MBO#42 by Ceed NVO

November 2012 / â&#x201E;&#x2013; 42

Business Environment WELCOME to the fortysecond edition of Montenegro Business Outlook. MBO is quarterly publication of pertinent economic indicators presenting a comprehensive view of Montenegro’s business environment. This publication is intended to serve international business people seeking investment opportunity in Montenegro. We welcome your comments.

Business Environment in Montenegro: Although the third quarter of 2012, from an economic standpoint, was rather quiet due to the fact that the general election was scheduled for mid-October, illiquidity remains a problem in the Montenegrin economy. In its recommendations, Central Bank stated that the government should consider adopting the principle of automatic bankruptcy for companies that fail to fulfill certain conditions Macroeconomic Outlook: The third quarter of 2012, at a macroeconomic level, was characterized by a slight reduction in economic activity: industrial production recorded a decline of 7.3% in August in comparison with the average level last year. In May 2011, the Montenegrin budget recorded a deficit of €3.26 million; public debt at end - June amounted to €1,620.4 million (50% of GDP). There were no major changes in the labor market. Salaries, without taxes and contributions, remained the same in August in comparison with the previous month. Unemployment was at a level of 12.48%. Banking Sector: From end-June to end-August 2012, the banking sector recorded an increase in total bank assets and deposits, and a decrease in total bank loans. During this period, the weighted average lending effective interest rate remained almost consistently at the same level. In addition, the weighted average deposit effective interest rate decreased slightly. The situation in the banking system, in terms of solvency and liquidity, was satisfactory. Privatization and Investment: Despite business barriers and the economic crisis, Montenegro still has a high inflow of investments for an economy of its size. It is expected that FDI will reach €450 million by the end of the year, according to an announcement made by the MIPA. Currently, one major privatization procedure is underway – the Simo Milosevic Institute, a health care centre, which is expected to be completed soon. However, a few other major investments are still pending. Economic Freedom- Doing Business: The World Bank has published its 10th Doing Business Report for 2013. The report includes a total of 185 economies, and includes two new economies, Barbados and Malta, which have been added since the last report. The World Bank Doing Business Report is one of the most comprehensive reports produced and is used by both the private sector and investors who are interested in investing in a country and by governments in order to assess what reforms need to be made to improve their ranking. MBO Interview: Jerome Philipeau, President and CEO of Vichy, a possible partner for the dr Simo Milošević institute

CEED CONSULTING Kralja Nikole 27a/4, Business Center “Čelebić” Podgorica, Montenegro Phone/Fax: +382 (0) 20 633 855 +382 (0) 20 620 611 E-mail: info@ceed-consulting.com www.ceed-consulting.com

Capital Markets: During the first 10 months of 2012, the Montenegrin capital market was characterized by negative trends. This was followed by a decrease in the volume of trade and also in the number of transactions when compared with the same period of 2011. This indicates that the capital market crisis is not yet over. The greatest turnover was recorded in the area of company shares, followed by bonds and investment funds. In the Spotlight: Decentralization in Montenegro: involving local selfgovernments in the financing of education EU Corner: Montenegro Progress Report 2012 We introduce: Global Entrepreneurship Week (GEW)

Business Environment in Montenegro Liquidity remains the problem

The third quarter of 2012, from an economic standpoint, was rather quiet due to the fact that the general election was scheduled for midOctober and because parliament didn’t work to its full potential. In that sense no significant regulations were adopted nor were any left pending, as it was expected that the new government and the new parliament would work on these issues once appointed. According to Monstat, due to the fact that the tourist season is important for the Montenegrin economy, it is a problem that it is so short. Despite this, the number of tourists increased in comparison with last year’s figures. During this period Montenegro worked on the negotiation process with the EU and opened several chapters. It is expected that all of the chapters should have been opened by the middle of 2013. Illiquidity remains a problem in the Montenegrin economy. According to data from the Central Bank, more than 2,100 companies have been blocked for more than 30 days, and there is an overall debt of more than €10,000. Central Bank started to publish these figures in July 2012. The Central Bank also proposed to the government, among other things, that it should consider increasing VAT by 2% (from 17% to 19%) as a temporary measure. Central Bank also proposed that the government should close the Aluminum Plant in Podgorica if there were no interested investors. The reasons for these proposals are that, according to Central Bank, the present level of debt cannot be serviced in 2013 with current budget income and without further debt. However, an increase in VAT would have a negative impact on the whole economy, including inflation,

the purchasing power of population, economic growth etc. The problem of illiquidity would escalate even further as investment levels, and especially foreign direct investment, would be directly affected by an increase in taxes. Montenegro has built an image as a country which offers attractive taxation levels and it should maintain that image in the future. Additionally, the Ministry of Finance stated that it had no plans to increase VAT in 2013.

In its recommendations, Central Bank stated that the government should consider adopting the principle of automatic bankruptcy for companies that fail to fulfill certain conditions. Central Bank stated that illiquidity problems have increased and that the number of company accounts that have been blocked is rising. At the moment there are more than 7,000 companies, comprising 2,400 workers, whose accounts have been blocked for more than 3 years, and have failed to find alternative ways of working. Central Bank has proposed the adoption of a law that would ensure automatic bankruptcy for companies that are blocked for more than 3 years. This would, according to Central Bank, contribute significantly to solving the problem of illiquidity. As a new government will be formed before the end of the year, there are some areas that need to be dealt with immediately. These include the problem of illiquidity which is crucial for the Montenegrin economy and which partially acts as the source of other problems including the grey economy, especially in the labor market. Additionally, reforms at a local authority level are necessary, in the area of taxes and fees paid by businesses, in order to create a good

business environment. Montenegrin administration is still slow and is not business-friendly; there is a lot of red tape that has to be removed in the near future. These are just a few small things that the new government will have to work on in order to get back on the road to recovery. Montenegro started the negotiation process to become a full member of the European Union on 29 June. This is expected to be a long process of adjustment regarding EU laws and regulations, and is also expected to be a painful process for companies in some sectors as competition will be much stronger in the future. In that sense it is important to be cautious when negotiating as there are already many examples of bad experiences in other countries’ These have occurred due to attempts to finish negotiations too quickly, and due to the implementation of new rules and regulations on an immediate rather than a gradual basis. This has had a negative impact on some companies and has caused them to go into bankruptcy. The private sector will monitor the whole process as its representatives are on the working groups that are responsible for negotiations; they will therefore make their colleagues aware of the consequences that can occur in such cases. ■ Number of registered companies in Montenegro as of 1 November 2012 Source: Commercial Court

