Montenegro Business Sector 2016

MONTENEGRO BUSINESS SECTOR 2016

■ FILIP VUJANOVIĆ, President of Montenegro ■ VUJICA LAZOVIĆ, Deputy Prime Minister of Montenegro and Minister of Information Society and Telecommunications ■ VLADIMIR KAVARIĆ, Montenegrin Minister of the Economy ■ IVAN BRAJOVIĆ, Montenegrin Minister of transport and Maritime Affairs ■ BRANIMIR GVOZDENOVIĆ, Montenegrin Minister of Sustainable Development and Tourism ■ PAVLE GORANOVIĆ, Montenegrin Culture Minister ■ VELIMIR MIJUŠKOVIĆ, President of the Montenegrin Chamber of Commerce ■ TATIANA PROSKURYAKOVA, World Bank Country Manager, Bosnia & Herzegovina, and Montenegro, Europe and Central Asia ■ GIULIO MORENO, Head of EBRD Montenegro ■ MILOŠ JOVANOVIĆ, CEO of the Montenegrin Investment Promotion Agency (MIPA) ■ MIROSLAV HIRŠL, President of the Montenegrin Foreign Investors Council (MFIC) ■ SANDRA ŠTAJNER, Director of Telenor Montenegro ■ VASILIJE KUSOVAC, Executive Director, Luka Kotor A.D. ■ SNEŽANA IVANOVIĆ, Director, Siemens d.o.o., Podgorica ■ NATAŠA AĆIMOVIĆ, President of the Municipality of Herceg Novi ■ PROFESSOR SNEŽANA MATIJEVIĆ, PhD, President of the Municipality of Tivat MATJAŽ BOŽIČ, Executive Director of Lovćen osiguranja (insurance) ■ DARREN EVANS, director of Stratex Development

CONTENTS

MONTENEGRO BUSINESS SECTOR 2016 06

WE HAVE ALWAYS BEEN CLEAR ABOUT OUR EURO PATH

Vasilije Kusovac, Executive Director, Luka Kotor A.D.

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Filip Vujanović, President of Montenegro

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YOUNG PEOPLE DRIVING E-DEVELOPMENT Vujica Lazović, Deputy Prime Minister of Montenegro and Minister of Information Society and Telecommunications

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Vladimir Kavarić, Montenegrin Minister of the Economy

Snežana Ivanović, Director, Siemens d.o.o., Podgorica

WE WILL DEVELOP EVEN MORE INTENSIVELY

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BUILDING AN OPTIMAL ENVIRONMENT FOR TOP INVESTMENT IN TOURISM Branimir Gvozdenović, Montenegrin Minister of Sustainable Development and Tourism

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ART DIRECTOR Jasmina Laković j.lakovic@aim.rs PHOTOS Zoran Petrović TRANSLATORS Snežana Rakić

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COPY EDITOR Mark Pullen mrpeditorial@mail.com PROJECT MANAGERS Aleksandra Ebilji a.ebilji@aim.rs Ljiljana Knežević lj.knezevic@aim.rs Biljana Dević b.devic@aim.rs

MONTENEGRO BUSINESS SECTOR 2016

Nataša Trifunović n.trifunovic@aim.rs

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FOREIGN INVESTORS REBIRTHED THE ECONOMY

OFFERING THE CUSTOMER PROPER INSURANCE AT THE MOMENT WHEN THEY NEED IT

OFFICE MANAGER Svetlana Petrović s.petrovic@aim.rs EDITORIAL MANAGER Neda Lukić n.lukic@aim.rs

A CHALLENGING ROAD TO A SUSTAINABLE FUTURE FINANCIAL DIRECTOR Dragana Skrobonja d.skrobonja@aim.rs EXECUTIVE DIRECTOR Maja Vidaković m.vidakovic@aim.rs GENERAL MANAGER Ivan Novčić i.novcic@aim.rs

INVESTORS RECOGNISE THE POTENTIAL MONTENEGRO OFFERS Miloš Jovanović, CEO of the Montenegrin Investment Promotion Agency (MIPA)

CREATING A RECOGNISABLE IMAGE OF TIVAT

DIALOGUE FOR BETTER ECONOMIC SOLUTIONS Miroslav Hiršl, President of the Monte negrin Foreign Investors Council (MFIC)

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THE ROAD TO SUCCESS IS ALWAYS UNDER CONSTRUCTION Normal Company Ltd.

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KEY MESSAGES

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21ST CENTURY QUALITY /PRODUCTS IN LINE WITH EUROPEAN STANDARDS

Matjaž Božič, executive director of Lovćen osiguranja (insurance)

DEVELOPMENT TREND CONTINUED

EDITORIAL aim team

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GEM OF BOKA

THE BEST QUALITY PRODUCT SUPPLIERS Montenegro Bonus

Velimir Mijušković, President of the Montenegrin Chamber of Commerce

Sandra Štajner, Director of Telenor Montenegro

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Professor Snežana Matijević, PhD, President of the Municipality of Tivat

CONSTANTLY TRANSFORMING OURSELVES

FULL SUPPORT FOR REFORM Giulio Moreno, Head of EBRD Montenegro

Nataša Aćimović, President of the Municipality of Herceg Novi

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Ivan Brajović, Montenegrin Minister of transport and Maritime Affairs

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WE HAVE SET THE FOUNDATIONS FOR STABLE GROWTH

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BUDVA DESERVES A MODERN MARINA Darren Evans, director of Stratex Development

MOST EFFICIENT SOLUTION FOR MONTENEGRO’S FURTHER DEVELOPMENT

ECONOMIC FRAMEWORK AND ECONOMIC POLICY GOALS 2016-2018

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Pavle Goranović, Montenegrin Culture Minister

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Government of Montenegro

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CULTURE IS THE MOST IMPORTANT MONTENEGRIN BRAND

Tatiana Proskuryakova, World Bank Country Manager, Bosnia & Herzegovina, and Montenegro, Europe and Central Asia,

Boj Commerce d.o.o.

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PRINTING Rotografika d.o.o.

Segedinski put 72, Subotica, Serbia Montenegro Business Sector 2016 Published by: alliance international media Makenzijeva 67, 11111 Belgrade 17, PAK 126909, Serbia

HIDDEN BEAUTIES OF MONTENEGRO Tourism

Phone: +(381 11) 2450 508 Fascimile: +(381 11) 2450 122 E-mail: office@aim.rs www.aim.rs ISSN no: 1451-7833 All rights reserved alliance international media 2016 THIS PUBLICATION IS FREE OF CHARGE

We Have Always Been Clear

ABOUT OUR EURO PATH By becoming a sovereign and internationally recognised state after the May referendum in 2006, we fulfilled the obligation to respect our history, but at the same time we secured valuable Euro and Euro-Atlantic integrations and economic success. We are committed to attaining EU standards without burdening ourselves with its internal relations FILIP VUJANOVIĆ, PRESIDENT OF MONTENEGRO

I

’ve always had ambiguous feelings about the restoration of Montenegro’s statehood: as the fulfilment of the debt to the past in which Montenegro was an internationally recognised state, and as a chance to promote its best interests for the benefit of all citizens of Montenegro by exercising its full sovereignty within the international community. By the May referendum in 2006, we fulfilled the obligation to respect our history, because the loss of the state bore the brunt of great injustice and its restoration brought back national dignity.

At the same time, in the past decade we secured valuable integration and development success. Montenegro is in the process of ratifying its NATO membership, but has also opened 22 chapters on membership negotiations in the EU and has closed two of them before the deadline. There has been growth in gross domestic product of 70 per cent, employment has increased by 9.8%, the average salary is up 70 per cent and pensions are 100 per cent higher.

The signing of the Protocol on the Accession of Montenegro to NATO is the finale of the very complex and demanding process of Euro-Atlantic integration, which represents great recognition for Montenegro’s success in attaining NATO standards. In just

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one month, the Accession Protocol has been ratified by the parliaments of seven NATO member states, which also refers to the expectation of good pace of membership ratification. Euro-Atlantic integration is proclaimed as our integration preference in the Constitution of Montenegro and in the Declaration of an independent Republic of Montenegro from 3rd June 2006, and based on the need for permanent security, economic and political benefits and the acceleration of European integration. Of the 28 EU member states, 22 are members of NATO, nine out of every ten EU citi-

The past decade was marked by the strong progress of Montenegro on its path towards the European Union, based on the foreign policy orientation of Montenegro and its commitment to European and Euro-Atlantic integrations zens live in NATO states, so it is natural that membership in NATO means additional encouragement to EU membership.

I see Russia’s opposition to NATO enlargement as an example of relations between Russia and NATO

and a consequence of the geopolitical context. Our constitutional preferences are European and EuroAtlantic integrations, and we have always been clear about that to everyone, including our friends from Moscow. The existing geopolitical framework and its sensitivity have caused the current attitude of Russia, which I expect to change through a shift in that same framework and new relations between Russia and NATO. I am convinced that we should be extremely patient and that we will be able to preserve the traditional relationship with Russia as well as gaining membership in NATO. I am a fan of committing to attaining EU standards without burdening ourselves with its internal relations. Regardless of sensitive issues within the EU, our goal should be to achieve the standards of the EU. We should use the accession process for our reform and also take advantage of joint action, particularly in the improvement of transport and energy infrastructure. Through the Brdo Brioni initiative and the Berlin process, we have a clearly designed package of support for infrastructure projects in the Western Balkans, with donations secured and the certainty of tangibility confirmed at the Paris meeting of EU and Western Balkan countries.

It is often debated, whether the Western Balkan might be a source of instability and therefore not a very welcomed part of the EU family. I am convinced that the countries of the region are not threatened by political instability. However, there are undoubtedly sensitive and open-ended issues that require full commitment, open and constructive dialogue and regional cooperation to consolidate and promote regional stability.

We are proud of the fact that we don’t have open issues with any of our neighbours and that there are many possibilities for cooperation with all of our neighbours.

In this regard, of course, I am not forgetting the question of Prevlaka, but in this area we have a temporary regime that has worked flawlessly since December 2002. However, this question does not burden our relations, but rather, on the contrary, it confirms our good neighbourly relations. With Kosovo we affirm good relations in all areas, and the agreement on the border showed that we were able to agree on an important and sensitive issue without international mediation.

When it comes to relations with Serbia I experience them as being close, meaningful and friendly.

I have always said and I will repeat - with Serbia we must have closest relations and be an example of intimacy in the international community. We are tied together by many values of shared history, many close things in the present and commonalities in many ways in our vision for the future. I am convinced that mutual respect, non-interference in internal affairs, the af-

firmation of closeness and understanding of diversity, secure precisely such a relationship between these two friendly countries. That is undoubtedly in the interest of all citizens of both countries, and whoever is responsible for state policy should bear this in mind.

In my recent constructive meeting with Serbian President Nikolić in Sarajevo during the Summit Initiative Brdo Brioni, we noted the closeness of our countries and citizens, affirming the need to respect the similarities and differences with the necessity of improving cooperation, especially in the economic sphere, and within it the improvement of transport and energy infrastructure.

We are proud of the fact that we don’t have open issues with any of our neighbours and that there are many possibilities for cooperation with all of our neighbours Last but not the least, let me say something about the upcoming parliamentary elections in Montenegro, planned for October. I am certain that the elections will pass in a democratic atmosphere. Part of the opposition entered the Government with the intention of participating in the preparation of free and fair elections, gaining the possibility to create an environment for credible elections in ministries, state bodies and institutions and local governments. At the same time, they are participating in all government activities, with adequate media coverage and overall promotion of these activities. Thereby conditions are being created for the acceptance of the election results and the formation of a government with full credibility. ■ Source: CorD Magazine

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INTERVIEW

Young People Driving

E-DEVELOPMENT It is our ambition for Montenegro to become a highly developed information society where the level of implementation of information technology will be tantamount to that in the European Union. We have recently made much bigger steps towards building infrastructure, e-governance and adopting laws that regulate this area VUJICA LAZOVIĆ DEPUTY PRIME MINISTER OF MONTENEGRO AND MINISTER OF INFORMATION SOCIETY AND TELECOMMUNICATIONS

“M

ontenegro has recognized the importance that the development of an information society and digital economy has for its development and has accomplished significant results in this area. Still, the fact that business still don’t utilise these solutions enough and still has a lack of professional staff poses many challenges on which the government and the Ministry are going to focus in the coming period” – says Vujica Lazović, Deputy Prime Minister of Montenegro and Minister of Information Society and Telecommunications.

■ How can Montenegro fully utilise its great strides towards the development of an information society to boost economic growth?

- The development of an information society in Montenegro is one of the main

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prerequisites for the country’s economic progress and for solidifying its competitive position in the region and beyond. Modern technology is the driving force in today’s highly globalised society, and our country cannot nor should not be an exception.

Digital literacy is a modern requirement with information-communication technology playing an increasingly important role while becoming a dominant mediator in education and business.

Hence, the skills and know-how that require digital literacy have never been more important than today and are absolutely necessary for the execution of expert tasks, while also being an important factor in the socialisation of every citizen.

A knowledge society devises tasks and enforces obligations – we need users that have the know-how and skills; we need young, educated people. The fact that young population in Montenegro

uses the Internet on a par with the average EU level is our driving force and the foundation for further development of information society.

Recently, we have made much bigger steps towards building an information society. We have accomplished great results in this segment in a very short amount of time, which has been recognised by international institutions. We have been focusing on building the information infrastructure, implementing e-governance projects, promoting an information society and adopting laws that regulate this area. It is our ambition for Montenegro to become a highly developed information society where the level of implementation of information technology will be tantamount to that in the European Union.

■ How much do the government and other national and local institutions

recognise the importance of e-governance, and how much are these solutions applied in the every day serving of citizens and companies?

- The Montenegrin government has certainly recognised the importance of egovernance and, to that end, has adopted several resolutions requiring those institutions governed by the E-Governance Law to fully implement it. The Ministry of Information Society and Telecommunications was given special tasks on which we are working on daily, in addition to maintaining regular contacts and cooperation with all institutions. We can safely say that we have made significant progress towards implementing a portion of our e-services and the eDMS project. In late 2014, we had a total of 77 e-services, and today we have 28 institutions providing 164 e-services on the e-governance portal with the trend constantly growing. By the end of 2016, we expect to have over 200 e-services available on the egovernance portal. Apart from our regular activities on creating and posting new eservices, the Ministry of Information Society and Telecommunications has started with regular weekly training sessions for civil servants in state institutions on the topic of implementation of e-surveys.

are going to have a much clearer picture about the closure of Chapter 10.

■ What are the main goals of this new third strategy for development of information society?

- The Strategy for Development of Information Society in Montenegro by 2020 is the third strategy of this kind and a natural continuation of the action plans for previous strategy that relies on the development framework that we have achieved so far, while having a rather ambitious and comprehensive view of the future.

Its general framework – infrastructure, security and digital economy –

■ How much did Montenegro progress in this area in relation to the

Although, the Montenegrin .me domain is among the youngest top-level state codes, it has had excellent success on the global market in terms of the number of registrations and content quality EU integration process, and when can we expect Chapter 10 to close?

- Montenegro has been constantly working to harmonise our national legislation with Acquis Communautaire and has adopted a set of laws regulating this area. We are currently working on amendments and supplements to certain laws in line with the EU’s requirements with the goal of meeting the final criteria for the closure of Chapter 10 – Information Society and Media. After the European Commission gives its opinion about these legislative changes and submits a report (following the recent visit by their expert mission regarding the final criteria), we

makes up the backbone of our plans. At the same time, we are firmly resolved to create an advanced infrastructure and a safe national information environment that will to be strengthened by administrative and institutional capacities serving as a basis for developing the digital economy through the e-segments that we have identified in the document.

SMEs are the foundation for economic growth and the focus is on startup and spin-off companies. However, we are at the very beginning when it comes to this, and since we are still not satisfied with the level of Internet and technology use by businesses, this remains our big-

gest task in the digital economy segment.

For their part, businesses simply have to recognise these benefits, and it is up to us to educate and to create a favourable business environment for them. I would also like to mention the development of human resources too, because we have tried to demonstrate, in this document, that people and ideas are key to a digital economy. We need experts, on one hand, and citizens/users, on the other. We want to do everything in our power to create an environment conducive to development of both digital skills.

■ Does Montenegro have enough of IT professionals?

- Montenegro is aware of how important professional quality staff is – that is, staff that should be market competitive and able to respond to the demands of rapid technological development, characteristic for this segment. EU countries are also facing great challenges in this regard, and we have been trying to fulfil the requirements of this process, while constantly working on improving our administrative capacity. Certain activities have already been carried out in terms of education, and the number of students who are studying ICT has significantly gone up. We are also working on increasing the number of teachers and researchers in this field.

■ What are your key goals in terms of further development of the telecommunications market?

- Montenegro has already reached an enviable level of telecommunications development and, judging by the numerous solutions that are implemented daily, the country is the regional leader. The ICT sector in Montenegro is well developed and competitive, on the regional level, primarily owing to the country’s having strong telecommunications operators founded with foreign capital.

The communications segment (the ‘C’ in ICT) is one of the driving forces behind the Montenegrin economy with an annual turnover of €300 million. It is exceptionally important for Montenegro to invest effort into enabling a fast development electronic communication networks and services, to create conditions for healthy market competition, to exercise frugality, MONTENEGRO BUSINESS SECTOR 2016

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to introduce new technologies and services in this sector and to implement international standards and principles.

The first IXP in Montenegro was established in collaboration with the ITU in July last year, and we have also been cooperating with the World Bank on analysing the broadband situation in the country and identifying opportunities for its development. Bearing in mind that the licenses for current operators will be expiring in early 2017, and since following the abolishing of the analogue signal in June 2015 a whole new spectrum of digital dividends became available, we are currently auctioning allocation of the spectrum.

The Agency for Electronic Communications and Postal Services of Montenegro, the national body that manages the radio frequency spectrum, is holding a public auction to allocate licenses for the use of radio frequencies of 800 MHz, 900 MHz, 1800 MHz, 2 GHz and 2.6 GHz in mobile electronic communication networks.

We have been working hard on promoting investments in the development of ground and mobile communication networks and bolstering the state-owned telecommunications infrastructure. The execution of these two tasks will ensure that the electronic communications sector will remain the pillar of development of Montenegrin economy and an important segment of the national gross domestic product (GDP). GDP growth is also promoted through the development of broadband access, which will also positively affect labour productivity, employment and efficiency of the entire public sector.

■ This year, you are marking the 10th anniversary of Montenegro’s independence and the 8th anniversary of the ‘.me’ domain, which proved to be an excellent ambassador of Montenegro abroad. What goals did you set for yourself for the near term?

- We can safely say that, at this moment, the global domain market is the market of perfect competition. Thanks to ICANN’s gTLD programme launched in October 2013, there are now 1,058 generic top-level domains (gTLD) and we envisage another 342 gTL domains will be made available

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which brings the total number to 1,400 new generic domains on the global market.

The strategy of positioning the .me domain as a sort of a Montenegrin online ambassador in the world, its differentiation from the growing number of the top level domains, is based on a personalised approach to Internet users. By actively promoting the .mw domain, i.e. by directly approaching Internet users, we have created a strong base of users. We have been promoting the .me domain as

top-level state codes, it has had excellent success on the global market in terms of the number of registrations and content quality thanks to good strategic orientation and successful policy of managing the unique two-letter code of our country.

■ Do you treat information safety as an important element of the overall safety of the country and its citizens?

