, 
Netherlands, Oman**, Poland, Portugal, Romania, Russia*, United 
States, Serbia Montenegro, Slovakia, Slovenia**, Spain, Sweden, 
Switzerland*, Thailand*, Turkey, United Kingdom, Ukraine, 
Zimbabwe*. 
(* = ratified, but not in force)   (** = not ratified or in force) 
 
 
A.11.c  OPIC and Other Investment Insurance Programs 
 
¶76.  Croatia is eligible for financing and political risk insurance 
coverage from the U.S. Overseas Private Investment Corporation 
(OPIC).  In 2004, OPIC provided $250 million in political risk 
insurance to support financing for the construction of a motorway in 
Croatia that will do much to improve the country's infrastructure, 
reduce transportation costs, and develop the tourism potential of 
the Dalmatian coast. OPIC provided the insurance to Private Export 
Funding Corporation (PEFCO) to support PEFCO's financing to Croatian 
Motorways, ltd. for construction of a portion of the Zagreb-Split 
motorway, consisting of a tolled four-lane highway connecting 
Bregana and Zagreb, and Bosiljevo with Sveti Rok.  In 1998, OPIC 
supported a $200 million private equity fund, Southeast Europe 
Equity Fund I, managed by Bedminster Capital Management, which 
invested in the Croatian banking sector (as part of the consortium 
that purchased Dubrovacka Banka) and the Croatian communications 
sector (by investing in Digital City Media, a broadband cable tv 
network in Croatia). Bedminster Capital Management's successor fund, 
Southeast Europe Equity Fund II, which has OPIC support, also 
targets investments in Croatia, among other countries.  For more 
information about OPIC, see www.opic.gov. 
 
Croatia is a member country of the Multilateral Investment Guarantee 
Agency (MIGA), for more information see www.miga.org. 
 
¶77.  In the event that OPIC should pay an inconvertibility claim 
under its political risk coverage, the local currency accepted by 
OPIC in any subsequent recovery would be made available to the 
Embassy on a priority basis for U.S. Government expenses.  The 
estimated annual U.S. dollar value of local currency used by the 
Embassy is approximately $16 million.  The Embassy currently 
purchases local currency from a local commercial bank at the market 
rate.  A major devaluation is considered unlikely. 
 
 
A.11.d  Labor 
 
¶78.  Croatia has an educated, highly-skilled, and relatively high 
cost labor force compared with the region.  In general, employer's 
wage costs are approximately 110 percent of an employee's net wage. 
The estimated average cost to employers in Croatia was 7,621 HRK 
(approximately $1524.20) per month as of October 2008.  The average 
net wage at the end of the third quarter of 2008 was 5,263 HRK 
 
ZAGREB 00000026  011 OF 013 
 
 
($1052.60).  The manner of calculating minimum wage was amended in 
2008 per the Minimum Wage Act. The Act introduced a substantial 
one-time wage increase and the adjustment formula stipulated by the 
Act ensures a continuous minimum wage increase over a longer period 
of time. Minimum wage raises will be calculated from the 
minimum-to-average-wage ratio from the previous year, increased by 
the percent equal to real GDP growth in the previous year. Certain 
suggested alternative calculations for various sectors are under 
review by the constitutional court. 
 
¶79.  Croatia's labor laws are aimed at increasing labor market 
flexibility by shortening the mandatory notification period before 
dismissal and reducing generous severance package requirements. 
However, Croatia still fares badly in terms of time and expense in 
hiring and firing employees.  Labor has generally been supportive of 
government efforts to boost competitiveness and welcomes foreign 
investment, but remains concerned about any possible cuts in social 
spending. 
 
¶80.  The Law on Labor regulates employee and employer relations 
through "employment contracts."  Fulltime employment must not amount 
to more than 40 hours per week and employees are entitled to at 
least four weeks of paid annual leave and seven days of personal 
leave. The Law on Labor also provides special protections for 
workers in dangerous occupations, work at night, and work by minors 
between the ages of 15 and 18. 
 
¶81.  Chapter 7 of the Law on Foreigners covers the issuance of work 
permits.  While there are quotas (determined annually) for work 
permits, there are no quotas for foreigners who execute key 
positions in companies or representative offices. Likewise, there 
are no quotas for business visas. 
 
