Mbo maj 2013 by Ceed NVO

May 2013 / № 44

Business Environment WELCOME to the forty-forth 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: Business environment in Montenegro is still under the pressure of economic crisis. Government is taking different initiatives in order to improve macroeconomic stability in the country. These measures involve new laws that would influence decrease in the level of grey economy as well as announcement of the introduction of the new level of VAT rate. Economic freedom: Montenegro has been ranked well in different reports that are measuring the level of economic freedom. Priority actions for fighting the economic crisis have to be considered, since they can negatively influence the level of economic freedom. The Government needs to consider negative effects of those measures on economic freedom. Macroeconomic Outlook: The third quarter of 2012, at a macroeconomic level, was characterized by a slight reduction in economic activity: industrial production recorded declines of 0.8% during January-February 2013 when compared with same period last year. Less tourists were recorded in January (4,5% below last year`s level. In the labor market, slightly negative trends were recorded. Salaries without taxes and contributions in January 2013 recorded a fall of 3% when compared to last year`s period, and totaled €490, while the unemployment rate was 14.2%. In February monthly CPI index rose 1.6% Banking sector: From the end of October to the end of December 2012, the banking sector recorded a slight decrease of total assets and liabilities, while household deposits recorded an increase. In this period, the weighted average lending effective interest rate was decreased by 0.32%. The situation in the banking system, in terms of solvency and liquidity is satisfactory. Privatization and Investments: The Council for Privatization and Capital Investments reviewed the proposal of measures made based on the analysis of privatization agreements concluded with investors in the tourism area, which have not been implemented yet. Certain agreements, due to the investor’s failure to fulfill defined obligations, will be terminated, while some others will be revised and re-defined. The Government of Montenegro continues to pursue the Privatization Plan for 2013: tender for New Tobacco Company has been launched; tender for exploration of oil and gas is to be announced soon; etc.

CENTRE FOR ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT Kralja Nikole 27a/4, BC “Čelebić“, Podgorica, Montenegro Tel/Fax: +382 (0) 20 633-855 +382 (0) 20 620-611 E-mail: ceed@t-com.me web site: www.visit-ceed.org.me

Business Environment in Montenegro by Darko Konjević

During the first 4 months of 2013 the Government of Montenegro made a significant effort in order to improve the situation regarding tax income to the state budget. These activities resulted in the creation of the Committee for fighting the grey economy that adopted the Action Plan for fighting the grey economy. This action plan resulted in a proposed Law on preventing illegal business operations that was adopted by the Government of Montenegro. Also discussions about the VAT rise in Montenegro have been intensified both by domestic and foreign stakeholders. The Government of Montenegro adopted the Agricultural budget of Montenegro for 2013 as one of the measures of supporting the agriculture sector in Montenegro. The Government defined a new minimal wage.

EU Corner: Montenegrin steps towards EU

The Working group for suppression of the grey economy adopted an Action plan for 2013 as one of the preconditions for activities that need to be undertaken in order to decrease the level of the grey economy. The action plan is mainly focused on areas that are having a large impact on the state budget such as: excise products, issuing of fiscal invoices, the grey economy at the labor market, tax debt of the companies etc. All of these areas can significantly influence the level of tax income and there is common action planned by all stakeholders (different inspections, state authorities, judicial system) in order to improve the situation in collection of income. Special attention is given to the forthcoming tourist season since it was proved that lot of tax evasion and non-registered activities were undertaken during the summer season in Montenegro.

Interview: Mr. Saygin Narin, CEO of Global Ports Holdings

Also the Working group prepared the Law on preventing illegal

Capital Markets: During the first 4 months of 2013, the Montenegrin capital market was characterized by a decrease in the volume of trade, but the number of transactions was characterized by an increase when compared with the same period of 2012. We can conclude that better days are ahead of us, but the crisis is not yet over. In the first 4 months of 2013, the greatest turnover was recorded in the area of company shares (85,2%), followed by bonds and investment funds. In the focus: Decentralization in Montenegro: involving local governments in the financing of education We introduce: Doing business in a changing climate – building a case for adaptation (2)

business operation and sends it to the Government for adoption. The law among other things proposes the following actions in order to improve the rule of law and to decrease the level of the grey economy: • Defines the obligation of legal subjects to open an account within a bank and to make all of the transfers via the bank as well as to pay salaries through bank accounts. • Defines the level of cash maximum within a company, • Defines the prohibition of opening a new company and doing new work for the owner of the company or entrepreneur which is under bankruptcy or in the liquidation process, or it has tax debts and blocked accounts, • Defines the obligation for providing certain documents of proof when publishing ads in newspapers, • Defines the obligation for organizers of cultural, sports and other events to report income of non residents and pay the appropriate tax; • Defines the obligation for companies that are collecting products, semi products and other from non registered persons to report each payment to such a person larger then 100€. Further discussion on VAT rise continues in Montenegro. There are obvious signs that in the next couple of months the VAT rate will rise from the current 17% to a proposed 19%. The VAT for basic products will remain at the level of 7%. The VAT rise has been requested by international

organizations in order to provide Montenegro with additional funding needed to stabilize the budget. Even though current analysis shows that there will not be any negative effects it is hard not to expect an increase of prices and inflation in the next period. It is also announced that this measure will be a temporary one but if it is imposed before the tourist season it could do some damage to Montenegrin attractiveness. It is always better to try to collect money from all those that are not registered and not to tax those that are already regularly paying all the taxes. The Government of Montenegro has adopted the Agricultural budget for 2013. The level of the budget is to the amount of €14,1 million. For agricultural development, rural development and fishery €12,6 million will be provided, €1,3 million will be provided for health care of animals and about €200,000 for conducting phytosanitary measures. The new minimum wage was defined by the Government at the level of €193. This level is defined for the first six months of 2013. The level of the current minimum wage is about €50 higher than before which represents a serious increase. ■ Number of registered companies in Montenegro as of 1st May 2013 Source: Commercial Court

Joint stock company Limited liability company

341 27,802

Part of a foreign company

447

General partnership

NGO

294

Limited partnership

426

Entrepreneur

16,928

Institution

1,142

Other

114

Total

47,607

Tax rates Value added tax

17%, 7% and 0%

Corporate profit tax

Personal income tax

9% (15% over 479€)

Economic Freedom

Macroeconomic Outlook

Economic Freedom of the World – Fraser Institute Fraser Institute- Economic freedom of the world- 2012 report

The index published in Economic Freedom of the World measures the degree to which the policies and institutions of countries are supportive of economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of privately owned property. Forty-two variables are used to construct a summary index and to measure the degree of economic freedom in five broad areas: 1. Size of Government; 2. Legal System and Property Rights; 3. Sound Money; 4. Freedom to Trade Internationally; 5. Regulation.

