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Useful Addresses Montenegrin Investment Promotion Agency (MIPA) Jovana Tomasevica b.b. (New building beside Government building) 81000 Podgorica, Montenegro Phone/Fax: +382 203 141, 203 140 , 202 910 E-mail: Website: Ministry of Tourism Rimski trg 46 81000 Podgorica, Montenegro Phone: +382 204 82 329

Chamber of Economy (Commerce and Industry) Novaka Miloseva str. 29-II 81000 Podgorica, Montenegro Phone: +382 81 230 545 E-mail: pkcg@cg.yu Website: Airports of Montenegro Crnogorskih serdara bb 81000 Podgorica, Montenegro Phone: +382 81 601 970 E-mail: Website:

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• Ancient Land Has Transformed Itself into a Thriving Modern Republic 4 • Prime Minister Outlines Ambitious Development Strategies 8 • Chamber of Economy Promoting European Integration 10 • Montenegro’s Fact File 12


• Privatisation Continues As Government Aims to Maintain Growth Rates 14 • Chamber of Economy Boosting Private Sector; Forging Global Links 16 • Investment Incentives Continue to Draw Investors 18


• Prospect of EU Accession Keeping FinancialSector Reforms on Track • Eurofond • First Financial Bank • Prva Banka

20 22 23 24

TRANSPORT & INFRASTRUCTURE • Building a New Montenegro: Infrastructure Projects with Investment Appeal • Public-Private Partnerships Key to Transport Infrastructure Projects • Porto Montenegro

26 28 31


• World-Class Telecom Infrastructure Employs Advanced Technologies • m:tel • Telecom Agency Promoting Sector’s Liberalisation • Promonte

33 35 36 38


• Tourism Master Plan Focuses on Quality, Not Mass Market Quantity • Tourism Revenues and FDI Rising

Regional Director: Lieve Luyten Project Manager: Kelly McCord Business Analysts: Desiree Brouwer, Aukje Oostendorp, Adam Bozsoki Editorial: Emily Emerson - Le Moing Production Coordinator: Katrien Henkens Design: Martine Vandervoort, Carine Thaens, Johny Verstegen, Walter Vranken, Dirk Van Bun, Wesly Isenborghs

40 42

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Prime Minister Outlines Ambitious

Milo Djukanovic, Prime Minister

Milo Djukanovic, Montenegro’s Prime Minister, discusses the country’s development strategies and investment appeal.

ET: Many outsiders regard the former Yugoslavian countries as marked by political instability. What makes Montenegro different? M. Djukanovic: Throughout the very turbulent recent history of the Balkans, Montenegro’s main focus has been to maintain and strengthen the country’s political stability. As a result of this strategy, Montenegro is the only ex-Yugoslav republic that has maintained its multi-ethnic character, and the country has been spared the conflict that afflicted its neighbours. Since its independence in 2006, Montenegro has been working on building a new, stable country based on stringent European standards. By establishing these new standards, Montenegro demonstrates that even in the Balkans, building democratic standards is possible. This is a strong and important message to the West.




Development Strategies Montenegro wants to become part of the EU and of the broader European community. We have been working very hard to carry out comprehensive reforms and we are harmonising our legal system to comply with European standards. ET: What is Montenegro doing to attract foreign investors? M. Djukanovic: Our reforms are not only designed to achieve EU membership; we are also trying to enhance quality of life here in Montenegro. We want to see more democratic freedom, more jobs, and higher pensions and salaries. In order to achieve this, we need very good partners, especially foreign investors. We have been trying hard to offer a comparative advantage to investors, and thanks to these efforts, Montenegro is now the region’s per capita leader in foreign investments. We attracted around €0.75 billion in foreign investments in 2007 and we have a population of only 500,000. ET: Which sectors do you single out as offering particularly strong investment potential? M. Djukanovic: Although Montenegro is now on the path of intensive economic growth, during the socialist era it was the least industrially developed republic in Yugoslavia. Montenegro’s comparative advantages lie elsewhere, for example in tourism and in services, so these are the sectors we have prioritised for development, and today these are also the most interesting for investors. We want to become an elite tourist destination, and this means we need an efficient and modernised infrastructure. Hence, this is the second area we have targeted for a lot of investments in the next decade. Beginning in early 2009, we will start building two new highways that will be of key importance in serving the coastal area. We are also in the final stages of completing a wastewater processing system for the coastal area and beyond, and we have major projects concerning treatment of solid wastes. In addition, we have made significant investments in transport infrastructure, including the railway system and the international airport. The third very important sector for investment is the energy sector. Our goal is to develop a sustainable energy strategy and environmentally friendly energy

that will place Montenegro on the European energy map as an ecological country. All new energy projects will be carried out without any compromises, according to the most stringent European standards. ET: How much foreign investment do you expect over the next decade in these key sectors? M. Djukanovic: In the case of our highway projects, feasibility studies show a cost of around €3 billion. In the energy sector, we expect around €1.5 billion in investment. The tender procedure will soon be in place for the privatisation of the national power company, and tenders will soon be announced for the construction of a new hydro-electric power plant as well. In tourism, we expect a huge amount of investment. Just one project is Velika Plaza, in which several investors have already shown an interest. This project is estimated at around €7.46 billion to €11.2 billion. This is the biggest tourism project being planned for Montenegro at the moment, but we have opportunities for many smaller projects, many of which will be getting underway in early 2009. ET: How is the government counteracting negative images of the Balkans? M. Djukanovic: Of course there are prejudices about our region, but the key issue is the question of stability. The solution to this uncertainty is unconditional membership in the broader European security and economic system. Europe has not always been devoted to implementing European standards all over the continent, and this created a fertile soil for violence and instability. We hope Europe will not let the same situation occur again, and we know that other countries in the Western Balkans are working to maintain stability as well. My message to Europe is that Montenegro offers a lot of opportunities, and we are investing all our resources in maintaining stability and making our country an attractive place for investors. We believe in European values. We are also aware of our responsibility to help maintain regional security. We want the world to know about what we have accomplished and what we are continuing to accomplish here.




Chamber of Economy Promoting European Integration As Montenegro’s Prime Minister, Milo Djukanovic, said on a recent visit to Bosnia, “There is no doubt that Montenegro is ready to apply for EU candidacy,” and on December 15, the Prime Minister formally applied for Montenegro to join the European Union. He made the request at a meeting in Paris with France’s President Nicolas Sarkozy, who held the rotating EU presidency, and the group’s expansion commissioner, Finland’s Olli Rehn.

Vice President, discusses the progress Montenegro is making toward becoming an EU member, and the Chamber of Economy’s role in the country’s ongoing economic development. ET: What progress is Montenegro making in meeting EU accession criteria?

Ljiljana Filipovic, Vice President Chamber of Economy

Montenegro signed a ‘Stabilisation and Association Agreement’ with the European Union in October 2007, the first stage in a country’s quest for membership. The formal request in December was the next hurdle in the lengthy process of reform and negotiation that candidate countries must undergo before entering the European Union, which already has 27 members. Speaking about the application, Milo Djukanovic said, “It’s a great day for Montenegro, and it’s also a great day for the European Union, because today it confirms its intention to unite the European continent.” The Chamber of Economy of Montenegro is doing its part to make sure the country reaches this ambitious goal. Ljiljana Filipovic,


L. Filipovic: We are in general agreement with the European Commission’s annual report on Montenegro and we are convinced that the country will achieve growth in the coming year, in spite of the international financial crisis. Montenegro’s GDP will not be as high as we expected, but it will rise nevertheless. Even in 2008, the country achieved almost 8% GDP growth, which was more than the planned growth of 7% for the year. In addition, we have a budget surplus, which will help the country weather the crisis better than other countries may. Montenegro has also kept unemployment under 10%. Our weak spot is our need for more foreign trade. When it comes to the overall picture, however, it is positive, thanks to growing services activity and more investments. ET: Is Montenegro continuing to attract foreign investment? L. Filipovic: Yes, foreign investments in Montenegro remain steady, and in fact Montenegro is the leader in the region when it comes to attracting direct foreign capital.



