Local Democracy Embassy
Europe Council and European Union programme

SISAK-MOSLAVINA COUNTY
Croatia

Report written by
Antonella Valmorbida

April 1997


CONTENTS

1. General informations about Sisak county
2. Economic situation
3. Import/export
4. Foreign investments in Croatia
5. Preferences concerning the reconstruction
6. Economic operators
7. Local Democracy Embassy
8. Sisak A.D.L. social-economic programme - 1997
9. Sisak A.D.L. general programme - 199
10. A list of the main industries in the city of Sisak

1. General informations about Sisak County

Sisak county extends on 5.100 km2. In 1991, there were 287.002 inhabitants. It means 9% of croatian territory and 6% of croatian people.
From a geographical point of view Sisak-Moslavina county is in west Slavonia. The war, from 1991 to 1995, changed radically Sisak county demographic situation. The city of Sisak is located in Panonia lowland, 50 km south of Zagreb, at the confluence of Kupa, Odra and Sava rivers. It is the county administrative centre and it has 60.000 inhabitants.
The most important industries, next to be ptivatized, produce electric power, oil, chemistry and metallurgy. They are living a deep crisis, while in area of services things are going better (especially for indispensable goods trade).
From 1991 to 1995, Serbian troops occupied more than 50% of Sisak county, so croatian people living there were forced to escape. On August 1995, the croatian reconquest of this area started just from Sisak, placed on the border-line. Serbo-croatians, living there since 1991, escaped in Banka Luka county, in Srbska Republic (Bosnia Erzegovina) and in Serbia.
The war left evident marks, destroying as houses, infrastructures, industrial and trading system, as civil life. According to statistics of the county office for refugees and evacuees, on August 1996 the city of Sisak lodged 12.993 refugeed and evacued people. They were 38.892 all over the county. These people are slowly coming back home, but it needs a strong investment in rebuilding.

2. Economic situation

2.1 Summary

• Heavy industries (power production, refineries, metallurgic and chemical production) have a leading roll. They works, above all, in the field of chemistry and fertilizing, metallurgy, agriculture.
• These industries are living now a strong crisis because they are technologically inadequate to foreign and home market demand. These straits rised in 1980 and they increased with the disappearing of Jugoslavian home market. Only firms able to fit their products to the foreign market are still surviving. All this means that the industry needs strong investments to acquire greater competitivness. In 1995, Sisak county industrial production lowered 1,9% in comparison to 1994 (in Croatia,in the same period, the low is 0,9%). Agriculture is living a particular phase of crisis, and several firms failed. Food-stuffs and consumer goods are imported without any control, and their high costs low the purchasing power.
• Crisis has also been provoked by the change of the ownership system. In fact, all the firms of the county are living the transition from a common property to a privatized system. They are trying to reconstruct an economic system based on little and medium firms, more siutable to the market's demand. Besides, to give always more attention to service, trade and transport industries, handcrafting has been forgotten in the last years. Last but not least, the tourist branch could also become a specific developing sector, thanks to the natural reserve of Lonja Field, proclaimed as a natural park.
• The roll of Sisak county is fundamental in croatian economy. Since middle 1994, Sisak county had the most important croatian energy industries (oil and gas). They gave the 60% of the national energetic production (in the unoccupied area). Sisak INA REFINERY produces every year by-products of oil for two millions ton. The thermoelectric power plant produces the 30% of croatian consumption. PETROKEMJA, in Kutina, meets the total demand of croatian agriculture industry and it is an important exporter. HERBOS, in Sisak, is one of the greater fertilizer chemicalproducers. TROKUT, in Novska, and DI, in Novoselec, together with 33 other frims ,produce timber for croatian and foreign market. SISCIA, SPORTSKA and ODJECA, in Novska, produces clothes.
• Sisak county natural resources are oil, methane, rivers (Sava and Kupa) and available growing land.
• Croatian industry, banking system and entrepreneurs suffer for lack of money. This is the limit for the development of a county with an high standard of human resources and raw materials. Well, these potential resources could be developed with cooperation activities.
  

2.2. Employment rate

In 1991, the 86% of productive people were employed in industries

Before the war in Croatia 76.134 people were employed in Sisak county industries (86,16%) and 12.222 people were employed in other jobs (88.356 productive people)

2.3. Occupied area and war effects

The occupied area represented more than 50% of the county and the 25% of the economic potential.

