Croatia Hopes to Attract Investment with New Legislation

We were curious and looking forward to reviewing (and positively assessing) the new draft legislation by the Ministry of Economic, aimed at “kick starting” and quickly realising state strategic investment projects, such as the Kupari resort complex, the coal-fired Plomin C power plant, the LNG terminal, etc.

The draft text of the legislation is vague and seems to have been written to support specific projects, as opposed to addressing systematic administrative, bureaucratic, and political issues that are regular obstacles to the realisation of investment projects.  The only “defined” criteria for a project to qualify as a national strategic investment is the minimum investment value, €20 million for industrial and production investments and €50 million for touristic projects. The other possible qualifying criteria are so subjective that it is unclear how a project would qualify.  For example, other criteria include: the project needs to “establish conditions for the employment of a larger number of persons”, “directly or indirectly and significantly adds to the development or improvement of conditions for tourism development”.  The other stated criteria are just as vague.  A commission will be established to be made up of government cabinet members, ministry officials and other experts that will review and propose a list of projects to be sent to the government cabinet for approval as strategic state projects.  In Croatia and other former socialist countries, the local population is always wary of the establishment of commissions or committees.  There’s actually a saying in Croatia: “When you can’t (or don’t want to) solve a problem, establish a committee!”  In this case, the criteria is so vague and the decision-making is exclusively within the government purview, meaning that only government (or politically) acceptable projects will be approved.

The measures that are intent on expediting projects are actually measures that by-pass interested stake-holders from the project development and gives exclusive negotiating rights to the government ministerial level, dependent upon the issue to be addressed.  If it is an urban planning issue, direct negotiations with the investor is under the purview of the Ministry of Construction and Spatial Planning, meaning that the government will be able to by-pass the Istrian County for the coal-fired power plant Plomin C and force the “coal-fired” wording into the County spatial plan, instead of the present natural gas plant.  If the issue is property ownership or management, then the investor directly negotiates with the Ministry of Justice, meaning that the complex property ownership issues for the LNG terminal project on the island of Krk will be resolved directly by the ministry…

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