Business Environment Macroeconomic Outlook Capital Market Banking Sector Privatization and Investments Economic Freedom Business News In the Spotlight Coming up... Graphic 17. Business indicator 14.7
15
12.1
10
7.3
5 0 -5 -10
-3
-4.2
-8.3
-6.7
2011
2012
-11.3
-15
2009
2010 Current situation
Expectations
Graphic 18. Export indicator 30
26.5
24.1
20
12.8
10 0 -10 -13.3
-20 -30
-24.4 2009
-4.5
-3.9
2011
2012
-12.4 2010
Current situation
Expectations
Graphic 19. Employment indicator 4.9
6 4
2.8 0.9
2 0 -2 -4 -5.2
-6
2009
2010
2011
2012
Expectations
Source: Business Climate Survey in the Small and Medium-Sized Enterprise Sector in Montenegro
Business climate index
In the Spotlight Business Climate Survey in the Small and Medium-Sized Enterprise Sector in Montenegro A business climate survey has been carried out in the small and medium-sized enterprise sector as part of the Economic Development and Employment Programme implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, in cooperation with the Ministry of Economy and the Small and Medium-sized Enterprises Development Directorate (SMEDD). The Business Climate Survey started in 2009; since then it has been repeated on an annual basis. The Centre for Entrepreneurship and Economic Development (CEED) has seen in charge of the implementation of the survey. The purpose of the survey is to assess the current situation of small and medium-sized enterprises in Montenegro. Each year a specific topic is chosen for discussion. For the survey this year, corporate social responsibility was chosen as the topic on which to focus discussions. In previous years, topics have included women's entrepreneurship and innovation. The survey included a total of 472 companies. According to the existing structure of business entities in Montenegro, the sample was dominated by micro enterprises, mostly set up as limited liability companies, and the most practised activity was trade. The environment in which small and medium-sized enterprises operate has seen changing over time, and the current policy of the Montenegrin government is strongly oriented towards the improvement of the overall business environment. In addition to national policy, there are numerous NGO-sector initiatives, especially initiatives set up by business associations which aim to contribute to the improvement of the business climate. The main aim, however, remains to clearly identify issues that create limitations for businesses. Despite significant efforts to improve the business climate, the SME sector, for the fourth year in a row, stresses that business development has been significantly restrained by various administrative and regulative measures. Most of the restrictions occur at a national-level and include factors such as municipal taxes and levies and excessively long administrative procedures. The consequences of such barriers are felt more intensely during periods of crisis. The aforementioned list of barriers can be expanded by adding market barriers such as unfair competition, high labour costs and difficulty in the collection of receivables as a result of economic insolvency, which is of particular importance due to the crisis. The results of this year’s survey show that the Montenegrin economy has suffered from the stillpresent effects of the global economic crisis. This year’s survey showed that 93% of the SMEs surveyed had, to a greater or lesser extent, suffered from the consequences of the economic crisis. This is the highest percentage recorded so far in this research. The consequences of the crisis have impacted on the main business indicators, and in comparison with the year before the figures are as follows: • 57.2% of companies registered a monthly decline in revenue, • 54.6% of companies registered a decline in profit margins, • 50.6% of companies faced a reduction in the number of customers/clients. Despite fighting insolvency, very few companies (between one quarter and one fifth, depending on the year) applied for a loan; medium-sized companies were the most active in this domain. Also, very few companies (between one fifth and one sixth, depending on the year) established some form of cooperation with business support institutions; the organizations that were contacted most frequently were the Chamber of Commerce, the Employment Agency of Montenegro and the Union of Employers of Montenegro. Every fourth company that was interviewed was a member of some organization, most often the Employer’s Federation and Montenegro Business Alliance.
Companies’ perception of the business climate has varied from year to year. On the whole it has maintained a negative trend, although expectations regarding the future are optimistic. The general business situation as a whole achieved the most negative vote last year (-8.3 indicator); in the case of export businesses, however, the most problematic situation was recorded in 2009 (-24.4 indicator). It can be concluded that the negative evaluation of the current situation has diminished (reduced negative business climate indicator) and that expectations are now much more moderate (7.3 in 2012 compared with 12.1 in 2011, and 12.8 concerning exports in 2012 compared with 26.5 in the previous year). Expectations regarding the future business situation were the most optimistic in 2010 (14.7 indicator). Exporters’ expectations in 2011 for the following year were the most optimistic (26.5% indicator). Expectations regarding employment have shown variations on a year to year basis; in 2009 expectations were pessimistic, but subsequent years showed a positive trend and reached a maximum indicator value in 2010 (4.9).
10