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Starting a New Investment Cycle in the Republic of Croatia in the the Republic of Croatia in the mandate 2012-2015 Radimir ai First Deputy Prime Minister of the Government of the Republic of Croatia Zagreb, March 2012

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Starting a New Investment Cycle in the Republic of Croatia in the the Republic of Croatia in the mandate 2012-2015

Radimir Čačić First Deputy Prime Minister of the Government

f the Republic of Croatia

Zagreb, March 2012

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By realization of all economically justified investments in public sector

By starting new projects using private capital in the area of public private partnership and energy efficiency, primarily in the large number of small projects the large number of small projects

Note: the emphasize is on the large number of small projects not demanding long-term preparations and quick to implement due to the shortness of time, the remaining 6 to 9 months in 2012

By creating preconditions for starting investments in private sector and positive investment climate (by reducing administrative barriers and for e.g. advanced payment of the public sector in the amount of 10%)

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Investment potential of Ministries and public companies (2008.-2012.)

Num. Ministry Ministry/Compa ny/ Agency Realised investments in 000 € Realised investments in 000 € Realised investments in 000 € Realizirane Investicije u 000 € Estimated investments in 000€ Maximum amount

f investments

with secured source of financing, possibility of taking

ver the projects

from 2013, with maximum effect in 000 € Δ investments in 000 €

2008. 2009. 2010. 2011. 2012. 2012. 2012.

1. TOTAL Ministry of agriculture 149.984 117.625 123.160 212.568 120.000 300.000 180.000 2. TOTAL 139.256 118.759 130.870 120.736 100.000 170.000 70.000 2. TOTAL MRRFEU 139.256 118.759 130.870 120.736 100.000 170.000 70.000 3. TOTAL Ministry of Economy 434.730 467.062 465.944 360.932 380.000 550.000 170.000 4. TOTAL Ministry of sea, transport and infratsructure 1.009.908 875.649 586.571 545.264 630.000 810.000 180.000 5. TOTAL INVESTMENTS (1+2+3+4) 1.733.878 1.579.095 1.306.545 1.239.500 1.230.000 1.830.000 600.000 6. TOTAL PPP+ESCO program 540.000 7. TOTAL Potential ŽUC 60.000 8. TOTAL Δ POTENTIAL NEW PROJECTS (6+7) 600.000 9. TOTAL (5+8) 1.200.000

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The investment potential of the started projects of ministries and

public companies (as well as those that can be started shortly) is insufficient for an optimal contribution to GDP growth

Therefore, it is necessary to start new investment projects financed

by private capital

Projects having preconditions for realization (analysis of needs,

location and building licences, etc.) bear a potential of €600 million:

Construction, completion and reconstruction of facilities in education, culture,

science, social welfare, health care, justice and defence by means of PPP

Energy efficiency Intensified roads’ maintenance

To start the realization certain amendments of legislation are needed – the

preparation phase completed (March/April 2012)

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Construction, completion and reconstruction of facilities in education, culture, science, social welfare, health care, justice and defence by means of Public-Private-Partnership

The value of investments in the following 4 years exceeds

HRK 7 billion The value of investments in the following 4 years exceeds HRK 7 billion

The possibility to complete investments in 9 months of

2012 is at the level of HRK 2.2 billion or € 300 million

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Objective: to provide conditions for introduction of one-shift

work in elementary and secondary schools

338 submitted projects / 835.000 m2 of school space, an

average planned value of the investment per m2 of space is HRK 7,442; the investment framework for the application of the PPP 7,442; the investment framework for the application of the PPP model only in elementary and secondary education is about HRK 6 billion

Reported (and available) fiscal capacity of the applicant counties

and cities amounts to 15.7%, while the remaining 84.3% or HRK 5,239,119,866 the counties and cities have demanded from the State Budget-related sources.

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Potential investment framework for PPP model amounts to

1,2 billion kn (150.000.000,00 EUR)

10 projects design, construction, renovation and/or

reconstruction of objects in culture sector (museums, state archive, opera etc.) archive, opera etc.)

Feasibility studies need to establish total value of the projects

(CAPEX + OPEX) for the whole duration of the PPP contract

2 years of preparation and construction + 25 years of use Financing - a loan for 25 years at the average interest rate of

6%

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EU Energy Policy, inter alia, demands energy efficiency increase Potential for energy efficiency increase is present in all sectors of

consumption, especially in building sector (buildings account for about 40% of total energy consumption and 80% of the existing buildings have more than 60% of unnecessary energy loss) buildings have more than 60% of unnecessary energy loss)

Energy efficiency improvement of the existing public buildings and

housings

Completion of new energy efficient facilities by PPP model In 2012, it is possible to complete total investments amounting to

HRK 1.8 billion or € 240 million

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Increase of capital investments into maintenance of local road

infrastructure

Implementation and realization through counties’ Road Authorities State Budget was doubled in the past 10 years, and investments into road

maintenance remained at the same level – possibility of decentralization maintenance remained at the same level – possibility of decentralization

