CorD Special Edition: Montenegro 2018 by CorD Magazine

MONTENEGRO 2018 Dragica Sekulić, Montenegrin Economy Minister: Preparing for EU Membership Responsibly ∎ Rafet Husović, Deputy Prime Minister for Regional Development: We Foster A More Balanced Development ∎ Darko Radunović, Montenegrin Finance Minister: We’ll Have a Stable Growth Path ∎ Aleksandar Andrija Pejović, Montenegrin Minister of European Affairs: Fully Devoted to EU Membership ∎ Osman Nurković, Montenegrin Minister of Transport and Maritime Affairs: Large Infrastructure Projects Increase Economic Growth ∎ Suzana Pribilović, Montenegrin Minister of Public Administration: Modern Administration Ready for Eu Integration Essential ∎ Dr Radoje Žugić, Governor of the Central Bank of Montenegro: Dynamic Economic Growth ∎ Emanuel Salinas, World Bank Country Manager for Bosnia-Herzegovina and Montenegro: Bold Fiscal Consolidation Steps Will Restore Stability ∎ Velimir Mijušković, President of the Chamber of Economy of Montenegro: Infrastructure Investments Will Pay Off ∎ Christoph Schön, President of the Montenegrin Foreign Investors Council (MFIC): Commitment to Reform Praiseworthy ∎ Sandra Štajner, GM, Telenor MNE: Company With a Vision of the Future ∎ Nikola Ljušev, CEO, Crnogorski Telekom: At the Forefront of Digitising Montenegro ∎ Zarija Franović, Director of the Port of Bar: We’ll Become the Region’s No.1 ∎ Radovan Orlandić, Director of Marina Bar JSC: Marina with three gold anchors ∎ Dragan Martinović, Martex d.o.o. (Ltd.): World Standard Products from Cetinje ∎ Prokopije Perić, CEO, Plus d.o.o. Podgorica: Listen And Fulfill Market Needs

SMALL COUNTRY OF GREAT VALUE

MONTENEGRO BUSINESS SECTOR

CONTENTS

2018

06 EFFECTIVE SAVINGS MEASURES, BUT CHALLENGES REMAIN Comment

08 PREPARING FOR EU MEMBERSHIP RESPONSIBLY Dragica Sekulić, Montenegrin Economy Minister

11 PEARLS OF THE BUDVA RIVIERA Corporate

12 MONTENEGRO’S ECONOMIC GROWTH FORECAST RAISED Economic Forecasts

14 COMPANY WITH A VISION OF THE FUTURE Sandra Štajner, General Manager, Telenor MNE

16 AT THE FOREFRONT OF DIGITISING MONTENEGRO Nikola Ljušev, CEO, Crnogorski Telekom

18 WE’LL HAVE A STABLE GROWTH PATH Darko Radunović, Montenegrin Finance Minister

22 WE FOSTER A MORE BALANCED DEVELOPMENT Rafet Husović, Deputy Prime Minister for Regional Development

25 ROAD TO NATO MEMBERSHIP Montenegro and NATO

SUNRISE OVER KOTOR BAY

26 FULLY DEVOTED TO EU MEMBERSHIP Aleksandar Andrija Pejović, Montenegrin Minister of European Affairs

30 DYNAMIC ECONOMIC GROWTH Dr Radoje Žugić, Governor of the Central Bank of Montenegro

33 WE’LL BECOME THE REGION’S NO.1 Zarija Franović, Director of the Port of Bar

34 BOLD FISCAL CONSOLIDATION STEPS WILL RESTORE STABILITY

36 COMMITMENT TO REFORM PRAISEWORTHY

DESIGNER Jasmina Laković j.lakovic@aim.rs

PROJECT MANAGERS Biljana Dević b.devic@aim.rs Nataša Trifunović n.trifunovic@aim.rs Vesna Vukajlović v.vukajlovic@aim.rs Nevena Đurković n.djurkovic@aim.rs

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of Transport and Maritime Affairs

Milo Milunović and Petar Lubarda

45 WORLD STANDARD PRODUCTS FROM CETINJE

60 GREAT NATURAL AND ECOLOGICAL POTENTIAL

Dragan M. Martinović, Martex d.o.o. (Ltd.)

46 WE ARE Emanuel Salinas, World Bank MEETING THE Country Manager for Bosnia-Herzegovina WISHES OF TOURISTS

COPY EDITOR Mark Pullen mrpeditorial@mail.com

TRANSLATORS Snežana Rakić

Suzana Pribilović, Montenegrin 39 MARINA WITH THREE GOLD ANCHORS Minister of Public Administration

53 LAZURE 40 INFRASTRUCTURE HOTEL & MARINA Corporate INVESTMENTS WILL PAY OFF 54 WINE, Velimir Mijušković, President of the BEER, BRANDY Chamber of Economy of Montenegro AND SUN Montenegrin Treasure 42 LARGE INFRASTRUCTURE 56 PAINTERS PROJECTS INCREASE OF TIME, SPIRIT ECONOMIC GROWTH Osman Nurković, Montenegrin Minister AND PEOPLE

Corporate

and Montenegro

MONTENEGRO BUSINESS SECTOR 2018

READY FOR EU INTEGRATION ESSENTIAL

Radovan Orlandić, Director of Marina Bar JSC

29 TIVAT MUNICIPALITY – PARTNER WORTH RECOMMENDING

EDITOR Ana Novčić a.novcic@aim.rs

PHOTOS Zoran Petrović

Christoph Schön, President of the Montenegrin Foreign Investors Council

Pavle Radulović, Montenegrin Minister of Sustainable Development & Tourism

50 MODERN ADMINISTRATION

OFFICE MANAGER Svetlana Petrović s.petrovic@aim.rs

EXECUTIVE DIRECTOR Maja Vidaković m.vidakovic@aim.rs

EDITORIAL MANAGER Neda Lukić n.lukic@aim.rs

GENERAL MANAGER Ivan Novčić i.novcic@aim.rs

FINANCIAL MANAGER Dragana Skrobonja d.skrobonja@aim.rs

PRINTING Rotografika d.o.o. Segedinski put 72, Subotica, Serbia

Ecology

64 BEAUTIFUL MONTENEGRO Montenegro

66 LISTEN AND FULFILL MARKET NEEDS Prokopije Perić, CEO, Plus d.o.o. Podgorica

Montenegro Business Sector 2017

E-mail: office@aim.rs www.aim.rs

Published by:

ISSN no: 1451-7833

alliance international media Makenzijeva 67, 11111 Belgrade 17, PAK 126909, Serbia Phone: +(381 11) 2450 508 Fascimile: +(381 11) 2450 122

COMMENT

Effective Savings Measures,

BUT CHALLENGES REMAIN Despite fiscal savings measures, Montenegro has succeeded in maintaining a high level of economic growth and remained committed to working on European Union integration. Nevertheless, in order for this result to be sustainable, and for the level of external indebtedness to be returned to an acceptable level, a lot more effort and skill are required to ensure the overall rating is positive

hen Montenegro embarked on a major investment cycle, many observers received this decision dubiously. From moderate indebtedness, the country entered the group of debtor countries with an unfavourable relationship between GDP and external debt, and a relatively weak economy exposed to strong external risks. Contrary to expectations, the economic policy measures of the Montenegrin Government in the past year have shown to have yielded extremely good results. The expected real growth of the Montenegrin economy in the first six months was well above the planned growth, i.e. 4.2%, as opposed to the planned 2.7%. Growth in the second quarter was an impressive 5.1%, which is one of the highest rates in Europe. Even more importantly, it has been shown that the assurances of the Montenegrin government – regardless of changes in the composition of its personnel – that is has a ready-made savings plan were not without foundation. Savings have so far been made without large cuts to budget and the administration itself, and also without posing a great need to raise tax rates. Such a high growth rate justified the aforementioned infrastructure works. Likewise, good results were helped in particular by excellent results in the tourist season and the continued growth of foreign investments. Major investments, primarily in transport infrastructure, which should serve to better connect the more and less developed parts of the country and allow for the penetration of investments and the development of tourism towards the country’s still underdeveloped North, have received a boost and are generally being implemented at the expected pace. Given that this primarily relates to road and rail infrastructure that is slow to generate profit, Montenegro will need a lot more skill to maintain macroeconomic stability and robust growth, whilst keeping its finances in check. Specifically, following this year’s GDP growth, estimated at four per cent, the pace is expected to slow next year and GDP growth in 2018 is forecast to total three per cent. As has been the case to date, growth is expected to be based on large investment projects in strategic economic sectors. The business sector praises the government for its openness to

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dialogue, but there is simultaneously a strong debate about the possible impact of VAT increases on the volume of economic activity. Still, what investors value in the long term is continuation of the government’s work on strengthening the country’s rule of law, reducing corruption and raising the efficiency of the administration’s work. In the meantime, a series of other measures have been adopted that should ease the work of the economic sector. This primarily relates to new attempts to accelerate the construction process, primarily with regard to large tourist complexes, given that the lengthy process of issuing building permits was previously considered as the single biggest obstacle on the World Bank’s Doing Business Index. Marked

The Montenegrin Government sent a signal to investors that it has taken fiscal stabilisation measures seriously. An open question remains over how the raising of the VAT rate will impact on continuing robust GDP growth success was also achieved on this front during this year. This year’s World Bank report ranked Montenegro 42nd of 190 ranked countries, which is an improvement of nine places compared to last year. This result was primarily recorded due to progress in the individual indicator of electricity generation, where Montenegro improved its position by 40 places, but some progress was also noted in the issuance of construction permits, primarily due to a reduction in financial costs, and in real estate registration indicators. What is undoubtedly pleasing is Montenegro’s dedication to European integration, which received wind in its sails as a result of the country’s membership in NATO and the administration’s good preparations for opening the remaining chapters. It is precisely these processes that are recognised by foreign investors as being of utmost importance to the continuous progress of the country in the long term. ■

INTERVIEW

Preparing For EU Membership

RESPONSIBLY

Montenegro is already, to a significant degree, behaving and acting in accordance with what is expected of a (future) EU member state, in the expectation that it will utilise the period until accession in the right way to prepare for membership

DRAGICA SEKULIĆ MONTENEGRIN ECONOMY MINISTER

he Government of Montenegro is continuously building the country as an attractive investment destination, with the aim of attracting large investors, and confirmation that Montenegro really is a safe destination for investment is provided by stable progress on the road to the European Union and the country recently joining NATO.