Economic freedom from around the world In the chain-linked index, average economic freedom rose from 5.30 (out of 10) in 1980 to 6.88 in 2007. It then fell for two consecutive years, resulting in a score of 6.79 in 2009 but has risen slightly to 6.83 in 2010, the most recent year available. It appears that responses to the economic crisis have reduced economic freedom in the short term and perhaps prosperity over the long term, but the upward movement this year is encouraging. In this year’s index, Hong Kong retains the highest rating for economic freedom, 8.90 out of 10. The other top 10 nations are: Singapore, 8.69; New Zealand, 8.36; Switzerland, 8.24; Australia, 7.97; Canada, 7.97; Bahrain, 7.94; Mauritius, 7.90; Finland, 7.88; and Chile, 7.84. The rankings (and scores) of other large economies in this year’s index are the United Kingdom, 12th

(7.75); the United States, 18th (7.69); Japan, 20th (7.64); Germany, 31st (7.52); France, 47th (7.32); Italy, 83rd (6.77); Mexico, 91st, (6.66); Russia, 95th (6.56); Brazil, 105th (6.37); China, 107th (6.35); and India, 111th (6.26). The scores of the bottom ten nations in this year’s index are: Venezuela, 4.07; Myanmar, 4.29; Zimbabwe, 4.35; Republic of the Congo, 4.86; Angola, 5.12; Democratic Republic of the Congo, 5.18; Guinea-Bissau, 5.23; Algeria, 5.34; Chad, 5.41; and, tied for 10th worst, Mozambique and Burundi, 5.45. The United States, long considered the standard bearer for economic freedom among large industrial nations, has experienced a substantial decline in economic freedom during the past decade. From 1980 to 2000, the United States was generally rated the third freest economy in the world, ranking behind only Hong Kong and Singapore. After increasing steadily during the period from 1980 to 2000, the chain linked EFW rating of the United States fell from 8.65 in 2000 to 8.21 in 2005 and 7.70 in 2010. The chain-linked ranking of the United States has fallen precipitously from second in 2000 to eighth in 2005 and 19th in 2010 (unadjusted ranking of 18th). Nations that are economically free out-perform non-free nations in indicators of well-being Nations in the top quarter of economic freedom had an average per-capita GDP of $37,691 in 2010, compared to $5,188 for the bottom quarter nations in 2010 current international dollars. In the top quarter, the average income of the poorest 10% was $11,382, compared to $1,209 in the bottom in 2010 current international

dollars. Interestingly, the average income of the poorest 10% in the most economically free nations is more than twice the overall average income in the least free nations. Life expectancy is 79.5 years in the top quarter compared to 61.6 years in the bottom quarter. Political and civil liberties are considerably higher in economically free nations than in non-free nations.

Montenegro in the report In the 2010 EFW Report Montenegro ranked 28th out of 144 countries. The worst rank was for the size of the government 94th and business regulation 79th while Montenegro was best ranked for credit market regulations and labor market regulations. Going into detail of the structure of the index we can see that within the size of the government most problematic areas are government enterprises and investments and payroll tax. In the area of legal system enforcement of contracts is the area for improvement while in the area of business regulations further actions are needed in the licensing area. As the report is showing, the measures against the economic crisis are influencing the level of economic freedom, which is the case for Montenegro. Every introduction of the new taxes, levies, burdens are having a negative impact on the level of economic freedom that will be shown in the next reports. Since Montenegro is devoted to achievement of a high level of economic freedom before taking actions the Government should always take into consideration the impact on the level of economic freedom. As a small country it is necessary to build Montenegro as an open, investment friendly country since this road can bring Montenegro to the necessary level of economic development. ■

Macroeconomic Outlook REAL SECTOR

According to accession made in February by IMF, economic activity in Montenegro in 2012 was paused, as the result of natural disasters and a sudden slowdown in industrial metal production. The economy is now faced with fiscal imbalances that have resulted in a rapid increase in public debt in recent years. For 2013, moderate economic recovery is expected.

Basic sectors

Industrial production: recorded a fall of 0.8 % during the period JanuaryFebruary 2013 in comparison with the same period last year. Major decreases in industrial output were recorded in the manufacturing sector (34,6%), while a noticeable increase in output levels (49,9%) was recorded in the electricity, gas, stream and air conditioning supply. Tourism: during January 2013, 15 504 tourists, of which 70.1% were foreigners, visited Montenegro, which was slightly below (5.5%) the level recorded at the same time last year. During this period, 57 059 nights were recorded (of which 73.4% were foreigners). Bar along with Budva and Herceg Novi were the most visited cities. Construction: last available data referring to this sector shows that during the fourth quarter of 2012, the total value of finished construction works was €68.5 million, while anticipated new building work projects are expected to total €19.6 million, 141,6% above last year`s average.

Inflation

Consumer prices recorded monthly growth of 1.6% in January 2012. The average inflation rate, measured by the Consumer Price Index (CPI), during the period January-February 2013 was recorded at a level of 3.7%.

The most significant price increases during that period were recorded in food and non alcoholic beverages (6.4%) and renting (6.2%).

Employment and Wages

The data from the Employment Agency of Montenegro shows that at the end of March 2013, there were 32 934 unemployed, leaving the unemployment rate at a level of 14.2%. In January 2012, the gross average salary was €731; the average salary without taxes and contributions was €490. Higher salaries, without taxes and contributions, were recorded in electricity, gas steam and air conditioning supply (€881) and finance and insurance (€851), while lowest salaries were recorded in the area of accommodation and food service activities (385€) and in the trade sector (€313).

PUBLIC FINANCE Budget

According to the estimation made by the Ministry of Finance, in December 2012, source revenues of the Budget of Montenegro and state funds amounted to €125.6 million (3.8% of the estimatedGDP), thus being 0.8% lower than planned, while consolidated budget expenditures amounted to €152.3 million (4.6% of GDP), and being 39.9% higher than planned. This resulted in a Budget deficit of €26.7 million.

order to achieve the targeted level of the deficit in the budget for 2013th year.