- We live in a time when information security is one of the basics of the overall safety of any country. Today, and considering the growing integration between cyber systems and physical systems and the negative consequences that a compromised cyber system can create, cyber security and its constructed national, regional and international architecture play a crucial role. The fast development of innovative interconnected technologies should be followed by a fast development of cyber solutions, especially protection from broadband threats. This is certainly a challenge that we must all respond to together. Undoubtedly, information safety is a challenge of modern times and, as such, it did not bypass Montenegro. We have frequently witnessed cyber attacks where virtual space is used for various

During our accession negotiations with the EU and our dialogue with our NATO partners towards full NATO membership, Montenegro has been continuously engaged in improving its cyber protection system a means that will help end users present their uniqueness in the digital world.

Apart from the personalised interaction with Internet users, our Development Programme has resulted in cooperation with online giants like Facebook, Yahoo, Wordpress, Universal Pictures, Google, The New York Times, AliBaba, Naver and others which only enhances our credibility based on which the .me domain will continue to generate growth on the global market. Also, we have established cooperation with 286 accredited domain name registrars, which, together with sales network, present and offer the .me domain to online users from over 200 countries. Although, the Montenegrin .me domain is among the youngest

malicious intents. In this area, Montenegro has been working hard on harmonising its legislation with the EU’s and has adopted several declarations, laws, strategies and other acts that regulate this field.

During our accession negotiations with the EU and our dialogue with our NATO partners towards full NATO membership, Montenegro has been continuously engaged in improving its cyber protection systems because we have recognised that information safety is an important element of the country and its citizens’ overall security. At the same time, we have been taking additional steps towards further improving our general cyber capacities, on which we will continue working in the following period too. ■

INTERVIEW

Photo by M. Vujovic, MAMA Int.

We Have Set the Foundations for

STABLE GROWTH

During the decade behind us we have successfully laid the foundations of a market economy, strengthened democratic institutions and intensively carried out economic reforms. That success did not go unnoticed – it was recognised by international organisations and institutions and foreign investors. On those foundations we continue to build a better future for Montenegro

VLADIMIR KAVARIĆ MONTENEGRIN MINISTER OF THE ECONOMY

W

ith the dynamic economic growth that marked the period since the restoration of independence, Montenegro endeavours to further encourage large infrastructure projects that link the national economy with the economies of the region and Europe.

■ The ten years since the restoration of the independence of Montenegro have been marked by dynamic economic growth. Has this period seen the laying of foundations for sustainable growth in the period ahead and what will that primarily be based on?

- Montenegro has achieved a lot in the past ten years, especially when it comes to the foundations for sustainable eco-

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nomic growth in all areas. Here I am primarily referring to that which is the job of the executive, and that is the issues of legislation, eliminating barriers to doing business, the competitiveness of the market and openness of the economy.

In the past decade we have achieved GDP growth of 67 per cent, a growth rate of 3.2 per cent, while FDI inflows amounted to 7.3 billion euros, or between 18 and 19 per cent annually in relation to GDP. We are not the only ones testifying to our results, but rather we also have confirmation from the greatest addresses, through membership in organisations that only recognise a high level of respect for the rules. Through membership in the WTO we have confirmed that we are ready to do business

according to the highest standards. We have signed trade agreements with EU member states, CEFTA, EFTA, Turkey, Russia, Belarus etc. We have good indicators on the global competitiveness index, and our status in terms of European and Euro-Atlantic integration is well known. Thus, through all of these facts we can say today that Montenegro is a state characterised by political and macroeconomic stability, an efficient and transparent tax system, a reformed banking system, simple and fast founding of enterprises, a good legal basis and protection for foreign investors, equal treatment of foreign and domestic investors, the euro as a currency, a liberalised foreign trade system etc. We’ve also done a lot in the area of the attractiveness of the business environment,

SUCCESSES

GOALS

POTENCIAL

In the past decade we have achieved GDP growth of 67 per cent, a growth rate of 3.2 per cent, while FDI inflows amounted to 7.3 billion euros, or between 18 and 19 per cent annually in relation to GDP

Creating a favourable business environment that will, above all, enable the creation of new jobs, but also attract new investors, is one of the important goals facing the Government of Montenegro

Large infrastructure projects in transport and energy, for which Montenegro is a hub and which connect the region and have European significance, will give a strong impetus to the further economic growth of the country

so we can say that we are at the top of the region in terms of the competitiveness of the business climate. The areas where we record and expect the most investments are tourism, energy and agriculture, but also industry, through the strong support of these sectors in a number of projects that are implemented by the Government of Montenegro.

implies the strengthening of infrastructure related to the construction of the submarine cable and transmission lines between Montenegro and Serbia. The project is worth a total of 127 million euros. Montenegrin electricity transmission, with the help of the Government of

struction of wind power projects. Implementation of the project VE Krnovo, an investment worth over 140 million euros, is unfolding according to a set schedule.

Complementary equipment has been delivered to Montenegro and the transport, assembly and installation of wind

■ At what stage is the implementation of the most important projects in the energy sector?

- The development of the energy sector is one of the priorities of the Government of Montenegro and to date a number of strategic steps have been made that lead to the realisation of important projects in the energy field. I would start from the most recent developments concerning the implementation of Block II of TPP “Pljevlja” - Elektroprivreda Crne Gore is ready to implement this project, which the feasibility study showed to be economically viable. With the imple-

Montenegro is a state characterised by political and macroeconomic stability, an efficient and transparent tax system, a reformed banking system, simple and fast founding of enterprises, a good legal basis and protection for foreign investors mentation of this project we will ensure the energy independence of the country, with the certainty and stability of supply, diversification of sources, as well as the issue of deficits. Another significant project is the undersea electric power cable between Montenegro and Italy, which is directly or indirectly related to other projects in the energy field.

In early July a financial agreement was signed to build a trans-Balkan electrical energy corridor that will connect Montenegro with Serbia, and which

Montenegro, has secured credit funds from the EBRD and KfW, while the contract that was recently signed represents the co-financing of these credit funds from donations in the amount of 25 million euros.

I would remind readers that this cable places Montenegro at the centre of energy flows in this part of the world and provides the ability to connect all the countries of the Western Balkans to Western Europe, precisely via Montenegro. It is inevitable to mention the con-

turbines and other ancillary equipment is underway. And works on the ground as part of the construction of VE Možura, a project worth 65 million euros, have begun and in the coming period it is expected that contract with the company will be concluded for the installation of electro-energy infrastructure.

■ Most of these projects have their own regional dimension, in the context of the Berlin initiative.

Have your expectations from the recently held summit in Paris been fulfilled?

- Absolutely. The idea of linking the countries of the Western Balkans, which began in 2014 at the meeting in Berlin, and continued in Vienna in 2015 and Paris this year, primarily resulted in the MONTENEGRO BUSINESS SECTOR 2016

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joint approach of the countries of the region with projects that have a broader dimension than the national potential and which we can best realise precisely through the Western Balkan initiative.

We know that Montenegro had successful projects, such as the Trans-Balkan electrical energy corridor that will connect Montenegro with Serbia. With this project, for which Montenegro received a grant of 25 million euros, our country has shown full seriousness and commitment to a process like the Berlin initiative.

efits brought by the implementation of these regional projects are immeasurably more important.

■ The Montenegrin Parliament adopted proposed contracts for oil and gas exploration in the Montenegrin coastal region. What are the next steps?

- The Parliament has just given the final word when it comes to awarding contracts for oil and gas exploration in the Montenegrin seabed to Italian-Russian

comes to this project the state’s interests are maximally protected through a set of laws that was adopted in previous years, and that the state will have a significant financial gain if oil is found - of the total income, the Fund for Hydrocarbons will have 85 per cent and 15 per cent will go to the state budget, while 54 per cent will go to tax on profits arising from upstream operations and related assets and nine per cent on dividends, with capital gains going to the state.

■ What are the key measures that your ministry is working on to improve the business and investment climate?

- Creating a more favourable business environment that will, above all, enable the creation of new jobs, but also attract new investors, is one of the important goals facing the Government of Montenegro. A lot has been done to date when it comes to creating more favourable conditions for investment – the foundations of a market economy have successfully been laid, democratic institutions have been strengthened with the gradual development of capacities in the public administration and the intensive implementation of economic

■ To what extent are these major projects an opportunity and how much are they a burden considering the small financial potential of the countries of the region?

- Large infrastructure projects in the energy and transport sectors have regional and even European significance, and thus they do not exceed the capacity of just a single country, but also the entire region. Thus, we are talking about projects in the field of energy, and road infrastructure, which provide a new perspective not only for the region of the Western Balkans, but also for the entire continent. From this aspect they are an opportunity for all countries in the region to be linked in terms of infrastructure to the whole of Europe, which – realising the importance of these projects – is ready to provide financial support for their implementation. So, the investments are high, but the ben-

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Creating a more favourable business environment that will, above all, enable the creation of new jobs, but also attract new investors, is one of the important goals facing the Government of Montenegro consortium Eni-Novatek. After this “green light” from the people’s representatives, next comes the formal signing of the contract, after which exploration on the four assigned blocks can start. We also hope that the aforementioned consortium will not be the only ones that will explore part of the Ulcinj block, given that the government also recently accepted the proposals of contracts for two exploration blocks with Greek company Energean Oil & Gas. We expect that there will be no obstacles to the parliament accepting these contracts, given that they are standardised. It is important to note that when it

reforms. There are also a number of projects implemented by the government precisely in order to create more favourable conditions for investment.

Thus, since 2012 the Government has been implementing the project of business zones, which involves creating a separate entity within the framework of local government, which is partially or fully equipped with infrastructure, but where the potential investors provided tax and administrative incentives at the state and local government levels. By the end of this year we will also launch the formation of business zones of strategic interest, with which we will create

another mechanism to attract large and significant strategic investors for the further economic development of the country. Then, through the Regulation on the Stimulation of Direct Investments we will create a more favourable business environment that will primarily enable the creation of new jobs. Funds for encouraging investments are allocated on the basis of a public announcement, and that is for investment projects with a minimum investment value of 500,000 euros and which ensure the creation of at least 20 new jobs within three years of the date of the concluding of the agreement on the use of funds.

■ In which ways does the ministry encourage the development of small and medium-sized enterprises? What is required in order to enable the local economy to be competitive in the European context?

- The projects I noted in my answer to the previous question apply to both do-

mestic and foreign investors, as well as to small and medium-sized enterprises that can thereby improve their operations.

In addition to all of that, it is also worth mentioning the Programme for Encouraging Cluster Development, which has been implemented since 2012 and which enables businesses, through the building of clusters, to improve their competitive-

of the investment, through which small and medium-sized enterprises operating on the territory of Montenegro are given a chance to improve their competitiveness in performing on the domestic market, and especially on foreign markets.

Finally, I would mention the European Union Programme “Competitiveness of Enterprises and SMEs (COSME) (2014-

By the end of this year we will launch the formation of business zones of strategic interest, with which we will create another mechanism to attract large and significant strategic investors for the further economic development of the country ness in business on the domestic and international markets. There is also the Programme of Increasing Regional and Local Competitiveness through harmonisation with the requirements of international business standards. Both of these programmes are based on the allocation of state aid, based on the principle of reimbursement up to 70 per cent

2020)”, in which Montenegro takes an active part, all with the aim of reducing problems that limit the growth of enterprises, especially SMEs, as well as enabling a better business environment, easier access to finance, promotion of entrepreneurial culture and the internationalisation of SMEs, i.e. their approach to foreign markets. ■

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GOVERNMENT OF MONTENEGRO

Economic Framework and

ECONOMIC POLICY GOALS 2016-2018

Montenegro’s Economic Reform Programme (ERP) represents the economic policy of Montenegro in the medium term and the basis for economic dialogue with Brussels. The ERP is the most important economic document of the country, structured according to the requirements and methodology of the European Commission 16 |

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I

n this way, for the second year in a row, Montenegro is preparing a comprehensive, consistent and a document comparable with EU member states and candidate countries that is discussed by Government commissions and adopted by the Government. As of 2016 the ERP has been available to all stakeholders through organised public discussion.

Through the Euro-Atlantic framework of economic policy, in 2015 there were significant positive developments on Montenegro’s road to Euro-Atlantic integration. By receiving an invitation to join NATO, the country has achieved one of its most important political objectives, set in the time of the renewal of independence. Membership in this organisation provides Montenegro with longterm stability and security, and also brings significant economic benefits. The experience of other new NATO members point to the fact that membership in NATO, as a rule, contributes to the improvement of the business environment, increasing the attractiveness of the country for investors, both foreign and domestic, and often raising the country’s credit rating.

Montenegro’s membership in NATO is complementary to the process of integrating the country into the EU. This process not only continued in 2015, but was also intensified. As far as the negotiations are concerned, from January to September four more chapters of the EU acquis were opened (16 - Taxation, 30 - External Relations, 9 Financial Services and 21 - Trans-European Networks). That brings the total number of open chapters to 20, while two chapters have already been provisionally closed. In 2016 the remaining chapters are expected to be opened, and some to be provisionally closed. The focus of the challenge that lies ahead for Montenegro in the coming period is moving from the harmonisation of the national legislation with the EU acquis to the process of its implementation. In accordance with the planned schedule adopted in the Programme of Montenegro’s accession, in the next three years all necessary measures will be taken to ensure that by the end of 2018 a maximum level of compliance with the EU acquis has been reached and to establish appropriate administrative capacity for its effective implementation, in order to

NATO WELCOMES MONTENEGRO AS A NEW MEMBER On the second day of the Summit in Warsaw on 9th July 2016, NATO adopted the Political Declaration, as a key political document of the Alliance, which welcomes Montenegro as a new member and voices hope that the process of ratification of the Protocol on Accession is to be completed as quickly as possible.

Prime Minister of Montenegro Milo Đukanović participated in a meeting of heads of state and government of NATO members devoted to issues of projecting stability beyond the borders of the Alliance, the future role of NATO in Afghanistan and relations with Ukraine.

Recognising the importance of projecting stability beyond its borders in order to ensure long-term stability within the Alliance,

Montenegro's Prime Minister MILO DUKANOVIĆ, (left) and NATO Secretary General JENS STOLTENBERG

Recognising the importance of projecting stability beyond its borders in order to ensure long-term stability within the Alliance, Prime Minister Milo Đukanović supported passed measures for the south and the east of NATO Prime Minister Đukanović supported measures passed for the south and the east of NATO. In that context, bearing in mind the importance of the Mediterranean for European and Euro-Atlantic stability, the heads of state and government confirmed that the Active Support operation will become the Ship Watch operation, which is not a part of Article 5, and discuss the possible role of NATO in the Central Mediterranean, which would be complementary to EU mission Sophia. Prime Minister Đukanović reiterated Montenegro's willingness to assist the Alliance in line with its capacities.

The session on Afghanistan, attended by President Ashraf Ghani, confirmed that NATO will continue to back up the Afghan Government, including the continuation of the Resolute Support mission in 2017. The Alliance will also continue to finance the Afghan forces until 2020, the meeting concluded.

The meeting of the NATO – Ukraine Commission also took place and Ukrainian President Petro Poroshenko was also in attendance. It was confirmed that an independent, sovereign and stable Ukraine, which is committed to democracy and the rule of law, is a key to Euro-Atlantic security and that NATO is willing to help Ukraine achieve that goal.

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finalise to accession negotiations.

Significant progress has been achieved in other segments of the EU integration process as well.

As such, Montenegro has signed inter-state border agreements with two neighbouring countries - Bosnia & Herzegovina and Kosovo. These agreements, which were made without the participation of the European Union or a third party, are a model for solving border issues in the region.

The positive role of Montenegro in resolving border issues in the Balkans was strongly noted at the Vienna Conference on the Western Balkans. At this conference, which formed part of the Berlin Process, agreement was reached on specific infrastructure projects in the region, and two projects for Montenegro were approved in the fields of energy and transport, with a total value of 45 million euros. These projects will greatly contribute not only to connecting Montenegro with the region and further to Europe, but also to the implementation of the overall

efforts have been invested in highquality programming for IPA II. In accordance with the new concept of pre-accession assistance, which now focuses on the sectoral approach, priority sectors in which assistance will be targeted in the next medium-term period have been agreed with the European Commission, and all the necessary activities

The Government of Montenegro recognizes the potential for growth of Montenegrin economy in tourism, energy, agriculture and industry, but it also sees room for improvement in the investment environment connectivity agenda, as one of the pillars for the development of the region as a whole.

During 2015 the implementation of projects under the Instrument for Pre-Accession Assistance – IPA – continued. Use of funds under IPA I is slowly coming to an end and it is expected that projects will be completed in 2017. Montenegro reports a high degree of absorption of funds on that basis, which confirms the readiness of Montenegrin institutions and organisations, not only for planning and programming, but also for implementation of the projects. On the other hand,

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launched for the introduction of sectoral budgetary aid, as the new pre-accession financial instrument.

ECONOMIC POLICY GOAL Although 2016 is year of parliamentary elections in Montenegro, the Government aims not only to continue realisation of planned policy measures, but also to create a new plan of reforms that will support reaching the main goal of economic policy in the mid-term.

The goal of economic policy in the period from 2016 to 2018 is more intense and sustainable economic growth, along with job

creation.

More intense economic growth implies that Montenegro needs higher rates of real economic growth in order to attain the level of GDP per capita of EU countries, that is to increase the living standards of the Montenegrin population and achieve one of the elements of the strate-

gic goal - quality of life for every individual in Montenegro. This growth must be sustainable in the future, in such a way that the reform measures to be applied in order to achieve that do not cause major economic problems.

In other words, the government will avoid changes that increase short-term economic indicators, and in the long run threaten the stability of the economic system.

The focus of economic policy in the period from 2016 to 2018 will be the growth of the competitiveness of the Montenegrin economy through the implementation of structural reforms and infrastructure development aimed at increasing domestic and foreign direct investment.

The economic prosperity policy was the commitment of the Government of Montenegro in

the previous period, and will remain so in the coming mid-term period. The model of economic growth in Montenegro is largely based on foreign direct investment. The Government of Montenegro recognises the potential for the growth of the Montenegrin economy in tourism, energy, agriculture and industry, but also sees room for improvement in the investment environment. In other words, regardless of Montenegro being a country of great natural potential with an important geostrategic position on the European continent, and which is politically stable and successful on its path of Euro-Atlantic integration, the preconditions for economic prosperity are developed infrastructure and an institutional framework that facilitates the growth of labour productivity. As a result of the unfavourable structure of the Montenegrin economy and a low workforce activity rate, the Montenegrin economy has faced a decade of high deficits in the balance of payments, caused by big deficits in foreign trade.

COMPLIANCE OF EU RECOMMENDATIONS AND MONTENEGRIN GOVERNMENT PRIORITIES The ERP is a living document.