Joint stock company Limited liability company Part of a foreign company

350 26,996 438

General partnership

NGO

295

Limited partnership

428

Entrepreneur

17,063

Institution

1,131

Other

113

Total

46,875

Tax rates Value added tax

17%, 7% and 0%

Corporate profit tax

Personal income tax

Economic Freedom

Macroeconomic Outlook

Economic Freedom - Doing Business 2013 The World Bank has published its 10th Doing Business Report for 2013. The report includes a total of 185 economies, and includes two new economies, Barbados and Malta, which have been added since the last report. The World Bank Doing Business Report is one of the most comprehensive reports produced and is used by both the private sector and investors who are interested in investing in a country and by governments in order to assess what reforms need to be made to improve their ranking. Some of main findings since the first report in 2003 are:1 • Over the last 10 years, 180 economies have implemented close to 2,000 business regulatory reforms, as measured by Doing Business. • Eastern Europe and Central Asia have improved the most, overtaking East Asia and the Pacific as the world’s second most businessfriendly region, according to Doing Business indicators. OECD high-income economies continue to offer the most business-friendly environment. • Business regulatory practices have slowly converged as economies with initially poor performance records have narrowed the gap with better performers. Among the 50 economies showing the greatest improvements since 2005, the largest segment—one third— is represented by countries in SubSaharan Africa. • Among the categories of business regulatory practices measured by Doing Business, there has been more convergence in those that relate to the complexity and cost of regulatory processes (business start-up, property registration, construction permitting, electric1

World Bank: Doing Business 2013

ity connections, tax payment and trade procedures) than in those that relate to the strength of legal institutions (contract enforcement, insolvency regimes, credit information, legal rights of borrowers and lenders and the protection of minority shareholders). • Two-thirds of the total number of reforms, almost 2,000, recorded by Doing Business focused on reducing the complexity and cost of regulatory processes. • A growing body of research has tracked the effects of simpler business regulations on a range of economic outcomes, such as faster job growth and an accelerated pace of new business creation. In this report Montenegro ranked 51st among 185 countries which represents an improvement of five places in comparison with the report last year. This report covers ten indicators that are ranked in order and compare countries on the basis of the ease of conducting business in them. In four out of ten indicators Montenegro improved its ranking. Improvement was seen in the following areas: obtaining credit (+4 places), paying taxes (+27 places), solving illiquidity (+8 places) and increasing electricity supplies (+2 places). Areas in which Montenegro fell included: starting up business (-11 places), registering property (-9 places), protecting investors (- 3 places) and enforcing contracts (-2 places). During the observed period, Montenegro officially recorded reforms in two areas: obtaining construction permits and obtaining credit. In the area of obtaining credit, Montenegro established a new credit registry. The data it pro-

vides is useful to credit guarantee institutions and also helps people whose data is recorded in the system and provides them with collateral for other credit obligations. Montenegro ranked overall in 4th position in the report in this area. Montenegro has made applying for construction permits less expensive by reducing the cost of pre- and post construction procedures. Montenegro improved its position by 27 places in the area of paying taxes. This was due reforms that had been undertaken also because of the new unified registration system that requires a smaller number of payments and has reduced the time duration of the entire tax procedure. Montenegro improved its position by 8 places in the area of solving illiquidity. This was mainly due to the fact that the time period required to close a business had been reduced from 2 years to 1.4 years. Montenegro fell by 11 places in the area of starting business despite the fact that it continued to carry out reforms in this area. This can be explained by the fact that most of the countries covered by the report focused their reforms in this area. This type of report shows decision makers the path that they should follow in order to be successful in carrying out reforms in the business environment. What actually matters is that the authorities implement reforms and that businesses rank them. It is less important that individual laws and regulations are adopted. During the forthcoming period Montenegro can expect to improve its position in this list, especially in areas in which it presently lags behind such as dealing with construction permits, enforcing contracts and registering property. The importance of this report is that competition is not restricted to neighboring countries but is with the whole world. In that sense it is important to be proactive and to keep up with reforms. We need to keep ahead of our competitors. ■

Macroeconomic Outlook Summary The third quarter of 2012, at a macroeconomic level, was characterized by a slight reduction in economic activity: industrial production recorded a decline of 7.3% in August in comparison with the average level last year. In May 2011, the Montenegrin budget recorded a deficit of €3.26 million; public debt at end - June amounted to €1,620.4 million (50% of GDP). There were no major changes in the labor market. Salaries, without taxes and contributions, remained the same in August in comparison with the previous month. Unemployment was at a level of 12.48%. *** According to an analysis prepared by the Ministry of Finance, the economy was still in deficit during the first half of the year. However, according to projections, it will reach an annual growth rate of 0.3%. The general situation in the real sector of the Montenegrin economy can be seen in the following basic indicators:

Real Sector Basic Sectors Industrial production: recorded a fall of 6.6% during the period January-August 2012 in comparison with the same period last year. During the observed period, major decreases in industrial output were recorded in the areas of mining and quarrying, and electricity production (23.3% and 14.2% respectively). The manufacturing industry only recorded a slight fall in activity (0.7%). Tourism: In August, 359,243 tourists came to Montenegro, of which 89.6% were foreigners (mostly from Serbian, Russia and Bosnia and Herzegovina). During the same month, 2,375,955 overnight stays were recorded. Budva, Herceg Novi and Bar hosted the highest number of visitors. During the period January-August the number of tourists increased by 3.8% in comparison with the same period

last year, while the number of realized nights increased by 6.1%. Construction: according to the most recent data, which refers to the second quarter of 2012, the total value of finished construction works was €60.62 million. This was 58.9% less than average last year. Anticipated new building work projects are expected to total €3.86 million, and other projects are expected to total €8.04 million.

Inflation The monthly inflation rate, measured by the Consumer Price Index (CPI), in August 2012 recorded an increase of 0.4%. The highest increases were recorded in the areas of residential water, gas and other fuels (3.2%) and transport (2.2%) due to increases in the prices of electricity, fuels and lubricants. The annual CPI inflation level in August 2012 amounted to 4% and was above the EU27 level of 2.7%.

Employment and Wages According to data from the Employment Agency of Montenegro, at the end of October, there were 28,966 unemployed persons (46.7% of which were women). Thus the unemployment rate was 12.48%. In August 2012, the gross average salary was €716; the average salary without taxes and contributions was €480. Higher salaries, without taxes and contributions, were recorded in the following sectors: electricity, gas steam and air conditioning (€882), finance and insurance (€859) and real estate activities (€851).

Public Finance Budget Current budget revenue in May 2012 amounted to €94.99 million, thus showing a decrease of 0.8% of its planned value. Within the revenue structure, tax revenue accounted for the main increase

(62.4%). This was followed by revenue from contributions (33.3%), other revenue (2.1%), duties (1.1%), fees (0.9%), and revenue from loan repayments and assets transferred from the previous year (0.2%). Budget expenditure totaled €98.25 million, thus showing an increase of €5.9 million in comparison with the level last year. At end - May, the budget showed a deficit of € 3.26 million. Public debt at end - June amounted to €1,620.4 million, thus representing half the level of GDP which is within the limits set by the Maastricht criteria.

