ZAGREB: Croatia's government pledged on Monday to boost the investment climate after a business report said legal uncertainties and administrative burdens were deterring foreign firms from pouring in money.
Croatia, which joined the European Union in 2013, has had one of the lowest level of greenfield investments among the new member states in central and eastern Europe.
The FIC association of foreign investors report said Croatia suffered from legal uncertainty due to frequent changes of the regulatory framework.
"It worries the investors a lot," said Hrvoje Stojic, from Addiko Bank, who presented the report from the body that groups 37 local companies owned by foreign owners.
Despite reforms which have eased the pressure on businesses, the tax take is still high, while many non-taxation fees bring an additional burden, the FIC said.
Stojic put the fees figure at some 9.3 billion kuna ($1.45 billion) a year.
The investors also complain about long judicial procedures and an inflexible labour market.
Deputy Prime Minister and Economy Minister Martina Dalic, who attended the presentation, said the FIC's remarks would be taken into account in economic policy next year.
"The government's goal is to identify all the bottlenecks for creating a better investment climate and work on their removal," she said.
Among such moves, she announced a performance-based public sector wage policy and a regular assessment of how any new legal solution could affect businesses.
Croatia has pursued a major fiscal consolidation, cutting the deficit to below 1 percent of gross domestic product from more than 5 percent several years ago, but the analysts warn that without business-friendly reforms Croatia's longer-term growth prospects remain meagre, at 2 percent at most.
This year Croatia's economy is expected to grow slightly above 3 percent, largely driven by tourism receipts and consumer spending. Tourism amounts to almost 20 percent of GDP.
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