■ Montenegro has made significant progress in the past year with regard to several negotiating chapters that relate to your sector. What does this progress mean specifically when it comes to the institutional framework and practise? - When it comes to negotiating chapters in the Ministry of Economy, Montenegro this year closed one chapter temporarily

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(Chapter 30 - External Relations) and opened one chapter (Chapter 1 - Free Movement of Goods), which I consider as being extremely important steps in the entire negotiation process. Through the coordinated work of a large number of officials in various institutions of the system, the Ministry of Economy has done a tremendous amount of work when it comes to these two chapters and their opening or closing is confirmation that the Montenegrin market is increasingly prepared to become part of the EU market. ■ According to announcements of the European Commission President, Montenegro and Serbia could be the first new EU member states among the countries of the Western Balkans. How prepared is the domestic economy to be ready for such a big change in a relatively short time? - The path to the EU is equally as important as membership itself, because it is during negotiations that all the changes that are the reasons we are seeking to

become full members take place. And the entire negotiating process represents a kind of preparatory period for the economy in terms of what is expected from joining the Union, given the fact that with membership in the EU the EU trade policy is taken on in its entirety. I consider that actually entering the EU itself will be confirmation that our economy was ready to accept, or rather has already accepted, what is brought by membership. ■ In this context, how do you assess the competitiveness of the domestic economy within the European framework, and which EU Member States are your role models? - Montenegrin companies, but also entrepreneurs generally in the Western Balkan region, have been able to improve their business today more than ever. When I say this, I’m thinking of the fact that Montenegrin businessmen have the possibility of utilising state assistance that we provide through various support programmes, and then a significant number of them use and

CREDIBILITY

RESPONSIBILITY

EFFICIENCY

Foreign investors who operate in Montenegro know that they have a credible partner in our state and we intend to maintain such a reputation and further improve it

Our basic aim is to enable our economy, through the fulfilling of obligations contained in every chapter, to adequately prepare for everything that awaits it on the European market following accession

Our goal is to reduce the budget deficit by implementing fiscal reforms and to enter into a budget surplus by as early as 2020

take advantage of EU pre-accession funds and, finally, today more than ever businesspeople have the possibility to interconnect. This last point is perhaps the key when it comes to competitiveness in European frameworks. Today, in these times of globalisation, the issue of connectivity is crucial. However, in order to enable trade and economic integration, we must create all the prerequisites for high-quality infrastructure connectivity in the areas of transport and energy. That is why we are initiating and advocating stances, above all, on regional connectivity that will contribute to the greater competitiveness of our economy within the European framework. As for the role models you mentioned, it is healthiest to observe individual elements within each of the economies of EU countries and to strive to take on that which is compatible with your economy. The experiences of Slovenia and Croatia are extremely valuable to us. ■ What are the key measures of the government and ministries when it comes to strengthening the sector of the domestic economy and what kind of feedback do you receive from businessmen during the Business Caravan? - The Ministry of Economy has been implementing numerous economic support programmes for many years, and this year we decided that the Business Caravan would be a way for us to better familiarise businesspeople with the opportunities for support that we offer. Alongside that, for the next year’s budget we plan to support the economy with €2 million intended for direct investments, the development of clusters, the introduction of innovations and international standards in operations and the modernisation of industry and for the business zone project.

■ Montenegro has shown in the previous period that it is an interesting destination for attracting new investors. To what extent are investors who already do business

a reputation and further improve it by creating an even more competitive business environment. Montenegro has one of the most competitive tax systems in the region: the corporate tax rate of nine per cent is at the lowest level in the region. In addition to this, the Government has created numerous financial and technical support programmes for domestic and foreign businesspeople, which are realised on the principle of subsidies, refunding part of funds or exemptions, or reducing charges and taxes – depending on the programme itself. The most favourable incentives at present are based on the Decree on incentives for direct investments, which enables financial incentives for new investments directed towards the creation of new jobs, especially in less developed areas of Montenegro. Funds for investment incentives, which range from €3,000 to €10,000 per new employee, are distributed on the basis of a submitted application in response to a public advertisement that we announce annually, and that applies for investment projects

Tax reforms don’t bring new burdens on the economy, rather, on the contrary, we are considering the possibility of reducing the burden of income tax here satisfied with the business environment and what do you do in order to encourage them to reinvest? - We are continuously building Montenegro as an attractive investment destination, with the aim of attracting large investors, and confirmation that Montenegro really is a safe destination for investment is our stable road towards the European Union and the country recently joining NATO. Foreign investors who operate in Montenegro know that they have a credible partner in our state and we intend to maintain such

with an investment value ranging from €250,000 to €500,000, depending on the region, and which provides for the employment of at least 10 to 20 newly employed persons within a deadline of three years from the date of the conclusion of the contract on the use of funds with the Government of Montenegro. For capital investments with a value exceeding €10 million and which provide for the creation of jobs for at least 50 new employees within a deadline stipulated in the contract on the use of funds for stimulating investments, incentives can be awarded for a value of up to 17 per MONTENEGRO BUSINESS SECTOR 2018

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cent of the total value of the investment project, without the implementation of a points scoring procedure. ■ Continuing with the challenges currently confronting the economy, how have fiscal consolidation measures impacted on the country’s economic dynamism? - It has been shown that the economic policy measures of the Montenegrin Government have yielded very good results on the economic and developmental fronts in the past year. The expected real growth of the Montenegrin economy exceeds the planned level significantly; in the first six months we recorded growth of 4.2%, while 2.7% had been planned. In the second quarter alone, growth was an impressive 5.1%, which is one of the highest rates in Europe. What is very important is that even in the period of demanding fiscal consolidation, which implied increasing the rates of certain taxes, we succeeded in retaining the competitiveness of our tax system and we work to ensure the measures implemented are in no way detrimental to the operations of businesspeople. ■ In your opinion, will Montenegro be in a position to maintain relatively high GDP growth rates despite policies of saving and to what extent do the major infrastructure projects you are implementing contribute to this dynamic? - Real GDP growth of 4.2% generated in the first half of the year, which, as I said, exceeded even our own expectations, was greatly stimulated by the more intensive implementation of works on the construction of large infrastructure projects, and here I’m primarily referring to the construction of the highway, local infrastructure and tourist capacities. Additionally, a record tourist season, or significant growth in tourism, had a major impact on the real growth of the Montenegrin economy. On the basis of results achieved and current estimates, we expect real GDP growth to total four per cent by the end of this year, while next year we expect real GDP growth

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of three per cent. As has been the case to date, growth will be based on large investment projects in strategic sectors of our economy. ■ After a long period of uncertainty, it is now clear that Italian company A2A, which – after the state – is the largest shareholder of Electric Power Industry of Montenegro (EPCG), is withdrawing from the ownership of this company. What precisely

some new partnership if such a decision is taken, successfully carry out strategic policies in the field of energy. ■ How much progress has been made on the project to construct the second block of the Thermal Power Plant in Pljevlja? - Negotiations for the implementation of this project are continuing and in the upcoming period we expect the Steering Committee for Project Design to be determined according to the offered technical-financial-legal aspects of Škoda Prague and General Electric, and in accordance with that define further activities and alternatives. Regardless of the ongoing negotiations, the current state of the electrical energy sector can undoubtedly develop through the economically and ecologically justified use of coal and electricity production in the Pljevlja area, and we will enable that not only through the construction of a new production facility, but also through certain investments in the existing Block I. ■ A question was recently raised over whether acceptance of the Paris Agreement on Climate Change calls into question the reconstruction of the existing block and the construction of a new block at this thermal power plant. What do your figures show?

We are in constant communication with businesspeople, because that’s the only way we can know where additional efforts should be exerted for the investment environment to be even better does this mean for this company and Montenegro’s energy sector? - The change in the ownership structure EPCG in no way changes the fact that this company was and remains a pillar of the Montenegrin electro-energy system and that it has enough expertise in its structure to lead development policy in the field of energy. Notwithstanding the fact that the entry of Italian company A2A into the ownership structure of EPCG in 2009 had positive effects for Montenegro, or for its energy and economic sectors, I consider that EPCG is today an enterprise that can independently, or in

- The Paris Agreement does not exclude or prohibit signatories that are largely EU members from realising the full value of their thermal energy potential, but rather only requires the use of such technologies that will minimise the negative impacts of thermal energy. The creation of the new production facility in Pljevlja will provide a tangible contribution in the joint fight against the negative impacts of climate change by gradually eliminating the negative impact of existing ways of utilising coal and working in accordance with the highest European standards when it comes to environmental protection. ■

CORPORATE

Pearls Of The Budva Riviera The hotel group 'Budvanska Rivijera' is one of the leading hotel systems of Montenegrin tourist destinations, which contributes with its operations to the creation of new standards in the competitiveness of the tourist market through continuous innovations of hotel contents and services

he last decade was marked for this hotel group by the adaptation of five hotels that are within the composition of the group, which contributed to better positioning on the market, the authenticity of the tourist product and the new image of the company. This company possesses 1,608 accommodation units in the hotels Aleksandar, Mogren and Slovenska plaža in Budva, as well as hotels Palas and Castellastva in Petrovac. With over €45 million invested from the group’s own funds, this hotel group has built a stable hotel system in the last decade, which is the driver of the hotel business in Montenegro. The Slovenska plaža tourist resort, with 1,016 accommodation units, is a symbol of tourism in Budva and Montenegro, and its integral ten villas are divided into two categories, with a specific offer that characterises the business of tourist resorts and brings a distinctive charm to the company’s brand. An unavoidable part of Budva’s tourist offer for decades has been the Hotel Mogren, which – with its location in the immediate vicinity of the old town and with its irresistibly attractive terrace of the city tavern – is a gathering place for visitors to the city. An interesting tourism story is represented by the hotel Aleksandar 4 ***, the adaptation of which was completed in May this year, and following renovation it now operates under the world-famous Blue Star brand, bringing the TUI Group

to Montenegro for the first time. The group’s other hotel resources are located in Petrovac, where the hotels Palas 4+**** and Castellastva 4**** are located in the immediate vicinity of the beach.