International Economic Relations Foreign Direct Investments (FDI) During the period January-August 2012, net FDI inflow amounted to €222.1 million, thus showing 10.1% y-o-y decrease. Total FDI inflow amounted to € 301.1 million. Observing the FDI inflow structure, the largest influx was made on the basis of the sale of real estate and as a result of investment in local companies and banks (€151.5 and €47.5 million, respectively). Total FDI outflow amounted to €79 million. This comprised residents’ investments abroad (€42.3 million) and withdrawals from investments made by non-residents (€ 36.7 million).

External Trade During the period January-August 2012, total exports totaled €245,307.7 million, recording a decrease of 15.3% in comparison with the same period last year. Total imports totaled €1,238,381.9 million, thus recording an increase of 3.9%. Montenegro is the most importdependent country when compared with Serbia, Greece and Bosnia and Herzegovina (29.3%, 8.9 and 6.6% respectively). However, Montenegro’s most important export markets are Serbia and Croatia (21.7% and 26.3% respectively). ■ (Source: Central Bank of Montenegro, Monstat, Ministry of Finance, Employment Agency of Montenegro)

Banking Sector

Privatization and Investments

BANKING SECTOR Source: Bulletin of the Central Bank of Montenegro (July, August, September 2012).

Total Bank Assets and Liabilities From end-June to end-August 2012, total bank assets and liabilities totalled € 8,453.2 million, while the average monthly level was 2,817.7 million. Total bank assets and liabilities were recorded as € 2,839.0 million at end-August 2012, thus showing a decline on an annual level (2.9%). At end-June, end-July and end-August 2012, within the structure of total bank assets, loans recorded a decrease, while monetary assets and deposits with depository institutions recorded an increase (Graph 1). Total bank capital amounted to € 834.4 million from June to August 2012, while on an average monthly level it amounted to € 278.0 million. At endAugust, total bank capital amounted to € 267.0 million, thus recording a decline on an annual level (5.9%). Deposits Total deposits amounted to € 5,714.4 million from June to August 2012 and on a monthly level amounted to €1,904.8 million. At end-August, total deposits amounted to € 1,954.4 million. Observing data from August 2012 and comparing it with figures from August 2011, total deposits increased by 3.4%.

age about 50.8%) and deposits with a maturity period of up to 3 months (average about 22.7%). Deposits with maturity periods ranging from 1 to 3 years showed a decrease. Observed on a sector by sector basis, within the deposit structure, deposits made by natural persons remained dominant with a percentage share of about 56.8%.

Household Deposits Total household deposits amounted to € 3,246.4 million, and on a monthly level amounted to € 1,082.1 million. At end-August, total household deposits amounted to 1,108.3 million and recorded an increase of 2.0% on a monthly level and of 8.5% on an annual level. From end-June to end-August 2012, within the maturity structure of household deposits, time deposits were dominant and were recorded as representing 68.7%. However, time deposits recorded a slight decrease in comparison with earlier figures (Graph 1).

Loans Total loans granted by banks amounted to € 5,814.1 million, which, on a monthly basis represented € 1,938.0 million. At end-August, total loans amounted to € 1,905.6 million, and thus recorded a decrease of 5.1% less in comparison with the previous year. The loan-to-deposit ratio1 amounted to 1.10 at end-June 2012, 1.02 at endJuly and 0.98 at end-August 2012. When observing data from August 2012 and comparing it with data recorded in June 2012, it can be seen that the ratio between loans and deposits improved. In the structure of total loans disbursed, corporate and household loans were dominant (91.0%) during the period from June to August 2012; the remainder referred to banks, other financial institutions, public owned organizations, non-profitable organizations and others. Interest Rates From June to August 2012, the weighted average lending effective interest rate (lending interest rates) amounted to around 9.54%. The weighted average deposit effective interest rate (deposit interest rates) amounted to around 2.98% in the same period. ■

Graph 1. The maturity structure of household deposits, in %

Within the deposit maturity structure, time deposits recorded a decrease (around 60.0% of total deposits), while demand deposits recorded an increase (around 40.0% of total deposits). Within the structure of time deposits, the largest segment was made up of deposits with a maturity period ranging from 3 months to 1 year (aver-

Source: Bulletin of the Central Bank of Montenegro: July, August, September 2012. 1 This ratio represents the relationship between loans and deposits. In this case loans exceed deposits by 10% at end-June, by 2% at end-July and were 2% lower than deposits at end-August 2012.

Privatization and Investments Despite business barriers and the economic crisis, Montenegro still has a high inflow of investments for an economy of its size. It is expected that FDI will reach €450 million by the end of the year, according to an announcement made by the MIPA. Currently, one major privatization procedure is underway – the Simo Milosevic Institute, a health care centre, which is expected to be completed soon. However, a few other major investments are still pending.

Investments EIB Provides €49 Million in Loans and Grants for Montenegro The European Investment Bank (EIB) has signed 4 contracts in favor of the local economy in order to support the country in its path towards the European Union. The EIB will lend Montenegro €25 million to support the country’s small and medium-sized companies (SMEs) and €20 million for urgent flood relief and prevention. The bank will also provide an additional grant worth €600,000 as part of the Western Balkans Investment Framework for the reconstruction of the water supply system in Cetinje and another grant worth €3.5 million to realize plans for a wastewater treatment plant in Pljevlja. Dario Scannapieco, the EIB Vice-President responsible for the Western Balkans said, “Thanks to these operations we are able to continue supporting the country in the sector of small and medium enterprises and also in the reconstruction process after the floods. Moreover, I am really delighted about the two grants in the water sector, because technical assistance plays a crucial role in preparing projects of a high standard.”

US Invenergy Eyes 5-10-MW Solar Park in Montenegro A US clean energy company, Invenergy, has expressed interest in constructing the first solar power facility in Montenegro with a capacity of 5-10-MW. The company’s president, Michael Polsky, at a meeting with the Montenegrin Prime Minister, Igor Luksic, expressed interest in the solar park as well as in evaluating the potential of the Moraca, Kamarnica and Maoca rivers. Polsky said that conditions were favorable for energy investment in Montenegro and that this represented a new development opportunity for Invenergy. Chicagobased Invenergy is currently implementing around 6,600MW in various energy projects and is developing new ones totaling about 15,000 MW. UniCredit Group Ready to Support Investment Projects in Montenegro The UniCredit Group plans to support investment and development projects in Montenegro. With its present tax policy, Montenegro is becoming an attractive and competitive business destination. In a statement issued after the meeting between the Montenegrin Finance Minister, Milorad Katnic, and the Vice-President of the