INTERNATIONAL ECONOMIC RELATIONS

Foreign Direct Investments (FDI) During 2012, net FDI inflow amounted to €453.6 million, 16.6% more than during 2011. - FDI inflow: € 633.3 million, mostly in the form of sale of real estate (€226.2 million) and investments into companies and banks (212,7€). - FDI outflow: € 179.6 million (recording the y-o-y growth of 70%) mostly in the form of withdrawal of non-residents’ investments in Montenegro (€126.6 million)

External trade

Total exports during the period January-February 2013 totaled €59.2 million, thus showing a growth of 15.3% in comparison with the same period last year. On the other side, imports totaled €223.5 million, thus showing a growth of 8.3% and an export-import ratio of 26.5%. Montenegro is the most import dependent country along with China, Serbia and Greece, and the most export dependent country along with Serbia, Slovenia and Croatia. ■ (Sources: The Central Bank of Montenegro, Monstat, Ministry of finance of Montenegro, Employment Agency of Montenegro)

During 2012, the fiscal deficit has exceeded the planed level, resulting in an increase of public debt. The government has adopted some fiscal measures to help the budget, but according to IMF assessment, it will take measurable and significant additional measures on both expenditure and revenue sides, in

Banking Sector

Privatization and Investments

BANKING SECTOR

Total Bank Assets and Liabilities

From the end of October to the end of December 2012, total assets and liabilities of banks amounted to € 8,470.30 million, while the average monthly level amounted to € 2,823.43 million. Total assets and liabilities of banks amounted to € 2,810.10 million at the end-December 2012, recording a decline at the monthly level (0.4%). At the end of October, November and December 2012, in the structure of banks’ assets, net loans accounted for the main share (61.0%), followed by cash and deposits with depository institutions (about 26.5%) (Graphic 1). From the end of October to the end of December, within the banks’ liabilities, deposits accounted for the main share (about 70.0%) and recorded an increase of share in total banks’ liabilities. In addition, borrowings (average around 14.5%) recorded a fall of share, while total banks’ capital (average around 11.5%) recorded an increase of share in total banks’ liabilities (Graphic 1). Graphic 1: The structure of total banks’ assets and banks’ liabilities, in %

Deposits Total deposits amounted to € 5,929.4 million from the end of October to the end of December 2012 and at the average monthly level amounted to € 1,976.5 million. At the end of December 2012, the total deposits amounted to € 1,981.0 million. Observing data from December 2012 and comparing to December 2011, total deposits increased by 9.0%. From the end of October to the end of December 2012, within the deposit maturity structure, the share of time deposits recorded an increase (amounting to around 61.3% of total deposits), while the share of demand deposits recorded a decrease (amounting to around 38.6% of total deposits). In the structure of time deposits, the largest share recorded deposits with maturity from 3 months to 1 year (average about 55.9%) and they recorded a slight increase of their share. Deposits with maturity up to 3 months recorded a fall of their share (18.6%). Observed by sectors, in the deposit structure, deposits of natural persons were still dominant with a share of about 57.3%.

Household deposits

Source: Bulletin of Central Bank of Montenegro, November 2012, December 2012 and January 2013

The total capital of banks amounted to € 857.3 million from October to December 2012, while at the average monthly level amounted to € 285.7 million. At the end of December, the total capital of banks amounted to € 294.0 million, recording a decline at the annual level (3.7%).

time deposits were dominant with 67.1%. In addition, observing data from November 2012 and comparing to December 2012, time deposits recorded a decrease of their share (12.2%).

Total household deposits amounted to € 3,396.5 million from the end of October to the end of December 2012, and at the average monthly level amounted to € 1,132.2 million. At the end of December, total household deposits amounted to 1,147.1 million and recorded an increase of 1.1% at the monthly level and by 11.0% at the annual level. From the end of October to the end of December 2012, in the maturity structure of household deposits,

Loans From the end of October to the end of December 2012, total loans granted by banks amounted to € 5,588.1 million, which was at the average monthly level € 1,862.7 million. At the end of December, total loans amounted to € 1,862.6 million, thus 4.8% less than in the previous year. The loan-to-deposit ratio1 amounted to 0.95 at the end of October, 0.94 at the end of November and 0.94 at the end of December 2012. In the structure of total loans disbursed, corporate and household loans were dominant by 92.0% in the period from October to December 2012, whereas the remaining referred to banks, other financial institutions, public owned organizations, nonprofitable organizations and others. Interest rates From October to December 2012, the weighted average lending effective interest rate (lending interest rates) amounted to around 9.48%. The weighted average deposit effective interest rate (deposit interest rates) amounted to around 3.24% in the same period. Graphic 2: Interest rates, period-end, in %

Privatization and Investments Open tenders New Public Call for the Company Novi Duvanski Kombinat AD Podgorica Launched The Government of Montenegro has invited the tender process for recapitalization through the construction of the factory and selling shares in the company Novi Duvanski Kombinat AD Podgorica (New Tobacco Plant). The subject of this tender is the granting of rights to build a factory to a mandatory investment program and determined project documentation of the Company with a recapitalization to the amount of the assessed value of the work 9,415,702€, (excluding VAT), and the sale of 7,669,611 shares of the company New Tobacco Plant JSC Podgorica or 100% of the share capital of the company. The deadiline for submission of Tender Offer expired on 7th May 2013 at 12 am (local time). The Tender Committee reserves the right to amend this deadline, if it is necessary. Sixth Tender for Salt Works Announced The Bankruptcy board of Salt works ‘Bajo Sekulić’ has launched the sixth

tender for the sale of the property at an initial price €209 million, ten million lower than at the previous auction. The interested bidders may deliver their bids by May 9, 2013. The initial price of the Salt works property on the first public tender was €257.8 million, but there were no bids delivered either then or the following four times. Ever since January 2012, when the first public auction was held, the interest was shown only by businessmen from Turkey. Privatization of the Container Terminal and General Cargo JSC: Companies to Deliver their Bids The German HHLA, Turkish Global Ports, Singapore Portek and ICTFI from Indonesia are companies that have passed the pre-selection phase in the process of privatization of the Container Terminal and General Cargo (CTGC) and now are invited to submit their bids. The Government has previously decided to privatize CTGC, or to sell 62% of state shares in this company and grant concessions for the use of the Port Bar area in order to develop the port sector and generate additional economic activities. CTGC is the company that has been separated from the Port of

Bar in 2008 and as of October 1, 2009 it has operated independently. The Government of Montenegro and the European Bank for Reconstruction and Development (EBRD) approved the tender documentation for the process of the sale of state shares of the company. All documentation is published on site: http://www. bar-transaction.com/, while access is granted only to companies that in the previous tender phase gain the right to present their offers to this project. The conditions of the purchase and concession contract have been changed. Namely, a Social program has been implemented with assistance of the EBRD and the number of workers optimized.

