Poll: German companies operating in Croatia dismayed by poor business climate

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Only 54 percent of German companies currently investing in Croatia said that they would embark on another investment in the country today, a recent poll released by a German-Croatian business association showed, pointing to the country's decreasing attractiveness for investors.

The poll, conducted by the Croatian-German chamber of industry from February to April this year, asked 150 German companies doing business in Croatia – which includes German giants like Alianz, Siemens, Bauerfiend, Knauf, Müller, and Spar – whether they would invest in the country again after seeing the obstacles foreign investments often have to deal with in Croatia.

Only 54 percent said they would be prepared to invest again, down from 68 percent in 2018. In addition, nearly 60 percent of companies polled described the state of Croatia’s economy as ‘bad.’

“This poll may only measure how the business environment is perceived, but it does indicate an overall impression that companies have about doing business here. Which is – nothing really changes,” head of the Croatian-German Chamber of Industry, Thomas Sichl, told Poslovni Dnevnik business daily.

In earlier years after Croatia had joined the EU in 2013, the percentage hovered around 80 percent. This year, Croatia not only fared worse than before, but the percentage of companies willing to re-invest in the country was lower in Croatia than in other countries in Central and Eastern Europe, where around 20 percent said the same.

In terms of marks for the overall business climate, Croatia was ranked 8th out of 20 countries in Central and Eastern Europe, putting it in the “relatively attractive” category for German investors.

The criticisms levelled at the general business climate are well familiar by know, and include Croatia’s inefficiency in tackling corruption, the overall tax burden, as well as the inefficient and complicated tax authority and tax system. The public administration and legal insecurity, which means laws and tax rules are often applied arbitrarily, also rank high on the list of Croatia’s problems as a investment destination.

On the other hand, the main advantages of Croatia listed by German companies included its EU membership, and good infrastructure. In spite of the dwindling labour force which is turning into an increasingly debilitating problem, German businesses said that Croatian workers’ qualifications and good education are still an advantag, Poslovni Dnevnik reported on Wednesday.

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