It is made such due to its compliance with the annual budget and the medium-term budgetary framework, and the fact that the European Commission annually assesses the reform measures and policies, and the European Union gives recommendations for improvement. Eight recommendations for Montenegro with the Ministerial meeting in May 2015 in Brussels, were the basis for defining national priorities for economic policy in the medium term in October. In the ERP for 2016 Montenegro presents structural reform measures with macro-fiscal and

sectoral impact that are aligned with the recommendations of the Ministerial Meeting. Because of the economic policy commitment of the Montenegrin Government to increase the competitiveness of the economy through the development of infrastructure and structural reforms that require large expenditures in the medium term,

The priorities of the Montenegrin economic policy in the period from 2016 to 2018 are: further development of transport infrastructure, fiscal sustainability, a favourable investment climate, systematic reduction of informal employment, the creation of conditions for the growth of loans for the growth and development of

The priorities of the Montenegrin economic policy in the period from 2016 to 2018 are: further development of transport infrastructure, fiscal sustainability, a favorable investment climate, systematic reduction of informal employment, the creation of conditions for growth of loans for the growth and development of SMEs, the strengthening of the external position of the country and capacity building Montenegro is not giving up on achieving sustained growth that is harmonised with the EU agenda that basically contains fiscal sustainability. On the contrary, by building and developing the economic system in a way presented in the 2016 ERP, Montenegro demonstrates its intention to create, for its citizens and economy, through investment and systemic changes, an environment close to that of the EU.

SMEs, the strengthening of the external position of the country and capacity building, which is also a common measure pervading the implementation of the seven objectives. These priorities are a response to the obstacles to economic growth and are in line with EU recommendations for Montenegro. â–

Montenegro’s

Cabinet session

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INTERVIEW

We Will Develop Even More

INTENSIVELY The period of a decade is very short when viewed historically, and during that period Montenegro has had big and, viewed in the long term, historical results.

What follows is a period of new and even more intensive development, which will be given a special impetus with the building of the Bar-Boljare highway IVAN BRAJOVIĆ MONTENEGRIN MINISTER OF TRANSPORT AND MARITIME AFFAIRS

W

e spoke with Montenegrin Transport and Maritime Affairs Minister Ivan Brajović about some of the most important strategic projects that should give new impetus to the development of Montenegro.

■ At the time of marking the tenth anniversary of the restoration of its independence, Montenegro embarked on the ambitious construction of the Bar-Boljare highway.

How are works currently advancing on this motorway?

- The restoration of independence placed before Montenegro numerous social, political, economic and cultural challenges, but also showed that we are ready to take responsibility for building Montenegro in a way tailored to its citizens, within the framework of its own peculiarities and development potential, according to the standards of the European family. In this process, one of the key elements in achiev-

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ing developmental and integration goals is the construction of the Bar-Boljare highway, which is also recognised as a project of strategic importance for Montenegro, and which should place all potentials of our country in the function of creating and attracting cargo and traffic flows, more dynamic and sustainable economic growth and a better life for all citizens.

Every major infrastructure project, even in regions that are much larger and more developed than Montenegro, is accompanied by challenges, but throgh joint efforts everything can be overcome, and in those efforts the quality, safety and durability of works need never be brought into question. Taking into account the maxi-

Vjeternik tunnel and Moračić bridge – and in the coming days we also expect the issuance of a building permit for another two capital facilities: the Kosman and Jabučki krš tunnels. Considering that works began in May 2015, we expect the first kilometres of the highway to be driven in 2019.

■ When completed, what will this highway mean for the economy and regional development of Montenegro?

- Viewed in the context of regional networking, the importance of the Bar-Boljare highway will grow over time, as our colleagues from Serbia increasingly progress in building their part of the highway to the border with Montenegro. We expect the

Montenegro Airlines, in cooperation with a reliable strategic partner, has the prospect of consolidating its position on the market and being a significant factor in the development of the Montenegrin economy mum protection of the interests of the state as an investor, and with full respect for all relevant regulations, standards and contractual provisions, we have reached the point of intensifying work on the ground.

Building permits have been obtained for the two largest objects on the route – the

construction of the highway to make all of its catchment areas more attractive to new inflows of foreign direct investments, and to attract new freight and traffic flows.

What we undoubtedly expect is that the realisation of this project will bring better transport connections between the

southern, central and northern parts of Montenegro and, consequently, the reduction of travel times and associated costs of the procurement of goods and services, better use of the natural resources potential of Montenegro, setting up small and medium-sized enterprises and new jobs in areas through which the highway passes or which gravitate towards it, in that way promoting more balanced regional development.

■ What are the effects of the engaging of the Montenegrin construction industry on this project, on economic growth in general and on the transfer of knowledge and technology from Chinese partners?

- I want to emphasise with great pleasure the fact that we have, with the Agreement on design and construction, succeeded in obliging the Contractor to employing at least 30 per cent of businesses from Montenegro, and to do so in relation to the contracted price of works. Thus, almost 250 million euros will remain in the financial flows of our country, which will in turn provide an additional positive impulse to economic trends in Montenegro. Apart from that, it will ensure the new contracted transfer of knowledge and technology with the aim of improving the quality of domestic companies, as well as the acquisition of appropriate experience and the development of appropriate abilities and skills, which will primarily enable domestic companies to survive on the market with increasingly tough competition.

The Ministry of Transport and Maritime Affairs, in its capacity as an investor, has so far issued 55 prior approvals for hiring subcontractors, which included 76 companies, 68 of which are from Montenegro.

When it comes to the number of engaged workers, currently on site there are just over 900 of them, and at the time of the greatest volume of works that number should increase to over 3,500. And in this segment the chance to hire domestic workers has also been recognised, and to this end – via the Employment Agency of Montenegro – training has been organised for workers registered with the Agency.

■ You have said that the state is a demanding investor. What do you expect from the main contractor and the large number of its subcontractors?

- I am glad that we recognise ourselves as a demanding investor, because that

means that we take care of the protection of our interests to the fullest extent. Conscious of the importance of this project and the money allocated for this project, we have set the bar high for the Contractor, both in terms of consistency in the application of European standards and quality, and in relation to all other contractual obligations. This inevitably involves a high degree of responsibility and a very strong commitment, both in the process of approving individual segments and in the implementation process.

In cooperation to date with CRBC we are mainly satisfied; all the problems and doubts that arise in each job, even

Transport and Maritime Affairs, acting as investor – includes project monitoring and steering (business unit within the company Monteput Ltd.), as well as an international Supervisory Authority (Franco-Italian consortium INGEROPGEODATA) while the revision of technical documentation and technical inspection of the works is entrusted to National commissions that are composed of renowned experts and university professors.

■ One of the most important topics in the region is cooperation with regard to the construction of infrastructure. What is the most important progress that has been achieved and what are Montenegro’s key priorities in that sense?

- The Western Balkan countries are dedicated to improving regional cooperation and economic stability, with the ultimate goal of attaining European standards and meeting the criteria for accession to the European Union. When defining the Main Transport Network, the Western Balkan countries are guided by the guidelines and methodology set by the establishment of the main network on the territory of the EU (the main Trans-European Transport Network, TEN-T), as well as demanding technical standards, while the principles entail the connecting of the capital cities of the EU, the main economic centres and major ports, with a time horizon until 2030.

The main traffic network in Montene-

Construction of the Bar-Boljare highway should contribute to the opening of small and medium-sized enterprises and creating new jobs in parts through which the highway passes, thus promoting balanced regional development this one, are settled through joint efforts.

I believe that this contractor will justify the trust given to them, considering its reference and the fact that it is among the world’s leading contractors, according to the selection of American magazine Engineering News Record.

■ How much is the construction of the highway a logistical and technical challenge for the ministry and responsible institutions?

- I believe that we have established a quality management system for this project, which – in addition to the Ministry of

gro has been defined and includes: SEETO road route 4: the Bar-Boljare highway (to the border with the Republic of Serbia); SEETO road route 1: the Adriatic-Ionian Corridor (coastal variant, or fast road route along the Montenegrin coastline), or links with the Republic of Croatia and the Republic of Albania; SEETO rail route 4: the Bar-Vrbnica railroad (to the border with the Republic of Serbia); SEETO rail route 2: the Podgorica-Tirana railway line (links with the Republic of Albania); the Port of Bar and Podgorica Airport.

The summit in Vienna also saw the MONTENEGRO BUSINESS SECTOR 2016

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reaching of an agreement on priority infrastructure projects that will be subject to possible co-financing of the EU for the period until 2020. The projects of interest for Montenegro and the Region are the sections of the Adriatic-Ionian corridor from Debeli Brijeg to Sukobina, the sections of the Bar-Boljare highway from Mateševo to Andrijevica and the bypass around Podgorica, and the reconstruction of the Bar-Vrbnica railway line.

■ How realistic is it to expect that by 2030 plans could be realised for the construction of road and rail routes towards Serbia, Albania, Bosnia &

waterway transport, combined transport, aviation and maritime transport, and also relate to the technical, social and safety standards of these sectors.

Chapter 21 is divided into two subareas: trans-European transport and the trans-European energy network. Special importance for the progress of Montenegro in Chapter 21 is represented by cooperation between the countries of the Western Balkans through the Berlin process and the Agenda of connectivity.

■ One of the key points in the development of tourism in Montenegro is developed aviation links with numerous destinations in the world. What are the plans of the ministry when it comes to the development of the Airports of Montenegro company?

- Bearing in mind that Montenegro, from the aspect of transport connections, is recognised primarily as a cheap destination, the moment for new investment in airport infrastructure has been recognised. This primarily refers to Tivat Airport, which has for many years been one of the pillars of the development of the tourism industry.

In this regard, negotiations are underway with the European Bank for Reconstruction and Development related to the project of building a new terminal building

Giving priority to the maritime economy in the concept of the development of Montenegro is a logical continuation of our activities, viewed from the perspective of the rich maritime tradition Herzegovina and Croatia, given the huge financial obligations implied?

- You are right that major financial resources are required and we will try to implement projects through various forms of private-public partnership, given the fact that we have virtually exhausted the possibilities of securing credit funds with state guarantees. The great interest of partners from all over the world provides optimism when it comes to the implementation of these projects.

■ Chapters 14 and 21 from your ministry opened recently. How demanding are they for Montenegro?

- Negotiation Chapter 14 - Transport policy, represents a demanding chapter, considering that EU regulations in this area encompass road traffic, rail transport, inland

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and the reconstruction and expansion of manoeuvring areas and platforms at Tivat Airport, for which the conceptual design has already been done. The project for the reconstruction of the control tower at Tivat Airport was also completed recently.

In addition to the aforementioned, intensive work is ongoing on improving the connectivity of Montenegro with the rest of Europe and beyond. Two low cost carriers – Ryanair and EasyJet – are already operating towards Montenegro, and as of August this year Ryanair started regular flights.

■ What are your further plans in relation to Montenegro Airlines?

- As in the case of the airport company, we have no dilemma when it comes to the importance and contribution of Montenegro Airlines to the overall economic

development of Montenegro. Although the Montenegrin air carrier meets certain problems in its current operations, there exist a number of indicators which suggest that it is competitive and that room exists for improvement in operations.

■ To what extent does Montenegro use its capacities in the area of the port territory and port infrastructure and superstructure in state ownership?

- The Law on Ports stipulates that port land and infrastructure represents state assets, and that the superstructure can be owned by companies or individuals. The same law gives the right to the administrative bodies with authority for ports through a concession that the use of the port or part of the port, port infrastructure, the provision of port services and performing other activities in the port that are with these services in economic, traffic or technological relations. Contracts of concession of the port area in the Port of Bar have so far been signed with “Luka Bar” AD and the “Port of Adria”, and in the coming period it is planned to grant concessions in the Port of Kotor and the former Bijela shipyard.

■ What are your plans in the maritime domain?

- Giving priority to the maritime economy in the concept of the development of Montenegro is a logical continuation of our activities, viewed from the perspective of the rich maritime tradition and the fact that our country has over 4,500 seafarers today.

On the world’s seas, under the Montenegrin flag, sail four new ships that respect the highest standards that are placed before us by the international and European communities. Marina Porto Montenegro is one of the most attractive in the Adriatic, with all elements that contribute to the development of nautical tourism in Montenegro. This marina currently offers 400 berths for yachts with a length from 12 to 180 metres, while a small number of marinas in the world have the possibility to accommodate luxury yachts and satisfy the highest standards when it comes to coastal services.

And, of course, there is the Port of Bar, which possesses significant competitive advantages in relation to the Northern Adriatic ports, shortening transit times and creating savings in the costs of maritime transport. ■

CORPORATE

SANDRA ŠTAJNER, DIRECTOR OF TELENOR MONTENEGRO

Constantly Transforming Ourselves The telecommunications sector is one of the most dynamic, and this is why Telenor has been constantly transforming itself, both globally and locally. We have to invest now to ensure that our customers can use all the advantages of modern technology in the future too. This is our motto that we have been successfully applying for over two decades

“T

elecommunications are an important part of the Montenegrin economy and GDP, and investing in this sector affects the country’s overall economy. For two decades, Telenor has been substantially contributing to development of this sector which resulted in the company becoming the market leader” – says Sandra Štajner, Director of Telenor Montenegro.

■ This year Telenor celebrates 20 years of operations in Montenegro. How efficient has the €140-million-investment been in this market?

- Two decades ago the telecommunications market in Montenegro was much different.

We started as the first mobile telephony operator when the technology allowed only voice-based services. Since the very beginning, our priority was to invest in developing the infrastructure and network that would support all the services we offer to our customers. By continuously investing, we managed to create a technologically advanced network, which, among other things, resulted in our becoming market leaders. Last year alone, we invested over €10 million in technological development because, by investing in quality and coverage, we could boost the main segment of our business. We also opened the Technical Building, worth €4 million, where we offer the latest telecommunications services like telehousing for the first time ever in Montenegro.

Telecommunications are an important part of the Montenegrin economy and GDP and investing in this sector affects the country’s overall economy.

■ Tell us something about the evolution of your services in the last two decades.

- We started with voice-based services and text messaging. In 2007, we implemented 3G Technology and, since then, have been gradually extending our Internet coverage in Montenegro. We were the first operator in the region to introduce 4G for commercial purposes in 2012, and the first operator in Montenegro to enable 4G roaming services. Mobile phone innovations have also influenced development of new services. Smart phones, now used by 60% of Montenegrin citizens, brought new options and paved the way for us to innovate even more.

Today, at a time when Montenegro is fast becoming a digital society, our ambitions are geared towards digital services. We are working on implementing innovative solutions

gro, which have contributed to a more transparent and dynamic telecommunications market.

We have been on the “white” taxpayers list for years, because we promptly pay our taxes. We are also advocating a more open dialogue with other operators and the regulatory agency. By doing so and by respecting the relevant laws, the rule of the law and European regulation, we can have a market that is predictable enough for future investments.

Concurrently, this is the main prerequisite for all future investors who are contemplating investing in this region.

■ What are Telenor Montenegro’s short and long-term priorities?

- Our industry changes quickly, and it is a safe to say that the telecommunications and IT sectors are not going to look at all the same in five

Improving our coverage and network quality are always our top priorities, which is why we are continuing to cover more territory with the 4G signal, while developing new and existing digital services based on cloud technology as much as possible because this technology enables access to huge content and saves it permanently online.

■ Telenor nurtures high professional standards and unique corporate culture.

How much does your experience with these two contribute to development of the telecommunications sector?

- Telenor Group has around 36,000 employees in 13 countries. Thanks to the experience that we bring from different countries, we have managed to set certain standards in Montene-

years as they do today. The words that best describe our plans: constant transformation.

We have to invest now to ensure that our customers can use all the advantages of modern technology in the future too. Improving our coverage and network quality are always our top priorities. We are continuing to cover more territory with the 4G signal in an effort to provide a perfect user experience and enable faster and easier communication with our customers. We are also going to develop new services and expand our current offer of digital services, as well as continue with our CSR activities. ■ MONTENEGRO BUSINESS SECTOR 2016

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INTERVIEW

Building an Optimal Environment for

TOP INVESTMENT IN TOURISM Following last year’s outstanding tourist season, Montenegro expects even better results. This is not just the result of a strategic decision to focus on high-end tourism, but also a number of other policies aimed at utilising the overall economic and cultural potential of the country BRANIMIR GVOZDENOVIĆ MONTENEGRIN MINISTER OF SUSTAINABLE DEVELOPMENT AND TOURISM

T

ourist destinations that seeks to take and maintain their position on the world tourism map must have in their offer various segments of the tourism product of appropriate quality, in order to successfully meet or exceed the expectations of tourists, thereby establishing their loyalty towards the destination itself. This is the essence of the concept of development of Montenegrin tourism, says Branimir Gvozdenović, Minister of Sustainable Development and Tourism.

■ What kind of tourist season do you expect this year and will it surpass 2015 in terms of revenue and number of tourists?

- The year 2015 was the best ever, and we expect further progress from 2016. On the one hand, our conviction is based on announcements and reservations, on the trend of double-digit growth in the num-

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ber of tourists from western countries and maintaining traditional markets, but also in large part on the treatment of reputable international media that promote Montenegro as a top destination. One of them is Lonely Planet. If we add to this the fact that this year we also have, among others, cooperation with Wizz Air, Easy Jet and Ryanair, as well as dozens and dozens of events, some of which are named the best in Europe, it is clear that our prediction is extremely well founded.

■ How much does elite tourism participate in the total revenue generated in this branch of industry?

- At the beginning I must say that it is precisely our commitment to high quality tourism that has led to the creation of incentives for investment in hotels, and which was ultimately the basis for an increase in the construction of hotels.

The number of tourism establishments

of 3- to 5-star category increased by 6.7% compared to 2014. In the last 10 years the number of high class hotels has increased by around 300 per cent. Also in the last Report of the Hotel Business in Montenegro it was stated that during the last 10 years hotel revenue increased 2.8 times, while realised profits before deductions for fixed costs was up as much as sevenfold. Thus, we collaborate with the industry and jointly create the conditions for the realisation of this commitment to the development of tourism. This brings us to the projected opening of 76 hotels in the next 10 years, with 8,000 keys of a high category. In addition to that, the value of signed investment contracts is about €3 billion.

In the context of new facilities of the highest quality, I must also mention that we are working with international institutions and companies on the tourism potential of cultural assets. In this way we are revitalising them and giving a

completely new value in a non-invasive manner, strictly taking into account the fact that it is precisely their cultural aspect and value that leads and sets strict limits for us at all times.

Alongside work on the infrastructure at Tivat Airport, for example, and in general, plans to introduce electronic visas, with full fiscalization that has a favourable impact over time on the tax burden, we continuously create that which has been our commitment since the moment we opted for high quality tourism: an optimal environment for top investments.

On the other hand, it is very important for us to build our complementary offer, in which everyone will have a place to spend their money and be satisfied with what they got for that money.

■ What kind of structure of tourists and tourism revenues and related subsectors do you desire the country to have in ten years?

- I appreciate that our priority should primarily be maintaining the balance in the structure of the dominant market and opening up towards some new ones that are important to us. So this means that it is essential to retain some of the

Norway 10%. Traditionally good figures of tourists from the region were also maintained – from Serbia we had growth rates of 39%, from Bosnia & Herzegovina 50%, Macedonia 17%, while a positive trend was maintained with Russian-speaking areas.

When it comes to trends in revenue growth, we rely, in addition to our own predictions, on relevant international institutions such as the World Travel and Tourism Council. It coincides with our own in the largest segment. Total revenue from tourism in 2005 amounted to €222 million, while in 2015 it was €801.3 million and for 2026 around €1.5 billion is expected.

■ What does Montenegro intend to do to further improve the business environment when it comes to investments in tourism?

- In recent years we have made tremendous progress on the Doing Business list of the World Bank when it comes to the issuance of building per-

PORTO MONTENEGRO

In the next ten years we plan to build 76 hotels with 8,000 high category keys. During the same period we plan to increase total tourism revenues from €801.3 million in 2015 to around €1.5 billion in 2026 traditional markets, such as the regional market or Russia, but alongside attracting tourists from Western Europe as a category that is interested in certain different forms and types of tourism in relation to the traditional markets. Distant markets require a special and also strategic approach, which is based mainly on a joint offer with the countries of the region, such as Serbia and Croatia, and of course good flight connections.