KATARINA KAŽANEGRA, Executive Director

ognitions received by this hotel group is the award received by the Palas Hotel from the World Tourism Organisation in the category of Wedding Destination of Montenegro. Monitoring trends, researching the market and analysing the potentials of its own hotels leads the group to constantly address the need to introduce novelties to its hotel offer. Thus, for the first time this year the offer of Hotel Palas has been upgraded with new winter package arrangements, with which this hotel has created a platform for the concept of year-round business. The tourism sections of wellness, romantic, family and mice packages have refreshed the offer of this hotel and represent a new challenge to operations, with

Monitoring trends, researching the market and analysing the potentials of its own hotels leads the group to constantly address the need to introduce novelties to its hotel offer The Hotel Castellastva has 171 rooms and 14 deluxe apartments, a new swimming pool, an aperitif and pool bar, as well a part with wellness facilities. The tourist product of this hotel is adapted to the Toucan Club concept, which is the brand under which Castellastva has been operating for the last four years. The highest category hotel within the group is the Palas”, which is rank as a 4+**** hotel and justifiably carries the epithet of the Star of the Group. Another in the series of professional rec-

seasonal work halted in the operations of Hotel Palas for the first time. Another segment of the Palas’s tourist product, which has been part of the regular offer for the last 12 years, is the festive New Year’s Eve programme. This year’s New Year’s Eve programme will be in the melodies of the famous songs of Lepa Brena, the group Magazin, Aco Pejović, Halid Bešlić, the Creative band and the trumpeters of the Dejan Petrović Big Band orchestra. ■ MONTENEGRO BUSINESS SECTOR 2018

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ECONOMIC FORECASTS

Montenegro’s Economic Growth Forecast Raised The World Bank recently raised its projection for Montenegro's economic growth in 2017 to 4.2 per cent, which is 0.9% higher than the forecast published in its June 2017 Global Economic Prospects Report

ontenegro’s GDP is expected to grow by 2.8 and 2.5 per cent in 2018 and 2019 respectively, according to the World Bank’s October 2017 Europe and Central Asia Economic Update Report. “After slowing in 2016, growth increased in 2017 due to a surge in investment and tourism. Despite a rise in employment and unemployment rate decline, the labour force participation rate remains low. Poverty is estimated to have declined in 2016, as social transfers surged,” reported the World Bank. “Despite a positive economic outlook and ambitious fiscal strategy for regaining control over public finances, short-term social impacts of fiscal consolidation and facilitating access to employment for women losing mothers’ benefit remain the challenge of the policy agenda,” the bank added. Montenegro’s economy is expected to grow by an average of 3.2% annually in the 2017-2019 period, driven by public investments and personal consumption. While investment growth will slow down as the construction of the Bar-Boljare highway reaches its conclusion, its contribution to growth will remain strong throughout the projected period, the World Bank noted. Current imbalances are likely to remain high, given the current growth pattern’s import dependence. Inflation is projected at two per cent in the 2017-19 period, with the VAT rate rise adding to current inflation growth. The fiscal deficit is projected to be reduced to two per cent in the 2017-19 period,

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of structural reforms would be required for their moderation,” noted the report. According to the report’s estimate, the Montenegrin economy expanded by 2.5% in 2016.

achieving a balance in 2019 and maintaining a surplus thereafter, to comply with the fiscal rule by 2022, the World Bank noted. While the authorities work on strengthening financial sector regulation, the private sector needs to address weaknesses in some non-systemic banks and use the recently adopted framework to resolve non-performing loans (NPLs).

INTERNATIONAL MONETARY FUND On the other side, the International Monetary Fund (IMF) said it expects the Montenegrin economy to expand in real terms by three per cent in 2017, down from April’s projected 3.3%. Montenegro’s GDP is expected to grow 2.8% in 2018 and 3.1% in 2022, according to the IMF’s latest World Economic Outlook report. The Fund envisaged back in April that Montenegro’s GDP, which expanded by 2.5% in 2016, would grow by 3.4% in 2018. The IMF expects average consumer

While the authorities work on strengthening financial sector regulation, the private sector needs to address weaknesses in some non-systemic banks and use the recently adopted framework to resolve non-performing loans (NPLs) “The positive economic outlook faces high but moderating risks. Growing public debt calls for decisive implementation of the recently adopted fiscal consolidation programme, to create the space for an orderly servicing of the large (above 16% of GDP) refinancing needs in the 2019-2021 period. External imbalances are still high, adding to an already high external vulnerability. Enhancing policy predictability and accelerating the pace

price inflation of 1.6% in Montenegro in 2017, up from one per cent in 2016, while average inflation is predicted to hit 2.6% in 2018 and 1.9% in 2022. Montenegro’s current account deficit is projected at 20.2% of GDP in 2017, before increasing to 21.2% next year. The shortfall is expected to shrink to 14% of GDP in 2022. The current account gap stood at 19% in 2016. ■

CORPORATE

SANDRA ŠTAJNER, GENERAL MANAGER, TELENOR MNE

Company With A Vision Of The Future Montenegro is the first country in the region where mobile operators have applied the electronic registration of new prepaid customers – says Telenor MNE General Manager Sandra Štajner

ith the vision to empower societies and the mission to help customers gain the full benefit of being connected, Telenor has been operating successfully in Montenegro for 21 years. “The fact that we have maintained leadership positions in revenue market share, number of customers and SIM share after 21 years of operations means that success is not only a result of the quality of our services, but also our ability to change and adapt to changes in customers’ needs,” says Štajner, speaking for this special edition. - At the same time, the telecommunications market is very dynamic, requiring constant changes and significant investment, while the total market value in Montenegro has been declining over the past five years. The situation in the region is similar - markets are either declining or remaining flat. With such trends, it is important for all telco players and all foreign investors to operate in a stable business environment, within a transparent and predictable regulatory framework. It is also of utmost importance for us to innovate the way we operate. We have completely modernised our network in 2017, enabling the latest generation technology at more than 360 locations all over Montenegro, while simultaneously extending the 4G signal. Transformation has become the key word in today’s business environment.

■ Telenor is not only a global operator, but also a regional “player” with an

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enduring tradition. Is there an internal competition when it comes to the regional market? - It is not about competition, but rather about synergy – we try to combine successful practices and apply them to regional markets. We also utilise the advantage of being part of the Telenor Group, applying experience from Europe and Asia to local markets and vice versa. For example, Montenegro is the first country in the region where mobile operators have applied the electronic registration of new prepaid customers. We shared our experience here with other operators in the region, as it has proven successful.

transformation across the world is valued at over 100 trillion dollars. Gartner estimates that digitisation will bring an additional 1.5 million IT service and application jobs by 2020. The digitisation of Montenegro is a key to the further development of its economy and society in general.

■ The Telenor Foundation publishes open invitations for projects that contribute to reducing inequality. Are you satisfied with the projects and their effects? - During the previous three years we have implemented over 20 projects that have addressed various social challenges. We are

Telenor completely modernised its network in 2017, enabling the latest generation technology at more than 360 locations all over Montenegro, while extending the 4G signal ■ You noted recently that digitisation should be seen as an opportunity and not a threat. How much has Telenor contributed to changing awareness in that direction? - We often hear that the digital transformation is the 4 th industrial revolution. Digitisation will have an enormous impact on efficiency, due to new technologies, but it will also have huge social, cultural and environmental impacts. According to the World Economic Forum, the financial potential of the digital

particularly proud of the fact that we are contributing to the digital safety of children. Every second child in Montenegro does not feel safe on the internet. Following the “Surf wisely” project, conducted over the course of five years, we entered the next phase in this area by signing a three-year cooperation agreement with UNICEF. By partnering with Government of Montenegro, particularly the Ministry of Education, we aim to introduce new educational tools to primary schools and provide digital literacy education for every child in Montenegro. ■

CORPORATE

NIKOLA LJUŠEV, CEO, CRNOGORSKI TELEKOM

At The Forefront Of Digitising Montenegro “We will work jointly on digital literacy, e-government and e-services for all citizens and businesses,” says Crnogorski Telekom CEO Nikola Ljušev

igitisation reshapes the telecommunications industry. At the same time, it is a great opportunity for the whole society. These general assessments that it’s tough to disagree with become much clearer when analysing a specific case in a specific society. Crnogorski Telekom is dedicated not only to its own business, but also has a profound impact on the country’s entire digitisation process. “Digitisation is not only a technological revolution, it’s about redefining societies, industries and our lives as individuals,” says Ljušev. - The role of telecoms in the digital transformation of societies is crucial and we believe it is our responsibility to be at the forefront and shape future developments. We are an enabler of digitisation and a driving force, thanks to the ubiquity and connectivity of our network, innovative smart home/city and cloud solutions. Crnogorski Telekom is committed to accompanying the Montenegrin Government on its digitisation path. We are in the process of signing a memorandum of understanding with the Government for establishing the Partnership for Digital Montenegro, which will provide the foundation for very tangible steps to be taken in the digitisation process. We will work jointly on digital literacy, e-government and e-services for all citizens and businesses. In parallel, we have already started working on a couple of Smart City proof-of-concept projects, like smart-parking, air and noise pollution monitoring, smart-bench etc. Crnogorski Telekom intends to address the local market in the coming period with a wide range of

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different Internet of Things (IoT) solutions developed for specific industry verticals, thanks to the scale of DT Group and its strategic commitment to IoT. Technology allows us to do things better, faster and more conveniently, and Crnogorski Telekom is going to use all of its production capabilities, superior quality and innovation capacity to be a valuable partner in Montenegro’s digitisation process.

experience. We believe that customer experience is a strong differentiating element that also creates a sustainable competitive advantage for the company. The explosion of data services and constant demand for higher speeds is an inevitable trend and, thanks to our strategic investments in frequency assets, we are in an excellent position to cope with these demands in the long run.

