Global Invest

Crescent-Shaped Croatia Brings Full Round of Investment Opportunities

Croatia has been quietly strengthening its economy, transportation system and technology status. It is ready to welcome foreign investors looking for places not yet popular but ready to rapidly expand economic global reach. Some call Croatia a hidden investment gem.
— By William Bell

Croatia holds the distinction of being the last member state to join the European Union in 2013. Located in the northwestern part of the Balkan Peninsula, the crescent-shaped country offers easy access to most of Europe.

The government has been actively upgrading its transportation systems and ICT infrastructure, and offers diverse industry options, ranging from agriculture to machinery manufacturing to tourism. An educated workforce, high quality of life, location, improved business regulations, and generous tax structure are gaining increasing attention of global investors.

Getting operations established in Croatia or adding Croatian businesses to supply chains now will enable corporations to get ahead of the competition.

The Ideal Location on Which to Build Economic Growth in the Balkans
The "Doing Business" study issued by the World Bank each year ranked Croatia as no. 51 out of 190 countries in its most recent report. That is impressive for a country with 4.4 million people. The score was 73.6, compared to the top performer Denmark with 85.3. Croatia has put itself close in ranking to countries that include Poland, the Netherlands, Belgium and the Slovak Republic.

Though there is still plenty of ways the government can improve business regulations to promote a market economy and foreign investments, progress is being made step-by-step. Recent changes were made to reduce minimum capital requirements; lower costs of construction permits; and abolish other requirements, like director signatures. Its best score is in cross-border trade at 100, a clear signal to foreign investors that opportunity to easily access Europe exists.

There are many features that make Croatia a desirable investment target. It is bordered by Serbia, Hungary, Slovenia, Bosnia and Herzegovina; touches Montenegro; and has a long coastal strip along the Adriatic Sea. Croatia's government touts accessibility as one of the top reasons to consider Croatia, saying its strategic position makes all of Europe accessible in three hours.

Almost half the country speaks English; over a third speaks German; and 14 percent speaks Italian. The multilingual characteristics of the population is an added benefit for businesses choosing direct investment or import/export activities. The workforce is educated, talented and innovative. It is also tech-savvy with more than 70 percent of the population using the internet and more than 55 percent possessing basic or higher digital skills.

The country is small which limits labor availability. But addressing this issue, the government increased quotas for foreign workers with an eye on keeping the tourism and construction sectors moving forward. Tourism has long been one of the top industries.

Much to Offer in Every Direction
There are a lot of projects in progress that will make Croatia even more attractive. It is upgrading its airports, like the Rijeka Airport, and has a high-quality highway and road system. Croatia is investing heavily in development of the Pan-European transport corridors which connect Central and Eastern European countries. Right now there is ongoing development and upgrading of seaports, including the Port of Vukovar and Port of Zadar.

Another feature getting the attention of investors is a generous tax structure. There is 0 percent tax on profits for up to 10 years in certain free trade zones. No customs taxes are charged when doing business across European Union country borders. There are 55 double taxation avoidance agreements with various countries. Job creation nets cash incentives.

One of the big attractions of Croatia is the fact it embraces innovative technology and has for decades. It encourages tech startups, innovators, and entrepreneurs, as well as big businesses.

Croatia is a bit of a well-kept secret in that it has many highly technologically advanced companies and a tech-savvy population. The U.S. Department of Commerce-International Trade Administration points to the University of Rijeka housing the most powerful supercomputer in the Adriatic region; Dok-ing producing the most used multifunctional demining robotic system; and Rimac Automobil developing and now manufacturing the fastest electric hypercar Concept Two.

Areas of investment opportunities include developing electronic information sharing capabilities, integration of digital technology, tech education, improved broadband coverage, and development of the Smart City infrastructure. ICT specialists are in demand.

In addition to ICT, top sectors in Croatia include the automotive industry, pharmaceuticals, machinery and equipment manufacturing, logistics, textiles, tourism, and food. The food and beverage sector employs the most people and generates the most revenue. Companies like Coca-Cola and Meggle are well-established, but the country is primed for sector growth, ready and willing to increase exports for products produced in Croatia by foreign countries.

In fact, all the sectors mentioned have numerous opportunities for the development of investment projects. The government maintains an eCatalogue of Investment Opportunities online, but the list is not intended to limit foreign investors to just these projects. They are welcome to investigate other opportunities.

Inviting the World in
Croatia is taking a proactive approach to growing its economy. There are several agencies and organizations leading the effort. For example, the Croatian Agency for Investments and Competitiveness and the Croatian Chamber of Commerce are vigorously carrying Croatia's welcome message to major events, like the Foreign Direct Investment Expo, in order to cultivate new partners and investors.

Of course, no country is perfect. Croatia still has room to improve its Doing Business status with the World Bank. It is also still moving away from a history of communism and socialism in that a majority of Croatians still get most of their income from the government, social insurance, and public monopolies.

Growing a true market economy and foreign investments is the path to change. Croatia has a Parliamentary Republic form of government and, of great importance in today's world, is considered a safe country.

As a member of the EU for only seven years, Croatia is already proving it is resilient, has a strong potential to experience significant economic growth, and is ready to become an important member of the European economy.

The time is now to investigate what Croatia has to offer because soon the secret will be out: It is a country filled with economic opportunities just waiting for investors.