Judging by current trends, these projections are also realistic. Last year we recorded double-digit growth rates from the countries of Western Europe: Germany 66%, UK 38%, Poland 15%, France 11% and

10 years we plan to open another 76 hotels.

Now we are facing a particularly important part of the job in attracting investments in the North, through state investments in infrastructure in so-called tourist zones. Thus in this area it was necessary to make significant investments from the Budget in the part of creating conditions for high-quality investment, but we are confident that this will stimulate interest. Thus, the total value of planned investments in the North alone – in the

mits – by 85 places. What has remained a particularly sensitive and important segment in the part of issuing licenses, which we’ll discuss in the next period, is its costs, i.e. the prices of utilities.

Furthermore, shortening the deadlines for the return on investment in high class hotels by introducing measures to improve the economic rationale of the investment required government incentives for the hotel industry. That was evidently the right move, given that it has led to a significant increase in the construction of hotels. So in the last year alone we opened 21 holiday facilities with close to 1,500 beds and, as I already mentioned, over the next

area of Bjelasica and Komovi – is between 800 million and a billion euros, and I am confident that in this space, with the state support I have spoken about, high-quality investments will continue rapidly.

However, what Montenegro must work in particular are private entrepreneurial initiatives, i.e. ideas that are related to our knowledge, and that capital that this knowhow can generate, and not exclusively for foreign investment. Our investment-development fund alone has, from 2010 until today, placed close to 65 million euros, financing 186 projects. In the last year alone it has provided a line of credit for the tourism and hospitality industry in the amount of €28 million, with which over 900 new jobs have been created. Moreover, through constant communication with the World Bank and other financial institutions, and with the improvement of legislation, we try to give an additional impetus to the private MONTENEGRO BUSINESS SECTOR 2016

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sector and secure the long-term sustainability of private initiatives.

■ How does Montenegro intend to ensure continuous visits of tourists beyond the peak season period?

- What we are currently focused on in particular is further diversification of the tourist offer, or events and other content that hotels and municipalities have to offer out of season. This year the government adopted a programme of incentive measures in the field of tourism for 2016/2017. It includes four support measures that are implemented through co-financing of the Government in the implementation of projects, in the framework of which one of the specific measures is precisely supporting events.

The largest amount of funds that can be granted through this incentive programme equates to up to 70 per cent of total costs.

Of course, MICE – which globally achieves an increase of over 10 per cent and other types of tourism which are not linked to a specific period of the year, and in which our country has also recorded growth, is the segment which is specifically dealt with by the Ministry, and the Montenegro Convention Bureau within the framework of our National tourism organisation. National Parks, whose programmes are specifically worked on, record growth of 30 per cent, along with tourism in nature generally, driven by the construction of ethno villages. Through cruise tourism Montenegro is visited by around 400,000 tourists annually. Along with the construction of high category hotels, all preconditions will be created for the development of year-round tourist destinations.

■ What measures does Montenegro take with regard to climate change?

- Our National Strategy in the field of climate change until 2030 was adopted in 2015, and this document will guide activities in the field of climate change in the period ahead. We also adopted the Intended national determined contributions of Montenegro to reducing GHG gas emissions, and reports on climate change, all in the context of the fact that our country is committed to a 30 per cent reduction in GHG emissions

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compared to the base year of 1990.

Montenegro, although small, takes its mission to fight climate change very seriously. This is not only because of the contribution of the same, but also because of an understanding of the fact that the global goal can only be reached with a lot of local efforts.

■ What has been done in the previous period in relation to Chapter 27 and how will Montenegro finance

However, the normative framework with the aim of accession does not mean much without activities on the ground which support the story of its quality. Activities on the rehabilitation of socalled environmental black spots with the World Bank, plans to cover the entire coast with wastewater treatment facilities in the next few years, the construction of sanitary landfills and recycling centres, and investing in raising the awareness of citizens, are things we are working hard on in order to meet the goals set.

■ What has been done in terms of the sustainability and protection of Ulcinj Salina salt pans?

- On the issue of the protection of the Salina everything possible and necessary has been done as a first step in the protection of what is primarily a national, and then an international, natural treasure.

Management has been temporarily entrusted to the National Parks, with which its physical and technical protection has been secured. It has been equipped in terms of infrastructure that ensures water circulation and thus the conditions for maintaining the ecological values of the area, while the government has ear-

That which Montenegro must work in particular are private entrepreneurial initiatives, i.e. ideas that are related to our knowledge, and that capital that this knowhow can generate, and not exclusively for foreign investment the costs related to meeting the requirements of this chapter?

- A strategic framework was made for this area and a very large number of laws and regulations have been adopted – a total of about 140 documents. What is our priority now is the expected opening of Chapter 27 this year, i.e. the fulfilment of initial benchmarks - development of the Strategy of approximation.

Implementation of the Strategy, according to the analysis carried out, foresees investments in the amount of €1.492 billion with the aim of achieving full compliance with the EU acquis.

Thus we are already investigating ways to finance these obligations.

marked certain funds for this location.

The Ulcinj Salina salt pans is also protected through spatial planning documents.

However, these are temporary measures. Our plan is a further, permanent procedure for the protection of this area and its sustainability. That is why we are in the process of drafting the Study for the protection of the Ulcinj salt pans. This is a process in which, if you want it done properly and without problems appearing later, you have to enter into it carefully and with dedication to every detail. In this sense it requires more time than originally planned. However, a lack of time is not a secondary quality, and we, without exception, decide for the latter. ■

CORPORATE

VASILIJE KUSOVAC, EXECUTIVE DIRECTOR, LUKA KOTOR A.D.

Development Trend Continued The Port of Kotor, or “The gate of Montenegro”, as it is known by many, will this year welcome 478 cruise ships, with around half a million tourists, thereby continuing the successful operations that are improving year on year

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ware of the importance that tourism has for the overall economic development of Montenegro, employees at the Port of Kotor – with high standards of service, efficiency and the highest security measures for ships and passengers – have for years represented one of the most successful companies in the country.

■ Many estimate that this year will be a record year for the operating of the Port of Kotor according to all parameters.

What are your specific expectations, given that you already have reports on the first six months of operations?

- As a continuation of successful operations and good business practices this year, being more successful than the previous year merely represents a continued trend of the development of “Luka Kotor” A.D. as a brand. According to announcements, this year 478 cruise ships will sail into the Port of Kotor. According to all parameters, this will be a record year that will bring with it confirmation of the title of one of the most successful ports in the Mediterranean, but also the obligation of quality management and coordination. I expect that we will successfully meet the challenges and needs of increasing the flow of ships and passengers and successfully close this business year.

■ The Port of Kotor has a great impact on the economy of Montenegro through the direct contribution of revenue from tourism. What are this year’s trends and indicators like when it comes to the visits of tourists passing through the Port of Kotor?

- Not accidentally dubbed “The Gate of Monte-

negro”, the Port of Kotor every year welcomes a large number of tourists who come to Montenegro via our port and familiarise themselves with all the beauty that this destination offers. During this year the arrival of a little less than half a million passengers from cruise ships has been announced. By welcoming such a large number of tourists, the Port of Kotor has an obligation to ensure its services and operations are carried out to the highest level possible, especially in treating the safety and quality of services, for both the ships and the passengers that we welcome.

Bearing in mind the attractiveness and the cultural and historical significance of the City of Kotor, which we represent, and Montenegro, as one

projects until there is a resolving of the issue of obtaining concessions in the area in which we do our business. Large development projects were carried out in the past. A new passenger terminal was built, designed and equipped to the highest standards, which should meet requirements for the high-quality reception of tourists coming into our port. A new office building of “Luka Kotor” A.D. has also been built and the capacity of the marine part of the Port of Kotor has been expanded, which allows for the greater reception of yachts and smaller vessels.

Infrastructure projects and capacity building in the future period depend on status in relation to the concession area.

Representing one of the most successful companies in our country, we provide an example of corporate social responsibility and a relationship towards the community of the top destinations in the world currently, it is an obligation to correspond with an appropriate attitude in the business environment.

Representing one of the most successful companies in our country, we provide an example of corporate social responsibility and a relationship towards the community, as well as support for the development of the local community. Internationally recognised in terms of quality, the Port of Kotor supports the quality of Montenegro as a tourist destination in the best light.

■ What are the future directions of investments in the Port of Kotor aimed at improving infrastructure and the total offer for the coming year?

- Under its current status, the Port of Kotor is not able to invest in infrastructure and development

■ In New York you recently received great recognition that is awarded by Business Initiative Directions and which relates to the exceptional quality of operations. In your opinion, what are the most important criteria that brought you this recognition?

- Certainly the international identity that we achieved through successful operations and constant increases in the volume of work over the past ten years. This award for quality proves that what we do represents a good choice for a good result. Our status as the third port in the Adriatic and the fifth in the Mediterranean, which is supported by the fact that we are continuing to develop and progress, must result in evaluation through recognition of various types. ■ MONTENEGRO BUSINESS SECTOR 2016

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INTERVIEW

Photo by Andrija Kasom

Culture is the Most Important

MONTENEGRIN BRAND

The most important cultural product of Montenegro are its creators, musicians, writers, theatrical and visual artists and filmmakers, who represent Montenegro and contribute to its recognisability in the world. The Ministry of Culture supports and follows their international success with special attention, in the belief that culture is the most important Montenegrin brand PAVLE GORANOVIĆ MONTENEGRIN CULTURE MINISTER

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he development of culture, fostering heritage, potentials of contemporary artists and their promotion at the international level represent the priorities of the Ministry of Culture. At the same time, linking and networking culture with other fields, such as tourism, science and education, is part of the Ministry’s efforts to create a new cultural concept that will contribute to the development and preservation of genuine values and achievements that underpin modern Montenegro, says Pavle Goranović, Montenegrin Culture Minister.

■ The exhibition “Symbols of the millennial statehood of Montenegro” opened recently, commemorating a thousand years of statehood and ten years since the restoration of the independence of Montenegro. What has this status in the past decade meant for the formation of the cultural policy of Montenegro?

- The act of restoring independence has had a great impact and importance in this

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field in the last decade. With the restoration of independence Montenegro was given an opportunity to independently create and implement various measures and activities, goals and tasks, which are based on the specific needs of its citizens and focused on its cultural heritage, and all of that based on the principles of balanced development and respect for the right to cultural diversity.

After ten years, we can say that significant progress has been made in the field of legislative and institutional reforms, that international cooperation has intensified, with which the culture of Montenegro is represented on the international scene, that the Montenegrin cultural sector has become a very important part of regional initiatives and cooperation programmes... This was done primarily through the involvement of the Ministry of Culture and cultural institutions, as well as through cooperation with the independent culture scene and leading Montenegrin artists of all generations.

When we talk about Montenegrin cultural identity, we primarily have in

mind the specificity which arises from the civic and multicultural concept of Montenegro. The exhibition which marks a thousand years of Montenegrin statehood shows that Montenegro has a long tradition and a rich cultural heritage, which obliges contemporary stakeholders in the Montenegrin cultural and creative scene to work on its preservation and protection, presentation and valorising.

This can only be achieved by a sovereign state. In this context we can say that the national cultural policy, as an instrument for the establishment of a consistent and modern cultural system, adapted to our distinctive cultural identity, received special impetus with the renewal of Montenegrin independence.

■ How much has the process of European integration contributed to broadening the cultural offer in Montenegro?

- The cultural offer does not depend directly on European integration, but good governance certainly leads to its improvement. This process is important for us be-

cause we are committed to international norms, which until then were not part of Montenegrin practices, we involve ourselves in the daily work of cultural institutions. Montenegro already previously ratified a significant number of conventions in the field of culture. However, European integration has imposed the introduction of new standards, but has also enabled access for the Montenegrin culture sector to new, alternative sources of financing.

■ ... And creating opportunities for Montenegrin culture to be better represented in the European context?

- International cooperation is one of the most important factors for the advancement and development of culture in all of its segments. The realisation of these priorities imply the membership of Montenegro in various international initiatives, forums, associations and programmes, among which special significance belongs to EU cooperation programmes. In that sense, Montenegro is today a member of Creative Europe and Europe for Citizens, the Forum of Slavic culture, the Anna Lindh International Foundation, the Biennial of Young Europe and the Mediterranean, European Film Promotion, the European Audio-visual Observatory, Traduki etc. The Ministry of Culture ensures the continued participation of the Montenegrin culture sector in major international events and festivals, such as the Biennale of Contemporary Art in

sent and recognisable on the international cultural scene, and is an unavoidable part of respectable international projects, while Montenegrin culture is part of the broader international context.

■ What kind of vision do you have for the development of culture in Montenegro and how are these ideas embedded in the 2016-2020 Programme for the development of culture?

- Culture is a complex area, with large and important, unique and specific potential, which must be in the function of the broader social development. In Mon-

Montenegro has a long tradition and a rich cultural heritage, which obliges contemporary stakeholders in the Montenegrin cultural and creative scene to work on its preservation and protection, presentation and valorising. This can only be achieved by a sovereign state Venice, the Leipzig Book Fair, the Market of the Cannes Film Festival and Berlinale and the Sarajevo Film Festival, and since 2013 we also choose our own candidate for the Academy Award in the category of the Best Foreign Language Film.

These are all indicators that the country is investing great efforts and resources to ensure the integration of Montenegrin culture in international and regional flows. Also testifying to the results achieved is the fact that today the Montenegrin creative sector is increasingly pre-

tenegro culture is legally regulated as an area of public interest, and in the same way the rate of spending on culture per annum is determined, which amounts to 2.5 per cent of the current state budget.

That shows what kind of relationship the state has towards this area and its affirmation. However, what we recognise is the significant possibility of also directing the Montenegrin cultural sector towards alternative sources of financing, of which there are certainly many, but which are not used in the right way.

In accordance with its multi-dimensional nature, culture is closely related to other areas, such as tourism, science and education, and thus our activities are directed towards networking with these sectors, with which we create a new cultural concept that will contribute to the development and preservation of genuine values and the achievements underlying contemporary Montenegro.

Public-private partnerships, donations in culture and the creative industries are just some of the novelties that we are working on the development of.

We will certainly continue with the regulatory superstructure and strengthening the function of cultural institutions, including the independent culture scene, with the strengthening of the professional competence of the culture sector and the greater involvement of young people in the implementation of cultural policy.

■ How is the potential of culture in the field of cross-sectoral connections recognised in the context of this document?

- As I have already noted, connecting with other sectors is extremely important. There are many reasons, but also conditions for such cooperation. For example, when it comes to the department of education there are already existing projects that we implement collectively, such as “Cetinje one story”, with which we give our contribution to familiarising pupils with the foundations of the multicultural being and fundamental values of Montenegro and the Montenegrin Royal Capital. The second plain refers to coordination with higher education institutions in the forming of study programmes and creating enrolment policies, in order for essential personnel, who have to date been leaving to study abroad, to be educated at Montenegrin universities.

And with the department of science we have a positive experience from the previous period through cooperation in the programmes of Horizon2020 and Erasmus. However, more intensive penMONTENEGRO BUSINESS SECTOR 2016

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etration in the field of scientific research is our common interest. When it comes to tourism, there is a strong connection with this ministry, precisely because of the great potential for the development of Montenegrin cultural tourism.

■ To what extent has cultural tourism become an integral part of the policy of Montenegro in the development of elite tourism?

- Testifying that culture is not only a consumer of funds is cultural tourism,

negro and contribute to its recognisability in the world. The Ministry of Culture supports and follows their international success with special attention, in the belief that culture is the most important Montenegrin brand.

Also worthy of respect are our legacy values, our rich cultural heritage, part of which has already been recognised in the world and added to the UNESCO list of cultural assets. That’s why I must mention the cultural and historical territories of Kotor, the historical core of Cetinje, the archaeological site of Duklja, the Old Town of Bar, as well as the Greek cemetery in Plužine, Bare Žugica and the Greek cemetery in Žabljak, which recently gained the status of UNESCO World Heritage Sites. These are all places which comprise Montenegro and its identity.

■ You recently presented the potential of Montenegrin cinematography in Cannes, including the possibility of shooting in Montenegrin locations. What does Montenegro offer in this area and what kind of results has it recorded?

- This year, for the sixth time, Montenegrin cinematography was presented its potential in the field of cinematography at the Market of the International Film

which represents a special and increasingly important content of the tourist offer. Our unique cultural heritage, our history and tradition, but also contemporary creativity, promote Montenegro in the best way and present it as an attractive holiday destination.

We recognise great potential in medieval towns and forts and old urban areas, which – with adequate protection – can be part of the modern tourist offer. An example for us is represented by the cities in the region, which generate enviable revenue thanks to film tourism, but also position their countries on the map of elite tourist destinations.

■ What would you single out as the highest quality internationally respected cultural products of Montenegro?

- The most important cultural product of Montenegro are our creators, our musicians, writers, theatrical and visual artists and filmmakers, which represent Monte-

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important that this area has been institutionalised through the establishment of the Film Centre of Montenegro, which we have been working on with commitment for a long time and for which the Government recently adopted a Study on the justification of its founding. Also testifying to the relationship of the state is the fact that we will establish a film fund, into which fund will flow from a variety of sources for the revitalisation of Montenegrin cinematography.

We have also introduced incentives for foreign producers, through which we will return part of the funds they have invested here after filming in Montenegro. Such a model has proven to be very good in the region, as evidenced by the films of Hollywood productions shot in our region. Interest in shooting in Montenegro is growing on a daily basis and I am confident that we will soon be able to boast that Montenegrin cities have been the sets of numerous blockbuster films.

■ In which way does the ministry encourage young artists and the alternative culture scene?

- Young, talented artists and successful students of art academies have our continued support. We recognise them as the future of Montenegrin culture and strive to ensure their important role is properly

The Montenegrin creative sector is increasingly present and recognisable on the international cultural scene, and is an unavoidable part of respectable international projects, while Montenegrin culture is part of the broader international context Festival in Cannes, under the auspices of the joint Pavilion of Southeast European countries. Due to its natural beauty, geographic location and climatic conditions, Montenegro earlier gained the epitaph of an “open-air film studio”. In addition to that, today highly developed infrastructure in the field of hospitality, experience gained in logistics of film projects, the possibility of engaging young and talented film workers, make Montenegro an interesting location for foreign shooting.

With the adoption of the new Law on Cinematography in the middle of last year this area is also regulated in a legally valid way. Important innovations have been adopted, which will enable the utilising of all Montenegrin potential. I consider it

valued. Those are precisely the ones who are working strongly to develop alternative culture and show us how important it is, both for young people and for the development of culture in general.

■ Does the cultural sphere in Montenegro have a sufficient entrepreneurial spirit and initiatives for public-private partnership?

- We recognise the future of Montenegrin culture in public-private partnerships. All the legal conditions have been created and it is now up to us, in cooperation with investors, to find the best model to achieve that. The interest exists, especially in the field of cultural heritage, where our potential is also the greatest. ■

CORPORATE

SNEŽANA IVANOVIĆ, DIRECTOR, SIEMENS D.O.O., PODGORICA

Most Efficient Solution For Montenegro’s Further Development Siemens is a company that has a clearly defined market, and high quality and proven products and solutions, which enables it to have stable operations in all areas in which it is present

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he company in Montenegro has been operating continuously for 16 years.