The occupied area of Sisak county was military liberated on August 1995. It covered more than 50% of the county and represented the 25% of the economic potential of this area. The county has 29 municipalities. Of these, 17 were totally occupied and 4 were partially occupied. The war caused destruction of houses, plants and equipment. The refugees coming back home, the rebuilding and the reestablishment of an economic background in the county cannot be realized without foreign investments support.
Sisak industries are working with heavy troubles. The damages provoked by the war and the heavy troubles to restart the economic market are the causes of a great productive shrinkage. Many firms, hardly struck during the war, searched for new trading markets, but quality and competitive prices vanished this effort. Other troubles to solve are: to restore the damaged structures; to restore the debts heeped up during production and sales shrinkage; to conform industries in according to modern technological standards. War destructions, to be close to the occupied area and to trade in a riskful area have not allowed the flow of foreign money and have forbidden the transfer of technology. Moreover, the banking system hasn't been able to support the economic restarting.
ZEJEZARA SISAK (steel production) is in a particular difficulty, and it is suffering losses for several years. Sisak county cannot face these troubles all alone. According to Sisak Chamber of Commerce, this firm can be restored wipping out a part of its debt (with the government support) so that its healthy part can be able to produce with more effectiveness.
The greater trading company in Sisak, BREZOVICA, went bankrupt. Other companies, located in the liberated area, are still changing their proprietors and they have to face many debts. Moreover, practised workers are leaving this area to emigrate.

2.4. Privatization process

The economic process from a collettivist to a privatistic form of the property is going on in Sisak county; in fact, 83 firms have just been privatized (39 in Sisak, 1 in Petrinja, 12 in Novska, 12 in Kutina and 19 in Ivanic Grad).

2.5. Economic and industrial concentration

8 companies control the 60% of Sisak county economy. Some of these are fundamental to the croatian economic system (oil and gas production in Moslavina and Novska district, the refinery in Sisak, petrolchemical production in Kutina, the INA distribution centre in Sisak, the electric power production in Sisak, the Adriatic pipeline, timber, etc. etc.).

2.6. Money cost

Money cost is high and it is a handicap to the economic, industrial and trading development. Banking system is formed by great public national banks, great profit-sharing banks, local banks. They impose a high money cost, so people and little trading companies cannot incur a loan. Microcredit initiatives could be a solution to start off little firms and handcrafting.

2.7. Infrastructures-communications

With regard to transport and roads, a part of the transport infrastructures is kept in good conditions. But there are still many bridges destroyed by the war. Public transport companies, postal and telecommunication services have reached a good quality level. Railroads suffered great damages during the war but now, thanks to some reconstructions, the situation is going better. River inland navigation of DUNAVSKI LOYD SISAK has been completely destroyed during the war.

3. Import/export

Sisak county export is increasing, while import is decreasing. In Croatia, the county of Sisak is the sixth county for export and the eleventh for import. According to Sisak Chamber of Commerce, export could still more increase.

3.1.1. Import/export with Italy

The Sisak county exports towards Italy more than it imports from it even if the numbers of companies which imports from Italy are far bigger. The situation is brought upside-down because of the role of some very big companies which are now going through a privatization process. These firms were used to work the former Jugoslavian market and now they have to deal with international market, among these there is Italy too.

The economical exchanges between the county of Sisak and Italy are growing, above all for the number of local companies which imports from our country. Between 1995 and 1996, here are the data from the county of Sisak :

EXPORT: + 8,36% IMPORT: + 34,5%


3.1.2. Business relations with Italy

In the area of Sisak there are 219 firms trading with Italy.
Statistics show that the area of Sisak has a great vitality and that it is a potential outlet for italian investors, because of its geographic closeness. Besides, italian investors could take advantage from Zagreb logistic system (Zagreb airport and Zagreb-Slavonskj Brod motor-way). In comparison with the other foreign business partners, in the area of Sisak the number of firms trading with Italy is higher.
In comparison with 1995, trading vitality and an increasing economic relationship between Croatia and Italy are also revealed by further exchanging relations in 1996. This means not only an economic renewal of the area, but also a trend to internationalize the economic relations, particularly with Italy.

3.1.3. Typology of Sisak firms trading with Italy

The 80% (175 on 219) of the firms trading with Italy are usually little firms, and they just import from Italy (food-stuffs and indispensable articles, while there is no trade concerning chemistry and metallurgy, traditional industries in the area of Sisak). This business relationship with Italy is still limited (in 1996, croatian firms imported goods for 500$/20.00$). Just a few firms (17 on 219) export in Italy.