Closed/canceled tenders Company ‘Sato’ Purchased Hotel ‘Nikšić’ in Sutomore Hotels ‘Onogošt’ in Nikšiću, ‘Teuta’ in Risan, ‘Nikšić’ in Sutomore and Inn in Šavnik were offered for sale for the ninth time. The total initial price was €13.8 million and the deadline for delivering offers was April 16, 2013. At a public auction held on April 19, hotel ‘Nikšić’ in Sutomore was sold for €300.000 over the initial price to the company ‘Sato’, which offered the highest price (€2.3 million). By a Decision of the Commercial Court Podgorica, the Hotel ‘Nikšić’ was closed in October last year. It comprises of 274 beds and it is located on the sea shore. The monies received from the auction will be used to cover €470.000 debt to workers, while other creditors will be paid out in a percentage from the remaining amount. The Bankruptcy

Source: Bulletin of the Central Bank of Montenegro November 2012, December 2012 and January 2013. 1 This ratio represents the relationship between the amount of loans and deposits. In this case loans were below deposits by 5% at the end of October, and by 6% at the end of November and December 2012.

Privatization and Investments Board stated that the decision is to be made about the next tender for the remaining properties of the company. Tenders for Institute Simo Milošević and daily Pobjeda Annulled The Montenegrin Privatization Council canceled privatization tenders for ‘Dr Simo Milosevic’ Institute in Igalo and the daily newspaper ‘Pobjeda’. According to Mr. Aleksandar Ticic, secretary of the Council, the submitted bids were not in compliance “with the criteria prescribed by tenders”. Bids for the institute came from France’s Vichy and Miodrag Kostic’s MK Group. Vichy offered an investment of EUR 33 million, announcing that about EUR 117 million would be invested in new facilities. Kostic offered to invest about EUR 20 million and to pay the institute less than it is really worth, said people at the Privatization Council. Negotiations for the purchase of daily newspaper ‘Pobjeda’ had only one bidder, Sarajevo-based ‘Avaz’ and the tender period officially lasted longer than one year. ‘Avaz’ has announced withdrawal from the purchase due to the poor company business results, after which negotiations continued before failing. Montenegro Government to Terminate Privatization Agreements The Council for Privatization and Capital Investments adopted a Decision on terminating privatization agreements in the tourism area. The Council ordered unilateral termination of agreements for hotels ‘Planinka’ and ‘Jezera’ in Žabljak due to failure to fulfill obligations defined in investment agreements. The agreement for hotel ‘Žabljak’ is still in force, since the works on it are in progress and are planned to be completed within a month. In the second form of privatization - sale through share capital the Council proposed termination of the agreements for the Hotel Centre for

Privatization and Investments Rest, Recreation and Rehabilitation Igalo and hotel ‘As’ in Perazica valley. In the third form of privatization, long-term lease, the Council proposed termination of agreement with Nord Star Company for peninsula Luštica, unless all obligations from the agreement are fulfilled by June 1, 2013. Czechs Closest to the Second Block of Thermo Power Plant Skoda Praha has the best chance to be selected contractor for the second block of the thermo power plant Pljevlja. Their offer is technically more advanced than the one submitted by Montenegrin side, stated the director of Skoda Praha Danielk Jirichka to Czech papers. According to him, the construction of the 220 MW second block would enable a lot of business for Czech supplier companies. Besides Skoda, the bids for the second block were received from Poland Rafako, Slovakian IEG and three Chinese consortiums. The financier of the second block will be Montenegro State Power Company (EPCG), while companies that delivered the bids will be contractors. EPCG is currently negotiating with banks and asks for the most favorable loan. It takes about €300 million for the construction of the second block, which is expected to be completed in three years.

Investment news Bids for the highway: Chinese would make the road to Matesevo for 800 million euros If the Montenegrin Government reaches an agreement on all the other details with Chinese investors, they will be ready to build an 800 million priority section of the motorway Bar-Boljare, from Podgorica to Matesevo. The two sides will have to make an agreement about the details, and the biggest news is that for the first time a specific amount of money was mentioned. Whatever the Government, Chinese investors

and construction companies agree, it is unlikely to expect construction soon and at best only the PodgoricaMateševo section and most likely one way only, to attract traffic immediately and start production of revenue. In addition to Chinese companies CCCC Intenational, which has the support of the Chinese government Exim Bank, the most serious bidder for the construction of highway is US-Turkish consortium Behtel-Enka. The Ministry of Transport and Maritime Affairs expects to receive new bids from the Chinese and all other companies interested in the Bar-Boljare motorway construction in the following 15 days, planning to present its position on that matter to the Government in June, on the basis of which the final decision will be made. The Minister of Transport and Maritime Affairs, Mr. Ivan Brajovic says that the bids of all partners have been improving daily, adding that all options are open until the final decision has been made.

interviews were conducted with Chinese partners. “ They would, according to unofficial information, continue the project and construction of a new hotel Queen’s Beach and a residential complex of villas in Milocer park. The owner of Adriatic Properties is the offshore firm Aidway Investment Ltd from the British Virgin Islands. Now included on the its board of directors are the owner of Restis Group, Victor Restis, the chairman of the board and their representative to Montenegro, Petros Statis, while the CEO is his brother Teofanis Statis. In previous convocations a member of the board was the owner of Aman Resorts, Adrian Zecha. There were some indications that the talks were conducted with Azerbaijan oil company SOCAR, which has leased the land of the former military barracks in Kumbor. Tourist Resort ‘Slovenska plaža’ Soon to Be Under ‘Iberostar’ Brand

Greeks to Hand over Sveti Stefan to Chinese

Once a trademark of Montenegrin tourism, tourist brand - city hotel Sveti Stefan, will probably have a new “boss” soon. The Greek Restis Group, an investor who led the project of reconstruction of the popular “Saint”, is ready to sell its shares and provide a new, financially stronger partner. Although the company Adriatic Properties, which is the official lease-holder of the complex Sveti Stefan, Villa Milocer and Queens Beach, did not want to publicly declare the negotiations with foreign investors, from multiple sources close to the negotiating team it has been confirmed that the “most serious

One of the most famous brands in the Spanish hotel industry “Iberostar” is interested in joint appearances on the world market with the hotel group “Budvanska Riviera”. The prestigious Spanish company has a chain of over 100 hotels in 16 countries around the world, and after Croatia (where it already has two luxury properties) it came to Montenegro with the aim to establish cooperation with HG “Budvanska Riviera”. They are especially interested in the complex “Slovenska plaza”, and the plan is to include in their catalogue the hotel “Palas” from Petrovac. Agreement of cooperation will be signed in June, it was announced to Radio Montenegro from Alfa tours. The arrival of “Iberostar” to Montenegro

and cooperation with one of the best travel companies will contribute to a better positioning of Montenegro on the world tourist map. Iberostar has owned the hotel “Bellevue” in Becici for the last 10 years.