UniCredit Group, Fabio Fornaroli, the government said that this is a good basis for receiving support from financial institutions. China’s Gezhouba Group Plans to Bid for the Construction of TPP Pljevlja Block II China’s Gezhouba will make an official offer to lead a new power generation project in Montenegro, related to the construction of a second block at the thermal power plant Pljevlja, by the end of September. Gezhouba first visited Montenegro in July to gather information for the preparation of a feasibility study and to prepare a project proposal. The coal fired power plant at Pljevlja has an installed capacity of 210 MW and uses coal from the Pljevlja basin. The potential second unit will use coal from the same reserves, which should be enough to guarantee a supply for both blocks during their lifespan. The Economy Minister, Vladimir Kavaric, pointed out that the government would not issue any guarantees for the project and that any business risk would be borne entirely by the investor, and not by the state. Preliminary estimates state that the second block would cost €330 million, and that construction works would take three years. The new energy source would generate 1.3 billion kWh. Montenegro Attractive to Chinese Investors Representatives from the International Port Group from Shanghai held a meeting with the President of the Municipality of Bar in order to discuss possible cooperation opportunities. The Chinese representatives stressed that the aim of their visit was to become familiar with the economic potential of Montenegro and to explore potential possibilities for cooperation in the areas of economy and tourism. Despite its size, Montenegro is attractive to Chinese investors. The President of the Municipality of Pavićević concluded

Privatization and Investments that Montenegro is ready to enter into partnerships in areas that investors find interesting. In addition to visiting the Port of Bar, the Shanghai delegation also visited the Container Terminals, the Atlas Capital Centre in Podgorica and Porto Montenegro in Tivat. Construction of the Luxury Complex, ‘Plavi Horizonti,’ in Tivat Postponed Qatari Diar is fully owned by the Qatar Investment Authority and has acquired the rights to the existing hotel complex, Blue Horizon, for €24 million. It agreed to invest €250 million in the five-star hotel complex construction, Blue Horizon, on the Lustica Peninsula, but has now decided to postpone the start of its project. The Blue Horizon site was supposed to occupy an area of 24 hectares, and Qatari Diar planned to build a five-star luxury tourist complex in a Mediterranean architectural style. This luxury resort was planned to greatly enrich the tourist appeal of Montenegro as well as contributing to positioning the country as a high-class tourism destination. However, the management of ‘Qatari Bajo Sekulic Saltworks

Privatization and Investments Diar’ recently instructed its branch office ‘Qatari Diar Hotel Investment Property Montenegro’ (QDHPIM) to stop all project activities due to the fact that there is some privatelyowned land situated in the complex they bought from the company ‘Primorje.’ The private owners were offered a price of €1007m2 for their land but they did not agree. The second reason that this project has been postponed is that some amendments are required in part of the planning documentation due to changes in circumstances in the world markets and because of the type of clients sought by ‘Qatari Diar.’ Therefore, amendments are soon expected to be made to the urban plan, ‘Pržno 2.’ A decision regarding this will be made soon.

Open Tenders New Tender for the Sale of the Bajo Sekulic Saltworks The bankruptcy administration of the Bajo Sekulic Saltworks has launched a new call for the sale of

the company’s property at a reserve price of €230 million, two million less than in the previous tender. Bids are expected by 19 January 2013, at which time they will be publically opened. The property offered for sale includes land, salt pans, industrial facilities, administration buildings, electric power and gas facilities and canals. The new tender has been launched despite the fact that, in July, parliament members adopted a decision to make amendments to the Spatial Plan 2020. The plan suggests restoring the area of the salt works by transforming it into a protected area. It is suggested that it could become a monument of nature and that its existing land use designation should be preserved. This decision prevents the construction of any tourist facilities in this area. Call for the Sale of Queen’s Beach Launched A call for sale and valorization of Kraljicina Plaza (Queen’s Beach) near Canj, at a reserve price of € 50/m2 has been launched. The deadline for the submission of bids is 10 January 2013, on which date they will be opened, at 1500, in the City Hall, Bar.

Montenegro Leases Land to LPGD for a Golf Resort Project

Kraljicina Plaza (Queen’s Beach) near Canj

Closed Tenders Montenegro Sells Zora Dairy to the Local Company, Simsic Montmilk The Government of Montenegro signed an agreement to sell the insolvent dairy, Zora, to a local company, Simsic Montmilk, based in Danilovgrad. According to the agreement, the government must repay Zora’s outstanding debts to both its workers and creditors. The government said that Simsic Montmilk has offered to pay €250,000 for Zora, and that it will invest the same amount again in the company. The state-owned stake of 99.56% in Zora was sold at a price of €0.43 per share. Montenegro Receives 20 Expressions of Interest in its Tender for Oil/Gas Exploration Interest to participate in this tender was expressed by around 20 international companies, all of which are reputable in this area, and five of which are the top five in the world. Some companies that visited the data room included: Wintershell from Germany, Exxonmobil International Limited from the USA, Statoil from Norway, INA from Croatia, Trajan Oil Gas Energean from the UK and Greece, Hellenic Petroleum, HESS Corporation, Total from France, ENI Spa from Italy, and Novatek from Russia, etc. The tender committee gave

interested parties information about procedures regarding concessions for exploration and for the production of oil and gas on the Montenegrin coast. The information was sent to the Council for Privatization and Capital Projects for adoption. The tender will cover the territory of former Ulcinj block - 13 blocks in all with a total surface area of 3,000 m2. Montenegro’s Zetagradnja Filed the Only Bid for the Novi Duvanski Kombinat Montenegro’s Zetagradnja has filed the only bid to tender for the partial privatization and/or recapitalization of the Novi Duvanski Kombinat. During the duration of the tender process, four companies showed interest in the company and bought tender documentation. Shareholders of the Novi Duvanski Kombinat comprise the government which has a stake of 68.78%, and the city of Podgorica, which has a stake of 31.22%. The main activities of the company include the purchase, production and marketing of tobacco and tobacco products. The company has a registered capital of €7.4 million, which is divided into 7,389,611 ordinary shares. Interested investors who wish to participate in the tender process are required to have experience in the tobacco industry for at least 3 years and to have annual operating revenues-sales of at least €5 million in the business year preceding public invitation.

A lease agreement for the construction of a golf resort in Tivat was signed on 25 October, 2012, by the Minister of Sustainable Development and Tourism on behalf of the Government of Montenegro, by Chris Librecs on behalf of the company LPGD and by Mr. Andrija Radman on behalf of the company ‘Montepranzo-Bokaprodukt Tivat’. The lease is for a land plot in the Adriatic municipality of Tivat and has been earmarked for the development of a golf resort. The land which totals 786,685m2 is to be leased for a period of 90 years, with a commitment on the part of the tenant to build and operate a golf course and associated facilities. Montenegro’s Privatization Council said, earlier this month, that LPGD has proposed to invest €181.6 million in such a golf course development over a nine-year period. Two Bids to Tender for the Institute Simo Milosevic An extended tender period for the sale of shares in the health centre for physical medicine, rehabilitation and rheumatology, ‘Dr. Simo Milošević AD, Igalo,’ closed on 30 September, 2012. The Tender Commission received two bids: one from the Serbian company, MK Group, owned by businessman Miodrag Kostić, and one from the French company, Vichy. During the process of assessing bids, both bidders were asked to upgrade and revise their offers. The French company, Vichy, offered €300,000 to take over 56.48% of the state shares, along with an investment plan of €33 million and investment of approximately €117 million for new amenities. MK Group offered about €6 million for shares and about €20 million in investment. The health centre in Igalo is the largest and most well-known multi-disciplinary spa resort for health treatment in the Mediterranean. The company also owns the famous ‘Galeb’ villa, built in 1979 for the exclusive needs of the former communist leader and president of the SFRY, Josip Broz Tito. ■

