February 2012
Business Environment in Montenegro Prepared by: Mr. Darko Konjević, Montenegro Business Alliance (MBA) for doing business. One major change in the new law relates to the limitation of fixed term contracts, a restriction that was not applied according to the old Law. Fixed term contracts can, according to the new law, be signed and prolonged for a maximum period of 2 years. After this time they are no longer fixed. Other changes include the implementation of protection against mobbing, strategies for defining the practice and work of agencies that employ workers on a temporary basis, the definition of procedures regarding firing and hiring At the end of last year the Parliament of and also the clarification of the rights and Montenegro adopted several new laws and obligations of employers and employees etc. also introduced new legislation that will affect businesses in 2012. These include changes to For the first time in Montenegro rules on the following laws: the Law on Excise, the lobbying as an activity have been prescribed by law. The new Law on Lobbying will be Labor Law, the Law on Lobbying. implemented from the 1st of January 2012. Changes to the Law on Excise include the Lobbying is defined as an activity that is introduction of new excise goods as well carried out with the intention of influencing as increases to certain excises. In addition the authorities regarding the processes of to existing excise products, the new law adopting laws and other important documents. prescribes that coffee and carbonated water The law defines procedures for physical should also be added as new products. Excise persons and companies to become registered on coffee will be 20% and on carbonated water lobbyists as well as defining conditions for which has added sugar or other sweeteners, the implementation of entering successful applicants into the registry of the lobbyists. the tariff will be €10 per hectoliter. In 2011, Montenegrin business environment was characterized by the strong presence of the financial crisis; its effects were shown through a variety of problems including a lack of liquidity, low turnover, low access to capital etc. This has had a very negative effect on the economy, and has resulted in an increase in the number of companies with blocked accounts and an increase in the level of internal debt. The government predicts that Montenegro will have a growth in GDP of 0.5% in 2012.
Excise duties were also raised from €70 to €100 on mid-level alcoholic drinks and from €550 to €650 per hectoliter on pure alcohol. The excise on cigarettes was increased from €10 to €15. There was a minimal increase in excise on cigarettes from 100% to 110%. Excise on gas oil/petrol decreased from €370 to €350 per ton. It is estimated that the new excises tariffs will collect an additional €11 to €14 million in the state budget during 2012. On of the most disputed laws in Montenegro is the Labor Law. Since it was adopted in 2008 there have been a number of ideas regarding changes and amendments that should be made. There has been pressure from both sides, from employers and from employees, each defending his or her own view of the subject. The business view is that an employer should be free to hire and fire workers depending on their abilities and needs, in accordance with rights, and as stipulated by the law. From the employees’ point of view this has somehow been interpreted as a protection of existing jobs. The changes that were made to the law were an attempt to try to create a win-win situation. However, in the end businesses face the same barriers as they did previously and the labor market remains constrained
Total foreign trade in Montenegro during the period January-November 2011, according to preliminary data supplied by Monstat, was €2,072.2 million. This showed an increase of 14.8% in relation to the same period of last year. Montenegro exported goods to the value of €418 million, an increase of 38.9% when compared with last year. Imports were recorded as €1,659.2 million, showing a growth rate of 10% when compared with the same period of last year. Exports were 25.2% higher than total imports, which was 5,2% higher than last year. This is a sign that export activities in Montenegro are strengthening but we still do not have a great export structure. In the export structure, the main items were ferrous metals (€204.4 million) and iron and steel (€26 million). In the import structure the most highly represented goods were meat and meat products (€65.3 million) and cereals and cereal products (€52.8 million). The main trade partners were Hungary (€76.4 million), Serbia (€73.7 million) and Greece (€39.1 million).
Business Environment Macroeconomic Outlook Capital Market Banking Sector Privatization and Investments Economic Freedom Business News In the Spotlight Coming up... Business Statistics and Data Business Registration Statistics (Number of registered companies in Montenegro as of 1st of January 2012)
355
Joint Stock Company Limited Liability Company
25,526
Part of a Foreign Company
434
General Partnership
62
NGO
293
Limited Partnership
436
Entrepreneur
17,040
Institution
1,103
Other
110
Total
45,359
Tax Rates 17%, 7% and 0%
Value Added Tax Corporate profit tax
9%
Personal income tax
9%
Source: Commercial Court
Economy Statistics Selected indicators Population (625,082 in 2003)
2010
2011
625,266
Real GDP (billion)*
3.025
3.273
Real GDP growth
0.5%
2.5%
Inflation rate (average annual CPI) XII 2010** / 2011
0,7%
0,1%
Unemployment rate XII 2010 / 2011
12.13%
11.56 %
451
361,5
Net FDI (million) I-XI 2010 / 2011
* Estimates, Ministry of Finance Bulletin, October 2011 ** Base 2010 Official currency
Euro
Source: Ministry of Finance, Central Bank of Montenegro, Monstat, Montenegrin Investment Promotion Agency (MIPA), Employment Agency of Montenegro
3