ET: What is the Chamber of Economy doing to boost Montenegro’s economic development and its chances to enter the EU? L. Filipovic: We are actively working to encourage more competition in the domestic economy and to remove any remaining barriers to doing business. The Chamber of Economy also launched an activity to register a collective trademark for various local products and services providers, to help them bring their products and services to foreign markets. The Chamber organised more than 30 seminars in 2008 specifically designed to assist local companies to become more competitive and to enter foreign markets more effectively. We are also working with the government concerning Montenegro’s EU candidacy. We have developed a clear plan to improve Montenegro’s institutional structure, regulatory environment, and financial capabilities. We believe that during the course of 2009 Montenegro will have a positive response from the European Commission concerning what has been done and what will be done in the near future. A priority for the Chamber of Economy is to promote EU standards in Montenegro. ET: What is the Chamber doing to encourage continued liberalisation of the local economy? L. Filipovic: Promoting economic liberalisation is another of the Chamber’s top priorities. We hosted a seminar in 2008 at which various experts from

abroad discussed Montenegro’s trade activities with local leaders. Montenegro has already made a great deal of progress toward liberalising foreign trade. We are currently in a transitional period concerning foreign trade and at the end of this, in two years, we will have zero customs duties on industrial products, and in four years other products will be added to the zero customs duties list. We already have zero customs duties on agricultural products. Certain sensitive products will see customs duties reduced by 50% in four years. This transitional period is to help Montenegro prepare for full liberation, which is set for January 1, 2012. ET: What advantages does Montenegro offer foreign investors? L. Filipovic: Our legislation is quite liberal, even more liberal than in other countries of the region which already have EU candidate status, such as Croatia. We hope that the European Commission will recognise everything that Montenegro has done and continues to do concerning liberalising our legislative and regulatory environment. We believe Montenegro does much more than other countries do in this regard. We also believe that it is in the interest of the EU to have the entire European continent developed, and that we can all benefit from increased emphasis on growth, improvement and harmonisation throughout the EU.




Montenegro’s Fact File Official name:

Republic of Montenegro


14,026 sq km, including land area 13,812 sq km and water 214 sq km.

Economy at a Glance Currency:


GDP (purchasing power parity):

4,761.2 billion (2007)

GDP (official exchange rate):

2,393 billion (2007)

Albania, Bosnia and Herzegovina, Croatia, Kosovo, Serbia

GDP real growth rate:

7.5% (2007)


678,177 (July 2008 estimate)

Labor force by occupation:

Ethnic groups:

Montenegrin 43%, Serbian 32%, Bosniak 8%, Albanian 5%, other (Muslims, Croats, Roma (Gypsy) 12%

agriculture: 2% industry: 30% services: 68%

Unemployment rate:

14.7% (2007)

Inflation rate (consumer prices):

3.4% (2007)

Export partners:

Switzerland 83.9%, Italy 6.1%, Bosnia and Herzegovina 1.3%(2006)

Import partners:

Greece 10.2%, Italy 10.2%, Germany 9.6%, Bosnia and Herzegovina 9.2% (2006)

Border countries:


Serbian 63.6%, Montenegrin (official) 22%, Bosnian 5.5%, Albanian 5.3%, unspecified 3.7%




June 3, 2006 (from Serbia and Montenegro)

Head of government:


Prime Minister Milo Djukanovic (since February 2008)

• Privatisation Continues As Government Aims to Maintain Growth Rates • Chamber of Economy Boosting Private Sector, Forging Global Links • Investment Incentives Continue to Draw Investors

Business & Investment Opportunities

“We discuss the business environment and any obstacles to doing business that our members have encountered.” Velimir Mijuskovic, President Chamber of Economy



Business & Investment Opportunities

Privatisation Continues As Government Montenegro, formerly part of Yugoslavia, has made impressive progress in transforming its economy from a socialist model to a free market system. Favouring separation from Yugoslavia long before its official independence in 2006, Montenegro severed its economy from federal control and from Serbia during the Milosevic era and maintained its own central bank, used the euro instead of the Yugoslav dinar as official currency, collected customs tariffs, and managed its own budget.

The dissolution of the political union between Serbia and Montenegro in 2006 allowed Montenegro to apply for its own membership in several international financial institutions, including the European Bank for Reconstruction and Development (EBRD). In January 2007, Montenegro joined the World Bank and IMF. Montenegro is currently pursuing its own membership in the World Trade Organisation as well as negotiating a Stabilisation and Association agreement with the European Union in anticipation of eventual membership. Severe unemployment remains a key political and economic problem for the country as for the entire region. In 2006, the year it declared independence, Montenegro’s economy grew by 8.6%. In 2007 it accelerated to 10.7%. The economy achieved around 8% growth in 2008, mainly through investments in tourism and construction, but this growth is expected to slow considerably in 2009, to around 5% or less, as a result of the global financial crisis and an anticipated reduction in foreign investments. In December, the government announced that it might ask for help from the International Monetary Fund if growth slowed to 2%.

22% stake in power monopoly up for sale In spite of the challenges of the current economic climate, Montenegro offers significant growth potential. It also has a government that has proven its willingness to support the private sector and to forge international economic ties. Montenegro will test investor confidence in 2009 by putting up for sale a 22% stake in its power monopoly, Elektroprivreda Crne Gore (EPCG), in which the state has a 70.6% stake. Based on its share price of €3.15 on the Montenegro bourse at the time of the announcement, EPCG is estimated to be worth around €1 billion. The government is also planning to open up projects in energy, tourism, and infrastructure this year. “If we realise only part of the planned investment in tourism, energy, and infrastructure, it is realistic to



Business & Investment Opportunities

Aims to Maintain Growth Rates achieve a more dynamic growth than the one forecast by the IMF,” Prime Minister Milo Djukanovic announced at a news conference in December. He noted that Montenegro expects to finalise a tender for the construction of a €2 billion highway in 2009 despite the economic crisis. Another key project in the works is for a €700 million undersea cable connecting Montenegro and Italy; construction is supposed to begin this year. The government also plans to sell 15 holiday resort locations in 2009. “All this is the grounds for our optimism in forecasting real growth of some 5% and the imperative is to maintain positive trends from past years,” Milo Djukanovic said at the news conference.

Privatisation program continues

Over the past half-century, Montenegro’s economy has been based primarily on industrial activity, particularly in steel and aluminium. Montenegro also produces bauxite, sea salt, and coal, while it also produces electrical power at its hydroelectric power plants in Perucica and Piva and its thermoelectric power plant in Pljevlja. Around 90% of Montenegro’s industrial production is for export, primarily to other countries in the former Yugoslavia.

Varied industrial activities Other industrial and manufacturing sectors include metalprocessing, engineering, woodprocessing, textiles, chemicals, leather and footwear, garments, household appliances, construction, forestry, and food processing. The food-processing sector includes fish-processing plants, flour mills with grain silos,

dairies, bakeries, breweries and juice factories, fruit-processing factories, wineries, processing of medicinal herbs, confectionary and others. Montenegro also processes tobacco and produces cigarettes. Montenegro’s agriculture sector benefits from abundant water resources and largely unpolluted land, making Montenegro an excellent choice for the production of organic produce and meats. Montenegro’s agricultural products include meats (poultry, lamb, goat, veal and beef), dairy products, honey, fish, vegetables, fruit, high-quality wines, and mineral water. Forests and woodlands cover 720,000 hectares of Montenegro’s land area, or 54%, making the country a good choice for wood-processing. Montenegro’s economy has strong growth potential.

Meanwhile, the government is moving forward in its program to privatise key industries and promoting the growth of the private sector. Montenegro has already privatised its large aluminium complex - the dominant industry, accounting for around 40% of GDP - as well as most of its financial sector, and has begun to attract foreign direct investment in the tourism sector. A large aluminium plant near Podgorica (the capital city) is owned by a Russian investor, who has been benefiting from free supplies of electricity, but the plant has been performing poorly thanks to falling aluminium prices and its future is uncertain.



Business & Investment Opportunities

Chamber of Economy Boosting Private Sector, Forging Global Links Montenegro’s Chamber of Economy has been supporting Montenegro’s business sector for 80 years. Today, the dynamic organisation is helping to upgrade Montenegro’s private sector while actively promoting the country abroad and providing a range of services for its 18,000 members. In addition to its regional offices in Niksic and Bijelo Polje, the Chamber has opened offices in Vienna, Ljubljana, Belgrade, and Moscow, with an office in Brussels scheduled to open soon.

has created a special department focusing on international relations and European integration.