Capital Marktets

We Introduce

CAPITAL MARKETS

During the first 10 months of 2012 the Montenegrin capital market was characterized by negative trends. This was followed by decreases in trade volume and in the number of transactions made, in comparison with the same period of 2011, indicating that the capital market crisis is not over yet. The greatest turnover was recorded in the area of company shares, followed by bonds and investment funds. The most important innovation has been the adoption of a new methodology for calculating indices, which aims to present an accurate picture of the situation in the capital market.

Trade on the Stock Exchange During the first 10 months of 2012, turnover on the Montenegrin stock exchange amounted to only € 27.21 million, thus showing a decline of 39.9% in comparison with the same period in 2011. The average monthly turnover during the first half of the current year was only € 2.72 million, which was much lower than the average monthly turnover in 2011 (€ 4.47 million). This indicates that the capital market crisis is not yet over. The decline in the turnover of the stock exchange during the first 10 months of 2012 was also followed by a decrease in executed transactions. During the first half of 2012, a total number of 5,853 transactions were completed. This was 51% less than during the same period in 2011 (11,456 transactions). During the first 10 months of 2012, three types of securities were traded: company shares, privatization-investment fund shares and bonds which included Government bonds and Ministry of Finance bonds. The greatest turnover was recorded in the area of company shares (62.8%), followed by bonds (26.4%). The total turnover of investment funds amounted to 10.8%. Company shares fell in comparison with figures recorded in the same period last year, while bonds and investment funds recorded increases (354% and 107% respectively). Looking at shares on an individual company basis, the highest monthly trade volume was recorded in March, during the first 10 months of 2012;

Aluminum Plant shares reached a volume of 3.98 million through a series of block transactions. Apart from this, the most traded shares during the last six months were those of Telekom Montenegro which achieved € 1.11 million on the A List.

Stock Exchange Indices The Montenegrin stock exchange uses two indices, MONEX20 and MONEXPIF. In March 2012, the Montenegrin Board of Directors adopted a new methodology for calculating the indices MONEX20 and MONEXPIF. Their aim was, by adopting a new method for calculating the index, to achieve a more accurate representation of the capital market situation. The new method that was adopted to calculate the index is available on the official website of the Montenegrin stock exchange. MONEX20 The value of the Montenegrin Stock Exchange, MONEX20, upon which MSE’s 20 most liquid companies are traded, has decreased steadily since the beginning of 2012 with just a few oscillations. However, a slight increase was evident last month. The highest value that was reached by MONEX20 during the first half of 2012 was recorded on 23 March with 9,807 points. The lowest value was recorded on 27 Jul with 8,138 points. Variations in index value have influenced all of the changes shown by shares represented in this index. In particular, the following have been

most greatly affected: Telekom Montenegro, Jugopetrol Kotor, Prva Banka, Montenegrin Electric Transmission System, Atlas Bank and Container Terminal and General Cargo. MONEXPIF The value of this index has declined steadily with just a few oscillations since the beginning of 2012. It reached its highest level on 2 February with a total of 4,273 points. The lowest point was recorded on 21 June with 3,022 points. The index value was influenced in such a way that a similar trend was evident in all of the privatization investment funds.

Privatization – Investment Funds on the Stock Exchanges The total volume of trade involving PIF shares during the first 10 months of 2012 amounted to €2.933 million. This showed a growth of 7% when compared with the same period in 2011. In total, during the first half of 2012, 1,218 transactions were made. These transactions represent a total of 61,298 million shares. The most actively traded shares during this period were Atlas Mont (34,607 million shares). The privatization-investment fund “MIG” JSC Podgorica has changed its name to the “Society for Task Management and Real Estate Management MIG” JSC Podgorica. It started to trade its shares on the free stock market, by auction, on 27 March. ■

Global Entrepreneurship Week (GEW) Nov 12-18 Global Entrepreneurship Week (GEW) is the largest entrepreneurial event in the world. Its aim is to connect people through local, national and global activities that are designed to help them to explore their options as innovators and to instruct them in local and global trends regarding entrepreneurship. Students, successful entrepreneurs and business people, along with representatives from both governmental and nongovernmental sectors participated in ■ of activities around the world a series to connect and celebrate the idea of entrepreneurship. Last year around 24,000 organizations in 115 countries were involved in the campaign, and more than 37,000 events were attended by over 7 million people. Contributions were made by the U.S. President, Barack Obama, the British Prime, Minister David Cameron, the Prime Minister of Israel, Benjamin Netanyahu, as well as many others.

for graduates of the University of Donja Gorica for three consecutive years, and which is intended for high school students from all regions in Montenegro. The first school attracted 37 participants, the second 68, and the organizers hope that they will attract at least 111 participants this year. A five-day program is planned and participants will have the opportunity to learn about the basics of entrepreneurship and innovation. Traditionally, students attend lectures given by entrepreneurs and representatives from the institutions that are responsible for creating an entrepreneurial climate in the country. They also pay a visit to the Prime Minister and are presented with a certificate at the end of their course by the Ministry of Education.

- Presented the Study for Services of Company development program to the tourism sector in the central and mountain regions of Montenegro in cooperation with GIZ, a German body which provides technical assistance, and which, for years, has implemented programs to support entrepreneurs and small and medium enterprises in Montenegro. - Presented research findings on entrepreneurship by women and entrepreneurship in the informal economy, in cooperation with t he C om m itte e of Wome n’s Entrepreneurship of the Chamber of Commerce of Montenegro (PKCG). ■

Since 2009, CEED has hosted the Global Entrepreneurship Week in Montenegro. In striving to create a successful event, CEED confirmed its desire to support and promote the idea of entrepreneurship, private property and free markets, and to support any initiative leading to the realization of business ideas. This has greatly contributed to the development of the entrepreneurial spirit in Montenegro, as a guarantor of economic prosperity in the medium to long term. Within GEW activities, CEED: - Supp or t e d t h e S c h o o l of Entrepreneurship and Innovation for Youth, which has been organized

EU Corner

In Focus: Montenegro Progress Report 2012 On 10 October 2012 the European Commission adopted the Progress Report on Montenegro as a part of the 2012 Enlargement Package. This is the first Progress Report on Montenegro since the country opened accession negotiations with the EU on 29 June 2012. The progress report presents an overview of progress made towards fulfilling political and economic criteria. In addition, the Progress Report reviews development regarding Montenegro’s capacity to take on the obligations of membership - the acquis chapters (33 chapters). The European Commission concluded that the country has made further progress in establishing a functional market economy, it has improved its ability to take on the obligations of EU membership, and is continuing to sufficiently meet the political criteria for EU membership. The screening process has begun and is expected to finish in Summer 2013. The accession negotiations will integrate a new approach for the chapters on judiciary and fundamental rights, and on justice, freedom and security, thereby reinforcing the focus on rule of law and on the irreversibility of the reforms that have been undertaken. Montenegro needs to further develop a track record in this area, in particular with respect to highlevel corruption and organized crime. Below, are the key findings of the Progress Report in terms of the private sector and the economy.