■ P3 Communications confirmed Crnogorski Telekom has the best network in Montenegro. What does that mean for the company and your customers? - I am very pleased with the fact that Crnogorski Telekom, for the third year in a row, won the P3 Communications’ Best in Test certificate

■ Crnogorski Telekom is also recognised as one of the biggest investors in the country. How much does the telecommunications industry contribute to the state economy? - The telecoms sector contributes significantly to the economic performance of the country, with nearly a six per cent share of GDP. In the

Crnogorski Telekom is in the process of signing a memorandum of understanding with the Government for establishing the Partnership for Digital Montenegro, which will provide the foundation for very tangible steps to be taken in the digitisation process for mobile network quality. Achieving the best results in an independent network quality measurement at the national level, based on widely recognised methodology in more than 30 countries, means that we have by far the best mobile network in the country and that our continuous investments are clearly visible and recognised. All this motivates us to continue to invest in network development and consistently provide the best customer

last business year alone, Crnogorski Telekom invested more than 46 million euros in the Montenegrin telecommunications market, while investments over the last ten years in the modernisation of the network, infrastructure and equipment in Montenegro have exceeded 200 million euros. We plan to continue strong investments in our next generation broadband networks, in order to seize the opportunities that are ahead of us. ■

INTERVIEW

We’ll Have A Stable

GROWTH PATH If we compare the current situation to the one less than a year ago, we can state unreservedly that the overall macrofiscal situation has improved significantly and that we have a stable growth path for the coming period. This is not only our assessment, but also that of the IMF and the World Bank DARKO RADUNOVIĆ MONTENEGRIN FINANCE MINISTER

he government is determined in its intention to work, with other social structures and with the support of all those who see a partner in Montenegro, to present and complete the process of reforming our society, says Darko Radunović, Minister of Finance in the Government of Montenegro. ■ How do you assess the overall macroeconomic situation at this time? - Based on available macroeconomic indicators, I can say with satisfaction that the Montenegrin economy achieved results in the first half of the year that are significantly above those planned. Specifically, growth was recorded in employment (3.5%) and earnings (2.3% -ARS), while goods exports and retail

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sales also increased. Moreover, the latest official data on GDP growth shows that in the second quarter we achieved a real economy growth rate of 5.1%, which elevated our country to fifth position in terms of growth rates in Europe. At the same time, the real growth rate in the first half of this year was 4.2%, which is also among the best in Europe, and I can state unreservedly that we expect this growth trend to continue until the end of the year, when we expect to achieve a growth rate of four per cent of GDP. The greatest impact on growth was caused by the personal consumption of households and the final consumption of the state. Furthermore, we also had record results in tourism this year, and there are realistic expectations that by the end of the year we will exceed the projections set when we started implementing fiscal consolidation measures. ■ What effect has been achieved by fiscal stabilisation measures implemented to date? - Data for the first nine months of 2017 show that realised budget revenues

amounted to €1,116.1 million and were higher in relation to the plan and compared to the comparative period of 2016 by €1.3 million, or €32.9 million. Likewise, budget expenditures were €100 million lower than planned, or 7.6%, primarily due to the lower realisation of the capital budget, and during those nine months amounted to €1,218.8 million. As a result of these movements, we realised a budget deficit of €102.6 million, the largest share of which, i.e. 98.5% or €101.1 million, related to capital expenditures, while current expenditures were financed from source revenues, which is the goal of the Montenegrin Government’s fiscal policy. ■ How dependent is Montenegro on the expert technical assistance of international organisations, such as the IMF and the World Bank, when it comes to formulating the best fiscal stabilisation policies? - The Government of Montenegro independently manages economic policy and in that sense it autonomously makes decisions and is responsible for their implementation.

THE GOVERNMENT

MANAGEMENT

ENERGY

The Government of Montenegro independently manages economic policy and in that sense it autonomously makes decisions and is responsible for their implementation

In the coming period, the management of the expenditure side will be aimed at reducing the relative share of discretionary spending in GDP

The project to connect the electricity systems of Montenegro and Italy via an undersea cable will be completed in 2019 and will position us as an important electricity hub in the region

On the other hand, we have established long-term cooperation with all relevant international financial institutions, first and foremost the IMF and the World Bank, which have the most complete databases, state-of-the-art working methodologies and techniques, experts in various areas of management and, perhaps most significantly, experience of a global character. These are significant resources that are particularly valuable in phases of devising development models through reforms or creating a mid-term framework for remedying the vulnerability of the fiscal system, as was the case with us.

of up to €295 million, €105 million of which is for the repayment of debts and obligations from the previous period and for the financing of the capital budget, while €190 million is from EXIM Bank for the construction of the highway. These figures indicate that demand for borrowing on the domestic and foreign markets has reduced significantly compared to previous years, given

■ What are your estimates like whne it comes to the effects of savings measures on the growth of social product? Will you be able to maintain the current high rate of GDP growth in the next year? - Considering the movements of the main growth drivers, primarily the construction sector, as an indicator of investment activity, with estimated gross

In the coming period, the management of the expenditure side will be aimed at reducing the relative share of discretionary spending in GDP investment of over €1.1 billion, as well as the tourism sector, with the estimated effects of the tourist season standing at around €950 million, it is essential to exert additional efforts in order to achieve those rates again in 2018. Bearing all of this in mind, we have projected an average growth rate of 2.8% for the 2018-2020 period. ■ How much do you plan to borrow on the financial market and how will that money be used? - The proposal of the Budget Law for 2018 envisages borrowing in the amount

that indebtedness in 2016 amounted to €655.4 million and in 2017, according to the budget plan, totals €455 million. We also expect to gain financial support of €80 million in the form of the World Bank’s PBG-Policy Guarantee, with the borrowed funds to be used exclusively for debt repayment. ■ How would you estimate midterm debt risks that are above optimal, in conditions where growth in interest rates is expected on the world market? - At the end of the third quarter of 2017,

Montenegro’s public debt amounted to 2,633.25 million euros, and by year’s end, according to projections, that figure will reach the amount of 2,779.79 million euros. According to the fiscal consolidation plan that we’ve placed in the focus of fiscal policy for the medium term, we expect the movement of debt to begin to fall in 2019, and for the level of public debt to fall below 60% of GDP in 2022/2023. In the coming period, from 2019 to 2021, we are awaited by the repayment of obligations on the basis of eurobonds, and we are now already considering options that would represent the best model for settling these obligations. In this sense, one option is to reissue bonds through which the existing ones will be repaid, in order not to come ot an increase in the debt, but rather to replace the previous new bond, while considering the possibility of a longer maturity period for their repayment. Another option is the issuance of a new bond that would significantly reduce the amount of existing bonds and reduce liabilities in the medium term period. The price of bonds depends not only on the current economic situation of Montenegro, but also on macroeconomic developments in the world. In this part, there are announcements of interest rate increases by the FAD and the ECB, but a question arises as to how much they will influence the growth of interest rates. According to some announcements, the market is expected to absorb a rise in prices when it comes to dollar bonds, while for euro bonds we will see the effect on the rise in interest rates. ■ How satisfied are you with the revenue side of the budget and which measures do you plan for improving tax revenues? - As I already mentioned, data on revenues for the January-October period show that collection in comparison MONTENEGRO BUSINESS SECTOR 2018

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with the comparative period last year increased by 4.2%, and in relation to the planned level by about one per cent, which is reason for us to be completely satisfied. In addition, from 1st January 2018, the measures established by the Fiscal Strategy of Montenegro 2017-2020, which relate to increasing the standard VAT rate, introducing excise on carbonated water with added sugar, introducing excise on coal and fiscalisation of cash registers, which – with the intensification of activities to reduce the level of the grey economy and tax receivables, will achieve a significant increase in budget revenues. ■ Which sector of companies can have expectations when it comes to changes in the tax system, in addition to the already adopted changes in VAT rates? - The programme of fiscal consolidation of the projected changes in the tax system refers to increasing the VAT rate from 1st January by two percentage points and the harmonisation of excise calendars for the mentioned excise products that do not increase the costs for the economy, and on the other hand are not existential products for citizens and have a harmful impact on health and the environment. There won’t be increases in other rates in the tax system, but changes can be expected with the aim of simplifying the tax procedure, reducing the taxpayer’s expenses in terms of charging and paying taxes, or shortening the time needed for administering taxes in companies. In the period ahead, the Government will consider the possibility of reducing the amount of social security contributions, as this category is the only one recognised as the one that exerts a higher burden on employers. ■ On the expenditure side there has already been a reduction in public sector wages. In the coming period, are you planning other measures to reduce expenditures? - Budget expenditure reductions will be achieved with appropriate measures of rationalisation and savings. During their conception, care was taken to ensure the establishing of measures that would have