International connections

Velimir Mijuskovic, President

Liaison between public and private sectors Velimir Mijuskovic, President, says that the Chamber concentrates on representing the interests of all its members, and is organised into 12 associations with representatives from each economic sector. He explains, “We discuss the business environment and any obstacles to doing business that our members have encountered. We also serve as a liaison between the private sector and the government by making suggestions to government leaders about how Montenegro’s business environment can be improved. We work on a partnership basis with government ministries. Our principle is to be representative of our members before the government.” One of the Chamber’s priorities is to contribute to Montenegro’s drive to become a member of the EU. “We educate our members about how to apply EU standards and regulations,” Velimir Mijuskovic says. The Chamber


The Chamber regularly organises business forums and other events to bring Montenegro’s business leaders together with leaders in other countries, and sends representatives to business conferences, exhibitions and other events around the world to establish contacts and promote Montenegro. Velimir Mijuskovic points out, “We organised nine business fairs in 2008, including in Italy, Austria, Hungary and Bulgaria. Next we plan an event in India. Through these fairs, more than 300 of our member companies have been able to showcase their products abroad, and more than 1,000 of our members have attended international business events.” In November 2008, the Chamber hosted a visit by members of the World Bank/Advisory Mission – IFC Doing Business Reform with the aim to support the government to better position Montenegro in the annual World Bank report ‘Doing Business’.

Supporting education and training The Chamber is also working to upgrade Montenegro’s human resources by requesting feedback from members concerning the kinds


of skills they are looking for in their employees, and then passing along this information to leaders in the fields of education and vocational training. “We work on all levels, from secondary school through university,” Velimir Mijuskovic says. As part of its goal to create more international connections for Montenegro’s business sector, the Chamber has joined a number of international organisations, including the International Chambers of Commerce association as well as Chambers of Commerce throughout the region and beyond. “Through our membership in these organisations, we can offer administrative services concerning transport and trade,” Velimir Mijuskovic explains. He adds that the Chamber also has the authority to issue various customs certificates and other documents which ensure fair treatment of transport companies and which track cargo throughout the shipment. One productive international partnership for the Chamber is with the Trade and Industrial Chamber of the Russian Federation. At a meeting in Moscow in December

2008, Velimir Mijuskovic and the President of the Trade and Industrial Chamber of the Russian Federation, Jevgenij Primakov, signed a cooperation agreement concerning trade arbitration between the two countries. The agreement is designed to serve as an efficient instrument for resolving disputes concerning bilateral trade and economic relations between Russia and Montenegro. Velimir Mijuskovic also presented investment opportunities in Montenegro’s energy sector and transport infrastructure.

World Trade Organisation membership The Chamber is actively working toward Montenegro’s membership in the World Trade Organisation and toward the country’s eventual Stabilisation and Association agreement with the EU. “We have organised several forums about these issues during which we recognise and identify trade barriers that our members encounter and we send strong messages from these forums to the government about how to remove these barriers,” Velimir Mijuskovic says. The Chamber is also

working on strategies to help local enterprises cope with the global financial crisis.

Assisting foreign investors Promoting foreign investment in Montenegro is another priority for the Chamber. Velimir Mijuskovic singles out tourism and agriculture as two sectors with particularly strong potential, and notes that the energy sector, transport infrastructure and the processing industry all need more investment. “We have had great improvements in tourism thanks to foreign investment, and our agriculture sector, because of Montenegro’s natural resources, is ideal for the production of healthful food. Montenegro also has great hydro electricity potential; we are currently using only 20% of our capacity. A tender for a large hydroelectric plant should be launched next year and around 30 smaller plants are to be built. Wind power also has potential,” Velimir Mijuskovic says. The Chamber of Economy will continue to play a key role in promoting Montenegro’s economic development.



Business & Investment Opportunities

Investment Incentives Continue to Draw Investors Montenegro’s plan to offer a 22% stake in its power monopoly, Elektroprivreda Crne Gore (EPCG), signals the government’s determination to continue to attract significant foreign investment. “I am confident that this capital increase will be successful, as well as other projects in the energy sector,” said Montenegro’s Prime Minister, Milo Djukanovic, at a recent news conference on the proposed EPCG sale, whose tender is expected to be announced at the end of January 2009. The Prime Minister said that the sale will “allow the potential investor to manage the company through a management contract, as well as have a partnership with EPCG in upcoming development of new power sources.” According to the Montenegro Investment Promotion Agency (MIPA), the government is also looking for partners for a series of four hydroelectric power plants at Andrijevo, Raslovici, Milunovici and Zlatica, with a total annual production of 693 GWh. The project would include the construction of four dams, one of 150 m and three of 60 m. MIPA, founded in 2005, is a one-stop shop for foreign investors looking for opportunities in Montenegro.

Strong potential in energy sector Montenegro has built no new power-generating facilities for 25 years and produces around 65% of its power needs at present. On the other hand, the country is using only around 17% of its hydropower potential. “If we increase the usage of those resources to 50%, Montenegro could become an electricity exporter,” the Prime Minister commented. Italian ENEL [ENEFN.UL], Chinese Des and Czech CEZ (CEZPsp.PR) have shown interest in partnering EPCG.


The move to sell part of the power monopoly is the latest in a series of major privatisations that Montenegro has achieved as a means of bringing added capital and know-how to its economy while stimulating the growth of the country’s private sector. Recent foreign investment inflows have targeted the financial sector, industry, manufacturing, tourism, telecom, and construction. Analysts say foreign investment is vital to finance the country’s current account deficit, estimated at 19% of GDP in 2008; the government expects this to fall to 18.5% in 2009.

Advantages for investors For investors, Montenegro offers a competitive tax system, a skilled labour force, significant investment incentives, free repatriation of profits, access to fastgrowing regional markets, a euro-based system, easy business start-up, and a government that strongly supports the private sector. There is no limit of amount of invested capital, and foreign investors are allowed to invest in any industry and acquire rights to any type of real estate. Foreign Direct Investment in 2006, classified by sectors 18%


2% 5%












• Prospect of EU Accession Keeping Financial-Sector Reforms on Track

Finance & Banking


Finance & Banking

Prospect of EU Accession Keeping Financial-Sector Reforms on Track The government of Montenegro began liberalising and upgrading the country’s financial services sector even before Montenegro achieved its independence in 2006. Montenegro’s Central Bank (CBCG) started to operate in March 2001 and Montenegro adopted the euro, which provided a foundation for the development of its financial system.

Local banks performing well Montenegro’s banking sector has attracted significant foreign investment since it was opened to the presence of foreign banks, and leading local banks have been upgrading their facilities and services and are performing well. Prva Banka, for example, meets all ISO 9001:2000 quality standards and has been expanding its branch network, while new local player First Financial Bank is quickly carving out a niche in the corporate investment market.

Thriving securities market The financial sector has been diversifying, and several funds are now operating in Montenegro, including Eurofond, which focuses on local investments. Montenegro has also developed a thriving securities market, which is overseen by the Securities and Exchange Commission (SEC). The SEC serves as the official



Finance & Banking

Standard & Poor’s views Montenegro as “stable” Standard & Poor’s Ratings Services has affirmed its ‘BB+’ long-term and ‘B’ short-term sovereign credit ratings on the Republic of Montenegro, while also affirming its ‘AAA’ transfer and convertibility assessment. In the view of the international ratings agency, Montenegro’s outlook is stable. The Standard & Poor’s report adds that Montenegro’s independence in 2006 helped to minimise political risk, while the country’s EU prospects, accelerated by the signing of the Stabilisation and Association Agreement (the first step toward EU membership) in October 2007, provide strong impetus for further reforms of the financial sector.

regulator of the country’s capital market and promotes Montenegro’s competitiveness in order to attract more foreign investment capital. Zoran Djikanovic, Chairman, explains, “Our main goal is to provide support and help to investors and businesses through establishing a legal framework that boosts economic activity.” In 2006, Montenegro’s capital market grew by 400%, making it the best performer in the region.

Loans increased 44.4% over first 10 months of 2008 Recent trends in the financial sector include strong growth in both loans and deposits. According to a report by the Central Bank at the end of October 2008, loans increased by 25.3% over the first 10 months of 2008, for an annual growth rate of 44.4%, while deposits totalled some €2.17 billion, adding up to a 13.1% total rise over the same period. Personal savings totalled €982.2 million by the end of October, for an average growth rate of 2.6%.

IMF/World Bank report also generally positive An International Monetary Fund/ World Bank report on Montenegro published in February last year concurs with this positive assessment. The IMF report states, “Montenegro, like many other countries in the region, is undergoing rapid credit growth, in the context of heavy foreign bank presence and euro use. To some extent, this credit growth represents a catch-up phenomenon from a low base, and the presence of foreign bank subsidiaries has been stabilising, providing risk-management expertise, as well as capital and liquidity support. Moreover, the euro has helped provide a stable macroeconomic environment – including lowinterest rates – conducive for financial development.” Nevertheless, Montenegro’s financial sector faces a number of challenges, both internal and ones created by the global financial-sector crisis. The Standard & Poor’s report points out that Montenegro’s recent construction boom and rapid credit

expansion have triggered high imports, resulting in a current account deficit. The report adds, “Net FDI covers around 75% of the gap, which, in tandem with the use of the euro, is a mitigating factor. However, rapid credit expansion poses a risk.”

