1. CROATIAN CHAMBER OF ECONOMY CROATIA BUSINESS AND INVESTMENT OPPORTUNITIES Argentine-Croatian Business Forum Buenos Aires, November 2006

2. CROATIAN CHAMBER OF ECONOMY CONTENT ECONOMIC SITUATION PERSPECTIVES GDP STRUCTURE AND SECTORS EXTERNAL RELATIONS (FOREIGN TRADE AND INVESTMENT) BILATERAL COOPERATION/ PRESENT AND PERSPECTIVES

3. CROATIAN CHAMBER OF ECONOMY Area56,538 km 2 Population4.4 mil Coastline1,778 km Islands1,185 Capital CityZagreb GEOGRAPHIC PROFILE EUROPE CROATIA MEDITERRANEAN SEA CENTRAL EUROPEAN COUNTRIES

4. CROATIAN CHAMBER OF ECONOMY Gross Domestic Product (bn USD) 38.5 GDP per capita 8,677 USD GDP, real growth rate 4.3 % international reserves(CNB) 8,801 mil USD average net salary 736 USD inflation 3.3 % industrial output growth 5.1 % unemployment rate 13.1 % (ILO) long term credit rating : BBB, Baa3 (Standard&Poors, Moodys) ECONOMIC PROFILE (2005)

5. CROATIAN CHAMBER OF ECONOMY THE GOVERNMENTS PRIORITIES Achievements: macroeconomic stability (inflation, exchange rates) moderate growth economic enviroment (HITRO HR) government deficit Improvements needed: external debt current account deficit unemployment restructuring (shipyards, iron plants, railways) reforms (health, public administration, justice, fiscal system) EXPORTS

6. CROATIAN CHAMBER OF ECONOMY GDP STRUCTURE

7. CROATIAN CHAMBER OF ECONOMY INDUSTRY SECTOR 20% of GDP 25% of total employment main industrial branches: - food and beverages production - electricity, gas and water supply - chemicals and chemical products - refined petroleum products - machinery - plastic and rubber products - shipbuilding (strongly export-oriented)

8. CROATIAN CHAMBER OF ECONOMY TOURISM revenues: 8 bn USD 19% of GDP 10 mil tourists 51 mil overnight stays nautical tourism (47 marinas) 1,185 islands 8 national parks world cultural and natural heritage sites protected by UNESCO

9. CROATIAN CHAMBER OF ECONOMY AGRICULTURE AND FOOD INDUSTRY 6% of GDP 7% of total employment wide range of products (fish, cattle, cereals, wine, olives, sugar beet etc.) 82% of cultivated land - privately owned many well-known export products: Vegeta, chocolate products, canned fish

10. CROATIAN CHAMBER OF ECONOMY BANKING SECTOR Banking – almost entirely privatised, stable and developed sector, highly diversified offer and good quality of financial products and services 36 banks, 5 (building societes) housing savings banks state owned banks 5% private domestic banks 3% foreign owned banks 92% Croatian National Bank – central financial institution HBOR (CBRD) – Croatian Bank for Reconstruction and Development – state owned investment bank

11. CROATIAN CHAMBER OF ECONOMY EXTERNAL RELATIONS Member of the World Trade Organization (2000) 37 Free Trade Agreements (CEFTA, EFTA, etc.) active role in the stabilization of the region Stabilization and Association Agreement (SAA) with EU (2001) candidate status - June 2004 opening of Croatia's accession negotiations with the EU - October 2005

12. CROATIAN CHAMBER OF ECONOMY COMMODITY EXCHANGE Total 27,356 mil USD Export 8,809 mil USD Import 18,546 mil USD (mil USD) Percentage EU countries (EU-25) 17,630 64% CEFTA countries558 2% EFTA countries 423 1.5% other countries 8,745 32.5% Total 27,356 mil USD Export 8,809 mil USD Import 18,546 mil USD (mil USD) Percentage EU countries (EU-25) 17,630 64% CEFTA countries558 2% EFTA countries 423 1.5% other countries 8,745 32.5% 2005

13. CROATIAN CHAMBER OF ECONOMY 9% 1% 3% 2% 0.1% 84% FOREIGN TRADE (2005)

14. CROATIAN CHAMBER OF ECONOMY (2005) MAIN EXPORT PARTNERS (2005) 21%21%21%21% 14% 7%7%7%7% 8% 10%10%10%10% AUS AUS BiH ITA ITA GER GER SLO 40% OTHER COUNTRIES(China, Hungary, USA,Serbia and Montenegro) OTHER COUNTRIES(China, Hungary, USA, Serbia and Montenegro)

15. CROATIAN CHAMBER OF ECONOMY (2005) MAIN IMPORT PARTNERS (2005) 5% 16%16%16%16% 9%9%9%9% 6%6%6%6% 7% 14%14%14%14% AUS AUS ITA ITA GER GER SLO RUS PRC PRC OTHER COUNTRIES (France, Hungary, Czech Republic, USA) 43%43%43%43%