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the least negative impact on economic growth and living standards. Through two recovery packages, in December 2016 and July 2017, a correction came on the expenditure side for certain positions, which – along with measures on the revenue side – resulted in fiscal consolidation. ■ How will the reduction of expenditures be reflected in the level of capital investments? - In the previous period there was a significant increase in expenditures for capital projects. Here I’m primarily referring to the construction of the priority section of the Bar-Boljare highway, but significant investments are also being

component of the budget and thereby provide a greater contribution to the overall development of Montenegro. ■ When will the current large infrastructure projects start to yield profits and how much is it possible to count on these revenues in future calculations of the revenue side of the budget? - The project for the construction of the Bar-Boljare highway will have its fully expected effects once it is completed in its entirety. In that sense, it is also necessary to observe an increase in budget revenues, through the payment of tolls. It is expected that the priority section of the highway, Uvač-Mateševo, is expected to be completed in 2019. The project to connect the electricity systems of Montenegro and Italy via an undersea cable will be completed in 2019 and will position us as an important electricity hub in the region. The expected multiplicative effects of these projects will give an additional impetus to economic activity and along with it the growth of public revenues and the strengthening of macroeconomic stability. ■ What do you consider the greatest challenges to macroeconomic policy in the coming year? - The projected macroeconomic frame-

I’m convinced that we have enough capacity, determination and strength to achieve our goals and the dynamics of our growth and development, through dedicated work invested in other road infrastructure, then projects that should encourage the development of tourism in the north of the country, projects worth tens of millions of euros, as well as projects intended for the needs of education, social expenses, culture... The capital budget, without the motorway, ranges between 75-80 million euros annually, while in individual years, when the proceeds from loans and donations are more significant, this amount is considerably higher. Upon the completion of works on the highway, it is planned to increase these expenditures, in order to strengthen the development

work and our plans can jeopardise the slowdown in the dynamics of key investment projects, which would make our fiscal projections unrealistic in the medium term. On the other hand, inconsistency in the implementation of financial consolidation measures, i.e. the failure to fulfil the planned expectations would have a negative impact on the budget deficit and on the control of public debt, which would result in a new re-examination of our financial capacities. I believe the Government is determined in its intentions to present and complete the reform process of our society. ■

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INTERVIEW

We Foster More Balanced DEVELOPMENT The Government of Montenegro believes the balanced development of the region is of utmost importance. In addition to existing incentive measures, there is room within the area of tax policy to provide even stronger motivation for potential investors to invest in the north of the country and open new jobs, leading to a decrease in internal migration

RAFET HUSOVIĆ DEPUTY PRIME MINISTER FOR REGIONAL DEVELOPMENT

he main strategic goal of Montenegro for regional development during 2014-2020 is defined as “achieving a more balanced socio-economic development of all local self-government units and regions, based on competitiveness, innovation and employment”. Achieving competitiveness at all levels was recognised as a key problem, and overcoming it should contribute to increasing employment, productivity and social cohesion at the regional and national level. The basic goal of the Strategy is complementary to the “Directions for the Development of Montenegro for 2015-2018”, the “Sustainable Development Strategy for Montenegro by the end of 2030”, “South-East Europe Development Strategy by the end of 2020”, as well as other sectoral development strategies of importance for regional development and strategic development plans of local self-government units. ■ What are the key measures used by the Government of Montenegro to foster balanced regional development?

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- First of all I would like to mention the incentive measures provided through the business incentives programme under the Ministry of Economy, with special incentive measures for the Northern Region of Montenegro, ensured access to extremely favourable loan funds provided by the Government of Montenegro through the Investment Development Fund (IDF), and the modernisation of existing transport routes. Significant progress was also made in the construction of the motorway. This will contribute to better links between the northern region and the central part of Montenegro, as well as faster access to the Bar port, where further transport of goods can be performed in a far more competitive manner. Likewise, significant funds have been allocated by the Government through the Equalisation Fund (EGL Fund) to assist underdeveloped municipalities. ■ How do you assess the success of these policies to date and where do you see room for further action? - The overall assessment would be that significant progress has been made, and the success to date can be analysed through significant improve-

ments to the road infrastructure, as well as the provision of considerable incentive measures. There is room for further activities precisely in the proper use of the incentive measures, since they are currently being seriously underutilised. Within the area of tax policy there are many more options to motivate potential investors to invest in the Northern Region and open new jobs. ■ How do you see Montenegro’s relations with neighbouring countries? - Montenegro can truly boast of being a country within this region with almost no open issues with its neighbours. There are a few smaller issues, but they have no essential impact on our relations with our neighbours. Thus, the overall assessment would be that the relations of Montenegro with neighbouring countries are a positive example for the entire region and beyond. This trend of positive relations has been particularly significant and has improved since the acquisition of Montenegrin independence in 2006. ■ To what extent did Montenegro joining NATO affect the foreign

COOPERATION

INCENTIVES

TOLERANCE

Political dedication to regional cooperation is of key importance and it must be set up on a realistic basis, in accordance with the needs of the region

Within the area of tax policy there are many more options to motivate potential investors to invest in the Northern Region and to open new jobs

The Bosniak side, as one of the constituents of Montenegrin authority, is making an effort to guide members of the Bosniak community towards forgiveness and respect

policy position of the country and the creation of new partnerships with member states? - Montenegro joined NATO relatively recently, just over six months ago, and it is too early now to speak of results related to partnerships. It is certain that by entering the NATO alliance Montenegro gained credibility regarding its foreign policy position, because it is well known that a country has to meet certain preconditions to join the NATO alliance, with the key precondition being the adoption of democratic principles. If this was not the case, we would not have become a NATO member state. The fact that all member states of the NATO alliance ratified the agreement on the

accession of Montenegro to NATO shows that Montenegro already has developed partnerships with NATO member states, but also with EU member states, as well as the international community in general.

acquired independence, particularly since the period of 1998. During 1999 that process became an official and clear policy of the Government of Montenegro, leading us to actual membership in NATO, as well as to the doorstep of full

Montenegroâ&#x20AC;&#x2122;s relations with neighbouring countries are an example for the entire region and beyond â&#x2013; To what extent did the EuroAtlantic integration process affect the strengthening of joint activities between Montenegro and other countries in the Western Balkans and other partners? - The process of Euro-Atlantic integration was a goal for Montenegro far before it

integration into the European Union. Other Western Balkans countries have also found themselves on this path, and our shared experiences have lead to close ties. So, the Western Balkans is the segment of the Balkans countries that have not yet joined the European Union (EU), with the exception of Croatia,

already a member state, sharing many similar characteristics, whether regarding the degree of political and economic development, or their path towards the European Union. Regional cooperation needs to be viewed and positioned as a key principle for political stability, security and economic development for the Western Balkans. ■ Where do you see room for improving regional development, cross-border cooperation and economic and political relations with neighbouring countries? - We can view regional cooperation through three aspects: economic, security and political. The economic component is easy to achieve, because capital will find channels to flow regardless of the views or barriers caused by political decisions, thus it is certainly hard to find arguments against the liberalisation of trade, flow of capital and other forms of improving economic development. Only open and constructive economic cooperation, with the support of the EU and other relevant international factors, can contribute to the creation of new jobs, improvement of the living standards of citizens and the true integration of the region into the EU. The security issues have a special dimension within this region. We should not speak of them much, since they are produced as a consequence of a lack of cooperation and lack of mutual understanding. ■ What migratory flows are the most typical for Montenegro? - There are several types of migratory flows found in Montenegro, as well as more reason for migration itself. First, we have internal migration, i.e. migration from the north towards Podgorica and the seaside, due to higher chances of employment and better living conditions in general. Regarding external migration, our citizens most frequently leave towards Western Europe countries, Benelux countries, America and Canada for the same reasons as with internal migration. ■ To what extent are we facing a brain drain from Montenegro and what can the Government do to prevent young people leaving the country?

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- Clearly the emigration of experts and educated young people from the country is significant in other Western Balkans countries, as well as here, in Montenegro, and this is a phenomenon faced by many other countries worldwide. At a time when you have extremely strong and large countries in the world, such as the U.S., Germany, France, the UK, and a very low birth rate in those countries, or even a negative one in some of them, it is natural for those countries to open their doors to young people, particularly experts and educated citizens of other states. Countries such as Montenegro, as well as countries nearest to us, like Serbia, Croatia, or Bosnia-Herzegovina, can

However, Montenegro also experiences a degree of ethnic distancing among various nationalities and ethnic groups, but the Government of Montenegro, like any responsible government, is approaching the issue with a lot of sensitivity, and endeavours to make inter-ethnic relations in Montenegro as harmonious as possible. This was even formalized through the Constitution of Montenegro and certain laws treating this issue. The Bosniak side, as one of the constituents of Montenegrin authority, is truly making an effort to guide members of the Bosniak community towards forgiveness at every step, as well as to be very sensitive towards members of other communities and other religions. So, from the aspect of BS, any distancing between communities in Montenegro on any basis is not only undesirable, but counterproductive for the whole society. ■ To what extent are the needs of national minorities represented in Government policy-making? - Article 1 of the Constitution of Montenegro establishes Montenegro as a civil state, while Article 2 states that the bearer of sovereignty is the citizen. Taking this as a starting point, this Government, and all previous governments, have created their policies based on these Constitutional principles. Thus, in policy-making the Gov-

Inter-ethnic distancing, where it exists, can be reduced and eliminated only if we live and work with one another, and not just next to one another barely deal with this issue. Countries with strong national economies simply “vacuum up” everything of quality worldwide, including human resources as the main resource of a country. ■ How would you assess interethnic relations in Montenegro? - Inter-ethnic relations in Montenegro are traditionally good, as evidenced by the fact that Montenegro is the only state arising from the breakup of former Yugoslavia where no inter-ethnic conflicts have occurred. Regarded from this aspect, we can truly boast of having good inter-ethnic relations.

ernment of Montenegro is paying a lot of attention to its citizens, with particular attention for the needs of minorities, and therefore several laws have been adopted containing positive discrimination affirming national minorities and members of minority communities. The needs of national minorities have been affirmed under the section of special financing through the Ministry for Human Rights and National Minorities and the Minorities Fund. Affirmation is also related to the legally prescribed procedures for the employment of minorities in public administration bodies. ■