The first Siemens representative office in Montenegro was opened in 2000, and after achieving successful results the representative office was transformed in 2005 into a company with limited liability, as Siemens d.o.o. (Ltd.) Podgorica.

“We are active in all three key areas of the parent company – electrification, automation and digitisation. Our goal is to implement the company’s mission – applying modern and comprehensive technological solutions that will enable the raising of the general standards of the country to a higher level,” said Snežana Ivanović, Director, Siemens d.o.o., Podgorica ■ Which infrastructure projects that are underway or at the beginning of their realization is Siemens Montenegro participating in?

- Siemens is a company that has a clearly defined market, and high quality and proven products and solutions, which enables it to have stable operations in all areas in which it is present. We place the focus of our business on investment in the infrastructure of Montenegro and the strategic development of the Montenegrin economy. In the past few years projects that are essential for Montenegro in the energy sector have been carried out, such as construction of the substation Podgorica 5, reconstruction of the Ribarevine substation, construction of the Kotor substation, with gas insulated switchgear of 110kV produced by Siemens. In 2014 the project of construction of the substation Lastva, with a value of 22.6 million euros, was initiated and is currently underway. The previous year saw the launch of the project of connecting the Krnovo wind

farm to the transmission grid, which includes the construction of two substations and two transmission lines with a total value of over 13 million euros. Currently, more than half of new substations in the distribution network function with Siemens equipment. Also, the railway infrastructure of Montenegro will be enhanced by the design and construction of the new Trebješica electric traction substation, which is valued at €3.4 million.

As one of the leaders on the global market of modern medical equipment and solutions, we are investing continuously in equipping medical institutions in our country. In this field we have become a strategic partner of the health system of Montenegro, whilst also simultaneously strengthening our presence in the private sector.

urious property intended for business, commercial and residential purposes in Montenegro. It is important to know that every company we work with has at its disposal the competence of our experienced team of experts, who will offer them the best and highest quality solutions. As tourism is a strategic branch of industry that Montenegro is developing very rapidly, we see great potential in this domain for future successful projects of the company.

■ Where do you see your place in the great work that is ahead of Montenegro in the field of European integration related to Chapter 27, covering the environment?

- In the area of environmental protection and

In the area of environmental protection and the conservation of the rich biodiversity of Montenegro, our company can provide quality solutions and is very committed to investment in energy-efficient systems ■ What does the redirecting of Montenegro towards luxury tourism and continued investment in the construction of elite hotel complexes mean for Siemens?

- Siemens, among other things, offers complete solutions for high-class hotels and commercial facilities: from substations to the most modern security and communications systems. In addition to the already implemented complex project that has integrated all the systems as a complete solution, Siemens has completed work on the Atlas Capital Centre, the most lux-

the conservation of the rich biodiversity of Montenegro, our company can provide quality solutions and is very committed to investment in energy-efficient systems. Siemens represents the leading supplier of technologies and solutions that contribute to reducing energy consumption and lowering emissions.

The solutions we provide encompass improving the control and regulation of energy use, the use of waste in heat production, the energy integration of production processes, but also many others that contribute to preserving the environment. ■

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CORPORATE

NATAŠA AĆIMOVIĆ, PRESIDENT OF THE MUNICIPALITY OF HERCEG NOVI

Gem of Boka Herceg Novi has been short-listed for the title of the European Capital of Culture 2021 based on our expertly made application.

The European Commission jury, which will rate the candidacies, has praised Herceg Novi’s application and underlined that the submitted concept promotes European dimensions while having interesting and innovative elements that can be developed further

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he report by the European Commission’s jury confirms our belief that Herceg Novi should be named the epicentre of the European cultural activities in 2021. The title of the European Capital of Culture will be borne by a town that has the best development potential and a plan that is ambitious and realistic. History and cultural tradition are both considered as the starting point and a strong argument in favour of the candidacy, while Herceg Novi’s location creates many opportunities for connecting and developing the entire Bay of Kotor. There are also stories worth telling: a story about the Balkans, a story about Montenegro. The stories about conflicts, friendships and complex relations that are expressed through projects and that shed a new light to crucial issues that Europe is trying to reconcile, especially now.

many benefits to all of Montenegro. Our aims are focussed on reconstructing cultural infrastructure, supporting NGO development, cooperating with main investors on realizing new large-scale projects, solidifying our ties with our partner towns, creating job opportunities for young people to motivate them to stay here, and making Boka the place by which Montenegro will be recognised as a gem that has a lot to offer to Europe.

■ How would the title of the European Capital of Culture promote the town, the region and Montenegro?

- This project mainly focuses on the idea of engaging citizens to make Herceg Novi the symbol of culture and many cultural events.

Our plans are long-term and they are closely related to Montenegro’s accession to the EU. They promote values like transparency, tolerance and modern technology. This project speaks volumes about the unity and development of the region, which comprises Herceg Novi, Kotor, Tivat, Budva, Cetinje, Bar and Ulcinj, with the aim of becoming a cultural and creative destination that can bring

■ Considering that the competition is in its final stage, what did Herceg Novi do to win this title in 2017 and become the first ever Montenegrin town to do so?

- The report compiled by the European Commission’s independent jury will serve as a guideline to our team in preparing the next application which should be submitted by early September, based on which the jury will make a final decision. We are focusing on implementing the European Commission’s suggestions and objections, communicating properly with Brussels, and coordinating with the future project partners, the government and line ministries in order to ensure

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the support for concrete programmes. The revised application should contain strategic issues about projects and programmes to be implemented after the official announcement of the winner (somewhere between 2017 and 2021). Our concept – called The Frenemies – will help us to navigate through the programme that brings a fresh perspective to the story about our region, and our joint and unique language, culture and art that stem from it.

■ Herceg Novi is one of the most attractive tourist destinations in the Adriatic. What does the town need to do in order to justify the European Capital of Culture title?

- Herceg Novi has a huge potential, but its cultural heritage has been neglected for the last 25 years. The city was deprived of investment, and not only in culture, and area which has been living in the shadow of past times despite the town’s having many interesting buildings, festivals and good potential. We understand that, in order for Herceg Novi to restore its former glory, we would have to reconstruct old landmarks, revive and develop the town. The European Capital of Culture project encompasses every aspect of the “culture of living”, including reconstructing some of the dilapidated cultural sites, investing in transport infrastructure, realising employment boosting projects, developing creativity, education and many other aspects. Culture is the main catalyst for this. ■

CORPORATE

PROFESSOR SNEŽANA MATIJEVIĆ, PHD, PRESIDENT OF THE MUNICIPALITY OF TIVAT

Creating a Recognisable Image of Tivat Nautical and other types of elite tourism are the strategic orientation of the municipality of Tivat. We are going to stick to this course because, with the construction of Porto Montenegro and the Luštica Complex, we have the infrastructure and tourist attractions that appeal to wealthy tourists

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e expect the Qatari Diar project, now being implemented at the Blue Horizons (Plavi Horizonti) location, to pick up pace. We are going to work on including more cultural and sports events in the existing tourist offer especially during the period before and after the main tourist season. Our aim is to extend the tourist season with the private sector as one of our main partners in every local community. We are also continuing to implement the subsidy policy for the construction of four and five-star hotels, exempt from paying their utilities. Also, a decision has been made where condo, apartment and ‘garni’ hotels are exempt from paying up to 70% of their utility bills. The end goal of this is to increase the hotel capacity in Tivat.

■ You have been appointed to the position of municipal president only recently. What are your first impressions?

- As of mid-May, it has been my honour to be able to perform the duties of the president of one of the most promising municipalities in Montenegro. I can proudly and rightfully make that claim, considering the huge number of foreign investments that have, without a doubt, expedited the development of Tivat. A lot has been invested into infrastructure, and our near term plans are equally ambitious. We have been dealing with the issue of non-valorised locations in the municipality, which possess a hidden potential to become attractive tourist destinations. Apart from focusing on the “big issues”, we are also very serious about dealing with many smaller but equally important topics or problems, and with the needs of our citizens with whom I communicate on a daily basis. My first impressions are good, and I am hoping for even better results.

■ How much have Porto Montenegro and Luštica Bay changed the business environment in the municipality, and how can tourism in Tivat further develop?

- The changes are clear and visible especially when we compare Tivat from 10 years ago to Tivat of today. Apart from visual changes, I would also like to single out a much more important change in improving the business environment.

A substantial number of people are engaged in implementing the projects I mentioned. Thanks to these projects, which are the direct results of foreign investments, we see many small and medium enterprises being formed, and this

and other related segments. This is where our chances lie, as well as opportunities for our local population and businesses in our municipality.

also contributes to the town’s development and higher employment in all economic segments.

The fact remains that we have been seeing constant growth in the number of foreign and domestic tourists too. In order to keep them in Tivat as long as possible, we have to offer them better quality facilities at the height of the tourist season, as well as all year around.

Apart from this, we have a few other challenges to tackle – the promotion of Tivat’s environs, promoting our cultural and historic heritage, creating a recognisable image of Tivat, connecting to other towns in the Bay of Kotor and consolidating our tourist offer. We have to somehow link this wonderful story about big investors to development for SMEs in tourism

selecting project contractors that will build the promenade and an outdoor swimming pool in Belani. We are also planning to execute works on the sewage system in Donja Lastva, worth €1 million. We are starting the reconstruction of DTV Partizan’s facility in the town centre and the construction of a brand new facility in the place of the current Red Cross premises. The construction of a residential building for four refugee families is also about to start with the assistance from the German NGO, HELP. Our other plans include reconstructing the public toilets on the Pine promenade close to Porto Montenegro.

Furthermore, we have a few other investments pending which are going to make Tivat a much better place to live in. ■

■ Which of the most important projects will be included in Tivat’s strategic plans for the upcoming period?

- As I’ve said earlier, our plans are ambitious, and I am going to mention just a handful of large-scale projects that are certain and are being currently implemented. Firstly, there is the project of constructing the first segment of the new road leading to the Luštica peninsula. We are currently preparing the tender procedure for

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INTERVIEW

Foreign Investors Rebirthed

THE ECONOMY

The high inflow of foreign investment and revenue growth in the services sector have had a decisive impact on economic growth since Montenegro gained independence. Additional incentives should attract new investors and increase employment, especially in less developed areas

VELIMIR MIJUŠKOVIĆ PRESIDENT OF THE MONTENEGRIN CHAMBER OF COMMERCE

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stable economic policy and improvement of the business climate have contributed to the constant growth of foreign investment, but also a booming SME sector, says Velimir Mijušković, President of the Montenegrin Chamber of Commerce.

■ Which branches of industry contribute the most to the dynamic economic growth of the country, and in which areas is a stronger recovery still expected?

- The Chamber of Commerce recently conducted analysis entitled “The Economy of Montenegro, 2006-2015”, which covered developments in the period after the gaining of independence, when significant progress was made in many

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areas. We note dynamic growth at an average rate of 3.2%, which is higher than the average growth in the region of 1.4%, as well as the European average, which was at the level of one per cent. The high inflow of foreign direct investment and revenue growth in the services sector had a major impact on the growth of GDP. Services increasingly participate in the formation of GDP, while the share of the manufacturing sector has stabilised at 10 -12 per cent. The real sector is characterised by the growth of small and medium-sized enterprises, of which there are 19 per cent more today than in 2006, with which they gain importance following the closures of large systems in previous years. Strong construction sector growth fuelled by

increased investment activities was disrupted during the crisis, after which positive trends were again recorded. In 2015 the largest volume of construction works was achieved, while in the company period – thanks to agreed investments – even better results are expected. The tourism sector achieves positive results in all parameters measured, and in 2015, compared to a decade earlier, the number of tourists had increased by 78.9%, the number of overnight stays by 86.9% and achieved revenues had increased threefold. Likewise, the trade sector has recorded steady growth, with the greatest volume of traffic recorded in 2015.

■ How has the strong influence of FDI in Montenegro impacted

on overall economic activity, the competitiveness of domestic enterprises and overall conditions for doing business?

- In the period since the restoration of independence a total of 7.3 billion euros has been invested in Montenegro.

FDI inflow was at a very high level in the period prior to and during the financial crisis, when it reached the level of 41.1% of realised GDP. In the last six years FDI inflows ranged from 14.3% of realised GDP, to 21.1% in 2015.

The largest share of FDI was directed towards tourism, banking, industry - metal, electrical and telecommunications. FDI inflow from 112 countries was recorded.

There is no doubt that the inflow of FDI is a factor that has influenced economic development the most, considering that Montenegro does not have enough of its own accumulation, so it is largely focused on foreign sources of funding. Between the realisation of FDI and its effect on economic growth there is a certain time lag, that is to say that it takes a certain period of time for an investment to be activated, which means that in the coming period we can expect significant effects as a result of the activation of current FDI. Strong FDI inflows have had a

economic activity led to the growth of budget revenues, while a significant number of jobs were also saved.

However, FDI has also had some negative effects, such as growth in the current account deficit. A characteristic of FDI in recent years has been the increased interest of foreign investors in the energy sector, agriculture and tourism, which are the most cost effective investments that foster growth in productivity and technological development. â– Has the system of providing equal benefits for domestic and

In the decade behind us a total of 7.3 billion euros has been invested in Montenegro, with the largest share of FDI directed towards tourism, banking, industry - metal, electrical and telecommunications significant impact on the growth of deposits and thus the banking system and capital markets. The growth of deposit has been achieved on the basis of two factors, as a result of the sale of assets and property and through the arrival of credible foreign investors on the Montenegrin market, which have become important clients of the banking system as depositors and as borrowers. The process of foreign investment has also had a significant effect on the budget, because the increase in

foreign investors come to life in practice?

- Total improvement of the investment environment in Montenegro during the previous period is a result of a stable political situation and the strategic orientation of state policy, which was reflected in the concluding of a number of multilateral and bilateral free trade agreements, as well as the adoption of appropriate laws and other regulations.

With the aim of improving the business environment and increasing

economic competitiveness, in January 2015 we brought the Decree on stimulating direct investments, with which financial incentives for new investments are defined. These measures seek to attract new investors, increase employment, especially in less developed areas, as well as contributing to balancing regional disparities.

To date two calls have been published in accordance with the Decree.

Last year this resulted in the signing of three contracts which were very successfully implemented. The process by invitation is still ongoing in 2016, but there is significantly higher interest and at least ten new Contracts are expected as a result. â– How have European and Euro-Atlantic procedures changed the public procurement system and how able are local companies to fulfil these conditions?

- Of the procedures that facilitated the preparation of bids and total participation in public procurement procedures, we should certainly single out the simplification of preparing bids through the publication of tender documentation and invitations to participate in electronic form via the public procurement portal, without the need to purchase the same.

It is also important to mention the reduction of costs, given that uncertified copies of various documents used in the procedure to confirm the creditworthiness of the bidder are accepted as evidence for participation. There has been a significant improvement in the transparency of the process, as well as reductions in the cost of making offers and the like, while bidders themselves have harmonised their operations with European rules for participation in public procurement procedures.

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■ What are the next steps that are needed in order for the domestic SME sector to keep pace with changes in the business environment?

- Improving the competitive capacities of SMEs is a priority for the development of the Montenegrin economy. In

order to achieve this it is necessary to secure favourable access to sources of financing for SMEs, to develop the lacking financial instruments and to advance capital markets. It is also necessary to improve non-financial support to SMEs, providing business support and advisory services, through the strengthening business infrastructure (business centres, technology parks and incubators), securing the necessary advisory services and training with the aim of raising the necessary knowledge and skills. Improving the production processes of SMEs should be provided through the use of new technologies that will result in increased production, reducing production costs and increasing product quality. It is particularly important to harmonise production with international standards of doing busi-

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ness and to encourage innovation. The Montenegrin Chamber of Commerce is extremely active on all of these issues.

■ How much has the branding of Montenegro become part of the thinking of companies that operate on the domestic market?

- Montenegro has initiated a number of projects in recent years (Good from Montenegro, Wild Beauty, Made in Montenegro, Offer domestic - choose quality etc.) which, regardless of the area and economic sector, de facto represent ways of dealing with the needs and challenges of branding destinations, or national branding, or auto-branding.

We can conclude that a good part has been well rated at prestigious fairs and certified by internationally recognised bodies. However, their lack of success to reach the customer, or, in other words, to penetrate the minds of consumers, shows the need for the patient, well thought out and consistent branding of products, which provides a competitive advantage.

The Chamber of Commerce of Montenegro has been committed and dedicated to the full economic valorisation of local natural and economic resources over the past seven years through the realisation of the project of assigning

isters of the Western Balkan countries with the Chancellor of Germany in August 2014, then the summits in Vienna and Paris, as its continuation, it is clear that the Western Balkans is recognised as a Region, the progress and development of which is very important for the future prosperity of Europe. It is our responsibility to take advantage of their recognition of this, and a prerequisite for that is a comprehensive commitment to better quality and the inclusion of mutual economic ties.

Likewise, the decision of the EU to allocate funds for transport and energy infrastructure will speed up the implementation of projects agreed at the Vienna Summit last year, but also expand the space for the greater involvement of the business community in regional infrastructure and other development projects. This will create conditions and encourage their stronger connection for joint appearances on works in the region and on the international market.

■ Where do you see the role of regional chambers of commerce in this work?

- The summit in Paris once again confirmed the importance and commended the regional initiatives im-

According to the analysis of the Chamber of Commerce which covered economic developments after the gaining of independence, during this period there has been significant progress in many areas – from the growth of GDP and direct investment to the flourishing of numerous branches of industry rights to use the collective trademark “Good from Montenegro” for domestic products of certified quality.

■ To what extent could regional integration and infrastructure development help to strengthen the attractiveness of the regional economy for foreign investors and for strengthening mutual exchange?

- After the meeting of the prime min-

plemented by chambers of commerce, gathering together in the Chamber Investment Forum of the Western Balkans, representing a business community that numbers more than 350,000 companies. Participation in the Summit further strengthened the position of this regional platform, as one of the most important factors of cohesion in the region and a significant mechanism to attract investment, increase exports and reduce unemployment.■

CORPORATE

MATJAŽ BOŽIČ, EXECUTIVE DIRECTOR OF LOVĆEN OSIGURANJA (INSURANCE)

Offering the Customer Proper Insurance at the Moment When They Need it The main goals of Lovćen insurance are increasing productivity and profitability of the Company as well as development of new products and distribution channels

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atjaž Božič was appointed Executive Director of Lovćen insurance in Montenegro a few months ago. We first asked him about the direction in which the further development of the company will head.

“Taking constantly into account clients’ needs and market fluctuations Lovćen Insurance is targeted at the development of new products and distribution channels (particularly alternative ones) on the Montenegrin market.

We are also dedicated to enhancing flexibility of business operations targeted at clients, raising staff motivation, development and support of innovations as well as improvement of organizational culture.Our major goals are increasing productivity and profitability of the Company along with ongoing development of corporate social responsibility.,” says Matjaž Božič, executive director of Lovćen osiguranja insurance company.

■ You are well acquainted with developments on the regional insurance market. What trends from the insurance sector should be taken into account when it comes to introducing a long-term business strategy?

- In order to follow trends and maintain a level of communication with the market it is essential to introduce insurance in digital and other media (mobile, web etc.). It is also necessary to be up to date with the development of other technolo-

gies and life trends, such as offering the customer proper insurance at the time when they need it.

At the industry level we are awaiting 1st August 2017 when deregulation and liberalisation of the MTPL market are due to enter into force, so we should be fully prepared and ready to embrace that development period.

