MBO Interview with Mr. Petar Ivanović, CEO of the Montenegrin Investment Promotion Agency MBO: Can you explain to our readers what MIPA is and what its role is? The Montenegrin Investment Promotion Agency - MIPA is a national agency that promotes foreign investment and facilitates economic development in Montenegro. It was set up in 2005 and serves as a platform for marketing foreign direct investment opportunities on behalf of the Montenegrin government. MIPA’s mission is to create partnerships with various stakeholders: foreign and domestic investors, the public and private sectors, international organizations and private individuals. Ultimately, through economic development, MIPA aims to improve the quality of life for all Montenegrin citizens.
Prof. dr Petar Ivanović, CEO of the Montenegrin Investment Promotion Agency (MIPA) Short biography: Prof. dr Petar Ivanović is a CEO of the Montenegrin Investment Promotion Agency and the professor at private university UDG. During 2009-10 he worked as the Chief Economic Adviser to the Prime Minister of Montenegro. Up-to-date he managed more than 40 international projects, including those in Afghanistan and on Kosovo, and over 100 surveys and projects in Montenegro. He participated at over 80 international conferences and at majority of them presented papers or delivered speeches. He owns a certificate to trade futures. Ivanović is honorary citizen of the Indianapolis, Indiana and member of the Mont Pelerin Society and the Philadelphia Society. He is on the List of Experts of The Heritage Foundation. He has published two books, a textbook and more than hundred economic papers. In the period 2005-09 he served as the president of Montenegrin Tennis Association.
MBO: What are MIPA’s plans in 2011? As always, to do what is necessary to attract as many foreign investors as possible, and to promote the country as the most competitive investment destination.
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MIPA has a variety of roles. It works on presenting Montenegro’s specific industrial and other concrete advantages to investors. It also conducts promotional activities aimed at target markets, and generally tries to improving the country’s image. Within this field, it coordinates and implements strategies designed to attract foreign investment, and finetunes individual strategies for certain industries. MIPA also provides professional services to foreign investors and helps to develop public-private partnerships. Finally, it supports initiatives aimed at developing investment, tries to stimulate green-field opportunities and works on increasing Montenegro’s competitiveness as an investment destination.
MBO: There are many investment promotion agencies throughout the world. Is MIPA different in any way? You are right; there are more than 10,000 economic development agencies in the world today, all competing for the same projects. Almost 200 countries are currently trying to attract FDIs. However, there are still only a limited number of productive, strategic and visionary investments. MIPA is trying to attract the attention of investors for such projects in Montenegro. At the same time, Montenegro is rapidly changing and is fast becoming the business platform of the Western Balkans. It has many projects that are under way, a record of consistent and strong economic development, its currency is the euro, it boasts competitive labor costs, has close proximity and access to the south east European market and offers emerging private universities and lifestyle advantages. Altogether, Montenegro is becoming a new business and living destination. I believe that MIPA is unique as it represents a good mixture of entrepreneurial approach, initiative and excellent communication along with a business mindset and work ethic that is easily understood by foreign investors. MIPA’s board also has strong support from the highest government officials including the prime minister and other key ministers.
MBO: Do you believe that you are on the right track and what are the main obstacles to further increasing FDI in Montenegro? The only way to see that we are doing our job well is to analyze the results that have been achieved. Since MIPA was established, foreign direct investment in Montenegro has grown each year, as have the number of registered foreign companies. The latter is very important, as typically, in countries in transition, large FDIs are concentrated in just a few companies. More and more foreign investors are cooperating with MIPA through the ‘After Care Program’, which shows that investors are not abandoned and that long-term cooperation is crucial for both sides. Also, present investors often operate as a bridge to new ones, and their opinions matter. Therefore, I would say that we are on the right track. However, we should always target higher goals. As for obstacles, we have to understand that every country in transition is not only a challenge for development, but also an opportunity for investors. It is all about the ratio between the risk and the reward. As for the obstacles that exist in Montenegro, they include issues such as labor law, the size of the market, the need to further strengthen the rule of law and administrative procedures. However, these obstacles are smaller in Montenegro than in neighboring countries. On the other hand, Montenegro already uses the euro as its currency, has a flat rate tax system with the lowest rates in the region (both corporate and personal income tax are 9%), treats foreigners as nationals, allow the repatriation of profit and most importantly offers a lot of business opportunities. As we continue, step by step, to work on removing the existing barriers, investors can focus on the opportunities that are available. Further proof that we are on the right track came just a few days ago when Montenegro was granted long-term Bb stable rating by Moody.
April 2011
MBO: What are the areas and industries that are of greatest interest to foreign investors? Recently, the greatest interest in Montenegro is as a hub for regional business. Stability and safety, the openness of our economy, access to regional markets, free trade and special trade agreements, such as the one with the Russian Federation, low inflation and the euro are attractive incentives for anyone thinking about the Western Balkans or South East Europe as a location for business. As for specific sectors, there is interest in the areas of energy, finance and insurance, tourism, the service industry, the development of infrastructure. Most recently interest has been shown in the areas of industry, construction and trade.