Political Criteria The section “Political Criteria” analyzes the progress made by Montenegro towards meeting the Copenhagen Political Criteria, which requires: stability of institutions guaranteeing democracy, the rule of law, human rights

and respect for and the protection of minorities. Regarding labor rights, the European Commission concluded that labor and trade union rights are generally respected. However, more attention needs to be dedicated to ensure the full transparency of representativeness and the right to establish new unions, negotiations on new collective agreements have not yet been finished and social dialogue still needs to be improved. Also, women remain under-represented in the labor market. Amendments to the Labor Law are still required in order to bring it in line with the EU acquis, while its implementation still remains a challenge.

Economic Criteria The European Commission analyzed Montenegrin economic development in terms of the existence of a functional market economy and the capacity to cope with competitive pressure and market forces within the Union. The European Commission assessed that Montenegro has made further progress in establishing a functional market economy. The banking sector is still recovering, and bank deposits are gradually increasing. However, bank capital and lending are declining. Further improvements have been made in market entry procedures and bankruptcy recovery. Regarding municipal licenses, further efforts are still required. The progress report stated that the telecom and energy industries have been liberalized and that the respective regulatory authorities have become more assertive. Average income per-capita in purchasing power standards increased to 43% of the EU average in 2011, from a level of 41% in 2010. However, the economy is still in the process of recovering, and the performance of several sectors still remains weak.

The progress report warns that large external imbalances have deteriorated. Also, the European Commission stated that unemployment is very high. Namely, the unemployment rate amounted to 20%, on average, in 2011 and during the first half of 2012, according to the Labor Force Survey (LFS). The European Commission used data from MONSTAT, which differs significantly from the data provided by the Agency for Employment (AEM). In addition, the progress report pointed out that inflationary pressures and public debt have continued to increase and it was concluded that the stability of public finances is challenged by a receding economy and substantial contingent liabilities. The European Commission assessed that the difficult economic situation of the aluminum plant needs to be addressed and that the country needs to attract further investment to develop its infrastructure. Regarding the legal system, weaknesses in the rule of law and in corruption continue to have an adverse effect on the business environment and remain a major challenge.

Ability to Take on the Obligations of Membership The section “Ability to Take on the Obligations of Membership” analyzed Montenegro’s ability to take on the obligations of membership — the acquis and Montenegro’s administrative capacity to implement the 33 acquis chapters. The European commission underlined that Montenegro has made some progress in improving its ability to take on the obligations of membership. Good progress has been made in the areas of public procurement, transport policy, statistics and science and research. The European Commission pointed out that progress has been limited in other areas such as the free movement of workers, the free movement of capital, company law, food safety, veterinary and phytosanitary policy, taxation, enterprise and industrial policy, the environment and climate change, and financial and budgetary provisions.

Montenegro’s limited administrative capacity represents a challenge in a number of areas and needs to be strengthened to ensure the effective implementation of EU legislation. ■ Source: http://europa.eu/rapid/press-release_ MEMO-12-769_en.htm and http://ec.europa.eu/ enlargement/pdf/key_documents/2012/package/ mn_rapport_2012_en.pdf

EU Funds The program for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME) will open during the new Financial Perspectives 2014-2020, with a planned budget of €2.5 billion. COSME is new program for small and medium-sized enterprises (SMEs), which will replace the current CIP program - Competitiveness and Innovation Framework Program. COSME will, in the first instance, target existing entrepreneurs (in their development, consolidation and growth phase) and future entrepreneurs (whilst setting-up their businesses). Further, specific target groups will be: young, new and female entrepreneurs, migrants, persons with disabilities, and senior entrepreneurs. The program will also provide public authorities with tools for policy reform; in particular through analytical studies and EUwide data and statistics. The overall objective of the program is to enhance the already business-friendly environment for SMEs in order to ensure and support their competitiveness and growth. COSME will be open to Member States, Members of the EFTA, acceding countries, candidate countries, potential candidates and European Neighborhood Policy (ENP) countries. Montenegro, as a candidate country, has access to CIP funds and will have the opportunity to apply for COSME funds during the forthcoming period. ■ Source: http://ec.europa.eu/cip/cosme/index_ en.htm

MONTENEGRIN STEPS TOWARDS EU - Accession negotiations with Montenegro have started The European Council has endorsed the decision of the General Affairs Council from 26 June, and under Danish Presidency at the Intergovernmental Conference with Montenegro , the process was officially launched in Brussels on 29 June. During the negotiation process there will be a special focus on fundamental freedoms, judiciary, the fight against corruption and organized crime. The Commission, in its negotiations with Montenegro, will apply a new approach which will allow Chapters 23 and 24 to be opened early in the negotiating process and to be closed at the very end. - Montenegro – European Economic and Social Committee (EESC) Joint Consultative Committee (JCC) established At the beginning of October 2012, the inaugural meeting of the Montenegro – European Economic and Social Committee (EESC) Joint Consultative Committee (JCC) took place in Brussels. The JCC comprises six Montenegrin and six EESC representatives as well as two permanent observers from Montenegro. The body gathered representatives of employers, of the unions, and of NGOs from both sides. Montenegro will be represented in the JCC by members of the Employers’ Union of Montenegro, the Montenegro Business Alliance, the Association of Trade Unions of Montenegro, the Union of Free Trade Unions of Montenegro, the Chamber of Commerce, NGO Ekvista, and NGO Put Nade (Road of Hope).