MONTENEGRO AND NATO

Road To Nato Membership

President of Montenegro FILIP VUJANOVIĆ and NATO Secretary General JENS STOLTENBERG

he Allies decided in December 2015 to invite Montenegro to accession talks to join the Alliance. On 19th May 2016, Allied foreign ministers signed the Accession Protocol for Montenegro. Following the signature of the Protocol, Montenegro had ‘Invitee’ status, allowing its representatives to participate as observers in Allied meetings. Having been invited to start accession talks join the Alliance in December 2015, Montenegro became the newest member of NATO on 5th June 2017. Just thirteen months after the signature of its Accession Protocol, Montenegro officially became NATO’s 29th Allied Nation. The Military Committee and its Chairman, General Petr Pavel, marked this significant event during their first meeting with Montenegro, no longer an “Invitee” but a full-fledged Ally. Montenegro’s membership to NATO on 5th June marks the end of an accession process that was initiated on 19th May 2016 when the NATO Foreign Ministers undertook the historic signing of its Accession Protocol. All 28 Allied national parliaments were then required to ratify the protocols, according to their national requirements and procedures, marking their agreement. Pending this ratification by all Allied nations, Montenegro received an ‘Invitee’ status, allowing its representatives to participate as observers in Allied meetings. Once all NATO member countries notified the United States of America, the depository of the Washington Treaty, of their acceptance of Montenegro’s accession, Montenegro was invited to accede to the Washington Treaty (or the North Atlantic Treaty). On 5th June, a

Montenegro began its first Membership Action Plan (MAP) cycle in the autumn of 2010 with the submission of its first Annual National Programme. This process allowed the country to identify key challenges that needed to be addressed, including reinforcing the rule of law, meeting NATO standards in security sector reforms and fighting corruption and organised crime ceremony was held in Washington, DC marking the formal deposit of Montenegro’s instrument for its accession to the Treaty. On 6th June, NATO, ACO and ACT Headquarters held a coordinated flag-raising ceremony to officially welcome Montenegro as the Alliance’s newest member. The Military Committee marked Montenegro’s new status as full-fledged member during their meeting on 7th June. General Pavel, Chairman of the NATO Military Committee, formally invited the Montenegrin Military Representative, Brigadier General Rajko Pešić to take his seat at the table for the first Military Committee meeting. During his opening remarks, General Pavel stressed that “this is a historic moment.

Operations, saying “Montenegro will continue its long-term contribution to global security through active engagement in Afghanistan and support to the Global Coalition to Defeat ISIL”. The Brigadier General concluded by emphasising “that membership in the Alliance is a two-way-street. Thus, besides the clear benefits of membership that Montenegro will have, we will continue to further promote and extend NATO’s core values and policies”. One of the most serious obstacles has been domestic opposition. As little as a year ago, public opinion polls showed roughly equal support for and opposition to NATO membership. However, after NATO governments tendered the offer of membership last year public opinion shifted in favor. In

On 6 June 2017, NATO, ACO and ACT Headquarters held a coordinated flag-raising ceremony to officially welcome Montenegro as the Alliance’s newest member First, I would like to thank all the civilian and military personnel that have been involved in Montenegro’s accession process. Your work has been invaluable in making Montenegro’s membership a reality. Montenegro is welldeserving of its membership and I am proud to call you Ally. Welcome to NATO”. Brigadier General Pešić, Montenegro’s Military Representative, thanked General Pavel for his warm welcome and the Allied Nations for all their assistance during the accession process. He also highlighted Montenegro’s ongoing support of NATO Missions &

January 2016, the pro-Western government in Podgorica announced that a new poll showed 47.3% public support for membership and only 37.1% against. Following the positive turn in public opinion, the government won a vote of confidence in parliament on the NATO membership question. And, on 18 th June, after two days of debate, the Montenegrin Parliament passed a resolution in favour of NATO membership by a vote of 48-26. This is the first enlargement since 1st April 2009, when Albania and Croatia both joined the Alliance. ■ MONTENEGRO BUSINESS SECTOR 2018

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INTERVIEW

Fully Devoted To

EU MEMBERSHIP I see 2025 as a horizon, a frame, and, with the good quality of continued reforms, Montenegro can become a member before this date, depending on the success of its reforms and the negotiation agenda. On our part, we are fully devoted and focused on fulfilling the criteria set by the EU

ALEKSANDAR ANDRIJA PEJOVIĆ MONTENEGRIN MINISTER OF EUROPEAN AFFAIRS

chapters, while we are fully devoted and focused on fulfilling the closing benchmarks that the EU has set.

e spoke with Aleksandar Andrija Pejović, Montenegrin Minister of European Affairs, about the prospects and challenges of Euro-Atlantic integration processes in the Western Balkans and Montenegro. ■ How would you assess the results of the government’s work on European integration in 2017? - In 2017 Montenegro continued with very good results and a dynamic tempo in progressing towards EU membership. Throughout the year we opened four negotiating chapters and provisionally closed one. This puts us at the stage od 30 open chapters, along with three that have been provisionally closed. Furthermore, the Government successfully completed activities and preparations for the opening of the remaining three negotiating chapters. We are ready to welcome the step which the EU needs to take to open these remaining

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■ Which chapters do you think are the most important to fulfil in the coming period? - Without a doubt, it is important to be fully concentrated and to achieve results on chapters 23 and 24. They are at the heart of the negotiating process and represent a sort of litmus test for any other progress across the negotiation spectrum. We are working on fulfilling 83 interim benchmarks which the EU defined in these chapters, and that is now the most important part of our daily work. Once fulfilled, we will be able to satisfy the closing benchmarks for chapters 23 and 24, and thus move into a new integration phase in the area of the rule of law. Apart from this area, there are numerous key legislative acts still to be adopted, such as the Law on Companies, the Public Procurement Law and the Public Partnership Law, as well as a multitude of bylaws within the four freedoms area. We need to start building or upgrading our information systems for customs, taxation, agriculture or statistics, as well as boost-

ing the administrative capacities of our institutions where required. The opening of the Environment chapter will present a very demanding and dynamic period of fulfilling and investing in EU standards when it comes to water management, waste disposal, air quality or nature. ■ In implementing the demands, many countries had most trouble with chapters 23 and 24, concerning the rule of law. How satisfied are you with Montenegro’s progress in this field? - One of the best scoreboards for monitoring this progress is the recent non-paper of the European Commission on the state in the field of the rule of law in chapters 23 and 24, which the Ministry of European Affairs of Montenegro posted on its website. There we can see a number of good results evident in this area, but also a number of issues to focus on in the period ahead. Let me note the fact that during the previous period, with the adoption of 65 reform laws, we have completed the legislative framework and reformed our judiciary, while in the field of the fight against organised crime and corruption we established new institutions, primarily

PRIORITIES

DEVOTION

SUPPORT

Chapters 23 and 24 are at the heart of the negotiation process and therefore our work on the fulfilment of 83 interim benchmarks is the most important part of our job

Positive messages from the EU are both gratifying and obliging. That is why we defined quite a dynamic European agenda for the coming period

It gives me pleasure to see that the latest public opinion surveys demonstrate the continuation of support among two-thirds of the public

the Anticorruption Agency and the Special Public Prosecutor’s Office, the work of which are already yielding results in practise. However, we need to work harder and more on securing the track record in fighting money laundering, human trafficking and the seizure and confiscation of assets. This should lead us to achieving interim benchmarks in the field of the rule of law and commencing the work on the future closing benchmarks in these chapters. ■ To what extent would you agree that a strong legal regime is not just a question of the institutional framework but also of its practise? - I fully agree with that. Building up a system is a complex process that develops in phases. In order to achieve results in practise, which are the most important and are the indicator of your success to-

wards membership, we had to establish a solid legislative framework, build efficient institutions and strengthen the capacities of individuals who will implement them. Afterwards, practical results need to ensue.

believe that by the end of it citizens will be able to see the benefits brought by the accession process. Our primary goal is for them to feel secure and safe, and to develop trust in the institutions and the system.

The negotiation agenda is extremely demanding and full of areas to focus on all the way through to the end of the process I might say that, five years after the opening of the accession negotiations, we have these results in all areas, although they are uneven in their nature when to comes to practical results within the track record. In some areas the effects of the changes are visible and influence the lives of citizens in a qualitative sense, while in some others they have only started providing results. However, it is a process and I honestly

■ Where has Montenegro been especially successful in the use of European funds? What could you name as the best example of good practice? - First of all, the previous perspective allocation for Montenegro, for the 2007-2013 period, has been almost entirely spent, the less than ten per cent remaining of the €245 million is still in the implementation phase, and I believe we will finish this full allocation

with almost 96 to 97 per cent of used funds. The new perspective 2014-2020 allocation is only now being implemented in practise, with the first three years having been devoted to building up the system and finalising the old perspective, but we can already note some excellent results. Let me emphasise the great interest of Montenegrin beneficiaries in the Adriatic-Ionian transnational programme, confirmed by their participation in 18 of the 34 projects approved in May under the 1st Call for Proposals, and almost two million of the six million euros available to IPA countries, which has been awarded to them through this call. ■ In your opinion, where are we now with the Berlin Process? How much do current political issues initiated by members of the region affect the implementation and practise of the tasks under this process, like connecting infrastructure and digitisation? - I would say that important reforms under this framework have already brought specific and measurable benefits in terms of efficient and effective usage of infrastructure, especially in the transport and energy sectors. The fact that this initiative is strongly supported by all countries in the region, and that there is dedicated involvement of EU member states, provides additional confirmation and guarantees that political disagreements, which are part of politics nowadays, will not impact negatively on the overall mission of the Berlin Process. We need to see how to improve on the process within the area of security, as well as to open it up for the environment to become an integral part. The Berlin Process needs to evolve to meet the needs and changing reality of the Balkans. ■ What do you see as the greatest advantage of the Berlin process for Montenegro? - The Berlin Process is a precious opportunity to provide EU funds for the implementation of priority infrastructure projects. Since 2015, Montenegro has received over 80 million euros for the preparation and implementation of several important infrastructure projects and continued with the implementation of planned connectivity reform measures. ■ How much do you think any change in the German leadership, which inspired this process, could have an impact on its tempo? - The attitude and support of Germany, as a founder and one of the most important