16. CROATIAN CHAMBER OF ECONOMY THE MAIN EXPORT PRODUCTS 2005 1. Mineral fuels and oils 13.6% 2. Ships and boats 11.0 % 3. Electrical machines, equipment and parts 9.2 % 4. Machinery, appliances and parts 7.4 % 5. Wood and articles of wood 4.1 % 6. Plastics and articles thereof 4.0 % 7. Articles of apparel and clothing accessories, 3.2 % knitted or crocheted knitted or crocheted 8. Furniture; bedding, mattresses, lamps 3.0 % 9. Articles of apparel and clothing accessories, 3.0 % not knitted or crocheted not knitted or crocheted 10. Articles of iron or steel 2.5 %

17. CROATIAN CHAMBER OF ECONOMY THE MAIN IMPORT PRODUCTS 2005 Mineral fuels and oils 15.1% 1. Mineral fuels and oils 15.1% 2. Machinery, appliances and parts 12.3 % 3. Vehicles and their parts 9.4 % 4. Electrical machines, equipment and parts 8.5 % 5. Plastics and plastic products 3.7 % 6. Iron and steel 6. Iron and steel 3.5 % 7. Articles of iron and steel 3.2 % 8. Pharmaceutical products 2.7 % 9. Ships, boats and floating structures 2.7 % 10. Paper and paperboard, articles of paper 2.4 % pulp, of paper or of paperboard

18. CROATIAN CHAMBER OF ECONOMY LEGAL FRAMEWORK FOR INVESTMENTS AND DOING BUSINESS IN CROATIA The Croatian Constitution guarantees: free transfer of profit and of invested capital equal rights for foreign and domestic investors real estate ownership Company Law companies: joint stock company -33,000 USD limited liability company - 3,300 USD public limited liability company limited partnership One-stop-shop (www.hitro.hr ) Investment Promotion Law

19. CROATIAN CHAMBER OF ECONOMY INVESTMENT PROMOTION LAW Tax incentives:

20. CROATIAN CHAMBER OF ECONOMY FOREIGN DIRECT INVESTMENTS (1993 - June 2006) Country Share in total FDI 1. Austria 21 % 2. Germany 17 % 3. USA 10 % 4. France 10 % 5. Italy 8 % 5. Italy 8 % 6. Hungary 7 % 7. Netherlands 7 % 8. Luxemburg 6 % 8. Luxemburg 6 % Source: Croatian National Bank Edited by: Croatian Chamber of Economy TOTAL = 12,502.9 mil EUR

21. CROATIAN CHAMBER OF ECONOMY FOREIGN DIRECT INVESTMENTS BY SECTORS (1993 - June 2006) Sector Share in total foreign investments Sector Share in total foreign investments Financial sector 25 % Telecommunications 12 % Pharmaceuticals 8 % Wholesale, commision and retail trade 6 % Production of petroleum products 4 % Production of non-metalic mineral 4 % products Extraction of crude petroleum 3 % Hotels and restaurants 2 % Source: Croatian National Bank Edited by: Croatian Chamber of Economy

22. CROATIAN CHAMBER OF ECONOMY MAIN INVESTORS Deutsche Telekom, Germany MOL, Hungary Siemens, Germany Coca-Cola, USA Vetropack,Switzerland RMC Group Ericsson, Sweden Agip, Italy Société Suisse de Ciment Portland, Switzerland Raiffeisenzentralbank AG, Austria Carlsberg

23. CROATIAN CHAMBER OF ECONOMY TAX SYSTEM profit tax (companies) - 20% income tax - 15%, 25%, 35%, 45% + city surtax value added tax (VAT) - 22%, 0% excise duties: – alcohol, beer, tobacco, coffee, cars, petroleum derivatives, non-alcoholic beverages, luxury products agreements on avoidance of the double taxation

24. CROATIAN CHAMBER OF ECONOMY FREE ZONES all business activities without custom duties and VAT retail is NOT permitted profit tax: 10% no profit tax for investments in infrastructure facilities (164,000 USD - 5 years) Entrepreneurial zones

25. CROATIAN CHAMBER OF ECONOMY FREE ZONES Buje Pula Port Rijeka Kukuljanovo Zagreb Krapina Varaždin Obrovac Osijek Slavonski Brod Split Port Split Ploče Vukovar Bjelovar Karlovac

26. CROATIAN CHAMBER OF ECONOMY WHY CROATIA? steady economic growth Croatias location and traditionally good business links with neighbouring countries FTA with most of the countries in Europe friendly environment and incentives for FDI, over 400 entrepreneurial zones free transfer of profits and invested capital (profits tax 20%) agreements on avoidance of double taxation (55) and protection and promotion of investments (62) EU – prospects / adjustment of legislation to acquis communautaire modern infrastructure highly qualified and well-trained labor force (E,D,I)