Big seize companies which have import/export exchanges with Italy. Percentage on the total of the exportations and importations (1996)

Companies which have relevant import/export activites with Italy (1996) :

According to the Chamber of Commerce Sisak - figures for april 1997
Seize of the companies of the county of Sisak
for numbers of employees

4. Foreign investments in Croatia

4.1. Legislation

With regard to economic system, basic principal of croatian republic is free-trading. Every entrepeneur has equal rights about trading and economic market.
The Constitution (art.49) assert:

" Profits acquired with investments cannot be cut by the Law;
foreign investors can bring out from Croatia their profits
coming from invested money"

Of course, this Law concerning trading companies ("Narodne novine" br.111/93) aims to grant foreign investors at all.

In Croatia, investitors have the same rights and duties of croatian people. Foreign investors rights and their own guaranties are defined with an agreement at the beginning of their commercial trading and investment. Thanks to this agreement, in Croatia foreign investor can:
- to invest money thanks to this agreement;
- to invest money in a company;
- to invest money in a bank or in an insurance company;
- to start an economic activity of his own;
- to acquire the right to use inland natural resorces or whatever he needs to start his trade.

Foreign entrepeneur can also found by himself or with an economic local partner:
- a limited company;
- whatever other company;
- an economic association;
- a joint-stock company.

4.2. The brench-house

Foreign companies and individual entrepeneurs cannot start trading in Croatia until they have established there a brench-house. It can be founded by a croatian company, by an individual foreign entrepeneur or by a member authorized of a trading company. The request has to be submitted to the Registry of the area where the brench-house has been founded. In the request must be showed the brench-house location and the company legal seat. Foreign entrepeneurs founding a brench-house acquire rights and duties concerning brench-house management alike every croatian entrepeneur.

4.3. The agency

According to the Trade Law ("Narodne novine" n.11/96), foreign entrepeneurs involved with trading can establish an agency in Croatia to test the market, to do advertising or to carry out agency and information works. Before establishing an agency, it must be filed by the local Chamber of Commerce.

4.4. The permit

According to the Permit Law ("Narodne novine" n.89/92), thanks to the permit, entrepeneurs have the right to use croatian natural resources and properties, when there are economic reasons (examples given: projects concerning municipal infrastructures, gas network or heating system). In the last years,the strategic position of the city of Sisak in comparison to Croatia and central Europe hasn't been used enough. With the end of the war, the situation is changing, thanks to new foreign investments.
About river navigation, the city of Sisak has a great importance, being it the main west port on Sava river. Thanks to Danubio-Main and Reno channel, and with the construction of the Vukovar-Samac channel, Sisak could became a strategic point, connecting european river navigation from north to south.
Anyway, investment could also concern with railway and motor-way plannings.
The permit can be given to a local so as to a foreign entrepeneur, up to 99 years.
The permit is given with the system of the open tender, or with an individual request (in this case the permit has a lesser length).
There are several other laws about taxes, customs, competition and other economic factors. Anyway, their are based on croatian Republican Constitution and croatian Trading Law.

4.5. Reasons to do investments in the city of Sisak

According to Sisak Chamber of Commerce to do investments in Sisak area means to have:
- a strategic position in Croatia, West Europe (and Italy, first of all) and East Europe;
- the availability of unoccupied areas;
- the possibility to use inland industrial structures;
- the presence of municipal areas with several public services;
- the possibility to found new economic activities.

5. Preferences concerning the reconstruction

Sisak county wuorked out a preference programme for reconstruction, based on two projects, "Bljesak" and "Oluja". To have further informations about these projects you can establish contacts with Mirko Ivanusic - Reconstruction and Development Department of Sisak-Moldavina county (document enclosed).

5.1. Organization

Sisak county founded some headquarters for the reconstruction. They must set up the coming back home of refuged and evacued people. They can also give suggestions concerning the reconstruction and the development of the areas damaged by the war.

5.2. Infrastructures

5.2.1. Roads, railway, bridges

Statistics concerning the war damages tell us that the reconstruction of the roads in Sisak county needs 245.326.710 kuna (more than 73 milliards liras).To privilege the return of good relations with Bosnia Erzegovina, croatian government wants first of all the reconstruction of the railroad connecting the two contries. But, first starting this work, it is indispensable to reclaim lands from mines.

5.2.2. Electricity

The document enclosed gives a list of the preferences in this field (reconstruction needs more than 3 milliards liras).

