Speech by President Milanović at the 12th Edition of the conference Dan velikih planova [Big Plans Day Conference]
I am pleased to address you at the “Big Plans Day” conference and hope that most of these plans will materialize in 2021. A wise man once said that everything that is essential fits on one page, therefore I will be brief and to the point.
As a society and an economy we have to open up because being closed leads to being non-competitive and falling behind in the long term. In the past 30 years we have not seized the available opportunities and this crisis and the lockdown we experienced in the first half of this year are opening up new possibilities.
An agreement has to be reached on defining Croatia’s new economic identity. It has to make the transition from a “wonderful country for a holiday” to a “great country for work”. Therefore, the main objective of the economic policy should be to increase employment and not reduce unemployment, be concerned about the investment rating, maintain the budget surplus or lament emigration, these are problems, however they are not the main problems, they are not the only problems. Therefore, the main issue is to increase employment. The number of people actually working, this is as important as how many people are unemployed, as well as how many of us there is. We are a national and an ethnic State, but we are not exclusively a community of blood and soil, there will be room for others also and they will be included in the population as people who are living and contributing, paying taxes. As a society and an economy we should strive to increase the share of highly educated people in the workforce, but not any highly educated people, because they are a key source of competitive advantage in the 21st century. Capital is cheap and there is lots of it. People are a source of competitive advantage of contemporary economies.
Our strategic orientation in increasing the competitiveness of the Croatian economy is reduced to a choice between attractiveness and aggressiveness. The dilemma about a development strategy boils down to the following: aggressiveness creates revenue in the country, but not necessarily new jobs. Attractiveness creates jobs by attracting investments. Thus essential development questions for the Croatian economy are being raised: Where do we stand on a global scale and what do we want? To be a resort for rich pensioners from the centre of the EU who will increase personal consumption and therefore ensure the growth of the GDP and budget stability year after year? Do we want to be a country whose economic and fiscal policy depends on the business cycle of the EU or a country that thinks strategically and seizes its advantages and potential? What is our potential? And finally, who leads and manages this process? Who is most responsible?
It’s time to leave the present growth model behind and focus on investment growth instead of personal consumption. This should not include investments that mostly depend on EU funds, but greenfield investments from domestic and foreign sources within the business sector that create new jobs. The structure of these investments must be different from what it is now and must follow our development priorities. It’s time for the economic and the fiscal policy to subordinate everything to this goal and abandon the policy of “reflexive interventionism” and incentives of rental business models. We must not allow a situation where the tax system stimulates rental activities and excise duties force production companies out of Croatia.
The economic and the budget dependence on a monoculture that generates low average wages, high seasonal employment, low added value and high sensitivity on external effects should not represent a source of long-term and sustainable economic growth and prosperity.
My vision of Croatia in 2030 and 2050 is a modern, innovative, open, healthy, green and sustainable economy. This is the economic identity I will advocate during my term of office. The new development model should be based on so-called double dividends – economy and the environment, so that the required investments are focused on the sustainability of the economy and business models. This can be achieved jointly: the State, businesspeople and workers under the umbrella of the European Green Deal. This agreement is the basis for the development of the competitive advantage of Europe in the 21st century, and Croatia.
In his address the governor noted that a major but brief downturn awaits us and that the recovery itself will be unequal and uncertain. I am interested in medium and long term trends. Turn your attention to the process of acceleration, an increase in uncertainty and inequality, greater focus on security as compared to profitability in business decisions. Within that an optimal business strategy should be adopted and we should position ourselves as much as possible in global chains of value.
In this respect the door of my Office, my advisers and mine are always open despite our limited budgetary resources. During my term economic diplomacy will imply the protection of Croatia’s interests in the international arena in the aim of promoting the Croatian potential and Croatia as a good place to work and invest, and to spend money. Not the promotion of individual companies. For this special laws have to be adopted, special rules about conflicts of interest. The best example of that was my visit to Berlin and the business cooperation that was agreed between Croatian and German companies.
The glass is half full. Let us learn a lesson from this situation: diversification, sustainability, production, employment. I call upon all of you to actively contribute to this process and that together we build a competitive economy to ensure the growth of employment and the prosperity of our people.