BUDAPEST INTERNATIONAL BUSINESS CENTER CONFERENCE 2013 Budapest, March 22, 2013

Agency for Investments and Competitiveness About Croatia

Agency for Investments and Competitiveness Why Croatia today?

Agency for Investments and Competitiveness Economic and Political Stability Economic and Political Stability Process of harmonization with EU legislation Negotiations ended with EU by mid of 2011 Accession: July 2013 Croatia became a full member in April 2009 Croatia was a non permanent member of UN Security Council from January 2008 till January 2010

Agency for Investments and Competitiveness Human capital Network of educational institutions Multilingualism Innovative people

Agency for Investments and Competitiveness Labor Cost Competitiveness

Agency for Investments and Competitiveness  Modernization of the railway network - Rijeka-Botovo project  100% digitalized communication network and high broadband Internet penetration  Croatia has one of densest networks of highways (km/km 2 )  Three major PAN-EUROPEAN corridors pass through CroatiaInfrastructure

Agency for Investments and Competitiveness Market Access Access to EU market of 500 million people Trade agreement signed with EU since February 1, 2005

Agency for Investments and Competitiveness FDI – billion € ( Q 2012) Country% of FDI Austria25.3 Netherlands15.5 Germany11.5 Hungary8.9 FDI in Croatia

Agency for Investments and Competitiveness Manufacturing activities Technology centres Strategic business support services Tourism (4 plus star hotels and resorts, sports and health centers, etc) Sectors Tax incentives Customs preferences Employment and education grants Incentives for modernization of technology and R&D activities Incentives for initial and capital expenses of the investment project Incentives for labour intensive investment projects Incentives Equipment and machinery and intangible assets: patent rights, licenses, know-how, or 2 year-gross salaries Eligible investment costs Investment Incentives

Agency for Investments and Competitiveness Investment Incentives Minimum investment: € - SME’s and large size companies Incentives Tax incentives0% - 10% profit tax rate Employment incentives€3,000 – €9,000 per employee Incentives for Innovation and Development 20% of the eligible cost of buying the equipment/machinery (up to € 0.5 million) Incentives for Initial and Capital Expenses of the Investment Project Cash grant in amount of 10% of the eligible costs (up to € 1.0 million) Respective investment incentives are calculated on an individual basis.

Agency for Investments and Competitiveness Investment opportunities Tourism Sector -Hotel companies - Government owned portfolio -Development projects - Government owned portfolio -Golf development Textile industry Infrastructure

Agency for Investments and Competitiveness Textile Clusters in Croatia TextileClothingLeather Employess4,00015,6008,700 Export, million € Import, million € Gross salary, € Revenue, million €  Arround 700 companies  Major foreign investors: Boxmark, Benetton, Calzedonia, Bulgari, Filati Textile Sector Overview Source: CBS

Agency for Investments and Competitiveness Tourism Projects - Overview STATE OWNERSHIP AVAILABLE FOR SALE (%) Projects / Companies Non-operating property Kupari100.00% Operating assets Bizovac Spa (Bizovačke toplice)99.44% Plat Hotels (Hoteli Plat)92.49% Dalma Hotels (Hoteli Dalma)84.30% Zivogosce Hotels (Hoteli Živogošće)75.21% Maestral Hotels (Hoteli Maestral)68.25% Orebic Hotels (Hoteli Orebić)63.65% Podgora Hotels (Hoteli Podgora)55.67% Vranjica Belvedere53.99% Medena Hotels (Hoteli Medena)53.66% HTP Korcula (HTP Korčula)50.38% Imperial Hotels (Hoteli Imperijal, Rab)50.07% Modra Spilja (Modra Špilja)43.14% Makarska Hotels (Hoteli Makarska)41.39%

Agency for Investments and Competitiveness Infrastructure projects

Agency for Investments and Competitiveness Zagreb-Pier Container Terminal, Port of Rijeka  PROJECT SUMMARY: Transaction structure: The Phase 2 is planned to be financed by private partner (concessioner) Location: Port of Rijeka, City of Rijeka Objective: Construction of Container Terminal (500,000 TEU/Y) on the west side of Rijeka port, envisaged to be completed in two phases: -Phase 1: construction of 400 m of waterfront -Phase 2: extension of the waterfront by an additional 280 m along with the construction of infrastructure, suprastructure and equipment for the Terminal Ownership: Maritime property of Republic of Croatia Estimated value: Total of Eur 321 mil -Phase 1: Eur 71 mil financed through a World Bank loan -Phase 2: Eur 250 mil for the completion of Project

Agency for Investments and Competitiveness Zagreb-Pier Container Terminal, Port of Rijeka Main Project Capacities: – Estimated terminal area-total of 37 hectares Phase hectares, Phase hectares – Transshipment capacity: Two berths for post-Panamax ships with total capacity of 500,000 TEU/y Additional Project Capacities: – Along with the construction of the Terminal the construction of connection roads D 403 and reconstruction of marshaling yard for containers are planned. Current status of the project: – Within the completion of Phase 1 the contract for construction activities has been signed and location permit is expected to be obtained soon.  LUKA RIJEKA The biggest port of Croatia and the most convenient hub for Central Europe and with excellent railway and road connections to CEE countries. Port depth: between m Volume Indicators (2011) : -Cargo: 9,145,198 tones -Container transport: 150,677 TEU -Passengers: 178,956 Financial indicators - in Eur (2011) -Turnover: 24,808,620 -EBITDA: 1,265,939 -EBIT: 118,468

Agency for Investments and Competitiveness Port of Vukovar  PROJECT SUMMARY Transaction structure: concession or equity investment in the company Luka Vukovar d.d. Location: Town of Vukovar Objective: – Strengthening the inland navigation sector, – Improving the port competitiveness The Project description: – Modernisation of existing and construction of new capacities and equipment: communal and infrastructural port facilities, bank, road and rail infrastructure. – Construction of an office building, a car park, a port control centre and a new port entrance. Estimated value: Eur 24,17 mil

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