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members of the EU, is vital to the future of the enlargement policy and the European perspective of the Western Balkans. The messages we receive from German officials, particularly in the form of expert and technical support, and the support of Germany through the launching of the Berlin Process, directed towards infrastructure connectivity among the countries of the region and with the EU, as well as their economic strengthening, confirms this country’s affinity with the objective of EU integration for the Balkans. Talking to a great number of interlocutors in Berlin, I see that this message resonates across the board all the way from the Bundestag, through the Chancellery and the government ministries, so that I strongly believe that the official position of Germany will not change in any case.

of its reforms and negotiation agenda. ■ How does the Montenegrin government intend to approach the continuation of EU integration in the light of these positive signals? - Positive messages from the EU are both gratifying and obliging. That is why we defined quite a dynamic European agenda for the coming period. We have established goals and obligations that would lead toward its fulfilment seriously and responsibly. First of all, in 2018 we expect to complete the process of opening negotiation chapters and accelerate work on their provisional closure. Furthermore, in 2018 we have also scheduled the adoption of an entire set of strategic documents that would contribute to the continuation of the successful implementation of reforms and the conclusion of the negotiation process, such as the new Programme of Accession of Montenegro to EU 2018-2020, Programme of Economic Reforms and the new three-year Government Working Plan. We are certain that the new Enlargement Communication of the EC, which is expected in February 2018, and the April Enlargement Package will acknowledge the results achieved and provide further guidance for achieving progress. ■ How much do Montenegrins know about the substance of progress in EU integration and what is their attitude towards integration? - Informing citizens and communicating on the commitments under the negotiating

We have worked hard to familiarise students, entrepreneurs, craftsmen, fishermen, farmers and all citizens with European values and standards ■ How would you comment on statements by EC president Jean-Claude Juncker and plans for the possible EU membership for Montenegro? - The statement of EC President Juncker is encouraging, as it gives a clear, time-bound membership framework perspective, but also indicates that progress towards the EU will depend on the individual progress of each candidate country. Juncker’s statement confirms that there is a clear preference of the EU to make all Western Balkan countries EU Member States, i.e. that their accession serves as the culmination of the European project. I see 2025 as a horizon, a frame, and that, with good quality of the continued reforms, Montenegro can become a member before this date, depending on the success

process and the benefits of EU membership is extremely important. We fully recognise this and, as such, in recent years we have carried out hundreds of activities aimed at better informing citizens about the accession process, the importance of conducted reforms, future benefits of our membership in the EU, as well as the need to develop ourselves and strengthen our own capacities in order for us to be able to seize all opportunities arising from EU membership. It gives me pleasure to see that the latest public opinion surveys demonstrate the continuation of support among two-thirds of the public, and that we are continuously recording improvements when it comes to the level of knowledge about the EU among our citizens. ■

CORPORATE

Tivat Municipality – Partner Worth Recommending

Photo by Miko Đuričić

The creation of a new market develops creativity, promotes the birth of ideas, enriches people's needs, and thus entrepreneurship, in a specific sense, encompasses the sum of knowledge, skills and abilities, but also the driving spirit, responsibility, dedication. This is precisely what led the Municipality of Tivat a year ago, when it established the Secretariat for Economic Development and Entrepreneurship, making the improvement of cooperation with Tivat businesspeople a priority for itself

he Secretariat initiated more intensive communication between the Municipality and businesspeople, recognising dialogue as a strong instrument in strengthening mutual cooperation and continuously advancing the business environment. In this way, the local administration recognises and responds in a timely wat to the demands of the economy and entrepreneurs, and the result is the satisfaction of end users. The Municipality of Tivat attaches particular importance to the intensification of cooperation with the Association of Entrepreneurs, Association of Caterers and Hoteliers and unemployed people registered with the Bureau of Labour, via the organisation of roundtables and open discussions, all with the idea of transparently highlighting obstacles to doing business and finding ways to overcome them. As a result of all business friendly initia-

tives and measures, Tivat is the only coastal municipality to be included in the pilot project of the Ministry of Finance to obtain an internationally recognised standard for a favourable business environment in Southeast Europe. One of the more interesting projects connects Tivat agricultural producers with the hotel Regent Porto Montenegro. Producers are able to place products and services in accordance with the standards and requirements of a renowned hotel operator such as Regent. In this way, Tivat farmers can feel the direct benefits of the presence of foreign investors in Tivat. The crowning of the intensive cooperation between the Municipality of Tivat and entrepreneurs is the organising of New Year’s Eve celebrations on the Pine waterfront. For the second consecutive year, the Municipality of Tivat, the Tourist Organisation of Tivat, the Catering Association and the Brand New Tivat are presenting New Year’s

Eve celebrations on the Pine waterfront. The festive holiday programme will run from 25th December to 7th January. A rich gastronomic offer, all-day musical programme, the real atmosphere of New Year’s bazaars with wooden huts will be completed with the performances of the region’s great music stars. Gibonni performs on 31st December, Željko Joksimović on 1st January and Neda Ukraden on 2nd January. ■

THE MUNICIPALITY OF TIVAT HAS TAKEN MEASURES AIMED AT REMOVING OBSTACLES TO COMPANIES’ DOING BUSINESS:

- exemption of 100% from utilities for hotels with four+ stars, and 70% for garni hotels; - reduction of municipal fees of 50% for facilities that open onto public areas and roads, as well as for performances of musical programmes; - exemption from charges for utilities in the amount of 100% for facilities intended for production, processing and storage; - option of payment of utility fees in instalments; - reduction of utilities fees for the amount of €200/m2 of solar collector or panel, for investors who build facilities that use solar energy systems for heating domestic hot water and heating or cooling interiors.

MONTENEGRO BUSINESS SECTOR 2018

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INTERVIEW

Dynamic Economic

GROWTH DR RADOJE ŽUGIĆ

GOVERNOR OF THE CENTRAL BANK OF MONTENEGRO

Montenegro has entered a phase of more dynamic economic growth. The rate of 4.2%, according to which the Montenegrin economy grew in the first half of this year, is encouraging and confirms the projections of the Central Bank of Montenegro (CBM), which is one of the few institutions that didn’t change the envisaged growth rates. Growth was achieved in most sectors compared to the same period of the previous year, and was dominant in the sectors of tourism, construction and transport

t is realistic to expect that annual growth will be within the limits projected by the CBM, i.e. in the range from 3.8% to 4.2%. If such a scenario is achieved, we will end this year as the region’s GDP growth leader. ■ According to your assessment, how much do external and internal factors favour the continuation of positive trends in 2018? - Our expectations regarding movements in the economy over the next year are positive, despite factors that can have the opposite direction of influence. Here I’m primarily thinking of the possible impact of fiscal consolidation measures on aggregate demand. However, I must point out that these measures, although unpopular while at the same time essential, are created very carefully, in order to balance increases in the fiscal balance, while preserving the standards of the population and the competitiveness of the economy. The deadlines

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for the implementation of these measures also contribute to mitigating their possible negative impact on aggregate demand by having mild positive effects from investments, which are strongly driven, primarily in the construction and tourism sectors. When it comes to the banking sector, financial risks have been reduced as a result of strong reductions in the level of non-performing loans and the continuous improvement of all parameters. Here I’m primarily referring to credit risk, as the dominant risk facing the banking sector, and thus I expect a stable financial system to contribute to economic growth. Moreover, there is a clear reduction in uncertainty on the international market, especially when it comes to the European region, so it is realistic to expect positive spillovers on all countries of the Balkan region, and therefore on Montenegro as well. Our preliminary projections indicate that in the next year we can expect real

growth at a rate of around four per cent, which is an extremely positive result, given the strong fiscal consolidation that is underway. ■ What are the most important recommendations that the Central Bank has forwarded to the Government of Montenegro regarding the implementation of the stabilisation policy in the next year? - The Central Bank regularly – for many years now and in accordance with our legal obligation – prepares and submits recommendations to the Government for conducting economic policy as it relates to four segments: fiscal policy, the financial system, the real sector and statistics. The CBM’s recommendations for 2018 are largely focused on measures whose implementation would intensify the recovery of the real sector, and would do so primarily through impacting on the improvement of the competitiveness of

AMBIANCE

BANKING SYSTEM

One of the important factors of economic growth is a stable, predictable and stimulating business environment

I consider that the banking system represents the most developed part of the Montenegrin economy

the economy. We placed special emphasis on the priority sectors of the economy and stimulating new employment. Thus we have, within measures aimed at increasing the competitiveness of the workforce, proposed a measure that would ease the problem of youth unemployment, while at the same time reducing the grey economy. Both of these problems represent a serious barrier to future growth and undermine the competitiveness of the economy. Alongside this measure, we suggested that it would be useful to prepare comprehensive analysis of the regulatory framework, in order to overview the possibility of changing the policy on earnings in Montenegro, while respecting the risks that may arise from the fiscal area.