- The working groups for negotiations The working groups for negotiations on Chapters 23 and 24 were set up in March, while those for Chapters 5, 25 and 26 were set up in July. The working groups for Chapters 6, 8, 3, 7, 12 and 20 were set up in September, while those for Chapters 11 and 22 were set up in October. From May to October 2012, there was an explanatory analytical overview of the EU acquis communautaire regarding Chapters: 23, 24, 25, 26, 5, 6, 8, 3, 7, 12, 20, organized in Brussels. Representatives from general directorates of the European Commission created the analytical overview of the EU acquis for these Chapters by presenting all of the key documents. - Key dates o December 2010: The European Council grants candidate status to Montenegro o March-May 2012: Screening meetings for Chapters 23 and 24 o 26 June 2012: The General Affairs Council (GAC) decides to open negotiations with Montenegro and adopts the negotiating framework. o 29 June 2012: The European Council endorses GAC decision. Formal opening of the accession negotiations at the first Intergovernmental Conference. o 24 September 2012: Start of the screening meetings for the remaining chapters. ■ Source: www.mip.gov.me, http://ec.europa.eu/ enlargement/

MBO Interview

Jerome PHILIPEAU President and CEO of VICHY, a possible partner for the “dr Simo Milošević“ INSTITUTE - Igalo, Montenegro

The French company, Vichy Group, applied for 56.48% of the state capital in the Dr Simo Milošević Institute in Igalo through a privatization tender process which was published at the beginning of August. Vichy is the European leader in the management of thermal and spa-centers. Its annual consolidated income, including the income of other partners that supported the offer, most significantly the French company, L’Oreal, is € 2.3 billion. Vichy has three thermal spas with a capacity of 270 cabins, three

hotels with a capacity of 400 rooms and a network of more than 300 associates. Within each hotel there is a health center, thus transforming Vichy’s complexes into unique medical-rehabilitation centers. Annually Vichy has a turnover of more than 130,000 therapy days and 90,000 over night stays that are directly associated with thermal therapy. The British Spa International Association presented Vichy with the award of best spa-hotels in Europe in 2011 Les Célestins.

Jerome PHELIEPAU said in his interview that after more than a year of careful preparation, Vichy patiently waited for an announcement regarding the sale, through tender process, of the state capital held in the Dr Simo Milošević Institute. During this period he said that the Vichy team had been present, on several occasions, at the Institute, in order to become familiar with the characteristics of the building and to identify areas that would require the most investment. Considering that the regular business of the Institute can’t be interrupted during the investment period, Vichy made plans about how to succeed in such a way that any investment would provide the best possible service to guests. Pheliepau stated that during this period, Vichy had felt increasingly reassured about the professionalism of the Institute staff, and about its vision of new management which would provide a good basis for developing the Institute in the future. He continued to say that, despite the fact that Vichy had become aware of negative elements in the work of the Institute, he believed that there were possible solutions. His final words were, “I believe that we will work in cooperation with those in charge of the Institution, at both local and national levels, and that we will solve all of the problems that we have identified to better position the Institute in the international market.” Certain media comments suggest that the offer of your competitor, MK Group from Serbia, is better. How do you react to such comments? We are professionals and business people who keep our word. That means that we will adhere to the tender rules and will not comment on any other offer.

Even though we are not aware of the references of our competitors concerning their performance in the area of work of the Institute, we wish them all the best. We strongly believe that the authorities that are in charge of the privatization process in Montenegro will perform their work in a qualitative manner. We hope that we have made their work easier with our offer and that our intention to invest € 33 million in existing facilities and € 117 million in new facilities will be of interest to them. The auditing company Ernest & Young has already checked the investment credibility of our offer and has confirmed our ability to proceed. Vichy is also ready to invest almost € 2 million in a very ambitious marketing plan that would give coverage right across Europe and the rest of the world, and would represent the services offered by the Institute. This would also help to promote the whole of Montenegro, not just Herceg Novi. Of course, some of our investment would have to cover debt reprograming and pay for any other obligations arising from court decisions made in respect of the Institute. Igalo has resources that we are interested in regarding the development of health resort tourism. Above all, the Institute has well trained and experienced staff in the area in which we are involved. I believe that they represent the company’s most significant capital. With a combination of planned investment and the Vichy brand name, the Institute would be soon be recognized in the international market. What is your relation towards the employees at the Institute? Let me be very direct – we want to keep all employees that want to work. Any employees who wished to leave the Institute for early retirement would be offered severance payments according to legal legislation and regulations in Montenegro. As the project develops we aim to create between 180 and 200 new jobs. We have also planned to allocate a considerable sum for training and for any additional education that may be required for employees. We have not had any problems so far with

our employees in any other projects; we do not, therefore, see why should it be any different in Montenegro. Do you have positive expectations? Of course. We hope that the Government of Montenegro will see Vichy as a strategic partner. We have carefully prepared and secured money for this investment. We have a lot of work ahead of us to turn the Dr Simo Milošević Institute into a world recognized medical and spa center. We will need lot of patience and trust. But if we don’t believe we can do this, we would not participate in the bid to tender. As a potential partner, how do you view Montenegro? We are even very confident in Montenegro’s potential, which, even as a small country, provides numerous opportunities to foreign investors. I have to admit that the Montenegrin Investment Promotion Agency (MIPA) is doing an excellent job, and that its persistence and compliance has had a great influence on us when considering Montenegro as a possible location in which to investment; we were at the same time considering other destinations such as Morocco, Qatar and Brazil. We have also had really good cooperation from the local authorities in Herceg Novi, as well as from state institutions and from the Government of Montenegro. Even the most beautiful diamond will stay hidden in the mud if there is no adequate business environment. The environment for foreign investment in Montenegro, along with the willingness of leading institutions to talk with investors like us, to participate in our plans, and to take on additional liabilities has made us realize that we have been taken seriously; we expect the promises that we have been made to be realized.

and is therefore burdened by some fairly significant court processes. However, as I already said, the company’s most significant is its employees, and we ill do our best to ensure that they are satisfied with their new work conditions. They represent the heart of the company, and without them, the potential of the Institute is not the same. We have long term plans. We believe that we can contribute to completely transforming the Institute, and to promoting not just Herceg Novi, but also the whole of Montenegro. One of our plans is to open a Vichy Academy in Montenegro; this would enable us to educate young people from the whole region and from even further afield. Last time we talked about Vichy resorts all around the world. Has anything changed? During the last couple of years, Vichy has grown steadily. Our recognized brand and quality standards are in demand at many of the largest developments and tourist centers in the world. We have already opened with two projects in Morocco: in Marrakech we have a 5-star spa-hotel resort and in Fes we have a 4-star medical and spa-center, Vichy Thermalia. We are also in the process of preparing a project to open one more 5-star spa-hotel resort in Casablanca. Additionally we have spa and medical centers in Qatar and on Mauritius. Both are 5-star. In France we have just opened a 4-star hotel in Montpelier. In addition to all of the above, we are in negotiating new projects in Brazil and China. We expect to add Montenegro to the list of exotic countries in which we work and hope that the Institute will become part of the Vichy family. ■

Do you believe that Dr Simo Milošević Institute has huge potential and a bright future? Yes exactly. The Dr Simo Miloševi Institute has remarkable potential; this is the right time to free up that potential and to benefit from it. The company does have a burden of debt from earlier work,

Business News

Business News The Government and the EU Delegation Extended the Deadline for Digitalization by a Further 90 Days The EU Delegation informed the Ministry for Information Society and Telecommunications that the deadline for digitalization would be extended by a further 90 days to obtain more options for the successful implementation of the project. The EU Delegation announced that the fourth factory test for the approval of equipment would be held during the first week of September, and that the EU would assess the quality control results for the equipment prior to the introduction of digital television broadcasting in Montenegro. The Montenegrin parliament, following the government’s proposal, recently extended the deadline for the completion of digitalization to 2015. ■ Source: Government of Montenegro