Challenges for maintaining financial-sector strength Both Standard & Poor’s and the IMF/ World Bank report call for stringent fiscal policies to ensure Montenegro’s financial-sector strength. “Given the monetary policy limitations under the euro, fiscal policy is the main instrument in managing domestic demand. The stable outlook on Montenegro reflects our expectation that the government will pursue economic and fiscal policies that address Montenegro’s sizeable external imbalances,” Standard & Poor’s concludes. On a positive note, the IMF/World Bank report comments, “Funding for credit growth in Montenegro comes mostly from asset sales to non-residents, including coastal real estate sales. The continued formalisation of the economy has also contributed to increased bank funding. This is in contrast to other countries in the region that have relied in large part on potentially more volatile foreign bank lending to finance their credit booms.” The IMF’s recommendation for Montenegro is “a multipronged strategy that relies on actions by banks, supervisors, and the legislative branch.” The prospect of EU accession is expected to remain a key driver for further reforms in Montenegro. To maintain fiscal health, analysts agree, Montenegro needs to continue to boost its exports, reduce public debt, and attract flows of foreign direct investment, particularly in tourism and energy.



Finance & Banking


Fund Targeting High Potential Local Projects Eurofond, created through a massive voucher privatisation in 2001, stands out from other investment funds in Montenegro. It is the only one of six funds in the country to be owned and run by fiscal professionals rather than by large state companies, which means that at Eurofond, decisions can be made more quickly. In addition, the fact that it was created through a privatisation process gives the fund added financial strength, according to Sotra Boisa, Managing Director. The fund’s value at the end of 2007 reached €282 million, although that total has since declined because of the global financial crisis.

Eurofond, whose mother company is Euroinvest, invests only in Montenegro and is increasing its shares in local companies. It makes strategic investments aimed at improving companies’ operations and at capitalising on Montenegro’s investment potential.

are in progress or planned. These include a golf course, an airport, hotel complexes and other facilities and services for upscale tourism.

Investing in high potential local companies

Why should European investors target Montenegro and Eurofond? Sotra Boisa answers, “Montenegro is a small country, but it’s a country with high potential, particularly in tourism thanks to its great natural beauty. Eurofond invests in a lot of very interesting tourism related projects. In Izbor Bar, for example, we plan to build the biggest shopping mall in Montenegro.”

“From the beginning, Eurofond had a vision to invest in small and medium sized companies as well as larger enterprises. In some small and medium sized companies, we originally had shares of 10% to 15% and now we have boosted those shares to two thirds or more. We also have shares in larger companies, including a 6% share in the electricity company,” Sotra Boisa explains. He adds, “We are trying really hard to improve all the companies in which we have shares of two thirds or more.” Current projects for the fund include upgrading its investment in Izbor Bar and organising the sale of some of its shares in a salt factory in Ulcini, which is attracting significant investor interest. Eurofond has improved the factory considerably by installing a completely new production line and upgrading various processes for salt extraction. The factory also has great value in its location, where many development projects


Outstanding opportunities for investors

Eurofond is a closed fund which wants to attract more potential investors and partners. To prospective partners, Sotra Boisa says, “We are ready to co-operate with you! Come and work with us!”

Bulevar sv. Petra Cetinjskog 78 Podgorica Tel: +381 (0) 81 246 729 Fax: +381 (0) 81 201 681 Mail:


Finance & Banking

First Financial Bank

Dynamic New Bank Targets Corporate Investors First Financial Bank, established in December 2007 and licensed in October 2007, is determined to carve out a niche in Montenegro’s banking sector. The bank focuses on corporate and investment activities, according to Theofanis Giarmenitis, General Director, and Ioannis Kotsikopoulos, Chief Financial Officer. They note that the bank meets Montenegro’s latest licensing standards, which were revised after the bank was established.

First Financial Bank sets itself apart from other banks operating in Montenegro. “We did not come here to take market share from existing banks, but rather to establish relationships in the entirely new corporate investor market,” Theofanis Giarmenitis and Ioannis Kotsikopoulos explain.

Beyond banking First Financial Bank is owned by Greek ship-owner and entrepreneur Victor Restis, who has interests in many sectors. Following this lead, the bank aims to get involved in sectors other than financial services to help jump start Montenegro’s economy. The group to which the bank belongs currently owns around 10 companies in Montenegro, including a mining company, and plans projects in real estate and development in Podgorica, Budva and Kolasin. “One of the reasons we opened a financial bank in Montenegro was to support the big activities we have going on here,” says Theofanis Giarmenitis.

Strong partner for foreign investors The bank is positioning itself as a strong partner for foreign investors in Montenegro. “We hope that First Financial Bank will

be a hub for all the companies around the world which want to invest here. We want to be the centre for all foreign investors in this country, and we are targeting major corporate clients,” says Ioannis Kotsikopoulos. He adds that Montenegro’s trade sector has enormous growth potential, since the country is consuming more and more, yet domestic production remains limited. First Financial Bank may be a newcomer to the banking sector, but this is a distinct advantage. “We can be more flexible than bigger established banks here. Although some look stronger, I don’t think they can handle a big corporate project. Other banks here are focused more on retail banking. First Financial Bank should be seen as the one and only corporate bank in Montenegro,” says Theofanis Giarmenitis. Ioannis Kotsikopoulos adds, “We want to be number one in our field.”

First Financial Bank AD Ul. 19. decembra 5 Gradski stadion Podgorica Tel: +382 (0)20 481 481 Fax: +382 (0)20 481 482 Email: Website:



Finance & Banking

Prva Banka

Montenegro’s Oldest Bank Focuses on Customer Service Prva Banka, founded in 1901, is Montenegro’s oldest bank and is ranked the country’s leader in providing world-class banking services. The bank was privatised in 2006 and now has 190 shareholders. It has been steadily expanding, and its current assets total €500 million, with a loan portfolio of €450 million. The bank has around €480 in deposits. In November 2008, Montenegro’s central bank reported that Prva Banka’s net profits rose 35.5% to over €4 million between January and September 2008.

Partner for international investors With its strong track record, Prva Banka has become the preferred partner for international investors in Montenegro. As Militin Bogdanovic, CEO, explains, “Prva Banka is a domestic bank with domestic capital that gives excellent services to all potential investors. Many companies in Montenegro and outside of Montenegro are opening their daughter companies here, and they like to bank with Prva Banka.”

Personalised services To provide the most convenient services, Prva Banka has expanded its branch network all over the country and now has 18 main branches and 18 sub branches as well as an extensive network of ATMs. Prva Banka works with companies in all Montenegro’s economic sectors, including metallurgy, mining, energy, machine building, electronics, forestry, food production and others. It has earned a reputation as a stable, reliable bank for both retail and corporate clients, and it is known for providing personalised services. Its motto, “Come to us to make a deal,” reflects the bank’s drive to remain competitive by adapting to each customer’s individual needs. The bank’s services for corporate clients include e-banking, corporate loans and deposits, internal and international payments, letters of guarantee, safety deposit boxes, and treasury services.


High potential sectors Concerning support for foreign investors, Militin Bogdanovic says, “Of course tourism is a big focus right now among foreign investors, and we want to be there for them. We also want to support the food sector, which has great potential, and to demonstrate that Montenegro is a country that takes its environmental responsibilities seriously. The energy sector offers exceptional investment potential as well, with several projects that currently need investment.” As for the current global financial crisis, Prva Banka has determined a strategy to bring the bank through potentially difficult times. “The crisis has created psychological pressure on the banking sector in Montenegro. We aim to achieve modest growth through a selective credit policy, and we will continue to focus on paying close attention to our clients,” Militin Bogdanovic says. The bank welcomes further contacts with international investors, and is ready to serve as the local partner for foreign companies in Montenegro. Militin Bogdanovic concludes, “We are the oldest, most reliable banking partner in the region, and we are looking to work with more international investors.” Prva Banka Crne Gore Vuka Karadzica bb Podgorica, Montenegro Tel: +382 81 445 280 Fax: +382 81 409 124

• Building a New Montenegro: Infrastructure Projects with Investment Appeal • Public-Private Partnerships Key to Transport Infrastructure Projects

Transport & Infrastructure

“Montenegro offers both political and economic stability, and the least risk of any country in the region.” Andrija Lompar, Minister of Maritime Affairs, Transportation and Telecommunication


Transport & Infrastructure

Building a New Montenegro: Infrastructure Andrija Lompar, Montenegro’s Minister of Maritime Affairs, Transportation and Telecommunication discusses the country’s outstanding investment potential as ambitious infrastructure projects get under way.

long-term foreign contractor for the maintenance of our rail infrastructure in partnership with the existing company. We will privatise all cargo operations and are offering concessions for railway stations. The Port of Bar can be divided into eight divisions, all of which will be privatised. Bar Marina is one of these eight, and we are looking for a long-term concession partner for it.