Montenegro Tax Paradise for Yacht Owners

Monte ne gr o Gov e rnm e nt Forbade Off-Shore Companies to Participate in the Tender for Oil and Gas Exploration

The Montenegrin Government forbade off-shore companies to participate in the forthcoming tender for oil and gas exploration. In Information, adopted at the last session, it was clearly stated that companies coming from tax paradises and off-shore destinations, companies registered in jurisdictions where Montenegro’s relevant bodies have no access to both registration or financial statements are not eligible to participate in the tender. Also, non eligible companies are those without a transparent ownership structure, as well as companies with whom the state has had a negative experience. In this way, the Government has abandoned so far the practice of allowing offshore companies to apply as bidders and buyers in privatization processes of the largest Montenegrin companies such as the Aluminum Plant, Iron Plant and tourist resorts. The exact date of the tender has not been officially announced yet. According to the tender conditions, there are 13 blocks selected that once belonged to the block 3 in Ulcinj covering an areas surface of 3191 km2. There were 24 companies that expressed interest in pursuing exploration for ‘the black gold’, among which are aome of the world`s largest companies in this area: Gasprom (Russia), Exxon (USA), Statoil (Norway), etc.

Croatia’s accession to the EU in July this year will bring indirect short-term benefits to Montenegro when it comes to yachting tourism, because Croatia will become a part of a single customs territory of the EU. Citizens who have so far kept their yachts, registered in their own states in Croatia, will have to officially import and register them in Croatia, or re-register them under some other so called ‘flag of convenience’, or perhaps search for a new home for their ‘floating pets’ – firstly in Montenegro, Turkey or even along the African coast of the Mediterranean, these countries do not come under EU legislation. While Croatia was outside the EU, owners could keep their yachts and boats in its marinas in the status of so called ‘temporary admission’, which enabled them to avoid paying high taxes to their states. This will end on July 1, 2013, so the rich are already preparing to move to the next ‘nonEU’ destination. ■

Capital Marktets

We Introduce

CAPITAL MARKETS

Trade on the Stock Exchange

Stock Exchange Indices

During the first 4 months of 2013, turnover on the Montenegrin stock exchange amounted to € 7,49 million, thus showing a decline of 3.74% in comparison with the same period in 2012. The average monthly turnover during 2012 was only € 1.87 million, which was a little lower than the average monthly turnover in 2011 (€ 1.94 million). This indicates that the capital market crisis is not yet over. The decline in the turnover of the stock exchange during the first 4 months of 2013 was followed by an increase in executed transactions. During the first 4 months of 2013, a total number of 2.402 transactions were completed. This was 11,26% more than during the same period in 2011 (2.159 transactions).

The Montenegrin stock exchange uses the two indices, MONEX20 and MONEXPIF. The value of the Montenegrin Stock Exchange, MONEX20, upon which MSE’s 20 most liquid companies are traded, had started in 2012 with its constant decline and permanent oscillations, to reach its lowest value of 8.138 points on July 27th. Afterwards, the index kept rising until the end of the year, reaching its highest annual value of 9.184 points on December 31st. Index growth continued in January 2013, when it reached its peak of 10.247 points on 16th of January 2013, after which it begins to fall. Variations in index value have influenced all of the changes shown by shares represented in this index. In particular, the following were most affected: Telekom Montenegro, Jugopetrol Kotor, Prva Banka, Montenegrin Electric Transmission System, Atlas Bank and Container Terminal and General Cargo.

During the first 4 months of 2013, three types of securities were traded: company shares, privatizationinvestment fund shares and bonds which included Government bonds and Ministry of Finance bonds. The greatest turnover was recorded in the area of company shares (85.2%), followed by bonds (7,5%) and privatizationinvestment fund shares (7,3%). The shares of companies (6,24%) and bonds (36,9%) recorded an increase, while investment funds recorded a decrease in comparison with the same period in 2011 (69,02% respectively). Looking at shares on an individual company basis, the highest monthly trade volume was recorded in April, during the first 4 month of 2013; the First Bank of Montenegro shares reached a volume of 1.11 million on the A list.

The value of the MONEXPIF index has declined steadily with just a few oscillations since the beginning of 2012. It reached its highest level on 13 August with a total of 4.007 points. The lowest point was recorded on 21 June with 3.022 points. From January 2013, the index also continued to decline and the lowest point in this year was recorded on 24 April with 2.608 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 4 months of 2013 amounted to € 543.318 thousands, which is 60,03% less in comparison with the same period in 2012. In total, 565 transactions were made during the first 4 months of 2012. The most actively traded shares during this period were Trend (5.200 million shares), while the least traded were those of HLT (just 1 share). ■ TURNOVER STRUCTURE MONEX 20

MONEXPIF

DOING BUSINESS IN A CHANGING CLIMATE – building a case for adaptation (2)

by MSc Slavica Nikolic and MSc Dragana Mileusnic

Hydropower plant Piva (Source: http://www.a2amontenegro.eu)

In the previous issue we introduced the key issues surrounding the complex topic of climate change, its implications and potential adaptation options. We now present a success story, to demonstrate how accounting for climate change can bring benefits not only to the company but also to society as a whole, and thus inspire you to take this into consideration in your future business activities. We mentioned that climate change implications for businesses can be twofold; Originating from either physical hazards or regulatory frameworks. In this sequel, our focus is on damages and costs that may result from its physical manifestations. One of the climate impacts Montenegro is likely to face, is the change of the precipitation pattern. According to a recent study Technology Needs Assessment for Climate Change Mitigation and Adaptation for Montenegro, it is estimated that potential revenue loss caused by climate change at the Hydropower plant Piva may amount to around 7 million Euros per year as of 2030. Although this piece of information may seem a staggering figure, and

it refers to a distant point in time, it makes a striking point allowing us to perceive the potential scale of the problem. Clearly, for operational systems that are not as big and complex, the damages are likely to be less costly, but at the same time, these smaller companies might have weaker adaptive capacity, if having less resources at their disposal. So, if we are to prevent these types of losses, we need to act immediately. Alternatively, we will need to clean up after the damage has already been done. Governments and companies in developed countries invested substantial resources in technical advancements and research on this topic. Therefore, wise leaders should take from their experiences and learn valuable lessons that can be transferred and implemented in their respective sectors. Our focus in this issue will be at the sector that has been in the spotlight of Montenegro’s development agenda - energy. We mentioned potential variability of water resources and its implications for energy production, with particular emphasis on HPP Piva. Some of the world`s leading energy companies