Third Request for the Implementation of Cross Border Cooperation Between Albania and Montenegro On Monday, 3 September, 2012 a third request was issued for bids regarding the implementation of cross-border cooperation between Albania and Montenegro. Interested partners from Albania and Montenegro can send project

proposals to the Joint Technical Secretariat from 3 September to 3 December (2012). Detailed instructions and rules are contained in the application package in the appendix. The notice of invitation along with the rules can be downloaded from the official site of the Ministry of Foreign Affairs and European Integration. ■ Source: Ministry of Foreign Affairs

Montenegro has Moved Up Nine Places in the Fraser Institute List Montenegro now holds 28th place in a list of 144 countries that is included in an annual report on economic freedom (Economic Freedom of the World) created by the Fraser Institute in Canada. This was announced yesterday by the Agency of Montenegro for the Promotion of Foreign Investments- MIPA. Last year, Montenegro was ranked 37th in the report. “In the search for answers to the global economic crisis, many governments around the world have increased taxes, public spending, and the level of regulation and intervention, which has resulted in the reduction of economic freedom in the short term, but has also affected prosperity and development in the longer term,” said Prof. Dr. Petar Ivanovic, CEO of MIPA. ■ Source: www.mipa.co.me

The Government has Adopted a Program to Encourage the Development of Clusters for 2012-2016 On Thursday the government adopted a program that is designed to encourage the development of clusters in the northern region of the country along with less developed municipalities, up to the year 2016. It will provide financial support for entrepreneurs, and for micro, small and medium sized enterprises. “This support will be used for the purchase of production equipment, on the principle of partially restituting costs. After submitting documentation to prove spending on resources, small businesses will be entitled to a refund of up to 70 percent, and medium sized enterprises will be entitled to a refund of up to 60 percent of the total value of their purchases. The maximum amount to be given will be € 7,000,” said Nina Vujosevic, Deputy Minister of Economy. ■ Source: Government of Montenegro

Renovated Railroad from Podgorica to Niksic Opened Today The Prime Minister, Igor Luksic, officially opened the new railway line from Podgorica to Niksic on Monday 1 October. The following day it began to take regular passenger transport. Around € 70 million was invested for

reconstruction and electrification. Trains will run at an average speed of about 80 kilometers per hour. About 70 workers and managers from the Czech company “OHL ZS” from Brno were employed for the reconstruction and modernization of the railway. ■ Source: Government of Montenegro

Montenegro is Attractive to German Investors Several German companies have submitted letters of intent to the Montenegrin Investment Promotion Agency (MIPA), expressing their willingness to invest in Montenegro. This was announced by the MIPA, who also stated that investment opportunities, barriers to investment and the improvement of cooperation with potential investors had been discussed during recent meetings between the agency’s director, Dr. Peter Ivanovic, and the Ambassador of the Federal Republic of Germany to Montenegro, Pius Fischer. “We are very satisfied with the cooperation we have established with several German business asso ciations and with the German Embassy in Montenegro. Particular interest was shown in the industry and energy sectors, areas for which Germany is world famous. Montenegrin investors are primarily interested in security, financial stability and clear rules of the game,” said the director of MIPA, Dr. Petar Ivanovic. ■ Source: www.mipa.co.me

Doing Business 2013: Montenegro has Advanced by Five Places Montenegro has moved up five places and now holds 51st place in a list of 185 countries in a new World Bank report about doing business, Doing Business 2013.

- From July last year to June this year, Montenegro has made progress in the following areas: paying taxes (27 places), closing business (8 places), giving loans (4 places) and obtaining/creating electrical connections (2 places). This information was provided by the Ministry of Finance.

grin economy is still struggling to recover from the effects of the financial crisis. “The current account deficit in the country is still high, industrial output is unstable, and credit growth is still negative in comparison with the previous year,” says the document. ■

Source: Government of Montenegro

Summit of Finance Ministers and Central Bank Governors of the Region was held at Milocer At the summit of finance ministers and central bank governors of the region, which was held in Miločer (25 October), government representatives and central bank representatives agreed that all of the countries in the region were facing similar problems. “The next four years will certainly be hard and will be characterized by uncertainty and risk for several reasons. Finance Minister Milorad Katnic said that the unresolved crisis in Europe not only affects the general public but also the banking sector.” ■

Golf Course to be built in Bjelopavlići The construction of a national golf resort, Montepranzo, will extend the existing tourist season and employ 600 workers over the next eight years, announced Chris Liebreks, a representative of the Dutch company LPGD, after signing a contract for the leasing of land in Tivat for 90 years. He announced that LPGD plans to build and expand activities, and to create other golf projects in Montenegro, primarily in Danilovgrad, where the company has already been in contact with the local administration. Plans show that the project will be located on the banks of the river Zeta, and Liebreks expects that it will provide jobs for locals during the year. ■

Source: Government of Montenegro

EBRD Lowers Growth Estimates for the Montenegrin GDP The European Bank for Reconstruction and Development (EBRD) has revised growth forecasts for the Montenegrin economy, estimating that this year it will amount to 0.3%, instead of the previously predicted 0.4%. According to new regional economic forecasts and the regular quarterly report of the EBRD, Montenegro’s gross domestic product (GDP) will improve by 0.8% next year, which is the same as was forecast three months ago. The EBRD said in its report that the Montene-

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Editor in chief: Darko Pekić info@ceed-consulting.com MBO Team: Dragana Radević Mihailo Zečević Darko Konjević Vesna Bojanović Jelena Međedović Jasna Žarković Biljana Janković Jovana Stojković ASSOCIATE Charlotte Rimmer, Editor Marko Mihailović, graphic designer

Coming Up! New Government to be formed in December

The new Montenegrin government, headed by Milo Djukanovic will be formed in early December. The main challenges for the new Government of Montenegro should be a better quality of life for citizens, a better economic environment and higher level of investments. Christmas Debate 2013 Traditional 21th Christmas Debate launched by Postgraduate Studies “Entrepreneurial Economy“ are to be organized on January 6th, at University of Donja Gorica. As usual, this event gathers known economists, public personalities, students and others, to discuss relevant topics for development of Montenegrin society.

Christmas Debate 2013

Traditional 21th Christmas Debate launched by Postgraduate Studies “Entrepreneurial Economy“ are to be organized in January, at University of Donja Gorica. As usual, this event gathers known economists, public personalities, students and others, to discuss relevant topics for development of Montenegrin society. All are invited!

Adriatic Fair- Calendar of Events 2013

Adriatic fair has announced its Calendar of Event for the next year. The Calendar can be downloaded from their web site: www.adriafair.co.me