5.2.3. Aqueducts

Aqueducts in the liberated area are out of work. Some of them need easy repairing. But, first of all, it is indispensable to reclaim them from mines (reconstructions need 14.450.000 kuna/more than 4 milliards liras).
Sisak Chamber of Commerce gives as an example the Levotanci-Madari water system. It was built in 1982 and worked till 1991 serbian occupation. After the liberation of this area, it is now indispensable a project to reconstruct the water system (document enclosed). During the war this water system was devasted. Machinery, electric power system and the whole outfit were damaged. There are nor water and electric pipes nor electric wires.

5.3. Municipal companies and services

In the occupied area, till now it hasn't been possible to set up a municipal companies system or a municipal services system. Concerning to these trouble, the preferences are: to bring back road network, school system, to repair school buildings, to organize a preventive sanitary treatment, commodities supplies, bank and post counters. To realize this kind of municipal services it is necessary to invest 2.500.000 kuna.

5.4. War damages - Estimates

the 16,5% of the buildings of Sisak county (17.216) were destroyed at all by the war. The greater public companies had great damages too. INA, for example, had almost 1.000 milliards liras of war damages.

5.5. Project to reconstruct the traditional wood houses in Cigoc

Cigoc village is now a protected area. It is considered an european natural park. This buildings represent the main cultural and architectonical features of the valley surrounding Sava and Kupa rivers. Reconstructing and protecting this heritage is one of the Sisak county aims (document enclosed).

6. Economic operators

6.1. SISAK CHAMBER OF COMMERCE
Hrvatska Gospodarska Komora
Supanijska komora Sisak
Ing.Dragoslav Krnjaic
Kranjceviceva 16
44000 Sisak
tel: +385/44/522 583
fax: +385/44/521 531

6.2. CHAMBER OF COMMERCE - economic division
Mrs Lilih Tomislav
Ulica S.i.a. Radica 8b
44000 Sisak
tel/fax: +385/44/522 487
e-mail: hrvatska-obrtnicka-komora@zg.tel.hr

touristic division
Mr. Mihovil Babic

Seat in Petrinja
tel: +385/0/44 82 620

6.3. Craftsman Union
Mr. Damir Horzic
M. Pupina 2
44000 Sisak
tel: +385/44/521 661

6.5. ZAGREBKA BANKA IN SISAK
Mrs Duradica Alabanda
Manageress
Produznica Ulicka Gorica
44000 Sisak
tel: +385/44/721 105

6.6. SISAKCA BANKA
Mrs Vesna Andrijasevic
fax: +385/44/522 090

6.7. PRIVREDNA BANKA
Mr. Goran Pegan
fax: +385/44/524 327

6.8. SISAK COUNTY
Mrs Dubravka Linski
S.i.a. Radica 36
44000 Sisak
tel: +385/44/522 777-239
7. LOCAL DEMOCRACY EMBASSY

7. LOCAL DEMOCRACY EMBASSY

Stjepana i Antuna Radica 2/A
44000 Sisak - Croatia
tel: +385/44/521 227
fax: ++385/44/521 231
e-mail: f.zocca@gpnet.it

L.D.E. could give partners telephone and fax numbers and further informations about Sisak economic situation and it could give you the way to possible contacts.

8. SISAK LOCAL DEMOCRACY EMBASSY SOCIAL-ECONOMIC PROGRAMME - 1997

8.1. General purposes

1. to reach informations about Sisak-Moslavina economic situation;
2. to promote development and reconstruction, establishing contacts among Sisak county
entrepeneurs and Sisak L.D.E. partners (industries, public services, etc.);
3. to support the promotion of this area as a focal point for trading exchanges;
4. to promote naturalistic tourism in the Lonja Field area;
5. to promote, together with Osijek L.D.E., the development of Pakrac music school.

8.2. Implementation

1. to reach further informations about Sisak (industries, banks, trading markets, laws concerning
foreign entrepeneurs, the number of foreign entrepeneurs working in the county);
2. to promote visits of entrepeneurs in Sisak county;
3. to promote, in the partner cities, meetings for Sisak entrepeneurs;
4. to be a point of information to the foreign entrepeneurs and to the croatian trading companies;
5. to give a logistic support for economic meetings;
6. to promote an international conference about economic chances in the area of Sisak (September
1997);
7. to promote a round table about tourism in Lonja Field;
8. to promote a music school in Pakrac.