experienced this similar problem years ago. One of them is HydroQuébec, Canadian utility company focused mainly on hydro source power generation. After an ice storm in 1998, they suffered $US 705 million damages. This was a wakeup call for the company’s management, who decided to allocate over a billion US dollars in infrastructural adjustments. They also invested in building a solid knowledge base enabling them to make better informed decisions in the future. One of the challenges they encountered is the difficulty of quantifying benefits from avoided climate change impacts, a problem concerning world class economists for years. Still, despite all the difficulties, Hydro-Québec expresses a high level of satisfaction with the gains resulted from their climate change adaptation investment program. Taking our case back to HPP Piva, we acknowledge that a tremendous amount of resources are needed for a similar programme to be implemented there. On the other hand, its owners, Montenegrin Electricity Company (EPCG) and their Italian partner A2A, might need to consider integrated management of their resources, and before taking serious investments in the infrastructural domain, consider collaborating more tightly with research institutions and strengthening the data allowing them to plan more accurately. We showed that uncertainty in this area is significant, but in accordance with the precautionary principle, we suggest incorporating this issue seriously in your future operations, planning and design. Similar recommendations can be made for other types of businesses potentially affected by climate change, such as those considering investing in mini and micro scale HPPs whose specific location and natural conditions of a site will determine whether they will succeed or fail in the years to come. Other opportunities will come from fast-changing regulations in the areas of climate and energy. We will provide an in-depth analysis in the following issue of Montenegro Business Outlook. To be continued…

EU Corner

MONTENEGRIN STEPS TOWARDS EU Montenegro opened and provisionally closed the 26th Chapter Education and Culture On the IGC between Montenegro and the European Union, which was held on 15 April in Brussels, the second negotiating chapter Chapter 26 Education and Culture was opened and provisionally closed . This section includes, among other things, the most important programs such as Erasmus Mundus, Tempus and Youth in Action, as well as Creative Europe Program, which are essential for citizens and enable thousands of Europeans to study and work abroad each year, improving cultural diversity, intercultural dialogue and learning. Bilateral screening process In April 2013 the bilateral screening of EU legislation was held on the following topics: 15th Chapter- Energy and 28 th Chapter-Consumer and Health Protection. Explanatory screening process In April 2013 an explanatory analytical overview was held about the following chapters: 16th negotiation Chapter -Taxes, 14th Chapter-Transport Policy and 9th Chapter relating to financial services. Resolution on Montenegro in the European Parliament In April 2013 the resolution on Montenegro in the European Parliament was adopted. The document can be downloaded at the following link: http://www.mip.gov.me/en/images/ stor i e s/dow n lo ad/ re zolucij apredlog-28012013.pdf ■ Source: www.mip.gov.me

Montenegro – Negotiations status Negotiations opened

Negotiations closed

1 – Free movement of goods 2 – Freedom of movement of workers 3 – Right of est. & freedom to provide services 4 – Free movement of capital 5 – Public procurement 7 – Intellectual property rights

The participants of the program are: new entrepreneurs, host entrepreneurs and Intermediary Organizations.

8 – Competition policy 9 – Financial services 10 – Information society and media 11 – Agriculture and rural development

New Entrepreneurs are defined as entrepreneurs in the early stages. This includes both nascent entrepreneurs, who are firmly planning to start their own business based on a substantiated business plan, and entrepreneurs who have recently started their own business.

12 – Food safety, vet. & phytosanitary policy 13 – Fisheries 14 – Transport policy 15 – Energy 16 – Taxation 17 – Economic and monetary policy 18 – Statistics

Host Entrepreneurs are successful and experienced entrepreneurs or people directly involved in entrepreneurship at SME management board level, according to the EU definition of micro, small or medium-sized enterprise.

19 – Social policy and employment 20 – Enterprise and industrial policy 21 – Trans-european networks 22 – Regional pol. & coord. of structural instr. 23 – Judiciary and fundamental rights 24 – Justice, freedom and security 26 – Education and culture 27 – Environment 28 – Consumer and health protection 29 – Customs union 30 – External relations 31 – Foreign, security and defense policy 32 – Financial control 33 – Financial and budgetary provisions 34 – Institutions 35 – Other issues Source: http://ec.europa.eu/enlargement/

Currently a call for the proposal “Erasmus for Young Entrepreneurs”, under the CIP program has opened. The general objective of the Erasmus for Young Entrepreneurs program is to help European entrepreneurs enrich their experiences, through learning and networking, and by spending periods of time in enterprises run by experienced entrepreneurs in other countries. It furthermore aims to enhance entrepreneurship, internationalization and competitiveness of new and established micro and small enterprises within the EU and in other participating countries. Who are the participants of the program?

6 – Company law

25 – Science and research

EU Funds In Focus:

18 December 2012 18 December 2012 15 April 2013

15 April 2013

Final evaluation of EU projects Evaluation (evaluation of projects and / or programs) is periodical evaluation of the effectiveness, efficiency, impact, sustainability and relevance of the program / project in the context of stated objectives. It refers to the general objective of the project and its purpose, and is engaged in the so-called long-term effect (impact). Given the stage of the evaluation cycle it is possible to distinguish between the following evaluations: the previous (ex-ante) evaluation prior to implementation of programs / projects, evaluation of progress (on-going) or periodic evaluation (interim evaluation) or a mid-term evaluation (midterm) in the implementation of the program / project, subsequent (ex-post) evaluation after the implementation of programs / projects. The objective of the evaluation is to understand better the project action, achieved results and prospects of impact and sustainability, as well as constraints and benefits from the project implementation. Identification of recommendations and lessons learned are also an important segment of final evaluation. The methodology used in the evaluation is based on the evaluation of programs / projects for the following five standard OECD-DAC criteria: relevance, efficiency, effectiveness, effects and sustainability. Evaluation criteria Relevance The extent to which the objectives of a development intervention are consistent with beneficiaries’ requirement, country`s needs, global priorities and partners’ and donors’ policies.

Intermediary Organizations are entities engaged in business support as their regular activities, which operate at national, regional or local level. Their role is to promote the program at national or sub-national level, recruit entrepreneurs, propose match-making services and establish successful relationships between NEs and HEs. ■

Efficiency A measure of how economically resources/inputs (funds, expertise, time, etc.) are converted to results.

The deadline for submission of proposals is: 09/07/2013

Sustainability The continuation of benefits from a development intervention after major development assistance has been completed. The probability of long-term benefits. The resilience to risk of the net benefit flows over time. ■

Source:http://www.erasmus-entrepreneurs.eu, http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=7429

Effectiveness The extent to which the development intervention’s objectives were achieved, or are expected to be achieved, taking into account their relative importance. Impacts The positive and negative, primary and secondary long-term effects produced by a development intervention, directly or indirectly, intended or unintended.