Andrija Lompar, Montenegro’s Minister of Maritime Affairs, Transportation and Telecommunication

ET: What are some of the current projects in the transport and telecommunications sectors? A. Lompar: We are in the second phase of the tendering procedure for a concession for highway construction; the tender has closed January 15. There are currently six companies, both Montenegrin and foreign, bidding for this concession. Other projects include modernising existing roads. We aim to solve bottlenecks by building bypasses in the cities of Tivat and Niksic, and we plan to build new intersections all over the country. Another very important issue in the transport sector is the ongoing privatisation and restructuring of the Port of Bar, the national railroad, the international airport and Montenegro Airlines. We are separating the rail company into one for cargo and one for passenger service. We will have a tender early in 2009 to find a


Concerning Montenegro Airlines, we aim to find a strategic partner, most likely through issuing shares through an international tender. We will also offer various tenders in the maritime sector. In the telecommunications sector, we now have three major players and we welcome more competition. We already have T-Com from Germany, the Hungarian Magyar Telekom, and a Norwegian player, Telenor. ET: What are the budgets for these major infrastructure projects Montenegro is planning? A. Lompar: There are 38 concessions planned at the moment in road infrastructure. We aim to build 180 km of highways for a total investment of €1.5 billion. We are already in negotiations with potential investors, and we are also organising conferences, providing data and making contact with international funders like the World Bank and the European Bank for Reconstruction and Development (EBRD) concerning infrastructure projects. We anticipate €350 million in foreign direct investment in our


Transport & Infrastructure

Projects with Investment Appeal highway system over the next five years alone. Contracts worth €65 million have already been signed for our railway projects. We expect to earn around €10 million through the privatisation process. Concerning the Port of Bar, we expect a total investment of €60 million in concessions and infrastructure around the port. We expect an additional €20 million in investment in airlines. For the international airport, we are trying to determine whether to privatise it or choose another option, but we know that around €40 million in investments will be needed. Other airports could be attractive investment opportunities as well because of the growing tourism industry. A number of infrastructure projects, including ones to build new tunnels and bridges, have already been awarded to

multinationals like Alpina and Strabag. ET: What are your top priorities at the moment? A. Lompar: Our top priority is to modernise infrastructure in order to boost tourism development. The agriculture and mining sectors will also benefit from this. We believe road infrastructure modernisation is still the most important for Montenegro. In the maritime and telecom sectors, most of the investment is coming from the private sector. ET: What kind of strategic partnerships are you looking for? A. Lompar: We seek more strategic partners for railroads, ports, highways and airlines! We are

looking for financing as well as technology transfer and know-how. We need a technological jump-start with the help of international partners. We anticipate incredibly rapid development and activity in Montenegro as well as in Serbia and Bosnia, and we are focusing on infrastructure in order to support and benefit from this development. ET: What are you doing to attract international investors? A. Lompar: We have closed a deal with the World Bank for financing public private partnership (PPP) studies and economic and financial consultancies. The EBRD organised a road show in London recently to showcase opportunities in Montenegro, and we presented documents on the stability of the country to prove how sound and profitable projects could be here. ET: What is your personal message to potential investors and partners? A. Lompar: Montenegro offers both political and economic stability, and the least risk of any country in the region. We offer huge opportunities at the moment in transport, infrastructure, and the government supports the idea of public private partnerships, which it sees as the best way for Montenegro to modernise its infrastructure in the shortest period of time. All foreign investments in Montenegro are protected by a strong legal framework that meets EU standards. Investors can expect massive industrial and economic development in Montenegro over the coming years, and the opportunities here are very diverse. We welcome partners from Europe.



Transport & Infrastructure

Public-Private Partnerships Key to Transport Infrastructure Projects The EU is granting Montenegro around €131 million for upgrading the country’s transport infrastructure, and various key infrastructure projects offer outstanding potential for investors and suppliers.

Financial crisis will not halt infrastructure development Prime Minister Milo Djukanovic announced at a news conference in December that the global financial crisis will not halt Montenegro’s plan to make major investments in upgrading its infrastructure with the help of international investors. He added that Montenegro expects to finalise a tender in 2009 for the construction of a €2 billion motorway between the Port of Bar and Boljare on the Serbian border, despite the economic crisis. Montenegro has received a €39 million loan from the European Investment Bank to complete the project. Millenium Bridge Podgorica



Transport & Infrastructure

Aerodrome Podgorica

A ‘Bidders’ Conference on the Bar-Boljare Motorway Concession’ was held in Podgorica in November 2008 and attended by six key bidders: Aktor, Greece; Bouygues, France; HCH, Israel; Konstruktor, Croatia; Alpine/ Porr, Austria; and Strabag, Austria. The conference was opened by Prime Minister Djukanovic, who confirmed that the motorway is a clear priority for the government and will continue to enjoy its full support.

Bidding for new Bar-Boljare motorway postponed to April 2009 Montenegro’s portion of the new motorway, which will extend to Belgrade and beyond, will stretch over 170 km through mountainous terrain, requiring around 18 km of bridges and 32 km of tunnels. The Montenegrin Faculty of Civil Engineering is designing the motorway, which is to be financed through the public-private-partnership

(PPP) model, the strategy Montenegro aims to adopt for all its major infrastructure projects. The deadline for bidding on the tender for the new motorway has been postponed to April 2009. This motorway is one of Montenegro’s most important infrastructure projects, since it will link the country to Central Europe by forming part of a Bar-Belgrade-Budapest European corridor. It will also vastly improve road transport within Montenegro, since the current road link between the Montenegrin coast and Podgorica to northern Montenegro and Serbia is obsolete. Part of European route E65, it is insufficient to cope with growing tourism and transport traffic. Montenegro now has 7,368 km of roads, of which around 4,742 km are considered ‘modern’. Due to the rugged natural landscape, the road network needs constant improvement,

and rebuilding. The government has placed a particular priority on improving the north-south grid.

Upgrading entire transport infrastructure The ambitious motorway project is one of many targeted as priorities for Montenegro as it works to upgrade its transport infrastructure. Dr Andrija Lompar, Montenegro’s Minister for Maritime Affairs, Transportation and Telecommunications, defined the country’s transport goals at the Vienna Economic Forum in April 2008. In addition to the Bar-Boljare motorway, he cited the Adriatic-Ionian motorway, which will include around 100 km in Montenegro and will link Podgorica with the Albanian border. Constructing a bypass around Podgorica and new roadwork to eliminate traffic bottlenecks are other top priorities, according to the minister.



Transport & Infrastructure

Montenegro’s railway network, overseen by Railways of Montenegro, is also to be the target of significant investment, and the Minister singled out the reconstruction of the railway line connecting the Port of Bar with the Serbian border. The first stage of this project has already been completed thanks to a €15 million loan from the European Bank for Reconstruction and Development (EBRD). For the second stage, Montenegro is receiving €52 million in funding from the EBRD and from the European Agency for Reconstruction (EAR). The European Export Bank is providing €57 million in funding for another key railway project, the ongoing rehabilitation and electrification of the Podgorica-Niksic rail line. Montenegro has 250 km of railways, including Bar-Vrbnica, an electrified line stretching 168 km, and two lines that have not been electrified: Podgorica-Niksic, 57 km, and Podgorica-Albanian border, 25 km.

Port of Bar The Port of Bar, Montenegro’s main port for transport traffic is also to be the target of massive investment to upgrade services, attract private sector investment and make more efficient use of the port’s capacities and potential. Projects for the port include new motorway links between the port, Serbia and the Adriatic-Ionian motorway; the implementation of EU standards regarding maritime safety and security at the port; the implementation of new measures to protect the environment around the port; and new means to regulate and oversee the port’s traffic and operations. The government plans to sign a long-term concession agreement with a port operator. The Port of Bar already has a free zone that can serve as a convenient base for businesses.