■ Compared to international practice it seems that the concept of insurance in the region, including Montenegro, has not gained the proper importance yet. Where do you see opportunities for improvement in favor of customers, insurance companies and also the state?

- Possible improvements could certainly be reached through education on the

■ In your opinion, what should change through the reform process in order for the insurance sector to gain the importance it deserves?

- The entire process should be viewed from the aspect of a client. The growth and development of the insurance industry can only be achieved through the growth and development of the customer base. Laws and regulations should be adjusted as well.

I also find it necessary for the insurance industry to develop and implement projects of promotion of insurance against catastrophic losses (floods, storm winds, hail, etc.) in cooperation with the state. On its part, the state can stimulate physical and legal entities through the various forms

It is only through the growth and development of the customer base that the growth and development of the insurance industry can occur. Regulations and laws should be adjusted to this need for insurance (life and non-life) implemented as a joint project of all insurance companies led by the National Bureau of Montenegro Insurers.

Considering interests of the state, as well as customers and insurance companies in Montenegro, the important question is cash outflow resulting from reinsurance activities. Montenegro is capable of retaining a part of large risks within its boundaries and it is necessary to think that way.

of reliefs and the insurance industry through the development of products tailored to the needs of customers.

An important step for the insurance sector should be made towards prevention of price dumping not based on actuarial mathematics but rather on mere vulgar and short-term pandering with a view to increasing market share at the expense of insurance and customers on a long-term basis. ■ MONTENEGRO BUSINESS SECTOR 2016

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INTERVIEW

A Challenging Road to a

SUSTAINABLE FUTURE Maintaining high growth after on-going large infrastructure projects end would require reorienting the Montenegrin economy towards a more sustainable and inclusive growth model, which must be based on a stronger emphasis on the private sector and improving the capabilities of the labour force TATIANA PROSKURYAKOVA WORLD BANK COUNTRY MANAGER, BOSNIA & HERZEGOVINA, AND MONTENEGRO, EUROPE AND CENTRAL ASIA

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lthough Montenegro achieved a considerable progress up to now, it needs to double its efforts in putting its economy on a sustainable path. In this interview, Tatiana Proskuryakova, World Bank Country Manager, Bosnia & Herzegovina, and Montenegro, Europe and Central Asia, speaks in detail about how this goal might be attained.

■ What does the World Bank’s systematic diagnosis of the Montenegrin economy say about its strengths and weaknesses?

- Since its independence a decade ago, Montenegro has made significant advances in its accession to the European Union.

The small, open economy has also been particularly vulnerable to external shocks, while recent public investment and spend-

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ing decisions have put fiscal stability and long-term sustainable growth at risk. The World Bank Group recently completed its Systematic Country Diagnostic, highlighting Montenegro’s reform and investment priorities. First, given the severe macroeconomic imbalances, the country will need to restore fiscal sustainability and place public debt firmly on a downward trajectory. Secondly, the country’s persistent youth unemployment, aging population, low labour force participation and inefficient public sector call for a rebalancing of the economic growth model toward greater private sector investment and job creation, with more inclusive employment opportunities.

■ Let’s talk about first priority: the resistance to shocks. There is much speculation about the large infrastructure projects as a source of

risk in terms of indebtedness? Are those the only foreseeable risks?

- Strengthening macroeconomic and financial resilience is essential to Montenegro’s strategy of poverty reduction and inclusive growth. Maintaining high growth after large infrastructure projects end would require reorienting the economy towards a more sustainable and inclusive growth model.

In the absence of structural changes, the rate of economic growth is projected to fall below 1% by 2019 as Montenegro runs out of fiscal space and borrowing capacity to stimulate growth directly through public investment. Even this outlook comes with large downside risks. On the external side, the slowing down or stagnation of global growth and of the Euro area, as well as the volatility of the financial market, threatens Montenegro’s growth prospects. Risks on the domestic side include delays in the

RISK

GROWTH

SUPPORT

Given severe macroeconomic imbalances, the country will need to restore fiscal sustainability and place public debt firmly on a downward trajectory

Montenegro’s future growth needs to rely on the private sector, with a focus on productive investments and improved competitiveness of domestic companies

The World Bank will selectively support Montenegro’s development agenda, with a particular focus on creating employment and economic opportunities, and restoring fiscal balance

needed structural reforms to stabilize public finances and increase competitiveness of the economy, persistently high levels of government arrears and NPLs (12.7% as reported in February 2016) and high unemployment.

■ The government sees this investment as a new lever for growth. In your opinion, is there a detailed account of benefits and expenses that could justify this position?

- Montenegro’s future growth needs to rely on the private sector, with a focus on productive investments and improved competitiveness that would allow Montenegrin firms to export and access much broader markets and economies of scale.

Such a growth model will require increasing labour productivity and labour market flexibility. Specifically, demand is likely to focus on higher skilled, better educated, and innovation-oriented labour as Montenegrin firms try to grow, innovate, and eventually compete in the EU and beyond.

At the same time, it will be important to attract investments and foster job creation in key sectors requiring labour-intensive and lower-skilled labour, such as tourism services and agriculture.

■ How resilient are public finances, having in mind that the level of indebtedness in terms of percentage of GDP will be considerable?

- To restore fiscal sustainability and place public debt firmly on a downward trajectory, the country will need to undertake ambitious fiscal consolidation. In the absence of fiscal consolidation measures, the deficit will swell to 9% of GDP in 2016-17 (not including arrears) before highway construction ends, while public debt will continue rising to around 80% of GDP in 2019. To put public finances on a sustainable footing, an overall fiscal surplus of 0.5% of GDP (based

on a primary surplus of about 3% of GDP to accommodate rising interest payments and amortization) is needed in 2019 to reverse the rising public debt dynamics. A fiscal adjustment of 2-2.5% of GDP each year, along with investment contraction after the end of the highway project, would reduce public debt in 2019 to a (still high) 76% of GDP. The country’s vulnerability to shocks, the lack of independent monetary policy, and the structural rigidities of the economy further support the case for immediate and sustained fiscal consolidation.

18% of total employment in Montenegro was generated by the tourism industry in 2014, while foreign receipts from tourism service exports corresponded to 20% of GDP in the same year. The Government recognizes tourism and a tourism-based local economy as priorities for the country, as reflected in the Montenegro Tourism Development Strategy to 2020. Supporting the tourism value chain will gener-

■ The second priority is to decrease unemployment. To what extent can Montenegro rely on foreign investments as a major engine of job creation?

- To attract foreign direct investments, a country needs to have strong and stable business environment, but also macro-

We want to encourage the Government to invest in projects that provide economic opportunities for citizens and private sector growth economic stability. Either foreign or domestic, investments need to stimulate private sector growth.

In Montenegro, agriculture and tourism are the main economic sectors, with great potential to create income and jobs. Tourism, the fastest growing economic sector in Montenegro, is a major source of employment and economic growth. Over

ate jobs and the growth of local suppliers and micro, small and medium enterprises supporting the tourism industry, including those in the agriculture sector, which by itself accounts for around 8% of GDP. Increased private sector investments and job creation in the areas of agriculture and sustainable tourism would substantially benefit rural communities and vulnerable groups, including women and youth.

Additionally, Montenegro needs to invest in an inclusive growth model where the private sector serves as the engine of growth and provides employment opportunities for the country’s labour force.

However, Montenegrin firms lack competitiveness: they are relatively poorly inMONTENEGRO BUSINESS SECTOR 2016

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tegrated into the global economy and are also less likely to adopt new technologies and to innovate. Unlocking the potential for micro, small and medium enterprises (MSMEs) – whose value-add is estimated to account for about two thirds of GDP – to grow and become more competitive, is critical for Montenegro. The WBG will support the growth of innovation-driven and productivity-led MSMEs, to foster a dynamic and competitive private sector better positioned to generate growth and

on firms (in areas such as construction permits, inspections, IP rights, and so on) could help improve firm competitiveness and foster growth and job creation.

■ What would be a key message to Montenegro’s Government when it comes to improving business and investment environment?

- Montenegro needs to maintain macroeconomic stability and prudent macro-financial management, since these provide a foundation on which everything else is based. We want to encourage the Government to invest in projects that provide economic opportunities for citizens and private sector growth.

■ Key messages for addressing the disharmony between supply and demand on the labour market?

- Improving Montenegro’s labour market performance and economic competitiveness will require a

employment, through a Jobs and Competitiveness Project.

■ What are the preconditions needed to make domestic private companies another source of GDP and jobs growth?

- As mentioned above, improving the business environment, particularly for micro, small and medium enterprises, will be essential to creating the long-term conditions for private sector growth and job creation.

The Government has enacted extensive business climate reforms as reflected by the country being in the top 50 countries in the world in terms of ease of doing business, however, there is still room for improvement. Ensuring the effectiveness of regulatory reforms (monitoring and evaluation of implementation of government’s regulatory reforms, strengthening accountability and incentives for regulators, and strengthening awareness of reforms) and further cutting the regulatory burden

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creating employment and economic opportunities, and restoring fiscal balance in order to accelerate inclusive growth in the long run. The new framework suggests between US$250 and US$300 million in indicative lending for Montenegro over the CPF period from the World Bank, tailored to the pace of economic reforms.

Currently, the World Bank is preparing a Tax Administration Reform project that aims to increase the effectiveness of revenue collection, make it easier for taxpayers to fulfil their obligations and increase the efficiency of administration in order to collect higher revenues with a lower burden on taxpayers.

■ How could these projects help the overall process of reforms?

- The World Bank Group will help support the reform process through an indicative lending program for the first two years of the new Partnership Framework of US$113 million with emphasis on two major areas: Enhancing macroeconomic and financial resilience. The primary objectives in this area will be to improve the sustainability and efficiency of public finances, with an emphasis on helping Montenegro get back on a path of fiscal sustainability,

Improving Montenegro’s labour market performance and economic competitiveness will require a more skilled and better educated labour force, as well as increased knowledge and innovation more skilled and better educated labour force, as well as increased knowledge and innovation. Solving this problem requires actions to strengthen the supply of labour as well as increase demand for labour from potential employers.

■ Which projects would the World Bank be ready to support in the next five years?

- The World Bank Group’s new Country Partnership Framework (CPF) for 20162020 will support Montenegro on a path toward more sustainable and inclusive growth. The new framework will selectively support Montenegro’s development agenda, with a particular focus on

and also to increase the stability and efficiency of the financial sector, by addressing weaknesses in the banking sector and the still high levels of non-performing loans. The World Bank program envisages a series of budget support programs as the main instrument to support key measures under these two objectives.

Expanding access to economic opportunities and jobs. The program will combine demand-side work on skills and removing disincentives to employment with investment in the creation of new jobs in the private sector, through the enhancement of the tourism-based local economic and sustainable development as well as through facilitating private sector investments. ■

CORPORATE

DARREN EVANS, DIRECTOR OF STRATEX DEVELOPMENT

Budva Deserves a Modern Marina The aim of the partnership between company stratex and turkish dogus group is the modernisation and expansion of marina budva, in order to create from the seasonal local port the kind of five-star nautical destination that budva deserves

“S

tratex and Doğuş Group are strategic partners, whose primary goal is the modernisation and expansion of Marina Budva, which will function as a safe, modern port with around 650 berths throughout the year, of which at least 300 will be reserved for the local population. The potential investment of €30 to €35 million will accelerate the urban renewal of Budva, and in an economic sense will positively transform the surrounding community.

With the new marina Budva will become one of the most desirable nautical destinations in the Mediterranean,” says Darren Evans, director of Stratex Development.

■ How important would it be to Montenegro for Budva marina to be included in the D-Marin network, which represents the largest international chain of marinas in the eastern Mediterranean?

- D-Marin is one of the largest international chains of marinas, which manages 11 unique marinas in the Ionian, Aegean and Adriatic seas, and as of recently also a marina in Barcelona. Montenegro will gain tremendous benefits from joining this already well-established network of marinas in the Mediterranean.

Benefits are primarily related to “knowhow”, international promotion, employment at the local level, investment and economic growth.

■ In Croatia, the investments of Dogus Group met with the approval of the local community. Do you think the local population in Budva will also accept the aforementioned project?

- We are confident that the local community in Budva will also support the development and our plans for the marina. Only someone

who does not care about Budva, or who does not know the benefits of such a project, could be against this kind of investment, which is primarily an infrastructural and tourism investment. In Budva there have been failed projects and abuse, and so caution with new investments is understandable. We are open to dialogue and are certain that we share the same goals as the citizens of Budva: We want investments that are consistent with Montenegrin law, investments that promote employment, improve infrastructure and the tourism offer, increase tax revenue and the standard of citizens, and which preserve and promote the cultural heritage of Budva.

Stratex has already completed two of by far the most luxurious projects in Budva, which serve as the pride of the city and of Montenegro: Dukley Gardens and Dukley Residences.

Stratex saved a failed Russian project that was left abandoned in ruin on Zavala and trans-

€140 million in Montenegro. Are you planning further investments in our country?

- We recently had the opportunity to present the business climate in Montenegro to senior officials of the U.S. Government. We were often asked this same question and the answer we gave at that time in Washington is the same today: the list of required improvements for the business environment in Montenegro is long, but, in general terms, Montenegro supports foreign investments.

Stratex Group is committed to developing its long-term portfolio in Montenegro and we look forward to strengthening the rule of law, which is obviously enhanced by accession to the European Union and entry into NATO. Stratex Group in Montenegro has over 40 projects, but in the coming period we are focused on Budva. We finished Dukley Gardens and Dukley Residences, and our goal is to start as soon as possible with construction

Stratex Group is committed to developing its long-term portfolio in Montenegro and we look forward to strengthening the rule of law, which is obviously enhanced by accession to the European Union and entry into NATO formed it into Dukley Gardens, which is now by far the most prestigious and highest quality resort on the Adriatic. Stratex’s projects bring to the country higher revenue from taxes and we increase opportunities for employment in Budva. Stratex Group has proved that it is a transparent and successful investor in Montenegro, and we will undoubtedly also convey that success to our project in the Marina.

■ Stratex Group has invested more than

of the five-star Dukley Hotel with 140 rooms, worth over €25 million, on the reconstruction and development of Marina Budva and the development of the Budva Riviera hotel group, in which we are now owners of 31 per cent of shares, along with partner MK Group.

Stratex Group is also the founder of the Dukley European Art Community, a cooperative initiative of social responsibility with the aim of internationally promoting and integrating Montenegrin culture. ■ MONTENEGRO BUSINESS SECTOR 2016

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INTERVIEW

Full Support

FOR REFORM The EBRD is supporting Montenegro in the country’s efforts to expand its economic base through the enhancement of its competitiveness, develop sustainable tourism, and secure energy security and efficiency and the regional integration of energy markets GIULIO MORENO HEAD OF EBRD MONTENEGRO

municipal infrastructure, 21% in industry, commerce and agribusiness, and 14% in financial institutions.

“T

he EBRD acknowledges the significant progress Montenergo has made in the overall process of EU reform and the improvement of its business climate, but believes that there is much to be done in the future too,” says Giulio Moreno, Head of EBRD Montenegro.

■ How much money has EBRD committed to Montenegro since the beginning of its operations in the country?

- EBRD has undertaken 53 projects in Montenegro to date, and the Bank’s cumulative investment amounts to €529 million. The bank’s current portfolio in the country is €405 million, of which 41% is in the private sector. The structure of the Bank’s portfolio is as follows: 41% in energy, 24% in transport and

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■ Which EBRD-supported projects stand out in terms of their contribution to overall economic activity in the country?

- The bank is currently operating in Montenegro on the basis of a Country Strategy approved in November 2013.

The priorities have been: i) expanding the country’s economic base through enhancement of competitiveness; ii)

financed the expansion of the Codra Hospital, including the first private maternity ward in Montenegro, invested in the equity of the country’s major retail chain, Voli, with the aim to help construction of a new distribution centre in Podgorica and the expansion of the company’s retail network, supported the meat production and distribution processes of the two largest meat production companies. It has also engaged in direct SME investments to enhance value chains and improve operational practices. The bank has also financed the development of new (and the re-

The Bank’s current portfolio in the country is €405 million, and its structure is as follows: 41% in energy, 24% in transport and municipal infrastructure, 21% in industry, commerce and agribusiness, and 14% in financial institutions supporting sustainable tourism, property and associated environmental and infrastructure needs; and iii) promoting energy security and efficiency, and the regional integration of energy markets.

Among a number of projects, the bank

construction of existing) transport and energy infrastructure, including CGES’s Lastva-Pljevlja power transmission line. The bank furthermore supported landmark projects in energy efficiency and renewable energy generation, such

as the installation of the EPCG’s smart metering system for the improvement of the company’s revenue collection and the reduction of distribution losses, as well as the Krnovo’s wind farm, the first of its kind in the region.

■ What do you see as major drivers of the Montenegrin GDP? - Tourism is certainly among the most important sectors of the economy that will drive future economic growth. The role of the subsectors that support tourism activities, such as accommodation and food services, and the operating of real estate, both currently at 8% of the economy, will certainly grow, reflecting Montenegro’s growing importance as a tourist destination, with around 1.5

TANAP and TAP gas pipelines, would make Montenegro the regional energy hub. The construction sector, which currently accounts for 5% of economic activity, will most likely be the main growth driver in the near future, backed by the construction of the first section of highway. Agriculture (together with forestry and fishing), currently accounting for almost 10% of GDP, could be another driver of economic activity.

■ How successful was Montenegro in using tourism as a lever to spur activity in other related subsectors, and what can be done if the country wants further to develop its potential, for example in agriculture?

- Weak linkages between the pre-

Tourism is certainly among the most important sectors of the economy that will drive future economic growth million foreign arrivals per year.

With a share of 5%, the utilities sector, and primarily electricity production, is relatively important for the Montenegrin economy, and with the current energy projects in the pipeline, we expect it to become an important growth driver in future. The potential benefits from developing a regional electricity market are high. The country, as well as the region in general, is rich with hydro potential, and the construction of underwater electrical cabling to connect Montenegro with Italy will open up the markets for exporting electricity.

In addition to this, access to the proposed 5 bcm Ionian Adriatic Pipeline (IAP) from Albania, through Montenegro and Bosnia and Herzegovina, to Croatia, as a natural continuation of the

dominantly coastal tourism and local agribusinesses located primarily inland dilute the country’s comparative advantages in agribusiness and sustainable tourism. Despite the fact that tourism, predominantly based in the coastal parts of the country, is the fastest growing sector in Montenegro, a major source of employment and economic growth, local agribusinesses, located primarily in interior (and more rural) parts of the country, often receive very few economic benefits from tourism receipts. Therefore, better sourcing of agriculture goods locally could make tourism-driven growth more inclusive.

■ To what extent could large construction works and energy projects backfire by being too heavy a

burden for public finance?

- As you know, the construction of a major highway was launched in 2015 and is by far the largest public investment in the country. The Chinese construction company, CRBC, was selected for the construction of the 44-km priority section (about one-third of the total highway), at a cost of US$ 1.1 billion. At the time when the construction contract was signed (Feb 2014), this amount was equal to EUR 809 million, or about a quarter of the country’s GDP. The project is mainly financed by a 20-year loan from China Exim Bank, with a six-year grace period and a 2% interest rate, while the Montenegrin government had to provide the remaining amount. Although the construction works should stimulate economic activity and boost the country’s long-term growth potential, it exposes public finance to significant sustainability risks.