Source: http://www.oecd.org/dac/evaluation/daccriteriaforevaluatingdevelopmentassistance.htm

MBO Interview

Interview with Mr. Saygin Narin CEO of Global Ports Holding

Could you introduce us to your company’s past work and its plans for the future? Global Ports is a wholly owned subsidiary of Global Investment Holdings (“GIH”), a public company whose 99% of the shares trading in the Istanbul stock exchange. GIH was established in the early 90s as a stock brokerage and investment advisory house and has been a pioneer in the establishment and progress of the Istanbul Stock Exchange. In early 2004, it was re-organised as an Investment Holding Company. GIH currently holds investments in compressed natural gas distribution, power generation, mining, asset management, real estate development in addition to port Management and infrastructure. As Global Ports, we own the concession rights and operate three ports in the Mediterranean region of Turkey, namely Kusadası, Bodrum and Antalya Ports. All of our ports have cruise piers and we are proud to handle almost half of the total 2 million cruise passengers visiting Turkey. In Antalya Port, we handle some 250.000 TEU of containers and 3 million tons of General bulk cargo. Over the last three years, we have concentrated our efforts to increasing operational efficiency, marketing activities of our existing portfolio and have achieved great results. Our container volume has tripled in this three year period, on the other hand

the number of cruise passengers visiting our ports has quadrupled since the privatization. Having streamlined our existing operations, accumulated knowledge and financial resources and achieved the organic growth targets, we are now seeking inorganic growth through privatizations, PPP’s and trade deals. In addition to Turkey, we are mainly exploring opportunities in the Adriatic and Middle East. What are the main strengths of your Company? Why would someone choose Global Ports over other similar companies? Similar to Montenegro, we are young, dynamic and growing. We have gained very valuable experience in turning around Antalya Port and trust that this know-how could be applied to the Port of Bar. We are one of the very few companies that operate cruise terminals in addition to the container and general bulk cargo. We are also very experienced in privatizations and in working under a regulated environment. We have established strong bonds and work in collaboration with export-import communities, regulators, shipping lines and trade unions which I believe is one of the crucial reasons for our success. Why did you choose Montenegro as your next destination for investments? The foreign investment atmosphere in Montenegro has the crucial elements of financial stability, security, fair legislation and regulation and equal treatment of foreign based firms. Turkey and Montenegro on the other hand have long established cultural and political ties, which make us feel as comfortable as if we were visiting our next door neighbour. When it comes to investing in port business, we do not see the ports of Montenegro serving the Montenegro market only. We believe, provided that we can influence the logistic chain, the ports could easily serve the

About Saygın Narin: Saygin Narin is the CEO of Global Ports Holding since 2010 and a board member of the Port of Akdeniz, Kusadası Cruise Port and Bodrum Cruise Port. Mr Narin previously served as the Managing Director of the Turkish Division of Statkraft AS; the European market leader in renewable energy generation. Prior to joining Statkraft, Mr Narin acted as the head of the Energy division at Global Investment Holding where he oversaw acquisition, financing, licensing, engineering and construction and finally the sale of energy generation assets consisting of a licensed portfolio of 1000MW. Between 1999 and 2007 Saygın Narin held various positions in RWE and Thames Water in Turkey, United Kingdom and South East Asia. From 2005 to 2007, he acted as non-executive director of Trans4M, a special purpose company in the course of PPP project to upgrade a majority of the underground stations in London, and was non-executive director of the China Water Company in Hong Kong and RWE Thames Water in Thailand. Mr Narin began his career at PricewaterhouseCoopers in 1996 and holds a BA in Business Administration from Bosporus University. land locked countries such as Serbia, Kosovo and Bosnia Herzegovina. Container Terminal and General Cargo (CTGC) is a company that has not achieved great results lately. What would have to be done in order to make it competitive over other terminals in the region? What kind of potential do you recognize in Montenegro, especially with CTGC? First of all, I must say that we are long term investors. There have always been clinical cycles in the world economy, but in the long term there has been and there will be growth in trade and container volumes. Ports are one very significant link in the logistic chain, but it is just a link. The success of the port would depend mainly on the hinterland and logistics chain around the hinterland. These factors would need to be supported by efficient operations, modern equipment, solid infrastructure and impeccable service standards.

southern Adriatic ports. We will work on the land and rail logistic chains very closely to achieve this target. We plan to raise the service standards by investing in cranes and systems. We are already communicating with container lines to convince them to increase their calls to Bar. We also envisage the use of the existing covered warehouse capacity of the port to a larger extent. Last but not least, using our extensive cruise experience, we aim to use CTGC piers to welcome cruise ships. We believe the hinterland of Bar has a lot to offer to cruise passengers. ■

Currently CTGC handles approximately 30.000 TEU, most of these are destined for Montenegro itself. Our aim would be to re-convert CTGC to the main gateway for Serbia and Kosovo, both of which currently uses

Business News

Business News Cheaper roaming prices should apply to the EU candidate countries

Government: Companies on the white list will receive benefits

FYR Macedonia, in coordination with Serbia and Montenegro, will approach the European Commission to secure lower prices for roaming services, announced the President of the Electronic Communications Agency of the Republic of Macedonia (ECA), Robert Ordanovski.

Not later than 1 July this year, the government will publish a white and a black list of companies which will be based on those who pay their taxes to the state, and the others - who are the biggest tax debtors.

“Accepting this initiative would provide lower prices for services offered in roaming with European Union member states, which will help the citizens as end-users of telecommunications services, said Ordanovski. The European Commission has been trying for years to make telecommunication companies operating in the EU reduce their roaming costs. The EC announced earlier that it was willing to consider inclusion of the EU candidate countries under the law regulating the wireless communications industry. Under these rules, mobile operators must limit roaming prices for internet transmission to 70 cents per megabyte, not later than 30 June 2017. Pricing for phone calls must be reduced up to 29 cents per minute while text messages cannot exceed 9 cents per message. Executive Director of British company Vodafone, Vitori Colao, asked the EU not to cut roaming prices as this will lead to an investment reduction. However, the attitude of the EC is that lower prices will boost market opening. Source: www.pobjeda.me

How many companies will be in this list is not known yet, but it is certain that the State will try to reward those who regularly pay their taxes. Criteria for ranking will be regular payment. - The criteria upon which the ranking of companies will be made is regularity of service to the State, and, in this regard, the companies will not be selected by economic activities. The very presence of the “white list” would mean certain social recognition, and it will have a motivational component to other subjects – said Ministry of Finance spokeswoman Marija Radenovic. She explained that the state wants, in this way, to show respect to regular taxpayers. Source: www.gov.me