¶82.  Workers are entitled by law to form or join unions of their own 
choosing, and workers exercised this right in practice.  In general, 
unions were independent of the government and political parties. 
The Labor Code prohibits anti-union discrimination and expressly 
allows unions to challenge firings in court; however, in general, 
attempts to seek redress through the legal system were seriously 
hampered by the inefficiency of the court system. 
 
 
A.11.e  Foreign Trade Zones/Free Ports 
 
¶83.  Croatia has several Free Trade Zones (FTZs), some in 
war-affected areas.  Special incentives are offered to users of 
FTZs. 
 
¶84.  The Law on Free Trade Zones allows a foreign-owned or domestic 
company in FTZs to engage in manufacturing, wholesale but not retail 
trade, foreign trade, banking and other financial activities.  The 
Law on Profit Tax also covers business in FTZs.  FTZ users are 
eligible for tariff waivers on imported products. FTZ users who 
construct or participate in construction of infrastructure projects 
worth 1 million HRK (about $178,000) or more in the zone, are 
exempted from paying corporate tax during the first five years of 
operation in the zone.  Other users in the zone pay corporate tax in 
the amount of 50 percent of the regular rate (i.e., 10 percent 
instead of 20 percent). 
 
¶85.  FTZs are exempted from any Croatian emergency measures or other 
restrictions pertaining to foreign trade or hard currency 
transactions.  Users of the zones may freely store their goods and 
production equipment in the zones.  Goods that are not intended for 
trade on the Croatian market or for domestic consumption are fully 
exempt from custom duties or taxes.  Imported goods will be taxed 
and assessed duties per the value of the production materials 
imported for the product and not per the value of the finished 
product. 
 
¶86.  The following fifteen counties currently have FTZS: Buje, 
Krapina-Zagorje, Osijek, Rijeka, Slavonski Brod, Split, 
Splitsko-Dalmatinska County, Obrovac, Ploce, Pula, Kukuljanovo, 
Varazdin, Zagreb, Vukovar, and Ribnik counties.  As mentioned 
previously, EU accession will force the Government to make changes 
in the free trade zone system and the incentives system associated 
with them. 
 
 
A.11.f  Foreign Direct Investment Statistics 
 
¶87.  Compared to other advanced transitional economies in the 
region, Croatia is in the middle group in terms of foreign direct 
investment (FDI).  New or green-field investments have seen 
particularly slow growth. According to the Trade and Investment 
Promotion Agency, there was one large-scale foreign investment 
project initiated this year (see list below paragraph 85). 
Privatization of strategic government-owned assets has been the main 
 
ZAGREB 00000026  012 OF 013 
 
 
source of FDI since Croatian independence.  Large state assets such 
as utilities, the state insurance company and banks, are being sold 
by the government, usually through international tenders, and in 
some cases, through initial public offerings (IPOs), as was the case 
recently with the state oil company, INA, and the national telecom, 
HT.  The Croatian Privatization Fund, the agency responsible for the 
sale of other assets, has shares and stock in 1112 (mostly 
non-performing) companies.  The state's share of the equity base 
value of these companies is about 21.8 billion HRK ($4.36 billion). 
Information regarding the Croatian Privatization Fund, including 
information on companies currently for sale, can be found on its 
website, www.hfp.hr. 
 
¶88. There were no significant sales made by the government in terms 
of privatization efforts in 2008.  In 2007, the Croatian government 
offered to the public first rights for purchase of its 32.5 percent 
stake in Croatia Telecom (Germany's Deutsche Telekom is the majority 
shareholder), of which 25 percent were reserved as priority for 
Croatian citizens. Individual purchase was limited to 16,695 HRK 
($3,227) and included the offer of one free share for every ten 
retained for at least a year. About 358,400 citizens participated in 
this offer and purchased shares at the cost of 265 HRK ($71) each. 
 
¶89.  Foreign Direct Investment between 1993 and the second quarter 
of 2008 totaled $19.5 billion, with investments in the financial, 
chemical and telecommunications sector accounting for 58 percent of 
total investment. Croatian firms invested $2.1 billion abroad 
between 1993 and the second quarter of 2008. It is estimated that 
inflow FDI for the first two quarters of 2008 amounted to 3 percent 
of GDP and that outflow FDI for the first two quarters of 2008 is 
estimated at under one percent. 
 