Aerodromi Crna has made significant improvements at airports Concerning air transport, Montenegro operates two airports at Podgorica and Tivat, both operated by Montenegro Airports (Aerodromi Crna) since 2003. Milovan Durickovic, Director, explains that Aerodromi Crna has made significant improvements in the airports’ facilities and services thanks to support from the EBRD, and that Montenegro’s airports will handle around 1.1 million passengers this year, more than double the 2003 total. Thanks to Aerodromi’s management, Podgorica Airport won a prize for the best airport in its class in 2007. “We invested around €10 million in our airports in 2008,


and Podgorica will have a new terminal by May 2009,” Milovan Durickovic says, adding, “Montenegro’s transport sector overall has made significant improvements.” The government welcomes international partnerships in the airtransport sector.

Fiscal policy key to keeping projects on track To keep its economic growth on track, Montenegro must push forward in its infrastructure development programmes in spite of the challenges posed by the current global financial crisis. As the World Bank points out in its new Public Expenditure and Institutional Review for Montenegro (PEIR), thanks to Montenegro’s use of the euro rather than a national currency, fiscal policy is the only policy instrument that its government can use to address the country’s socio-economic development challenges. “Fiscal policy will have to play a double function,” says Jan-Peter Olters, World Bank Representative in Montenegro and task team leader for the report, “namely, to ensure continued macroeconomic stability and to create the fiscal space necessary for critical public investments in transport and energy infrastructure.” At a cabinet meeting in January 2009 chaired by Prime Minister Milo Djukanovic, the government of Montenegro adopted its “2009 Economic Policy”, whose main goal is to ensure continued economic growth over the year. The policy states, “Bearing in mind the specific circumstances of the global financial crisis and its impact on domestic economy, the government intends to focus its activities, first and foremost, on further strengthening the competitiveness of the economic system, as the basic prerequisite for attracting investment and sustaining the projected level of economic growth.” The economic policy document provides for specific measures aimed at launching planned infrastructure, tourism and energy projects; further reducing unemployment through support to small and medium businesses; strengthening the competitiveness of the economy; and further developing the north of Montenegro. In addition, the government adopted its “2009 Privatisation Plan”, defining privatisation methods in order to better promote competitiveness and stimulate foreign investment and entrepreneurship in all areas. The plan includes a list of companies to be privatised and the percentage of share capital due for privatisation over the year. Prospective investors can review the list and various opportunities in Montenegro on the web site of the Montenegrin Investment Promotion Agency (MIPA).


Transport & Infrastructure

Porto Montenegro

World’s Biggest Port of Call for Large Luxury Yachts Porto Montenegro aims to make Montenegro a top port of call for large luxury yachts. Oliver Corlette, Managing Director, explains, “There is a dearth of slips or berths in the Mediterranean capable of serving yachts over 25 meters in length. We are creating a place for them to go. This business will have a huge positive impact on the country.” As a marina operator, Porto Montenegro plans to jump start Montenegro’s nautical services sector and also provide tourism-related services to help position Montenegro as a nautical destination. The potential profits are considerable. Oliver Corlette says that luxury yachts costing €1 million per meter spend around 10% of their value every year in operating costs. Much of this can go into the local economy if the facilities and services are in place locally; a 50-meter yacht berthed in Porto Montenegro’s facility will spend €5 million per year in operating costs. “We will house around 150 yachts, so you can imagine the kind of effect it can have on the local economy,” he points out.

World’s largest luxury yacht marina The Porto Montenegro project will be one of the world’s largest luxury yacht marinas offering related amenities, including hotels, apartments, shops, ship repair services, golf courses and other sports facilities, and other exclusive services. “If we are successful here, we will create a nautical community which will take advantage of the rich history of Montenegro as well as Montenegro’s nautical skills,” Oliver Corlette says. More than 900 yachts over 30 meters in length are currently being built, and around 200 are expected to be completed yearly over the next few years. Yet most of the yacht facilities currently available in the Mediterranean were built for yachts up to 25 meters long. Porto Montenegro’s key investor, Peter Munk, head of mining company Barrick Gold, saw the gap in the market. “He recognised the need for bigger berths for the newer luxury yachts,” Oliver Corlette says.

Oliver Corlette, Managing Director

The first phase of Porto Montenegro will open in the summer of 2009, with two jetties and some support facilities. The second and third phases will be completed in 2010 and 2011 respectively. The first phase is designed as a prototype to show investors what Porto Montenegro will become. Oliver Corlette explains that the project has received strong support from the government. He concludes, “Porto Montenegro will help create a service culture here in Montenegro that will set the bar for the rest of the hotels and resorts in the region.”

Porto Montenegro Obala BB, 85320 Tivat - Montenegro Tel: +382 82 674 660 - Fax: +382 82 674 656


• World-Class Telecom Infrastructure Employs Advanced Technologies


“Nowadays the telecommunications sector in Montenegro is well developed, and is widely regarded as generator of economic development on a macroeconomic level.” Zoran Sekulic, Director AGENTEL



World-Class Telecom Infrastructure Employs Advanced Technologies Montenegro has placed a high priority on developing a world-class, competitive telecommunications infrastructure to support the country’s continued economic growth.

Since 2000, Montenegro has made significant progress in liberalising and modernising its telecommunications sector. It has implemented a modern telecom infrastructure that includes a digital circuit switched telephone network and a national fibre optic transmission network, and it has installed a high-capacity, packet switched MPLS2 based network.

AGENTEL oversees market Montenegro was the first country in former Yugoslavia to establish a regulatory agency for its telecommunications market. The Agency for Telecommunications (AGENTEL) has been in operation since 2001 when it was launched as part of the provisions of Montenegro’s telecom law established in 2000. AGENTEL has set up a sound, reliable




regulatory and legal framework for the country’s telecom sector, and foreign investors in telecom will benefit from a well-regulated investment climate with significant growth potential. Zoran Sekulic, Director of AGENTEL, explains that his mandate is to help secure foreign investment in Montenegro’s telecommunications sector and to bring the sector up to global standards. He says, “These goals have been achieved. Nowadays the telecommunications sector in Montenegro is well developed, and is widely regarded as generator of economic development on a macroeconomic level, facilitating the development of other sectors.” According to AGENTEL, in 2007 Montenegro had 176,289 fixed line subscribers, 87.39% of them residential customers; this represented a growth of 4.79% in the number of fixed subscriber lines since 2006. ADSL connections in 2007 totalled 14,428, double the 2006 total. Internet penetration grew by 7.6% in 2007 alone to reach over 30%, a sharp increase over the 2.5% recorded in 2001 and more than the South-Eastern Europe average, but still below the EU average, offering room for growth.

Mobile services penetration beats EU average Mobile telephony has been the fastest growing segment of Montenegro’s telecommunications sector. With a 168.6% mobile telephony penetration rate at the end of 2007 (over 1 million users), Montenegro has the highest mobile penetration in the region (where the average is 82.9%) and has even higher penetration than the EU average of 114.2%, according to AGENTEL. Mobile penetration grew by more than 20% in 2007 alone. Montenegro’s mobile market now includes three services providers: ProMonte, launched in 1996 in partnership between Montenegro PTT and European Telecom Luxembourg and acquired by the Telenor Group in 2004; T-Mobile Montenegro, owned by Crnogorski Telekom; and M-Tel, a joint venture between Telekom Srbija (Serbia) and Ogalar BV (Denmark) that was launched in 2007.

Increased competition in 2007 AGENTEL implemented significant advances and increased competition to the local telecom market in 2007. AGENTEL issued licenses to four providers of fixed wireless telephony and Internet services, introducing competition in the fixed telephony market for the first time. The licenses were granted to m:tel, BroadBand Montenegro, T-Mobile and ProMonte, all of which will apply WiMAX technology. AGENTEL also granted licenses to provide third-generation (3G) services to T-Mobile, ProMonte and m:tel.


In addition, AGENTEL issued licenses for cable distribution to BroadBand Montenegro (WiMAX) and to PTT Inženjering, which uses the existing cable network. Also in 2007, AGENTEL granted five licenses for voice transmission over networks based on the Internet protocol (VoIP). “This facility enabled users in Montenegro to make international calls at far more favourable prices. AGENTEL played a proactive role in the introduction of competition and new operators,” Zoran Sekulic points out.

