Protestantes

Despite global recession, small business is still the most dynamic part of the economy. Small business ended the business year 2009 with 81,426 small and 1,390 medium-size enterprises, 96,909 crafts and 1,125 co-operatives. A total of 180,850 economic entities account for 99.7% of the total economy, employing 66% of the workers. Employment in small-business entities increased by 2.8 in 2009 compared to 2008, total revenues decreased by 6.9% and profit for the period by 13.1%. The share of small and medium-size enterprises in exports stood at approximately 44% in 2009. The analysis of financial results by activities shows that the following are the three most important activities: manufacturing, trade and information and communications with a share of more than 50% in total business results, as was the case in the past ten years. Construction and professional, scientific and technical activities also recorded good business results, whereas other activities were less significant. Depending on the period of analysis, micro economy in Croatia accounts for about 80% of the total economy.

In the Operation Plan of Small and Medium-Sized Entrepreneurship Promotion for 2008 – 2012 of the Government of the Republic of Croatia, of 18 April 2008, which is implemented through the annual Operational plans, the fundamental strategic guideline is strengthening of competitiveness of small business and it has been implemented on an on-going basis. For small countries, such as Croatia, entrepreneurship, characterised by market penetrability and higher value-added products, is crucial. Competitiveness of small business is promoted through aid for the purchase of advanced technologies and technological procedures, which are used for diversification and development of new products, along with transfer and networking of knowledge.

In addition, entrepreneurial projects involving investment in energy efficiency, environmental protection and introduction of the quality management systems and international standards are being promoted. The Croatian economy has about 1,500 fast-growing economic entities - Gezelle for which special incentives are intended, in accordance with the de minimis aid rules. Gazelles in small business operate in the activities involving technological innovations, production of new technology, ICT, wood industry, manufacture of ecological products, small shipbuilding, etc.

Entrepreneurs improve their export capacities through aid for clusters and creation of brends16. The

system of supporting institutions and regional developmental agency, as well as the established entrepreneurial zones, facilitate the beginning of entrepreneurship and growth and development of small-business entities.

16 _{The European Business School released the first Innovation for Development Report, 2009-2010 that measures the} innovative capacity of 131 countries worldwide by the Innovation Capacity Index. The Index is based on 5 pillars of innovation capacity: institutional environment; human capital, training and social inclusion; regulatory and legal framework; research and development; and the use of ICT. The Innovation Capacity Index provides a quantification tool for policy discussions on various aspects of innovation - the methodologies allow the formulation of policy prescriptions that are country-specific and based on a nation’s development stage and the nature of its political regime. According to the Innovation Capacity Index, Croatia is in 38th place out of 131 countries. Slovenia and the Czech Republic are in 31st and 32nd place, while Slovakia, Poland and Hungary are behind Croatia (in 39th, 40th, and 41st place, respectively). The strength of Croatia's innovation capacity is evident in the following indicators: number of

Entrepreneurship for the youth, beginners and disabled people, as well as women’s entrepreneurship has its place in the development of small business, especially at the regional level. In strengthening of competitive capacities of the small and medium-size enterprises, a significant part relates to training for entrepreneurship, which includes all forms of registration of entrepreneurs, i.e. companies, crafts and co-operatives. As a part of institutional development, the Ministry of the Economy, Labour and Entrepreneurship established the Registry of aid to small business, a database with data and technological solutions and the reporting system, which allow for monitoring, analysis and evaluation of the system of incentives. Drafting of Small Business

Development Strategy for 2012-2020 period is being considered17.

The Republic of Croatia has been implementing the European Charter for Small Enterprises since 2003, which is the main EU document for implementation of small business development policies. In 2008, the EU adopted the Small Business Act for Europe for the purpose of further development and promotion of small and medium-size enterprises, implying that the process established by the European Charter for Small Enterprises changes and that with 2010 a new reporting cycle begins, which will monitor the implementation of the small business development policies through the application of the Small Business Act for Europe. The SEE countries have reached an agreement to measure performance by the so called policy index in a two-year reporting cycle.

The service of the Government of the Republic of Croatia for a quicker communication between entrepreneurs and citizens with state administration bodies – HITRO.HR, has been operating for more than five years (the first office was opened on 11 May 2005 in Zagreb). By using services of 61 HTIRO.HR offices more than 38,507 companies and crafts were established. Out of a total number of newly-established companies, more than 2,594 are in foreign ownership. HITRO.HR expanded to all county centres, larger cities and islands in the Republic of Croatia. In addition to cost reduction, the largest savings were made in terms of time, since the entire establishment procedure was shortened from 40 days in 2004 to 24 hours, through the project e-Tvrtka (e-

Company)18.