Basic transport infrastructure destroyed There is no need to prepare project documentation Short realization time Possibility to complete investments amounts to HRK 450 million or

€60 million at annual level

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Public procurement – new Public Procurement Act entered into force on 1

January 2012; adoption of all secondary legilsation in final phase – enable more efficient procedures

Taxes – level of Croatia’s alignment with acquis is very high Para-fiscal fees – continued monitoring and reduction of number and rates Para-fiscal fees – continued monitoring and reduction of number and rates

f some para-fiscal fees (monument preservation fee, water contribution

tax, etc)

Customs – constant progress and very high legislative alignment with

acquis

Public administration – continued professionalization of the public service

in order to build a modern, reliable and citizen-oriented public service

Payment discipline – increased discipline in payment in public companies;

new Act on deadlines for settlement of financial obligations

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Investment climate

Act on establishment of the Agency for investments and Competitiveness Amendments to the Investment Promotion Act Development of the Investment Promotion strategy Development of the Smart Specialization Strategy Decree on Investment projects of significant economic interest Decree on Investment projects of significant economic interest

Energy

124 licenses issued for the delayed projects Act on establishment of the Center for monitoring energy sector and investments Preparation of the projects from the energy sector

Mining
New Mining Act under way
Industry

Development of the Industrial policy strategy Restructuring of the shipbuilding industry

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Following intensive consultations with potential investors and thorough analysis of the offers, it has been concluded as follows:

BRODOGRAĐEVNA INDUSTRIJA SPLIT (with BSO) – the offer made by DIV d.o.o. Samobor is

acceptable and privatisation contract will be signed in due course;

BRODOTROGIR d.d. – the offer made by JADRANSKA ULAGANJA d.o.o. is declined and the

Ministry of the Economy has recommended a new solution for restructuring and Ministry of the Economy has recommended a new solution for restructuring and privatisation to be proposed in 90 days;

Brodograđevna industrija 3. MAJ – the offer made by JADRANSKA ULAGANJA d.o.o. is

declined and Ministry of the Economy will recommend to the Government a new solution for restructuring and privatisation to be proposed in 90 days;

BRODOGRADILIŠTE KRALJEVICA d.d – the offer made by JADRANSKA ULAGANJA d.o.o. is

declined; bankruptcy proceedings to be initiated;

ULJANIK d.d. Pula – (not under restructuring process) will be privatised; in 30 days Ministry
f the economy to prepare a privatisation model

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Starting a New Investment Cycle in the Republic of Croatia in the the Republic of Croatia in the mandate 2012-2015

Radimir Čačić First Deputy Prime Minister of the Government

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By realization of all economically justified investments in public sector

By starting new projects using private capital in the area of public private partnership and energy efficiency, primarily in the large number of small projects the large number of small projects

Note: the emphasize is on the large number of small projects not demanding long-term preparations and quick to implement due to the shortness of time, the remaining 6 to 9 months in 2012

By creating preconditions for starting investments in private sector and positive investment climate (by reducing administrative barriers and for e.g. advanced payment of the public sector in the amount of 10%)

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public companies (as well as those that can be started shortly) is insufficient for an optimal contribution to GDP growth

by private capital

location and building licences, etc.) bear a potential of €600 million:

science, social welfare, health care, justice and defence by means of PPP

preparation phase completed (March/April 2012)

Construction, completion and reconstruction of facilities in education, culture, science, social welfare, health care, justice and defence by means of Public-Private-Partnership

HRK 7 billion The value of investments in the following 4 years exceeds HRK 7 billion

2012 is at the level of HRK 2.2 billion or € 300 million

work in elementary and secondary schools

average planned value of the investment per m2 of space is HRK 7,442; the investment framework for the application of the PPP 7,442; the investment framework for the application of the PPP model only in elementary and secondary education is about HRK 6 billion

and cities amounts to 15.7%, while the remaining 84.3% or HRK 5,239,119,866 the counties and cities have demanded from the State Budget-related sources.

1,2 billion kn (150.000.000,00 EUR)

reconstruction of objects in culture sector (museums, state archive, opera etc.) archive, opera etc.)

(CAPEX + OPEX) for the whole duration of the PPP contract

6%

consumption, especially in building sector (buildings account for about 40% of total energy consumption and 80% of the existing buildings have more than 60% of unnecessary energy loss) buildings have more than 60% of unnecessary energy loss)

housings

HRK 1.8 billion or € 240 million

infrastructure

maintenance remained at the same level – possibility of decentralization maintenance remained at the same level – possibility of decentralization

€60 million at annual level

January 2012; adoption of all secondary legilsation in final phase – enable more efficient procedures

tax, etc)

acquis

in order to build a modern, reliable and citizen-oriented public service

new Act on deadlines for settlement of financial obligations

THANK YOU FOR YOUR ATTENTION!