27. CROATIAN CHAMBER OF ECONOMY INVESTMENT RECOMMENDATIONS green-field investment in export-oriented manufacturing sectors green-field investment in export-oriented manufacturing sectors co-operation in manufacturing and product development – advantages: tradition, quality and engineering know-how co-operation in manufacturing and product development – advantages: tradition, quality and engineering know-how booming tourism sector booming tourism sector numerous infrastructural projects numerous infrastructural projects privatisation process privatisation process production and assembling in free zones production and assembling in free zones development of new technologies development of new technologies energy sector… energy sector…

28. CROATIAN CHAMBER OF ECONOMY COMMODITY EXCHANGE CROATIA - ARGENTINA source: Croatian Bureau of Statistics - mil USD YEAR EXPORT IMPORT TOTAL BALANCE 2000. 2.1 4.4 6.5 - 2.3 2001. 1.3 10 11.3 - 8.7 2002. 1.2 14 15.2 - 12.8 2003. 0.3 14.8 15.1 - 14.5 2004. 0.3 37.7 38 - 37.4 2005. 3.8 82.7 86.5 - 78.9 2006.I-IX. 0.5 38.6 39.1 - 38.1

29. CROATIAN CHAMBER OF ECONOMY COMMODITY EXCHANGE CROATIA - ARGENTINA in 000 USD

30. CROATIAN CHAMBER OF ECONOMY EXPORT STRUCTURE CROATIA - ARGENTINA Export in 2005 source: Croatian Bureau of Statistics PRODUCTS mil USD % Turbojets, turbopropellers 3.2 85 Machinery for working rubber or plastics 0.2 6 Moulding boxes for metal foundry 0.08 2 Antibiotics 0.06 2

31. CROATIAN CHAMBER OF ECONOMY source: Croatian Bureau of Statistics PRODUCTS mil USD % Leather further prepared after tanning 56.6 68 or crusting, of bovine or equine animals Cheese and curd 8 10 Fish fillets and other fish meat 3.6 4 Aluminium wire 3 3 IMPORT STRUCTURE CROATIA - ARGENTINA Import in 2005

32. CROATIAN CHAMBER OF ECONOMY BUSINESS IMPROVEMENT POSSIBILITIES TRANSPORT – PORT OF RIJEKA, PORT OF PLOCE AIRPORT ZAGREB FREE ZONES INFRASTRUCTURAL PROJECTS (ROADS, ENERGY SECTOR) SHIPBUILDING EXPLORATION OF OIL AND GAS MACHINE-BUILDING INDUSTRY CHEMICAL AND PHARMACEUTICAL INDUSTRY FOOD INDUSTRY AGRICULTURE

33. CROATIAN CHAMBER OF ECONOMY CROATIAN COMPANIES PRESENTED BY CATALOGUES ALTPRO d.o.o., Zagreb Research, development and production of the safety signalling systems for the railway infrastructure and rolling stock ATLANTIC GROUP, Zagreb Production of cosmetics, instant vitamin drinks FERO-LEKO d.o.o., Pozega Production and trade of food supplements (antidiabetic, liver disease) INSTITUTE OF IMMUNOLOGY Inc., Zagreb Production of viral and bacterial vaccines, plasma derivatives PORT OF RIJEKA, Rijeka Port activity: loading, unloading, warehousing, transportation of cargo

34. CROATIAN CHAMBER OF ECONOMY CROATIAN COMPANIES PRESENTED BY CATALOGUES PECON d.o.o., Zagreb Engineering, production and trade in process industry (food processing industry, chemical industry, pharmaceutical industry) RIZ-TRANSMITTERS Co., Zagreb Design, manufacturing and supply of radio broadcasting transmitters and watthour meters ZAGREB FAIR, Zagreb Organising international fairs and congresses GENERALTURIST d.o.o., Zagreb Tourism – inbound, outbound, air ticketing

35. CROATIAN CHAMBER OF ECONOMY established in 1852 since 1991 public law institution with obligatory membership 20 county chambers 7 Representative Offices abroad 9 departments, 5 centres, 42 professional associations, 73 groups, 21 affiliations Euro Info Correspondence Centre member of ICC, Eurochambres, CEI, Alpe-Adria Chambers, UNECE, ASCAME, UEAPME, ECSB, TII, FIATA, OICA, EMEC ISO 9001/2000

36. CROATIAN CHAMBER OF ECONOMY HOW THE CHAMBER CAN HELP YOU? Biznet - simple and quick access to information and the companies database via Internet (www.hgk.hr) register of Croatian companies information about regulations and laws in the field of economics business opportunities exchange The Permanent Court of Arbitration - efficient system for resolving commercial disputes

37. CROATIAN CHAMBER OF ECONOMY International Relations Department phone: + 385 1 4828 382 fax: + 385 1 4828 380 Rooseveltov trg 2 10000 Zagreb Croatia, Europe www.hgk.hr e-mail: eoi@hgk.hr Thank you for your attention!