The Croatian capital of Zagreb has launched a series of ambitious developments projects for which it is seeking investment. An area of 10 square kilometres has been selected by the city for the development of new infrastructure including schools, roads and hospitals, but Zagreb needs outside investment to realise this project. This is why the city is now actively welcoming FDI as part of a positive upgrade, Ladislav Prezigalo, head of office for the economy, labour and entrepreneurship of Zagreb, told fDi Magazine.

One of the biggest projects is the ‘city on the river’, which is to be built on the shores of the Sava river, which curves through Zagreb. Mr Prezigalo expects that there will be international bids for this project, and adds that it will create huge meaning for the land as it will open up an opportunity for ships to shore within 60 kilometres of the Croatian capital.

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If this project is successful, it will be an economic breakthrough for Croatia, as it will allow the country to focus on its transportation sector. In addition to new railway systems and roads, river-based traffic – which is by far the cheapest mode of transport in the region – will be greatly encouraged by the project. If it is successful, the city on the river development will lower the cost and increase the competitiveness of river-based transportation, and make Zagreb a hub in south-east Europe.

In order to attract investors, Zagreb has arranged open-day sessions during which potential investors are invited to visit the city and explore its potential. This method has already paid off – in central Zagreb alone, 60% of new investment has come from abroad. “Our experience is that investors think their money is secure here,” explained Mr Prezigalo.

In addition, a recent proposal to change the law for foreign investors by diminishing the tax charged on profits will make investing in Croatia much more attractive. If it goes through, it will be a much-needed change for Croatia, as companies in neighbouring countries such as Serbia and Bosnia-Herzegovina pay nearly 50% less corporate tax, Mr Prezigalo said.

In recent decades, Zagreb's population has ballooned, going from 500,000 in the early 1990s to 800,000 today. The city's rising population is partly due to its low unemployment rate – when compared to the rest of Croatia – which has attracted people to the capital. Zagreb is considered the economic heart of Croatia, responsible for 50% of all economic activity in the country.

In order to cope with and cater for these 300,000 new inhabitants, Zagreb has decided to launch redevelopment projects that will provide employment as well as change the look of the city.