9. SISAK L.D.E. GENERAL PROGRAMME - 1997

A. TO PROMOTE LOCAL DEMOCRACY

• Administration meetings
• To found a data bank about population, civil rights and profugees coming back home
  

B. SOCIAL AND CULTURAL EXCHANGES

• Civil society school-meetings
• Exchanges among schools, multicultural education for young people (exchanges among Sisak county and foreign partners young people)
  

C. INFORMATION PROJECT

• Stage in Strasburg of the local delegate
• To buy material for L.D.E. (books and electronic supports)
• Meeting on free information
• Publication of documents about human rights and minorities rights
• support to the local media
  

D. TO PROMOTE THE TOURISTIC VILLAGE AND TO PROTECT ENVIRONMENT

• Round table about the development of Lonja Field natural park
• To reconstruct the traditional buildings of Cigoc village
  

E. TO PROMOTE THE ECONOMIC DEVELOPMENT AND THE RECONSTRUCTION

• Equipment and training on reclaiming lands form mines
• A conference on Sisak county economic situation
• To bring back into use the primary school in Gvozd
  

F. TO EXTEND THE L.D.E. RANGE TO PAKRAC

A news letter editing

Partners:
City of Sisak (Croatia) - Anci Veneto - City of Arese - City of Casale Monferrato - City of Lainate - City of Pregnana Milanese - City of Mogliano Veneto - Veneto Region - Association Peace and Development of Montebelluna - Blessed are the Peacemakers - Brotherhood SOS Lipovlijani - Committes Lainate for Lipovlijani - Committee for the support of the forces and initiatives of peace/Schio, Alto Vicentino - Reception Group for ex Jugoslavia families/Gussago (Italy) - City of Martin (Slovakia) - Causes Communes Suisse (Switzerland) - Forderkreis (Remchingen - Germany)

This project is sponsored by the Congress of Local and Regional Authorities of Europe (CLRAE) - Europe Union and Europe Council

Staff on April the 1st 1997 - Delegate : Prof. Vincenzo Melone - Local Assistant : Sandra Nekola - Responsible for the project : Antonella Valmorbida

10. A LIST OF THE MAIN FIRMS IN THE CITY OF SISAK

1. INA (joint-stock company) Zagreb - OIL REFINERY SISAK
Ante Kovacica b.b.
Telephone: 044/512-244
Telefax : 044/31-314
Production and manufacturing of oil products

2. "SIPAS" SISAK - (limited)
Galdovacka 4
44000 SISAK
Telephone : 044/545-333
Telefax : 044/545-378
Working of plastic (polyethylene, polypropylene, polyamids)

3. THERMO-ELECTRIC POWER PLANT
Electric power production

4. ZELJEZARA SISAK (IRONWORKS) (joint-stock company) Sisak
Bozidara Adzije 19
44000 SISAK
Telephone: 044/35-202
Telefax : 044/30-206
Iron and steel,working of plastic, manufactures

5. HERBOS (joint-stock company) Sisak
Nikole tesle17
44000 SISAK
Telephone : 044/43-333
Telefax : 044/40-069
Fertilizers production and trading, agriculture and breeding chemical products

6. SISCIA (limited) Sisak
Nikole Tesle
44000 SISAK
Telephone : 044/45-255
Telefax : 044/43-019
Clothes

7. SEGESTICA (limited) Sisak
Quirinova 8
44000 SISAK
Telephone : 044/40-222
Telefax : 044/43-015
Production of drink and alcoholic liquoes. Wine and vinegar

8. LJUDEVIT POSAVSKI - MILL AND BAKERIES (joint-stock company) Sisak
Kralja Zvonimira 24
44000 SISAK
Telephone : 044/40-622
Telefax : 044/40-622
Production of bread, meal and by-products of corn

9. PRISTANISTE I SKLADISTA (limited) Sisak
Rimska 29
44000 SISAK
Telephone : 044/21-655, 22-953, 22-686
Telefax : 044/22-926
Goods trading and stocking

10. DUNAVSKI LLOYD (limited) Sisak
Rimska 28
44000 SISAK
Telephone : 044/522-333
Telefax : 044/43-298
Goods transporting (river inland navigation)

11. GRADITELJ
I.Fistrovica 3
44000 SISAK
Telephone : 044/24-157
buildings

12. HIDROPUT (joint-stocking company) Sisak
Ladjarska 30
44000 SISAK
Telephone : 044/24-157
Telefax : 044/24-760
Quarry and pit-sand extraction

11. ENCLOSED DOCUMENTS

1. Maps and graphics
2. Letovanci-Madari water-furnishing system
3. Preferences list
4. Investment preferences in 1997
5. Report concerning "Bljesak" and "Oluja" projects
6. L.D.E. presentation
7. A press review

LOCAL DEMOCRACY EMBASSY
Europe Council and Europe Union programme
SISAK-MOSLAVINA COUNTY
Economic situation - April 1997