Privatisation key to telecom development strategy Privatisation has been key to Montenegro’s telecom development strategy. The public telecom company, Telecom Montenegro, was created from the separation of the state-owned PTT Montenegro, which provided postal, telegraphic, and telecommunication services; Telecom Montenegro took over from PTT Montenegro all telecom activities. In 2005, Magyar Telekom, a subsidiary of Deutsche Telekom, acquired 76.53% of Telecom Montenegro, and re-branded the company into Crnogorski Telekom in 2006. Crnogorski Telekom was Montenegro’s only fixed line services provider until 2007. Crnogorski Telekom has established international partnerships with Albtelecom (Albania), BH Telecom (Bosnia and Herzegovina), Belgacom (Belgium), T-Croatian Telecom (Croatia), Macedonian Telecom, T-Systems (Germany), OTE (Greece), Telecom Italia Sparkle (Italy), Telekom Austria, Telecom Slovenia and Telekom Srbija (Serbia) to provide efficient international service. Crnogorski Telecom also has a number of subsidiaries, including T-Com and T-Com Internet (Montenegro’s first Internet Services Provider, which began offering service in 2005), Extra TV, MIPNet (the Montenegrin IP network, realised in partnership with Cisco Systems), T-Mobile, and Montenegro Card, a telephone dialling card operation. According to the terms of its contract, Magyar Telecom must invest €67.3 million in Crnogorski Telekom between 2005 and 2010, of which €26.7 million must be in fixed telecom services and €38.8 million in mobile services.

New undersea cable in the works The Montenegrin government plans continued investment in its telecom infrastructure, including support for a project to build and install a €700 million undersea cable connecting Montenegro and Italy that is set to begin construction later this year. The telecom sector continues to offer strong investment potential.




Newest Telecom Operator Offers Advanced Network and Added Value m:tel began offering services in the Montenegro market in 2007 and already has 270,000 pre-paid and 50,000 post-paid subscribers for its 2G GSM and 3G UMTS services, and 6,000 subscribers for its WiMAX service. M-Tel is very popular among corporate clients, which make up around half of its post-paid subscriber list. “We aim to earn a 30% to 35% market share,” says Zlatko Trhulj, CEO. He adds that the young company is owned 51% by Telekom Serbia and 49% by Delta Group, the prominent Serbian holding company. “We are particularly attractive to corporate subscribers because of our synergy with companies in Serbia as well as in Bosnia, where Telekom Serbia is also active. It’s easier for customers to use one network in dealing with all three countries,” he explains.

Competitive edge Defining m:tel’s competitive edge, Zlatko Trhulj cites the company’s strong synergy with Telekom Serbia, its very advanced third-generation network that allows customers to benefit from super fast connection speeds of up to 7.2 megabits, and its state-of-the-art WiMAX network. Added value through convergence is another of m:tel’s strong selling points. As Zlatko Trhulj explains,

m:tel’s goal is to become a leading telecom services provider not only in Montenegro but throughout the region, and to serve as an ambassador for Montenegro. Its local network already matches its competitors in size and reach, and m:tel has established roaming contracts with 60 providers in Europe, the US, China and Eastern Asia.

Zlatko Trhulj, CEO

m:tel, an attractive choice for investors as well as customers, is concentrating on differentiating itself through its services. Zlatko Trhulj explains, “Since the launch of the network we have an electronic recharge system for our pre-paid subscribers, so that they can recharge from 1-50; our competitors are still using vouchers. We have also developed a very good WAP portal, called Mondo. m-tel is all about quality of networks, quality of service and quality of prices.”

“Telekom Serbia wants to be the regional telecom leader and their strategy to achieve this goal is through convergent operators like m:tel.”

Strong corporate citizenship Committed to being a strong corporate citizen, m:tel sponsors Montenegro’s national water polo team, which won the European championship and was placed fourth in this year’s Olympic games, and the Podgorica basketball team Buducnost. It also makes a big effort to hire locals; only two of its more than 250 employees are not Montenegrin.

m:tel D.O.O. Kralja Nikole 27A 81000 Podgorica Montenegro




Telecom Agency Promoting Sector’s Liberalisation Montenegro’s Agency for Telecommunications (AGENTEL), founded in 2000, is making sure that Montenegro’s telecom sector develops according to world-class standards. The agency serves as the country’s regulator for the telecommunications sector. Zoran Sekulic, Director, explains that AGENTEL works closely with Montenegro’s government, telecom operators and the Ministry of Telecommunications and Transport. He says, “The government determines strategies for the telecom sector’s development as well as frequencies and fees, while the Ministry of Telecommunications and Transport proposes policies to the government and represents Montenegro abroad. AGENTEL is responsible for encouraging competition, issuing licenses for telecom activities, promoting investments in telecom in Montenegro, solving any problems between telecom operators, and protecting consumers’ interests. AGENTEL has made great strides forward in liberalising Montenegro’s telecom sector and bringing new players to the market.”

Bringing new players to the local market Among the agency’s main accomplishments have been the creation and implementation of a country


dialling code for Montenegro in record time and the successful privatisation of Telecom Montenegro. AGENTEL’s role in this process included preparing a study on implementing third-generation networks and issuing tenders during 2007, which resulted in licenses for two existing operators and a third license to a new operator to provide second-generation and third-generation services. “Thanks to excellent management by the agency, various measures have been taken concerning fair tariffs, people who lost their jobs



through privatisation were given chances to work in new companies, and opportunities for new investment in Montenegro’s telecom sector have been increased significantly,” Zoran Sekulic points out. In 2007, AGENTEL issued licenses for five providers of wireless Internet services.

Mobile penetration now 200% AGENTEL has helped to stimulate the rapid growth of telecom services in Montenegro. The country’s mobile telephone penetration has reached 200%, for example, one of the highest rates in Europe, and Internet penetration is now 42%, a significant increase over the past. “Obviously, telecommunications in Montenegro continue to develop very quickly,” Zoran Sekulic says. AGENTEL continues to support new regulations that bring more market openness and international standards to Montenegro’s telecom sector. New regulations concerning new entries to the market have been established, according to Zoran Sekulic, who explains, “The new provision is that new telecom operators who want to invest in telecommunications in Montenegro just have to notify the agency of their intentions and the agency has to register them. Licenses will only be issued in cases concerning the use of limited resources, such as radio frequencies and numbering.” Recently AGENTEL took on new responsibilities thanks to a new Law on Electronic Communications through which the technical division of Montenegro’s highly respected Broadcasting Agency (BA) was merged with part of AGENTEL to create the Agency for Electronic Communications and Postal Activity, which will be under government supervision. The BA and AGENTEL have co-operated well in the past.

Outstanding investment potential Montenegro’s telecom sector represents outstanding investment potential, according to Zoran Sekulic. He says that licenses for wireless Internet services and for cable services, particularly for northern Montenegro, offer very interesting prospects for investors. He adds, “We have many valuable resources, and there has been a lot of interest in a tender process for a fourth mobile operator, but we will wait to begin the

tender procedure until we are certain that it will be a complete success.” The first international company to enter Montenegro’s telecom market was Promonte, which has been very satisfied with its results there. “Montenegro’s geographic position and a government willing to improve economic conditions and attract foreign investments, along with Montenegro’s political and security stability, give this country great potential for development. Promonte saw that Montenegro had a real potential, so we went for it,” comments Christopher Laska, Promonte’s CEO.

High potential opportunities in northern Montenegro Projects in northern Montenegro have particularly strong growth potential since the area is less developed than in the southern and central parts of the country, and network coverage remains limited. “The northern part of Montenegro has great prospects for tourism development, but so far this has not occurred. We need to upgrade telecommunications facilities and services in the north part of the country in order to spur on tourism growth there,” Zoran Sekulic says. AGENTEL is playing a key role in promoting Montenegro abroad and in attracting foreign investment. The agency partners with a number of international organisations, including the United States Agency for International Development (USAID) and European organisations, and it is currently sending some of its staff members to International Telecommunications Union (ITU) meetings in order to upgrade the agency’s organisation and activities. “We have also hosted conferences which were attended by the representatives of neighbouring countries and some EU countries. This year’s telecom conference was opened by Hamad Toure, the ITU’s general secretary. Through all these activities, we inform the international business community about the opportunities in Montenegro,” Zoran Sekulic explains.





Local Mobile Services Leader When Promonte launched GSM mobile operations in Montenegro in 1996, it became Montenegro’s first mobile services provider, and it remains the country’s leader in mobile telecom services. Today, Promonte is licensed for GSM, 3G and WiMax technologies and offers a wide range of services, including mobile voice, roaming, value added and mobile data services over GPRS, EGDE, 3G, HSPA,WiMax and WiFi networks. Promonte is part of the Norway based Telenor Group, which has 150 million mobile telephone subscribers through 12 operators across Europe and Asia. Promonte illustrates the potential of the Montenegro market. As CEO Christopher Laska explains, “Promonte is a very good example of a multinational company with a success story in Montenegro.”