Gross government debt (as of end-March 2016) amounts to approximately EUR 2.5 billion or 67% of the projected 2016 GDP (EUR 3.8 billion), and according to the baseline scenario of the latest public debt sustainability analysis published by the IMF (March 2016), this debt is projected to reach 80% of GDP by 2018. In addition, the direct multiplier of the construction works on the economy may be limited, as only 30% of the investment is sub-contracted to domestic companies (and labour force).

■ What are the potential external risks for public finance, and how is Montenegro prepared to contain them?

- The Chinese loan for the construction of the highway was signed in US dollars and thereMONTENEGRO BUSINESS SECTOR 2016

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fore carries a significant currency risk to public finances, as a weakening of the euro (Montenegro’s legal tender) brings an increase in cost of servicing this loan.

In addition, large-scale infrastructure projects, especially in such a difficult terrain, frequently overrun anticipated costs.

With public finances already stretched, additional financing for the remainder of the project may be difficult to obtain, and the long-term ability of Montenegro to monetise this project is also uncertain.

■ What do the EBRD-World Bank Business Environment and En-

terprise Performance Survey (BEEPS) say about the business environment in Montenegro?

- The latest EBRD-World Bank Business Environment and Enterprise Performance Survey (BEEPS) found that the top business environment obstacles identified by Montenegrin firms are competition from the informal sector and access to finance.

The share of firms that reported competition with firms from the informal sector increased from 27.3% in BEEPS 2009 round to 52.4% in BEEPS 2013/14 round. This may also include practices by registered firms, such as paying part of the wages informally, thus obtaining price advantages over competitors and affecting the tax revenue of the state. Access to finance was the second most severe obstacle, with 36% of the surveyed firms describing themselves as “credit-constrained”.

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■ Having in mind that Montenegro is already a champion among the countries in the region in attracting FDI, do you think that there are some remaining issues the government should address?

- Yes, the country has done some commendable work in the area of ease of doing business. Over the years, Montenegro has established a track record of business-friendly legislation and openness to foreign investors, with the country regularly topping the regional list of countries in terms of FDI per capita. Also, Montenegro is the most advanced country in the region when it comes to the EU integration progress.

From an investors’ point of view, the EU outlook is a major plus and a unique anchor for market-oriented reforms and European standards. Of course, there is still much to be done in the future, for which Montenegro will have the full support of the EBRD. The

entrepreneurial initiatives. In this regard, the privatisation process in Montenegro is in an advanced phase, with most state assets having been sold off. Nevertheless, the country still has a significant transition agenda ahead, including the privatisation agenda, and therefore, the privatisation impetus needs to be restored.

Progress over the past year has been minimal, and a new effort is needed to bring state-owned assets up for sale and attract further investment into key sectors such as energy and tourism. The bank engaged with the Privatisation Council to support the privatisation of the Port of Bijela and the Health Institute in Igalo.

It also provided technical support for the preparation of the preliminary design of the terminal building and manoeuvring areas of the Tivat Airport.

■ Why is the sector of micro, small and medium-sized enterprises (MSMEs) in Montenegro still weak, and how is the bank supporting it?

- Access to finance remains one of the top obstacles to doing business by SMEs. This is due to high risk aversion of the banks combined with the low level of financial literacy and informality among SMEs. Spe-

According to the baseline scenario of the latest public debt sustainability analysis published by the IMF in March 2016, Montenegrin debt is projected to reach 80 per cent of GDP by 2018, and the major driver of the debt is a construction of the highway, a bold endeavour which carries significant risk latest World Bank Doing Business Report ranks Montenegro 46th out of 189 countries with the most problematic areas being access to electricity (163rd place), obtaining construction permits (91st) and registering property (79th).

■ The government has an ambitious privatisation plan for 2016, and EBRD is partly involved in the privatisation of some of the companies. What are you expectations in that respect?

- As you know, the EBRD’s mandate is to foster progress towards market-oriented economies, while promoting private and

cifically women-led enterprises continue to face significant obstacles to further grow their businesses, and often face difficulties in accessing finance and professional consultancy services. Many SMEs lack professional management experience, good accounting skills and appropriate corporate governance. The EBRD therefore has an integrated approach regarding the development of the SMEs sector, which combines both bank lending (either through partner financial institutions or via direct SMEs support) and deployment of SMEs advisory instruments. Improving access to finance and know how for SMEs will remain a priority. ■

CORPORATE

MONTENEGRO BONUS

The Best Quality Product Suppliers Montenegro Bonus is state-owned company dealing with energy products and storage capacity management on behalf of the Government of Montenegro

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rovider of services in energy sector, supplier of gasoline, distillates, fuel oil, and LPG to a network of customers in Montenegro, including hospitals, schools, hotels, restaurants, and businesses, Montenegro Bonus guarantees the best quality product supply.

Our main activities are:

• Natural Gas - Being the main operator of the natural gas transmission system (TSO), the Company has close cooperation with the EEC and other natural gas TSOs in the region as well as being a promoter of the IAP Project.

- Importer and distributor of CNG to Montenegro customers.

• Oil Storage Capacities - Oil terminal in the Port of Bar – 17,600 m3 (15,000 m3 for fuel oil and 2 tanks with 1,300 m3 each for other oil products; - Oil terminal in Morinj / Lipci (Bay of Kotor) – 10,000 m3; and - Bijelo Polje oil terminals – northern part of Montenegro – 24,700.

• LPG - fully equipped sphere tank in Podgorica and LPG tank in Cetinje.

• Electricity - Upon full implementation of the 3rd EU Energy Package, the Company has become an

Importer and distributor of electricity to Montenegro customers.

• General cargo - warehouse in the duty free zone of the Port of Bar, with a total area of 12,796 m2, on three stories and completely reconstructed infrastructure; • Renewable energy - expanding operations in renewable energy as the fastest growing power source in the future. Montenegro Bonus is a socially responsible company and pays special attention to the environment and the community.

Potential partners interested in the above energy products trading cooperation are welcome! ■

booking@hotel-aleksandar.me www.hotel-aleksandar.me

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INTERVIEW

Investors Recognise the Potential

MONTENEGRO OFFERS

Political stability, European and Euro-Atlantic integrations, the government’s commitment to reforms and the creation of a business friendly environment are just a few of the many reasons for the impressive and steady growth of FDI in Montenegro. Current trends for 2016 and 2017 promise sustained inflows

MILOŠ JOVANOVIĆ CEO OF THE MONTENEGRIN INVESTMENT PROMOTION AGENCY (MIPA)

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ecognising the importance of FDI inflow for economic development and growth, Montenegro is working constantly on securing an attractive business environment at both the national and local levels. We spoke with Miloš Jovanović, CEO of the Montenegrin Investment Promotion Agency (MIPA), about the future prospects of FDI in Montenegro and the Agency’s efforts to reach new investors.

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■ How many investments has Montenegro attracted since it became independent and in which areas were these investments predominantly channelled?

- Montenegro has the largest inflow of foreign direct investments in the region when measured as a percentage of GDP. Since the restoration of its independence, Montenegro has attracted more than €6.6 billion. The

largest amounts of FDI were attracted in the sectors of tourism, energy and telecommunications. In the last ten years foreign investments have accounted for an annual average of around 19 per cent of GDP. Montenegro has one of the highest per capita net FDI inflows (almost €1,000 per capita in 2015), which confirms its attractiveness for foreign investors. For the past two or three years Montenegro has maintained a steady level

of foreign direct investments. We do not expect it to increase, but we would be very satisfied if we manage to maintain the same amount of FDI as in 2015, when we attracted €757 million. According to the data of the Central Bank of Montenegro, the amount of FDI in the first four months of 2016 was €249 million, with Norway as the leading country this year – with a total amount of FDI of €85 million. Growth dynamics are expected to continue performing in a broadly similar way in 2016 and 2017.

Thus, the substantial list of shovelready projects will sustain the strong performance of capital investments.

■ To what extent have the EU accession process and EuroAtlantic integration helped this cause?

- EU and Euro-Atlantic integrations have been a key factor in building a system that is based on the rule of law, democracy, the protection of human rights and a functional market economy. Significant activities towards creating a better regulatory framework through the process of harmonisation with EU regulations and standards have been launched or are already ongoing in almost all

investments. Imagine what impact these investments would have on the living standards of our citizens. One of the most important benefits of joining NATO is the huge economic gain that would be made when Montenegrin companies get the chance to sell their products on foreign markets, and that would be our chance to connect our companies with foreign firms in various sectors.

■ Which regional policies could have the greatest impact on attracting investors in Southeast

■ What were the major factors contributing to Montenegro’s high score in FDI? - The high score in FDI in Montenegro is directly connected with many things, among which are: political stability, European and Euro-Atlantic integrations, an almost completely restructured economy, the strengthening of democratic institutions and empowering of the rule of law, as well as the commitment of the Government of Montenegro to make Montenegro one of the top choices in the region for investors. Montenegro is a

EU and Euro-Atlantic integrations have been a key factor in building a system that is based on the rule of law, democracy, the protection of human rights and a functional market economy country with the lowest rate of corporate and personal income taxes in the region. The VAT rate is 19 per cent, which is among the lowest in Europe.

The Government of Montenegro has recognised the importance of FDI inflows for economic development and growth, and has offered many incentives for investors at both the national and local levels. Besides that, the government is devoted to improving the overall business environment in Montenegro, and is regarded as a ‘’pro-business government’’.

areas that are important for business. Euro-Atlantic integration contributes to ensuring the greater security of Montenegro, which encourages investors to invest their capital and knowhow in Montenegro. Furthermore, on its way to EU membership Montenegro has seen an increased inflow of FDI from current EU member states. On the other hand, it is time for us to guarantee stability and ensure investors that their money is secure, so that Montenegro can benefit from checked

Europe and how is MIPA contributing to those initiatives?

- Regional cooperation is essential for increasing prosperity and economic growth. Through regional cooperation, a business environment will be created in the Western Balkans that will provide for foreign and national direct investments. The idea of an economic space in the region is taking root. In this context, some important results have been achieved in the Western Balkans in the fields of free trade and infrastructure. Beyond the intra-regional challenges, the ultimate goal is to reconnect the Western Balkan countries fully with all their neighbours, EU Member States and candidate countries alike.

Economic cooperation through the MONTENEGRO BUSINESS SECTOR 2016

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CEFTA agreement is strengthened, but there is room for its improvement. I’m sure the integration process will not only make the Western Balkans stable, but also competitive and more attractive for investors. In the light of further regional integration, MIPA recently signed a Memorandum of Understanding with FIPA, the Bosnian investment promotion agency, and is committed

to contributing to regional initiatives with all of its expertise.

■ Apart from well-known areas like tourism, which others are gaining prominence among investors?

- Montenegro has to date attracted the largest amount of foreign investments not only in tourism, but also in the energy and telecommunications sectors. In the energy sector, the Electrical Industry of Montenegro (Elektroprivreda Crne Gore) was recapitalised in 2009 by Italian company A2A. The leader in sales of petroleum products is Jugopetrol, which was privatised in 2002 and bought by Greek company Hellenic Petroleum. The energy sector contributes a share of 22 per cent of the GDP of Montenegro.

Montenegro has also created a very attractive business framework for

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investments in the sector of renewable energy, which the Government of Montenegro has set as a strategic priority for its energy sector. For example, investment in the wind farm at Možura Hill is the first step in possible future cooperation between Montenegro and Malta in the energy sector, after Enemalta Plc., a company majority-owned by the Government of Malta, agreed to in-

- Montenegro, as one of the most attractive countries for investment in the region, has been working on promoting its investment opportunities. One of the key institutions playing the role of investment promoter is MIPA. The MIPA team has been attending many international investment summits and conferences, where we had to opportunity to promote Montenegro among the world’s most prominent investors and companies. One of the latest events that I attended, as CEO of MIPA, was the SelectUSA Investment Summit, which gathered together the most renowned investors from around the globe. The Montenegrin Investment Promotion Agency has also been publishing three publications on an annual basis (Country report, 111 FAO and 11 reasons to invest in Montenegro), which include an overall presentation of investment opportunities, potentials, offers, conditions, requirements and so on. Besides MIPA, the Government of Montenegro and its ministries have worked heavily on promoting Montenegro as an investment destination. The na-

MIPA has unofficial representatives in countries in the Middle East and recently signed an agreement with a Chinese company to represent its interests in China vest €80 million in this renewable energy project in Montenegro.

We should also note that the three biggest telecommunications companies in Montenegro have been privatised and are currently owned by Deutsche Telekom, Norway’s Telenor Group (which, for example, has invested more than €140 million during its two decades of doing business in Montenegro) and Telekom Srbija. The telecommunications sector’s share of GDP is around seven per cent.

■ What policies and techniques does Montenegro use to inform investors about the opportunities it offers?

tional strategic goals of EU and Euro-Atlantic integration offer us wide access to investors from the EU and NATO countries.

■ In which countries does MIPA have representatives, and how does your approach to investors differ when it comes to their interests?

- Given the importance MIPA has in promoting Montenegro and its favourable investment climate to the world, we have worked hard on establishing good relations with the key partners of Montenegro. We have unofficial representatives in countries in the Middle East and we

recently signed an agreement with a Chinese company that has offered to be a channel for s for the huge Chinese market. Since investments in Montenegro originate from over 100 countries, we maintain a tailored approach to our partners from that many countries, but we favour none specifically and are willing to welcome and provide assistance to investors, regardless of their country of origin. Every foreign investor has the same rights as domestic ones in Montenegro.

relationships with foreign investors and partners, and to provide knowledge and experience to help set up businesses, thereby further promoting the development of Montenegro. Our research and analysis sector is committed to providing up-to-date investment and market analyses. All of our employees

■ How is MIPA equipped in terms of people and knowledge for these extensive processes?

- MIPA’s team members are young and ambitious professionals who come from different backgrounds, thus making the team diverse, but strong. Young economists, political scientists, and lawyers are working on a daily basis to establish good

regularly attend training courses and seminars in order to further improve their skills.

awards. One of many is the ‘’Runner-up of the Best Investment Project in 2014’’, which MIPA received at the Annual Investment meeting in Abu Dhabi – a conference organised under the patronage of Vice President and Prime Minister of the United Arab Emirates (UAE), Mohammed bin Rashid Al Maktoum.

I’m sure the integration process will not only make the Western Balkans stable, but also competitive and more attractive for investors

■ What acknowledgements has MIPA so far received for its work?

- Since MIPA was established in 2005, it has received many national and international prizes and

At the SelectUSA Summit 2016 I represented MIPA and received plenty of praise for the work MIPA is doing. I met with representatives from the most successful companies, as well as from the governments of many countries. This only makes us work harder in doing the best job in the world – promoting our beautiful Montenegro. ■

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INTERVIEW

Dialogue for Better

ECONOMIC SOLUTIONS Foreign investors appreciate the Montenegrin process of integration into the European Union and NATO, the reforms undertaken and the open dialogue in which the Government and business community are looking for the best solutions for the country. An efficient and resilient economy is especially important in these times of new European realities after the British exit from EU MIROSLAV HIRŠL PRESIDENT OF THE MONTENEGRIN FOREIGN INVESTORS COUNCIL (MFIC)

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he Montenegrin Foreign Investors Council (MFIC) plays an important role in both advocating the improvement of the business climate in Montenegro and serving as a first point of information for many investors looking for new business opportunities. While there are many issues in which further improvements in legislation and efficiency of administration would be valuable, the evidence shows that many recommendations given in the White Book were already addressed,” says Miroslav Hiršl President of the MFIC. ■ How many members does MFIC have today, and what is their contribution to the Montenegrin economy?

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- Today, the MFIC has 34 members and the membership base keeps expanding. Our members are respectable and renowned companies who operate in many countries worldwide.

They perform diverse business activities and it is this diversity that enables us to have an insight into almost all important business sectors in Montenegro. Our members come from sectors and industries such as banking, insurance, telecommunications, post, tourism, energy, production, audit, and construction. Altogether, they provide jobs for more than 8,000 employees and make up around 30% of the national GDP, which is quite admirable.

■ What are the most important recommendations given by the MFIC that were integrated into

the Government’s Operational Plan for 2016?

- Out of a total of 113 recommendations that the Montenegrin Foreign Investors Council identified and published in the latest issue of the White Book, 51 recommendations have been accepted, 46 recommendations have not been accepted, while 16 recommendations will be subject to further consideration. Those recommendations subject to further consideration relate to the application of different laws, and we are happy to see that the Government has included some of these laws into its Operational Plan for 2016. These are the Law on banks, Law on consumer protection, Law on tourism, Law on spatial planning and construction, Law on companies, Law on VAT, and Law on electronic com-

munications. We feel that there is room for more amendments and reactions, for example, when it comes to the Labour Law. But this Law will be included in the Government’s plan for 2017 so we have time to prepare our proposals and recommendations.

■ How many of these issues were already addressed or are in process of being addressed in practice?

- Currently, we are dealing with spatial planning and construction, together with other business associations in the country, to have stronger impact. One initiative regarding telecommunications was already sent to the relevant Government bodies. As I mentioned, the Labour Law still needs some adjustments, and we are constantly pointing out the issues our members face when it comes to the application of this Law. Almost half of our recommendations were accepted by the Government, and those relate mainly to our initiatives on the laws on ports, yachts, infrastructure, corporate governance, and the like. We particularly addressed the Law on Foreigners, the provisions of which complicated the business. We prepared a Position Paper targeting this issue and majority of our requests are accepted.

my and politics. In addition, 2016 is the year of regular parliamentary elections in Montenegro. This usually entails a slowdown in reforms. In the context of those processes, it is primarily important to continue making efforts to strengthen macroeconomic and financial stability, and then to define a credible long-term plan reforms and business environment improvement.

■ What do those investors who are already operating in the country see as the most challenging issues in the long run?

- What we see as challenges in improving investment and business climate on the long run includes the adjustment of state administration, labour market and tax policy. The low capacities of the public administration need to be improved, and cooperation between the units of the public administration should be enhanced in order to shorten waiting peri-

The MFIC has 34 members operating in sectors and industries such as banking, insurance, telecommunications, post, tourism, energy, production, audit, and construction, with more than 8,000 employees and accounting for around 30% of the national GDP ■ What are the most important remaining questions that the government should address in order to improve investment and business climate in the short run?

- 2016 is quite specific, both for Europe and Montenegro. After the citizens of Great Britain have voted “yes” to exit the European Union, we are facing a new European reality which already impacts the economy and business activities. This issue is very important for Montenegro, which is in the process of EU integrations in terms of econo-

ods and to be more efficient. The labour market should be more flexible in terms of relations between the employees and the employers, which, we hope, will be achieved with the amendments to the Law planned for 2017. Even though some progress was made in terms of infrastructure, we still believe that more efforts are needed to improve it. The construction of highway, road infrastructure would help, but work still remains to connect our roads with European corridors to have full transport and

economic purpose. What remains is to try to work on improvement of rail and airport infrastructure, as those seem a bit neglected.

■ How much have Montenegrin EU integration and Euro-Atlantic integration contributed to better economic climate and overall reforms?

- The process of integrations to the European Union and NATO is important for Montenegro as it strengthens political and economic stability and security, something that is appreci-

ated by foreign investors. Almost all laws have to be aligned with the acquis and it takes time. Our members often complain that there are many amendments to the laws and bylaws and that the laws are frequently changed. The reforms to improve the economic climate have started already and some results can be observed, but more actions need to be taken. However, many chapters are open and the process advances. This is a sign that the Government shares European values and is Europe-oriented. We believe that this progress will be an even stronger incentive for the Government to continue with the reforms and to create a better economic climate and provide economic benefits.