Montenegro 36th on the list of hospitality Montenegro is ranked 36th on the list of local population hospitality to visitors from abroad with a score of 6.5, made by the World Economic Forum. Better positioned than Montenegro are Macedonia (fifth place and 6.7), Bosnia and Herzegovina (eight place

and 6.6), and worse are Croatia (65th place and score 6.3), Slovenia (73rd place and score 6.2) and Serbia (87th place and score 6.1). The possible score range is from 1 to 7, with 1 being inhospitality and 7 an absolute hospitality. Most hospitable countries 1. Iceland 6.8 2. New Zealand 6.8 3. Morocco 6.7 4. Macedonia 6.7 5. Austria 6.7 6. Senegal 6.7 7. Portugal 6.6 8. Bosnia and Herzegovina 6.6 9. Ireland 6.6 10. Burkina Faso 6.6

Least hospitable countries 1. Bolivia 4.1 2. Venezuela 4.5 3. Russia 5.0 4. Kuwait 5.2 5. Latvia 5.2 6. Iran 5.2 7. Pakistan 5.3 8. Slovakia 5.5 9. Bulgaria 5.5 10. Mongolia 5.5

Source: www.pobjeda.me

A high human development in Montenegro Montenegro is ranked 52th out of 187 countries according to the Index of human development (HDI), which as they say in UNDP is a category of high human development. The Index of Human Development (HDI) is a summary measure for assessing long-term progress in three basic dimensions of human development: a long and healthy life, access to knowledge and a decent standard of living. “Montenegro shares this position with the Republic of Palau. Between 2005 and 2012, the value of HDI for Montenegro increased from 0.756 to 0.791, which is an increase of five per cent, “ it was announced by UNDP. HDI position of Montenegro in 2011, based on data available from 2012, and

methods that were used in 2012 – was 50th place out of 187 countries. “The HDI for 2011 ranked Montenegro in 54th place out of 187 countries. However, it is wrong to compare the values and positions with those published in previous reports, because the basic data and methods changed, “explains the UNDP. Source: www.undp.org.me

The World Economic Forum: Montenegro holding 48th position According to the new report by the World Economic Forum on competitiveness in the field of information and communication technologies, Montenegro dropped two places to 48th position, among 144 countries ranked. The 12t h Glob a l R ep or t on Information Technology, to which Mina-business agency had access, covered two countries more than the previous year. In last year’s report, covering 142 countries Montenegro ranked 46. Finland, Sweden and Singapore continue to be leading countries judging by the network readiness to use ICT. Network Readiness Index, on which the survey is based, includes four subindices – environment, preparedness, use and impact, all divided into ten areas. These relate to the political and regulatory, business and innovative environment for ICT, infrastructure and digital content, acceptability and skills. Sub-index use includes the willingness of individuals, businesses and governments for greater use of ICT, while the fourth sub-index refers to the economic and social impact of ICT. Looking at results in the ten areas under consideration, Montenegro achieved its best result in the field of economic impact of ICT, taking 39th place. Considering mobile phone subscriptions in proportion

to the population, Montenegro occupies fourth position, while by the individual use of the Internet holds 72nd place. In areas such as political and regulatory, and business and innovative environment, Montenegro is ranked 72nd and 41st. As for the readiness of individuals, businesses and government, it holds 56th, 71st and 47th place, respectively. Within the region, the best positioned country is Slovenia, in 37th place. It is followed by Croatia in 51st place, Macedonia 67th, Bosnia and Herzegovina, which has achieved a significant improvement from 84th to 78th position and Serbia in 87th place. The last place in this year’s report is assigned to African country Burundi. The study was jointly developed by the World Economic Forum and a leading international business school INSEAD.

is planned that the pipeline connecting the Albanian Fiera with Split, passes through the territory of Montenegro and Bosnia and Herzegovina. Energy Strategy of Montenegro recognized the Ionian-Adriatic Pipeline as a leading option for gasification of Montenegro. IAP is not only a chance for the gasification of Montenegro, but also the opportunity to place its own gas, which is expected to be discovered in the Montenegrin coast. Montenegro gave principle approval for the intended route of the IAP through its territory. Montenegro also received an additional grant for the preparation of the Gasification Master Plan, whose findings will enter the study on building the IAP. Source: www.gov.me

Source: www.weforum.org

A Draft of the Memorandum of Trans-Adriatic and Ionian-Adriatic Pipeline Adopted The Government adopted a draft version of the Memorandum of Understanding (MoU), signed between Montenegro, Albania, Croatia and Bosnia and Herzegovina for the support and cooperation in the implementation of the Trans Adriatic and Ionian-Adriatic Pipeline. - The MoU provides support to each Party in the development, financing and implementation of the TransAdriatic and Ionian-Adriatic Pipeline, preparation of the internal markets to receive gas from Azerbaijan and the Caspian region, and the interconnection of IAP with TAP – states the Information about the Conclusion of a Memorandum that the Government considered. The Ionian-Adriatic gas pipeline project aims at connecting gas networks in the Balkan countries. It

Editor in chief: Darko Pekić ceed@t-com.me MBO Team: Dragana Radević Mihailo Zečević Vesna Bojanović Jelena Međedović Jasna Žarković Biljana Janković Jovana Stojković ASSOCIATES Charles Brogden, Editor Marko Mihailović, graphic designer Front page picture: MBO archive

Coming Up! UDG has launched the Stock Exchange of entrepreneurial ideas

The aim of the Stock Exchange is to encourage the development of entrepreneurial and business ideas first of all, among students and high school students from Montenegro. Stock exchange is a place where students present their business ideas (“Offer ideas”). Accepted business ideas (10 of them) will be presented to the quotation of a business idea, and according to the Rules of the quotation of business ideas on the Stock exchange. The event will be held during the celebration of European Union day (May 9).

USAID’s RCI Access to Finance Event The Regional Access to Finance Event titled “Challenges and Opportunities for a BETTER FUTURE and GROWTH,” which is organized under the auspices of USAID’s Regional Competitiveness Initiative (RCI) will be held on May 14, 2013 at hotel Ramada in Podgorica, Montenegro. It is possible to register for the event by using the following link: http://registration.bcserdon.com/eventdetails. php?event_id=55

Free Market Road Show 2013

University of Donja Gorica (UDG) this year for the fifth time is a part of FMR (Free Market Road Show: www.freemarket-rs.com), a series of conferences are to be held in several European countries. The main theme of this year’s conference is: “To save or not to save: Will austerity programs alone save Europe”. The conference in Podgorica will be held on 23 May, starting at 10am. For the participation at the conference there is no participation fee, but all participants must be registered. All those interested can sign up by sending an email to fmrs@udg.edu.me, no later than 17 May at 11 am.