Europe’s highest mobile telephone penetration Montenegro has implemented world-class regulations for the telecommunications sector and Montenegrins have shown they are eager to adopt new technologies. In fact, Montenegro now has Europe’s highest penetration rate for mobile telephones, and many locals have several telephones with different service providers. Internet penetration, however, is estimated at only 35% to 40%.


graduates, and strongly supports Montenegro’s economic development. It also sponsors a number of community service projects, including projects concerning the environment.

Investing in Montenegro

Christopher Laska, CEO

Promonte’s strategy for the Montenegro market is to retain its competitive edge in mobile services by focusing on providing outstanding customer services. “We will stay number one by taking the best care of our customers,” Christopher Laska says confidently.

Launch of mobile broadband services In addition, Promonte launched mobile broadband services in January 2008. “Mobile broadband Internet access is a very cheap and fast way for Montenegrin customers to get Internet access. What makes Promonte unique in the region is the accessibility of internet services through the highest number of different technologies. At the same time, and because the local market is small, Promonte tests different solutions so the whole Telenor Group can benefit,” Christopher Laska explains. Promonte employs less than 300 people, half of them university

While the Montenegro market is small, it has excellent growth potential as the country works toward EU membership, according to Chirstopher Laska. He says, “Montenegro is a good starting point for expanding throughout the Balkans. There are a lot of business and investment opportunities here, particularly within the tourism sector, especially inland attractions,” he points out. Christopher Laska urges investors to explore opportunities in Montenegro. “My personal message is that Montenegro is a small but fantastic country that offers a lot of potential.”

Promonte GSM Bulevar Dzordza Vasingtona 83 81000 Podgorica Montenegro Tel: + 382 20 23 50 00 Fax: + 382 20 23 50 35 E -mail: Call center: +382 69 9898

• Tourism Master Plan Focuses on Quality, Not Mass Market Quantity • Tourism Revenues and FDI Rising


“Montenegro has great potential for the attraction of new investments, not only on the coast, but also in the central and northern parts of the country.” Predrag Nenezi, Minister of Tourism



Tourism Master Plan Focuses on Quality, Not Mass Market Quantity Pedrag Nenezic, Minister of Tourism and the Environment for the past seven years, discusses Montenegro’s tourism development strategies.

Pedrag Nenezic, Minister of Tourism and the Environment

ET: What is the role of the Ministry of Tourism and Environment in Montenegro’s economy? P. Nenezic: We oversee the tourism sector and are mandated to develop Montenegro’s tourism policies, strategies, action plans and the institutional framework related to tourism and ecology. We also supervise several institutions such as meteorological institutes and Montenegro’s national parks, of which we now have five. As you know Montenegro has a plan to join the EU, so we are very busy with adjusting our legal and institutional framework to meet EU standards. We are also working to upgrade local tourism infrastructure. ET: How is the ministry working with the private sector?


P. Nenezic: We think of the private sector as our partner. We need to work together but also need to be critical towards each other. There are many serious private sector players already active in Montenegro’s tourism sector, and many others waiting to come here, in spite of the global financial crisis. ET: What does the ministry’s master plan for tourism focus on? P. Nenezic: The master plan for tourism aims to position Montenegro as a high quality destination. In 2008 we updated our 2001 plan to further emphasize making Montenegro an upscale destination with a diversity of tourism products rather than a mass market destination. The plan also includes a focus on making Montenegro a year-round destination.



ET: What are some of the major tourism projects foreign investors have launched here? P. Nenezic: The most prestigious name is probably Aman resorts, which opened its first property in Montenegro in December 2008. A resort on the island of Sveti Stefan will open in the winter of 2009. Another top foreign investor is Peter Munk, a businessman from Canada, who is working with us to develop the Port of Montenegro, which is designed to be the main Mediterranean port for large luxury yachts. We have also confirmed that a Kandinsky resort will open in the Budvanska Riviera region, with construction beginning this year. We are currently negotiating with Egypt’s Orascom, and if everything goes well, they will begin construction of new hotels here in 2009. They plan around eight hotels, 750 villas, a downtown marina, a golf course, and more. The leading international brand names in the tourism sector are coming to Montenegro, which is good. Our current goal is not just to attract investors but to attract the right investors and to properly manage the country’s tourism development. ET: What are the advantages for investors in Montenegro’s tourism sector? P. Nenezic: Montenegro is blessed with beautiful unspoiled nature, in the north as well in the south. One of the ministry’s goals is to develop Montenegro’s mountainous region. In the Durmitor area alone, we have 20 peaks of 2,000 meters and over 20 lakes. Our national parks cover 20% of the country’s land area and are also helping to put Montenegro on the international tourism map. In northern Montenegro we already have a beautiful resort, Bianca in Kolasin, and now we are promoting hiking and biking on 6,000 km of trails.

heritage. If we succeed in this, which I am very sure we will, Montenegro is going to be an exceptional tourism destination. ET: What is the Ministry doing to help protect Montenegro’s environment while still fostering tourism development? P. Nenezic: The only Mediterranean country we can compare Montenegro to in terms of beauty is Lebanon, not in the way it has been developed but in its pure natural beauty, and we are determined to preserve this natural heritage. On the one hand we are trying to liberalise the process of planning and issuing licenses for tourism development, but on the other hand we have implemented environmental protection laws. Every new project needs to meet stringent environmental criteria. Montenegro has signed all the important United Nations conventions on the environment, and we have signed the Barcelona convention, which includes four protocols controlling coastline development. We also insist on strict environmentally friendly technologies and communal structures. Tourists are increasingly demanding environmentally sensitive tourism facilities and services. The world has a huge number of affluent tourists who want to stay in luxurious hotels which are in a preserved environment. Montenegro aims to be an ideal destination for such travellers.

ET: How many visitors does Montenegro attract per year? P. Nenezic: We welcome 1.2 million tourists per year, which is twice the country’s population. This includes more than 8 million of overnight stays. Our main goal, though, is to extend the tourism season and to attract the right kind of tourists. Our vision is that by 2020 Montenegro will be a fully developed tourism country which is socially and economically sustainable and which attracts tourists all year around. Our vision is also to preserve local flavour, the soul of this country as well as its nature and




Tourism Revenues and FDI Rising Montenegro’s exceptional tourism attractions are becoming better known. The country attracted 1.3 million visitors in 2007, compared to 555,000 in 2001, and revenues from tourism rose from €86 million in 2001 to €500 million in the first 10 months of 2008, according to Minister of Tourism and Environmental Protection Predrag Nenezic. The World Tourism Organisation announced in 2008 that it expected tourism to Montenegro to grow by over 8% per year over the next eight years. Tourism projects in Montenegro, including a recent one to create a top Mediterranean yacht port, have attracted significant interest from international investors. In November 2008, Montenegro’s central bank reported that direct foreign investment in Montenegro’s tourism and infrastructure since 2001 totalled almost €3 billion. In fact, investment inflows have been so strong in the tourism sector that the government has adopted an ambitious tourism strategy: Montenegro aims to be an upscale tourism destination. Its tourism development will be based on providing facilities and services which will satisfy a discerning and demanding international clientele and which will also be sustainable economically, socially and environmentally.

Exceptional attractions Montenegro is well endowed with the potential to achieve this goal. Although a small country, it has very varied and dramatic landscapes, including rugged mountains, unpolluted rivers, the biggest lake in the Balkans, and one of the most beautiful and well preserved sea coasts in Europe, as well as historic monuments, a vibrant cultural life, and friendly people. Given these charms, it’s no surprise that Montenegro topped the list of ‘Travel + Leisure magazine’s upand-coming destinations for 2006’. The magazine recommends Montenegro for its “untouched white sands and time-capsule medieval villages.” Major hotel groups have been investing in creating new hotels and resorts or upgrading existing properties in


Montenegro. Most of these projects focus on the coast but some investors are targeting mountain areas where ski facilities are being constructed. As Minister of Tourism Predrag Nenezi explains, “Montenegro has great potential for the attraction of new investments, not only on the coast, but also in the central and northern parts of the country.” In fact, the minister announced in January 2009 that Montenegro expects its tourism revenues for this year’s winter season to rise to around €26 million, a 12% increase over last year. On-going investment in infrastructure will make it even easier to visit Montenegro, and the tourism sector continues to offer significant potential.

The European Times - Montenegro  

The European Times is an independent media agency that specializes in in-depth promotional reports on different countries and regions worldw...

The European Times - Montenegro  

The European Times is an independent media agency that specializes in in-depth promotional reports on different countries and regions worldw...