Grčić Announces Economic Turnaround and New Investments

The new year will bring recovery and December 2013 will bring more optimism than December 2012. In 2014, and especially in 2015, I expect a new investment boom, thanks to the flow of money from Europe.

The government aims to reverse trends and stimulate economic growth in the new year, said Prof. Dr. Branko Grčić, Deputy Prime Minister and Minister of Regional Development and EU Funds, in a New Year’s interview for Novi list. Grčić announced significant incentives for private investors that should encourage them to increase investments and create new jobs.

Grčić states that he has high expectations for two strategically important laws.

-One has already been passed in the Parliament, namely the Investment Promotion Act. The other is in preparation, concerning large, strategically important investment projects. The beginning of 2013 will be marked by the adoption of the implementing regulation of the Investment Promotion Act, after which a whole range of incentives will be available to investors. For investments over 3 million euros, corporate income tax will not be paid at all for a period of up to 10 years, starting from the year the investment begins, provided that at least 15 new jobs related to the investment are created. For entrepreneurs investing between 1 and 3 million euros, the corporate income tax rate is reduced by 75 percent, on the condition that at least 10 new jobs are created, while the corporate income tax rate for investments up to 1 million euros is reduced by 50 percent if the investor creates 5 new jobs. This is just part of the incentives that are aimed at benefiting investors, with the goal of enhancing the competitiveness of the Croatian economy, achieving higher employment, and ensuring balanced regional development, says Grčić.

He considers the removal of bureaucratic obstacles, reduction of tax burdens, respect for contractual relations, timely payment of obligations, and better liquidity as key for investors.

-Without money, it will be difficult to break out of this vicious circle. It is very important to restore the trust of the financial system in Croatian entrepreneurs and to find additional financial instruments that will allow for risk sharing and facilitate financing for ongoing operations and new projects. Therefore, it will be important to accelerate the restructuring of companies with the help of the state, banks, and major creditors based on the Financial Operations Act. Secondly, we are strengthening financial FGSs, and other models are being prepared that would allow funds to enter equity companies and assist in restructuring, both financially and through management improvement. Regarding small entrepreneurs, in 2012, HAMAG-Invest nearly doubled the number and value of guarantees, helping them to better navigate the crisis, and HBOR has also made a very significant contribution in this regard, says Grčić.