Croatia has already attracted more than EUR 1 billion in foreign direct investments (FDI) this year because in the third quarter British American Tobacco deposited EUR 500 million for the purchase of the TDR tobacco company, Deputy Prime Minister Branko Grcic said on Wednesday, adding that one should wait for the end of the year for comprehensive FDI data.
In Q1 2015, foreign investments were 40 percent higher than in Q1 2014, in Q2 “we already have half a billion euros registered,” and in Q3 EUR 500 million was paid after BAT bought TDR, Grcic told reporters in Porec when asked to comment on a decrease in foreign investments, adding that the statistics were official only for the first half of the year.
He said the government was eliminating obstacles facing investors, mentioning European Coastal Airlines, which this summer, after 14 years of attempts, introduced seaplane flights between Croatia’s islands and the mainland.
Responding to questions, Grcic said he was not worried about the investment data. He said that at the end of Q2 investments accounted for nearly 1% of the 1.2% GDP growth and that this had happened for the first time in seven years.
Speaking to the press before a government session in Zagreb, Finance Minister Boris Lalovac said he could not understand how the tax policy could be one of the obstacles to bigger foreign investments, when various breaks had been introduced.
“We left HRK 3.8 billion in reinvested profit in three years. We said we would relieve (the taxation of) salaries, even rescind the 40% rate. We rescinded HRK 400 million worth of parafiscal levies. We have known for 20 years already that taxes in Croatia are high and that we must cut them. We have shown that we are cutting them,” he said when asked to comment on the drop in foreign investments.
Lalovac said that according to the World Bank’s “Doing Business” report for 2014, “we are competitive.” The report ranked Croatia 65th among 189 countries, ranking best in tax payment (36th).
FDI in Croatia in the first half of 2015 amounted to EUR 498 million, according to preliminary data of the Croatian National Bank, which was down 45% on the year, as estimated by Raiffeisenbank Austra analysts. In the first half of 2014, FDI amounted to EUR 2.4 billion, but nearly EUR 1.5 billion referred to round-tripping in June that year.
Over 60% of FDI in the first half of 2015 came from Luxembourg, followed by Germany and the Netherlands.
From 1993 through June 2015, FDI in Croatia totalled EUR 29.9 billion, or EUR 27.5 billion if round-tripping is excluded.