¶90.  According to official statistics from the Croatian National 
Bank, Austria is the largest source of foreign investment in 
Croatia, accounting for 30.6 percent of total FDI since 1993.  The 
Netherlands is second with 15.2 percent of total FDI, followed by 
Germany with 12.6 percent and France with 7 percent. Because 
transactions are often executed through third countries and the 
Croatian National Bank records country of origin of the final 
transaction leading to the investment, in many cases, this results 
misleading statistics. The U.S. Embassy Zagreb estimates that the 
actual amount of U.S. investment in Croatia was approximately $ 2.5 
billion. However, the US investment referenced to in recent years 
was the purchase of Pharmaceutical company Pliva by US company Barr 
Pharmaceuticals, which was bought out at the global level by Israeli 
Teva in December 2008 (see list in paragraph 91).  The leading 
destinations for total Croatian investment, from 1993 to the second 
quarter 2008, were the Netherlands with 24, Bosnia-Herzegovina with 
18 percent and Serbia with 17 percent.  In the first two quarters of 
2007, Croatians invested $11 million abroad.  The Netherlands was 
the lead investment destination for 2008 followed by Bosnia 
Hercegovina and Serbia. 
 
¶91.  The Croatian National Bank provides information about foreign 
investments in aggregate form which can be found on their website at 
www.hnb.hr.  The following includes some major ($20 million and 
above) foreign investments in Croatia to date listed at investment 
value at the time of the transaction (current values are not 
available): 
 
Foreign investor: GP&Partners (Dutch) 
Corn starch factory 
Value: $103 million 
 
Foreign investor: Barr Pharmaceuticals (U.S) 
Pharmaceuticals (which was bought out by Israeli Teva in December 
2008) 
Croatian company: Pliva 
Value: $2.3 billion 
 
Foreign investor:  Deutsche Telekom (Germany) 
Telecommunications 
Croatian Company:  Croatian Telecom (51 percent of shares) 
Value:  $1.272 billion 
 
Foreign investor: MOL (Hungary) 
Oil Industry 
Croatian Company: INA d.d. (26 percent of shares in 2003 plus 21.15 
percent in 2008) 
Value: $505 million + $1.3 billion 
 
Foreign investor: Lactalis (France) 
Dairy 
Croatian company: Dukat 
Value: $400 million 
 
Foreign investor: Banca Commerciale Italiana (Italy) 
Banking/financial services 
 
ZAGREB 00000026  013 OF 013 
 
 
Privredna Banka (66.66 percent of shares in 1999 plus 10 percent in 
2002) 
Value:  $300 million + approximately $50 million, according to media 
reports 
 
Foreign investor: Unicredito Italiano (Italy) 
TAKEN OVER BY BANK AUSTRIA IN 2007 
Banking/financial services 
Zagrebacka Banka (96 percent ownership) 
Value:  $230 million (estimate) 
 
Foreign investor: Erste und Steiermarkische Bank (Austria) 
Banking/financial services 
Rijecka Banka (85 percent share) 
Value:  $155 million 
 
Foreign investor: Austria Creditanstalt Group (HVB Group) (Austria) 
TAKEN OVER BY SOCIETE GENERAL IN 2006 
Banking/financial services 
Splitska Banka (88 percent ownership) 
Value:  $132 million 
 
Foreign investor: Heineken N.V. (Netherlands) 
Brewery 
Karlovacka Pivovara company (94.42 percent) 
Value:  $125 million 
 
Foreign investor: Rockwool Group (Denmark) 
Stone wool producers 
Value: $110 million 
 
Foreign investor: Sutivan Investment and Excelsa Anstalt 
(Lichtenstein) 
Hotels and tourism 
Plava Laguna (81.5 percent) 
Value: $70 million 
 
Foreign investor: CMC (U.S / Switzerland) 
Steel 
Croatian company: Sisak Steel Company 
Value: $52 million 
 
Foreign investor: Ericsson (Sweden) 
Telecommunications 
Tesla Company 
Value: $48 million 
 
Foreign investor: Hofmann and Pankl Betelligungasse (Austria) 
Minerals processing 
Straza Company 
Value: $39 million 
 
Foreign investor: Societe Suisse de Cemment Portland (Switzerland) 
Cement 
Tvornica Cementa Koromacno company 
Value: $38 million 
 
Foreign investor: Applied Ceramics (U.S) 
Semi-conductor components 
Value: $30 million 
 
Foreign investor: Interbrew (Belgium) 
Brewery 
Zagrebacka Pivovara company 
Value: $27 million 
 
Foreign investor: Coca Cola Amatil (Australia) 
Non-alcoholic beverages 
Croatian company:  n/a 
Value: $20 million 
 
BRADTKE