In view of the achievements, a further systematic support to small business should be ensured, primarily through: (i) creation of conditions and implementation of institutional solutions for expanding the sources of financing (venture capital funds, equity funds, EU financial instruments), facilitating access to sources of financing of innovations and their commercialisation and increase in total investment in small business, (ii) including small business entities in financial markets and finding alternative lending sources (iii) increased use of internet and e-services (e-commerce, e- business, e-banking, e-marketing, etc.), (iv) strengthening of support of development to new age

17 _{Strategy for Women’s Entrepreneurship Development 2010 – 2013 – adopted in March 2010; Analysis of} development and position of crafts with the guidelines for crafts development strategy and Guidelines for a short-term crafts development 2011-2012 – completed in May 2010; Learning Strategy for Entrepreneurship 2010-2014 – adopted in June 2010; Cluster Development Strategy 2010-2015 – proposal completed; Strategy for Promoting Investment and Internationalisation 2012-2020, at the international tender – the expected deadline for delivery is end-2012.

18 _{The Ministry of the Economy, Labour and Entrepreneurship has developed a Programme of measures for simplifying} the operation of small business entities, in accordance with the Economic Recovery Programme of the Government of the Republic of Croatia of 6 June 2010. The Programme of measures for simplifying the operation of small business entities is divided into two areas: facilitating entry into entrepreneurship and facilitating operation of small and

medium-size enterprises carrying out entrepreneurial activity. The Programme defines 14 implementing entities

according to their respective competence and 27 measures relating to the following areas and activities: 11 measures aimed at legislative amendments, 4 measures for systematic analysis for the purpose of rationalisation and efficiency, 5 measures for facilitating financing, 2 measures for e-business and digitalisation, 1 measure relates to education and information, 1 measure relates to advisors and consultants for entrepreneurship, specialists for providing assistance and expert support to recovery of economic entities, 2 measures for promotion of entrepreneurship and 1 measure for more strict application of the existing economic regulations.

economy (with considerable growth possibilities) including small business in tourism and cultural industries, (v) better connection of small business with research and development and entities for whom this is a core activity, (vi) giving priority to promotion of further growth and continuity of implementation of developmental projects of fast-growing economic entities, (vii) increasing overall productivity as a result of application of innovations, new technologies and research and increasing the share of small business entities which enter the market with higher value-added products, by applying advanced technological solutions, (viii) further investment in life-long learning for entrepreneurship, (ix) support to export and market competitiveness of small business through clusters, (x) flexible employment and (xi) promotion of entrepreneurship with an aim of further enhancement of entrepreneurial culture.

Small and Medium-size Enterprises in Tourism

As regards the Programme of the Government of the Republic of Croatia intended for lending to small family enterprises in tourism “Incentive for success”, the assumed obligations are being conducted. As a part of the Programme, in the 2002-2009 period, loans were granted at a subsidised interest rate to small and medium-size business entities. In the 2011-2013 period, more than HRK 210 million worth aid will be disbursed to these entities. The subsidy funds will be allocated, under the Programme, to 248 companies and 226 crafts. The said number of enterprises operates in 357 hotel and restaurant facilities for accommodation, classified as hotel-type facilities – hotel, all-suite hotel and boarding house, 79 suites and 34 summer houses. That segment of small hotel industry operates even in off-peak season, especially in smaller towns, when larger hotel systems are closed, thus directly affecting the extension of the tourist season. Small and medium-size enterprises, beneficiaries of the Programme, have 5,854 rooms and 1,097 suites and 15,150 beds, accounting for 11% of the total number of rooms available in the Croatian hotels, all-suite hotels and boarding houses, 34% of the total number of registered tourist apartments and 13% of beds in the total number of beds in hotels, all-suite hotels, boarding houses and registered tourist apartments.

In the period 2011 - 2013, implementation of the incentive measures for small and medium-size business entities in tourism through non-refundable grants is planned to be continued. Non- refundable grants will promote development and realisation of the programmes and projects for creating the preconditions which will contribute to the development of the basic, as well as improvement and enhancement of the supplementary tourism offer in the Adriatic hinterland, in the continental area and in the hinterland of the Croatian islands. Non-refundable grants will also be directed at development of the selective types of tourism at the seaside and in the coastal area and improvement of environmental protection and safety while conducting specific forms of seaside tourism. Furthermore, production of original souvenirs will be promoted, as well as restoration, valorisation and revitalisation of the cultural, traditional and natural heritage as a new tourist product. The incentives will also encompass the events for increasing competitiveness in tourism and improvement of conditions for disabled persons in hotel and restaurant accommodation facilities. The objective is to enable a better positioning in the tourist market for the segment of small and medium-size enterprises in tourism in the forthcoming short-term period, in accordance with the required quality standards.