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■ To what extent was the government open to recommendations given in the White Book in the past?

- The White Book is a reference document when it comes to improving the business environment in Montenegro. Since improving the business environment is one of the strategic goals of the Government, the Government recognises the importance of our White Book. In previous years,

ment representatives, and we tackle those issues that are recognised by our members as important and relevant. Our members participate in the work of the different Councils created by the Government, which treat particular topics such as environment, for example. This is useful since we, as investors, operate in the country on a daily basis and can see all good and bad sides of doing business. In addition, we have joint meetings every

ment climate in Montenegro?

- Foreign investors approach us both on a daily basis, and we believed that we have to make our cooperation more formal. That is why the Montenegrin Foreign Investors’ Council signed a Memorandum of cooperation with the Montenegrin Investment Promotion Agency last year. This Memorandum was signed to enable and stimulate the implementation of joint projects within which private and public sectors merge their resources and professional knowledge and skills in order to contribute to improvement of investment climate in Montenegro, and we believe that these projects should soon come. Another reason for formalizing our cooperation is that we believe that the MIPA will help us reach certain relevant governmental bodies faster and more easily, allowing us to discuss our initiatives.

■ Based on your communication with prospective investors in Montenegro, what are the major issues they are interested in?

- Prospective investors are inter-

the Government was very open to our recommendations, and we always had feedback. They accepted part of our recommendations, which are either implemented or in progress. Another part of the recommendations is refused with comments and explanations given why the recommendations cannot be implemented. We revised those unaccepted recommendations every year and try to tackle again those that hinder our business.

■ How has communication between the government and the MFIC has developed over time, and to what extent does the government rely on the knowledge and experience of MFIC members?

- We have good cooperation with the Government and an open dialogue. Every year, we organise events where the guest speakers are Govern-

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We have good cooperation with the Government and an open dialogue about issues that are recognised by our members as important and relevant. Some of them like the Labour law are already in the Governments agenda of change year after publishing the White Book, and that is an opportunity to present them our suggestions and solutions, to try to find the best way to ease the operations and to meet the interest of all stakeholders. Our members point out at every occasion that they are ready to bring their knowledge, skills and experience, and that is something that the Government appreciates.

■ How might cooperation between the Montenegrin Investment Promotion Agency (MIPA) and the Montenegrin Foreign Investors’ Council (MFIC) contribute to improvement of the invest-

ested in different business activities. Recently, the number of projects dealing with renewable energy sources has been growing, and those investors target all parts of Montenegro, not only central and southern part. Windmills and small hydro power plants will be developing in soon. Montenegro does not lack investments in tourism, and there are quite an interesting number of requests for the construction of hotels, both on the seaside and in the north.

There is interest for investments in agriculture, but we believe that it should be better promoted to have some tangible results. ■

CORPORATE

NORMAL COMPANY LTD.

The Road to Success is Always Under Construction Normal Company ltd. is a construction company that deals with the construction of residential and commercial properties and hotels

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ur business is based on devoted, thorough and professional work and, as our references show, we are able to respond successfully to the most challenging projects in the country. Moreover, through different types of social activities we also place an emphasis on socially responsible work. We have been present on the Montenegrin market since 1992 and have been recognised as a high quality and reliable partner in the country. We are proud of our ability to pull through and maintain a stable position on the Montenegrin real estate market during the time of economic crisis, demand fluctua-

tion and other aggravating circumstances.

The main task of the management of Normal Company ltd. is to ensure sustainable business operations based on the continuous improvement of products and services, as the success of the company depends on the level of satisfaction of both our clients and employees. As our clients say, we gained their trust through fair and friendly relations, innovations, ideas and continuous improvement, and we have managed to maintain and strengthen our position throughout the years.

The mission of our company is to provide pleasant and contemporary living and working areas, balancing between price and quality, with the greatest contributors to that being

motivated employees within the company.

In accordance with that, in Podgorica we have to date built over 150,000m2 of residential and commercial units, with efforts to intensify construction in other parts of the country. Our projects are located at the most attractive locations in the city and that is a reason why some of the most important public institutions and prestigious companies relocated their offices to our buildings, which are characterised by high quality, safety, modern design and functionality.

We would also highlight our most lucrative project so far – the construction of the Hilton Hotel in a prime location in the centre of Podgorica. Normal Company is the General Contractor of this project, as well as co-investor. ■

Our product range:

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Log Cabins • Cottages and Wood Houses • Business Premises Made of Wood • Roofs and Roof Structures Balcony Railings, Windows and Doors • Canopies, Interiors and Stairs

Srdanov Grob b.b., 84210 Pljevlja, Montenegro Phone: +382 67 278 478 brvnare.jasen@gmail.com www.brvnarejasen.com

85000 Bar, Montenegro, Jovana Tomaševića 39 Tel/fax: +382(0)30 31 22, 75+382(0)30 313 123 +382(0)30 302 380, +382(0)30 302 381, Mobil: +382(0)67 393 299 E-mail: branislavzenovic@t-com.me

društvo za špediterske, pomorsko-agencijske poslove, trgovinu i turizam ”zenšped” doo bar www.zensped.co.me

KEY MESSAGES

We Have Always Been Clear About Our Euro Path FILIP VUJANOVIĆ

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uro-Atlantic integration is proclaimed as our integration preference in the Constitution of Montenegro and in the Declaration of an independent Republic of Montenegro from 3rd June 2006, and based on the need for permanent security, economic and political benefits and the acceleration of European integration. Of the 28 EU member states, 22 are members of NATO, nine out of every ten EU citizens live in NATO states, so it is natural that membership in NATO means additional encouragement to EU membership.

PRESIDENT OF MONTENEGRO

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Young People Driving E-Development

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he Ministry of Information Society and Telecommunications was given special tasks on which we are working on VUJICA LAZOVIĆ DEPUTY PRIME daily, in addition to maintaining regular MINISTER OF contacts and cooperation with all instiMONTENEGRO AND MINISTER tutions. We can safely say that we have OF INFORMATION SOCIETY AND made significant progress towards impleTELECOMMUNICATIONS menting a portion of our e-services and the eDMS project. In late 2014, we had a total of 77 e-services, and today we have 28 institutions providing 164 e-services on the e-governance portal with the trend constantly growing. By the end of 2016, we expect to have over 200 e-services available on the e-governance portal.

We Have Set The Foundations For Stable Growth

e have signed trade agreements with EU member states, CEFTA, EFTA, Turkey, Russia, Belarus etc. We have good VLADIMIR indicators on the global competitiveness KAVARIĆ MINISTER index, and our status in terms of European MONTENEGRIN OF THE ECONOMY and Euro-Atlantic integration is well known.

Thus, through all of these facts we can say today that Montenegro is a state characterised by political and macroeconomic stability, an efficient and transparent tax system, a reformed banking system, simple and fast founding of enterprises, a good legal basis and protection for foreign investors, equal treatment of foreign and domestic investors, the euro as a currency, a liberalised foreign trade system etc.

Building an Optimal Environment For Top Investment in Tourism

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udging by current trends, these projections are also realistic. Last year we BRANIMIR recorded double-digit growth rates from GVOZDENOVIĆ MINISTER the countries of Western Europe: Germany MONTENEGRIN OF SUSTAINABLE 66%, UK 38%, Poland 15%, France 11% and DEVELOPMENT AND TOURISM Norway 10%. Traditionally good figures of tourists from the region were also maintained – from Serbia we had growth rates of 39%, from Bosnia & Herzegovina 50%, Macedonia 17%, while a positive trend was maintained with Russian-speaking areas. Total revenue from tourism in 2005 amounted to €222 million, while in 2015 it was €801.3 million and for 2026 around €1.5 billion is expected.

We Will Develop Even More Intensively

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he main traffic network in Montenegro has been defined and includes: SEETO road route 4: the Bar-Boljare highway (to the border with the Republic of Serbia); SEETO road route 1: the Adriatic-Ionian Corridor (coastal variant, or fast road route along the Montenegrin coastline), or links with the Republic of Croatia and the Republic of Albania; SEETO rail route 4: the Bar-Vrbnica railroad (to the border with the Republic of Serbia); SEETO rail route 2: the Podgorica-Tirana railway line (links with the Republic of Albania); the Port of Bar and Podgorica Airport.

IVAN BRAJOVIĆ

MONTENEGRIN MINISTER OF TRANSPORT AND MARITIME AFFAIRS

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Foreign Investors Rebirthed The Economy

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he Chamber of Commerce recently conducted analysis entitled “The EcoPRESIDENT OF THE nomy of Montenegro, 2006-2015”, which MONTENEGRIN CHAMBER OF covered developments in the period after COMMERCE the gaining of independence, when significant progress was made in many areas. We note dynamic growth at an average rate of 3.2%, which is higher than the average growth in the region of 1.4%, as well as the European average, which was at the level of one per cent. The high inflow of foreign direct investment and revenue growth in the services sector had a major impact on the growth of GDP. VELIMIR MIJUŠKOVIĆ

CORPORATE

BOJ COMMERCE D.O.O.

21st Century Quality

Boj Commerce d.o.o., with its HQ in Andrijevci, is engaged in the production and sales of cut timber of various dimensions

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he company was founded in Andrijevci in 1995, and it currently has 40 employees. Boj Commerce has a very long tradition in manufacturing finished wood products, including top quality fir tree elements of different dimensions. Our entire fir timber range is exported to the neighbouring countries, to clients from Serbia and Kosovo, with whom we have been cooperating since our inception. We have managed to continuously produce good financial and business results thanks to the long-term cooperation and trust of our clients. Corporate social responsibility is our priority, which implies a responsible approach to the community in which we operate, the environment and especially to our employees as the main pillar of our CSR activities. The high quality of our products ensures our lasting market presence and gives us the opportunity to further develop and advance our production in an effort to fully meet market demand. Our excellent financial results seen in our business turnover of close to €2 million and our good business reputation clearly demonstrate our commitment and hard work. ■

Products in Line With European Standards

Forest & Industrial Complex POLIMLJE, a company headquartered in Berane, is the market leader in Montenegro in the segment of wood processing and production of multiplex elements. The company also has a very high business and credit rating

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ith over 70 years of market presence and experience gained in the making and drying of sawn coniferous and deciduous timber, the production of sawn and processed furniture and joinery elements, veneer, plywood and various veneer pressings, we offer our customers top quality products manufactured in line with the highest European standards.

Our product range is comprised of multiplex battens and panels, Latoflex battens, construction formwork, timber, and beech elements, using the latest steadily expanded and improved technologies in order to respond to market demand. Because our products are made from solid wood and layered veneer, which are very popular in a wider market, almost all of them are exported to EU countries, and mainly to our clients in Germany, Italy and Austria with whom we have unlimited-term contracts on continuous product placement. The majority of our products are exported to the most demanding European market, Germany, which is a testament to our quality and commitment of all of our employees on accomplishing mutual goals. In the last few years, thanks to substantial investments, we have innovated most of our production capacities, which, along with our latest energy equipment, makes Polimlje one of the most important companies in Montenegro. ■ MONTENEGRO BUSINESS SECTOR 2016

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TOURISM

Hidden Beauties of

MONTENEGRO

TARA RIVER

In the relatively small area of 13,812 square kilometres that Montenegro covers, you can find great physical-geographical contrasts. Those varieties and specificities make Montenegro one of the most attractive tourist regions in the Mediterranean and Europe as a whole

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A

fascinating Montenegrin mountain world with over 150 peaks higher than 2,000 metres, with sleepy villages and peaceful high mountain pastures that are reminiscent of times long past are awaiting adventurers. The natural potential and anthropogenic values of the continental part of the Montenegrin coast and the north of Montenegro are becoming increasingly interesting to numerous tourists who flee city crowds and noise to find their own peace and satisfaction in the nature and hospitality of village hosts and their households, a healthy way of living, traditional/national cuisine, old customs and well-preserved tradition.

Particularly interesting and authentic facilities for rural tourism in Montenegro are available in Durmitor, Bjelasica, Prokletije, LovÄ&#x2021;en, the Lake Skadar basin with the Zeta valley and the rural part of the Montenegrin coastline.

The smallest country on the Balkan Peninsula has its own undiscovered beauties, hidden in the tight corner of its well-known coastline. Montenegro, well known around the world for its ham, can also be proud of its national parks, forests, rivers and mountains. Because of that, Montenegro can meet the needs of all visitors that come to holiday in this country.

Montenegro boasts five national parks rich with fascinating moun-

tains that offer many possibilities for visitors to use their holiday actively.

BIOGRADSKA GORA Biogradska gora is one of the best preserved rainforests in Europe, and is actually one of the last three in Europe.

It is along the route to the coastline and for people arriving from Serbia this park is the first one they come across on the way. Anybody passing through towards the coast can come to this beautiful nature reserve at the heart of Bjeslice Mountain, which is also known as “The lungs of Montenegro”.

Of particular interest is the fact that Biogradska gora was a protected area in 1878 and, along with Yellowstone, the first named national park. The first to recognise the significance of this beauty was King Nikola, who issued a ban on cutting wood, which ensures that the average age of the trees today is over 400. In the central part of this nature reserve is Lake Bigrad.

RIVER TARA The Tara Canyon is the deepest in Europe, and the second deepest in the world, at 1,333 metres. There is also the River Ljutica, the shortest river in the world, at only 135 metres long.

This river could not be handled even by the most extreme water sports professionals.

DURMITOR, BLACK LAKE

BIOGRADSKA GORA

Only a couple of hundred metres further along will pass below the grandiose Djurdjevica Bridge over Tara.

When it was built in 1940, it was one of the biggest and most beautiful transport objects of its kind in the world.

During World War II, Partizan fighters collapsed an arch of the bridge in order to prevent the advance of enemy troops, just two years after construction was completed. However, the symbol of the Tara Canyon was successfully restored and it today represents one of the most recognisable parts of Montenegro. There is a

Zip line from the 172-metre-tall bridge that is a must for visitors.

DURMITOR, ŽABLJAK, BLACK LAKE...

Visitors should not bypass Durmitor National park and Mountain, with its grandiose peak – Međed. Durmitor has 18 glacial lakes, also known as “mountain eyes”. The prettiest and biggest among them is certainly Black Lake, which is surrounded by coniferous forest. The top of Međed, with its pine forest, gives the lake an emerald green colour.

Many call Durmitor the most beautiful mountain in Montenegro, with its 48 peaks and at over 2,000 metres tall. There are five canyons and over 500 kilometres of marked trails, while it is also one of the best marked mountains. It provides ideal conditions for hiking and for those that like these kinds of activities Durmitor is considered one of the best areas of nature for this adventure.

Covering a relatively small area, this is a mountain world of fantastic shapes. The climate differs totally to the country’s coastal area.

Located at an altitude of 1,456 metres in the very centre of Durmitor, Žabljak is the town at the highest altitude in the Balkans MONTENEGRO BUSINESS SECTOR 2016

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the town and lake of Plav in the eastern mountain ranges of Montenegro. Visitor is a mountain in southeast Montenegro, between the Plav-Gusinje Valley to the east and the spring of the River Zlorečica to the west. Visitor Mountain spreads along a southwest-northeast course and forms the border between the Municipalities of Andrijevica and Plav. Visitor Lake is situated at an elevation of 1,820 metres and, along with Lake Hrid and the breath-taking surrounding mountain peaks, represents a nature-friendly and active outdoor excursion destination.

KOMOVI MOUNTAINS

Žabljak represents a good destination for winter tourism, but for many tourists this unique city is the best choice for a summer holiday. This little city in the north of Montenegro is surrounded by numerous lakes and a number of mountain peaks. Žabljak attracts a large number of visitors during the summer, who come to see its natural beauties that emerge at each step.

long and 30 km wide, is covered on all sides by vast plateaus at an average altitude of 1,900 metres - Štavna and Ljuban to the north, Rogam to the west, Crne to the south and Varda to the east. The highest peaks of the Komovi Mountain massif are Kučki Kom (2,487m), Ljevoriječki Kom (2,469m, north peak of Kučki Kom) and Vasojevički Kom (2,460 m).

KOMOVI MOUNTAIN Komovi Mountain is one of the three most impressive and most magnificent mountain ranges of Montenegro and the Dinaric Alps - Dinarides. Komovi Mountain is situated in eastern Montenegro and stretches between the farthest upstream parts of the River Lim to the east and the River Tara to the west, to Drcka River in the north and the Prokletije range to the south. From the south and east, Komovi Mountain is encircled by the peaks of the Montenegrin-Albanian mountain range known as Prokletije – Accursed Mountains, with the highest peaks at an altitude of 2,534 metres - Kolac/Maja Kolata, 2,694m Jezerski Vrh/Maja Jezerce - and to the north by Bjelasica Mountain, with its highest peak being Crna Glava, at an altitude of 2,139 metres. The Komovi Mountain massif, which is 40 km

PLAV AND VISITOR LAKE The Visitor/Goles/Zeletin/Greben mountain range is located between the Komovi and Prokletije ranges, above

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PLAV-GUSINJE REGION

LAKE SKADAR The Balkans’ largest lake, the dolphin-shaped Skadar, has its tail and two-thirds of its body in Montenegro and its nose in Albania. Covering between 370 and 550 square-kilometres (depending on the time of year), it is one of the most important bird sanctuaries and wetland reserves in Europe. The endangered Dalmatian pelican nests here, along with another 256 species, including a quarter of the global population of pygmy cormorants. You might spot whiskered terns making their nests on the water lilies, while at least 48 species of fish lurk beneath its smooth surface, the most common of which are carp, bleak and eel. Mammals within the park’s con-

SKADAR LAKE

fines include otters, wolves, foxes, weasels, moles and groundhogs.

On the Montenegrin side, an area of 400km2 has been protected with the status of a national park since 1983. This is a blissfully pretty area encompassing steep mountains, hidden villages, historic churches, clear waters and floating fields of water lilies.

Virpazar is a small town on the bank of Lake Skadar, where small boats sit on the lake, ready to sail at any time. From Virpazar you can go on walking routes, cruising, cycling, kayaking etc. For those who enjoy wines, there are wine routes, while a must try wine from this area is Vranac.

ADA BOJANA The beach of Ada Bojana consists of two parts: nudist and non-

KITESURFING ADA BOJANA

nudist. In order to enjoy this wonderful offer, a part of the 2,200metre-long beach gives you the chance to find your own peace and watch the never ending blue sea. There are various activities on Ada Bojana. Indeed, so much so that it is listed among the world’s top 10 destinations for kite surfing, paragliding and windsurfing. Horseback riding has been one of the main tourist attractions for the past four decades.

Ada Bojana is a real oasis of serenity where, nudists can enjoy themselves far from the curious eyes of spectators. For those who prefer a more river-like environment, there is the River Bojana on the other side. Rafts with fish restaurants, said to be among the best in this part of the Adriatic region,

are visited by celebrities year-round.

The best thing about Ada Bojana is that accommodation is right next to the beach and you can choose if you will enjoy your views from an apartment, chalet or hotel. Surrounded by parks, you can choose entertainment in the form of beach volleyball, football, or simply swim and enjoy the salty water.

When you go to the Montenegro coast you should stop and take in the views on either side, where you will see many natural beauties along the way. You will discover beautiful sights, rest up for the journey ahead, and it would be shame not to try “cicvara” (gruel) or “kačamak” (maize porridge) and find out something more about this beautiful country. ■

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