MBO: MIPA was one of the organizers of the recent US-Balkan Business Summit in Baltimore in the USA. What was the main idea behind the organization of this summit? Its main goal was to present the Western Balkans as a region that is large enough to attract big US firms. The importance of this event was that it showed that Western Balkan countries can work together. The presence of two presidents and a number of high governmental officials sent a clear message to any US investors that might be interested in the region as a whole that it is ready for another wave of economic development, and that the political obstacles that existed in the past no longer exist. It is time for economic revitalization. Additionally, this event also showed that there are some Western Balkan companies that are big enough to be interested in the US market for export. It was an important first step, but many more still need to be made in the future.
MBO: Do you have a promotional plan for the rest of the year? We are trying to maximize the small funds we posses to promote investment as much as possible. As well as attending MIPIM in Cannes (the largest real estate fair in the World) and the Business Summit in Baltimore, MIPA was present at several events throughout the region: the Brown Forum in Dubrovnik, the 2nd International Business Forum in Sarajevo and various other business events in Zagreb and Ljubljana. Together with the Ministry of Sustainable Development, we will make a presentation about investment opportunities in Milan in June, and in Munich in October. We will also make presentations in Paris in May and in Hong Kong in November
with the Ministry of Economy. It is very likely that, supported by interested investors and partner organizations, MIPA will also manage to conduct business forums in Rome, London, Moscow and Madrid. With such diversification we are trying to show how open we are to attract investors from different part of the globe, which is crucial for further economic development. Although forums and events are very important, they are not the only promotional tools. Publications and web sites are also very important. Therefore, MIPA will update all of its publications and will also prepare new ones. It will also further extend its web site which has, particularly over recent months, recorded a significant growth in visitors.
MBO: Recently MIPA organized a meeting between a group of twenty new foreign investors and the prime minister of Montenegro. How would you evaluate success of this meeting? The fact that there was a group of twenty new investors who were all interested in completely new projects in Montenegro is the best example of interest that we can give. It also reflects very positively on MIPA’s capacities. The meeting was not formal, but was very focused and pragmatic. For example, US Bechtel, supported by JP Morgan, the US EXIM Bank and OPIC, clearly presented its interest in developing the first highway in Montenegro. Marsh, the world’s leading insurance broker, is interested in expanding its activities to Montenegro. The Spanish company Fersa is ready to invest in the first wind farm, while another Spanish company, Assignia, is ready to invest in infrastructure development, particularly railroad reconstruction. Martifer Solar from Portugal is interested in investing in the first solar plant, while Eco Oil is interested in setting up a company that will ensure the permanent cleanliness of Boka Bay, which is under UNESCO protection. The NBGI Private Equity Fund is ready to support medium size projects in Montenegro, and Engel and Volkers are looking for partners in the area of real estate development. Turkish Global Investment expressed interest in the privatization of certain port facilities, while the French company Segemcom has already decided to open a representative office in Montenegro. This indeed is MIPA’s job: to bring investors to Montenegro and to put them in contact with the relevant governmental institutions that have a mandate to make decisions about such projects. It would be shame to lose any of those opportunities.
MBO: You mentioned a highway. Bearing in mind the strong impact of such a project on the Montenegrin economy, do you believe that its construction will start this year? MIPA doesn’t have a role in deciding who will be awarded the government contract. Such a role lies in the hands of the Ministry of Transport. I can only note that, for several years, we have talked about two different models for infrastructure development. The Ministry advocates a PPP model, but MIPA advocates stage-by-stage development. We are not such a big country and the whole highway system in Montenegro is only around 350 km in total. That is less, for example, than the distance between Zagreb and Split. It is pity that we have wasted over four years waiting for the completion of a PPP tender which has achieved no results. Meanwhile, we could at least have completed part of the highway.
MBO: Recently, the parliament of Montenegro adopted a new Law on foreign investment. What are the main amendments that have been made? The new law further defines the national treatment that foreign companies in Montenegro will receive, except in two areas: (a) the production and trade of military equipment and (b) development of cross border zones. MIPA is recognized as key institution for the promotion of investment, and for encouraging cooperation between investors, the state and local authorities. MIPA is authorized to generate statistics on foreign investment and investors, to collect any necessary data and to provide various analyses in the area of FDI, to prepare investment promotion strategies and to modify promotional plans, etc. In addition, beside its board, MIPA now has a council which is headed by the prime minister. This is in charge of ensuring the harmonization of various country strategies.
Jovana Tomasevica 2A, 81000 Podgorica, Montenegro Phone/fax: (+382 20) 203-141, 203-140 Web: www.mipa.co.me e-mail: info@mipa.co.me
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