Bank that you attended was also the impact of possible rises in interest rates on the U.S. and European markets on public debt and the cost of borrowing in developing countries. How would you assess the possible risks of these changes at the level of financial stability in Montenegro? - It is certain that when the European Central Bank ends its non-standard meas-

â&#x2013; Whe it comes to maintaining stability and stimulating economic growth, there is increasing talk about the advantages of a holistic approach, which implies the synergy of structural reforms, monetary and fiscal policies. How present is this approach in the current Montenegrin economic policy? - One of the important factors of economic growth is a stable, predictable and stimu-

Our preliminary projections indicate that in the next year we can expect real growth at a rate of around four per cent, which is an extremely positive result, given the strong fiscal consolidation that is underway lating business environment. It is totally certain that such an environment is created through the coordination of monetary and fiscal policy, alongside adequate structural reforms. In Montenegro we have a Financial Stability Council, whose work is presided over by the CBM, along with the participation of the Ministry of Finance, the HOV Commission and the Insurance Supervision Agency, and this body applies this approach in its work. â&#x2013; One of the topics of the recent session of the IMF and the World

ures of monetary policy, a certain increase in interest rates will occur, which could impact on increasinf the costs of borrowing. At this moment, however, there are no announcements suggesting that a significant increase in interest rates could occur in the near future. On the other hand, in the case of our country, following strong economic growth, the positive results of fiscal consolidation and the recent improvement of the credit rating, we expect a reduction in the interest rate as it relates to the countryâ&#x20AC;&#x2122;s borrowing, and on the basis

of reduced country risk. Bearing this in mind, we do not expect risks to financial stability on this basis. ■ Can you tell us more about the prepared set of laws (Law on the Central Bank, Law on Amendments to the Banking Law and the Bank Rehabilitation Act), and the effects of their implementation? - The CBM has intensive activities when it comes to improving the regulatory framework that governs banking operations. These activities aim to harmonise Montenegrin legislation in this area with the applicable European directives and other regulations that regulate the operations of financial institutions. With the adoption of this set of legal regulations and a significant number of bylaws, the most recent EU directives regulating the areas of banking, insurance, securities transactions, leasing, factoring, microcredit and credit guarantee operations will be implemented. The objectives that will be achieved through the reform of banking laws are primarily reflected in further strengthening stability and the development of the financial system as a whole, as well as raising the supervisory capacity with a high degree of harmonisation of the legislation with the European acquis. This creates the conditions for Montenegro to satisfy the requirements of negotiating chapter 9 in Montenegro’s EU accession process. No less importantly, the new legal solutions will strengthen the resilience of banks, but also the real sector, to potential risks that Montenegro is exposed to, as a small and open economy. ■ The level of financial stability that has been achieved is also followed by significant improvements in the performances of the banking sector. How much has this been contributed to by the implementation of the Law on the Voluntary Financial Restructuring of Debt? - Due to the lack of effects of the implementation of the Law on Voluntary Restructuring of Debts towards Financial Institutions (ZOSFR), adopted in 2015, the CBM began preparing amendments to it last year, with the intention of fur-

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ther improving the process of voluntary financial restructuring. Amendments to this law were adopted in June this year and provided additional incentives for both banks and clients, i.e. debtors, while at the same time administrative procedures were reduced, coverage of loans that can be restructured was extended, while freeing up part of the collateral from mortgages for restructured loans has been enabled. Alongside incentives, penalties were introduced for banks that refuse, for unjustified reasons, to restructure loans applicable for restructuring in accordance with this Law.

ments of additional significant amounts will be realised in the coming period. ■ How would you assess the overall state of the banking sector? - I consider that the banking system represents the most developed part of the Montenegrin economy. The system is stable and secure, although certain continuously decreasing vulnerabilities are present at the individual level. The financial result of banks at the aggregate level is positive, while liquidity and solvency have improved and their levels are still significantly above the mandatory minimum. Banks’ assets, in amounts of over €4 billion, exceeded the 2016 GDP level. Liquid assets exceeded the total of €1 billion, while NPLs recorded a huge decline, from the level of over 25 per cent in 2011 to the current level of 7.4%, which is significantly below the regional average. ■ How willing and able is the banking sector when it comes to supporting the growth of economic activities in the country? - After years of stagnation and decline, credit activity was reinvigorated this year. In the first nine months of this year, the level of approved loans increased by 13.3% compared to the end of the previous year. Nevertheless, data show that lending was largely focused on the retail

The CBM’s recommendations for 2018 are largely focused on measures whose implementation would intensify the recovery of the real sector, and would do so primarily through impacting on the improvement of the competitiveness of the economy The implementation of amendments to the ZOSFR, from June to to this day, has had significant effects. By the end of October, at the level of the system, twelve restructuring contracts amounting to €10.5 million had been signed. This, alongside other activities, contributed to a decrease in the level of NPLs, with a fall from 9.27% recorded at the end of May, i.e. before the implementation of this law, to 7.4% at the end of September. We have announcements and positive expectations that restructuring agree-

sector, so there is scope for intensifying banks’ support to the real sector. In this direction, the CBM maintains continuous communication and cooperation with all banks in Montenegro, in order for us to act together in the direction of developing the banking sector and strengthening financial stability and, indirectly, strengthening the economy. A strong, healthy and profitable banking sector, with healthy competition and without cartelisation, is the best support for the development of the economy as a whole. ■

CORPORATE

ZARIJA FRANOVIĆ, DIRECTOR OF THE PORT OF BAR

We’ll Become The Region’s No.1 “Thanks to its extraordinary geographical position, available resources and development potentials, the Port of Bar has a realistic chance to position itself as a leader in the region,” says this company’s director, Zarija Franović, speaking for this CorD special edition

ecoming the best in the region isn’t easy, and that’s something that’s clear to Zarija Franović, who heads the Port of Bar, which is completely under the regime of a Free Zone. That’s why he announces serious plans to achieve this goal as soon as possible. “On the territory of the Port of Bar there are specialised terminals for the transhipment of different types of cargo, where the personnel structure, technical equipment and way of functioning provide quality that is in accordance with the strict requirements of the international port services market,” explains Franović. - I would particularly like to point out numerous development plans and projects directed towards increasing the port capacity, from the construction of new terminals and the extending of the coast on existing ones, to the construction of port superstructure facilities. A particularly interesting project for us is the extension of the coast at the Passenger Terminal, which would enable the receiving of medium-sized and large passenger ships and cruisers, which would have a positive impact on the city of Bar as a whole. Moreover, in the last three months we have made all port capacities operational, of which, for instance, the rehabilitation of the track for alkaline from the port’s entrance to the reservoir was a prerequisite for the start of a very important job in handling alkaline/lye. The complete

rehabilitation of the cold storage facility has been finished and it now satisfies all international standards for the storing and preserving of foodstuffs that require storage in controlled temperature conditions. ■ According to official information, the cargo turnover at the Port of Bar increased by 70% this year compared to last. What changed to enable handling to increase so much in the space of just nine months? - In comparison with the same period

cargo have had a direct positive impact on the scope of work at the Port. ■ During previous years the Port of Bar has been part of various international projects aimed at improving the integration of maritime transport on the Adriatic. In your opinion, to what extent have these projects been fruitful in the context of integration and cooperation in the Adriatic Sea? - The main initial positive effect of the international projects you refer to is the agree-

The construction of the Bar-Belgrade highway and reconstruction of the Bar-Belgrade railway will definitely provide a substantial contribution to positioning the Port of Bar as a port of regional importance from last year, the growth of realised cargo handling for the first nine months of 2017 totals 45.31%, and not 70 per cent, as stated in your question. Compared to last year, the highest growth was registered in the area of transhipment of dry bulk cargo, by 73.47%, then concentrated zinc and lead, by 24%, and liquid cargo, by four per cent. Viewed in terms of structure, transhipment works were considerably higher compared to 2016, for dry bulk cargoes: bauxite by 89.53% and cement in bulk state by 168.82%. The activating of the bauxite mine in the vicinity of Nikšič and the initiating of overseas exports of this

ment of the Adriatic ports for their business priorities to include mutual cooperation in a way that will ensure a general improvement of the position of the Adriatic port system and attract as many goods as possible to the Adriatic. This would simultaneously mean fulfilling the basic precondition for increasing the degree of utilisation of port capacities. Of course, the integration of Adriatic ports and cooperation between them are components of a very complex process that must continue, both through international projects financed by the European Union’s funds and in other forms. ■ MONTENEGRO BUSINESS SECTOR 2018

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INTERVIEW

Bold Fiscal Consolidation Steps

WILL RESTORE STABILITY The World Bank strongly supports Montenegro’s efforts aimed at fiscal consolidation and strengthening the financial sector’s regulatory framework. It also underlines the importance of diversifying the country’s growth potentials beyond tourism, as a path to a sustainable economy

EMANUEL SALINAS WORLD BANK COUNTRY MANAGER FOR BOSNIA-HERZEGOVINA AND MONTENEGRO

onsiderable public infrastructure investments, as well as the last year’s increases in public sector wages, minimum pensions and social transfers, brought public spending in Montenegro to almost 50% of GDP. Considering that this spending was covered through borrowing, public debt rose to 75 per cent of GDP in 2016. The Montenegrin government addressed these imbalances by introducing fiscal consolidation measures, though they have yet to yield long-term results and restore stability. Our interlocutor, Emanuel Salinas, World Bank Country Manager for Montenegro, says that the most urgent measure the Montenegrin government must focus on is improving

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fiscal sustainability and financial sector resilience. Although it is a challenging task, Salinas is confident that Montenegro, with support from the EU, the World Bank and other development partners, will overcome today’s challenges. ■ How would you rate Montenegro’s fiscal consolidation efforts to date? - We welcome the Government’s commitment and actions to put Montenegro back onto a sustainable macro-fiscal trajectory. In the 2017-2019 period, the economy is expected to grow at an average of 3.2%. However, this growth path will be determined by careful macroeconomic management and private sector growth.

The positive economic outlook faces high but moderate risks. Growing public debt calls for decisive implementation of the recently adopted fiscal consolidation programme, to create the space for an orderly servicing of the large debt. Enhancing policy predictability and accelerating the pace of structural reforms would also be needed to support faster private sector growth. Reducing unemployment, especially among the youth, and mitigating short-term poverty and social impacts of fiscal consolidation and facilitating access to employment need to be important parts of the policy agenda. ■ How sustainable are those results? - I am confident that Montenegro,

with support from the EU, the World Bank and other development partners, will overcome today’s challenges and achieve strong sustained and inclusive growth based on private investment and jobs over time. ■ How do you estimate the risks caused by external indebtedness? - The focus now should be on stabilising public finances ahead of the high refinancing needs in 2019-2021, to allow gradual adjustment and avoid further shocks to society. At the same time, the country needs to diversify its growth potentials beyond tourism by also increasing its backward and forward linkages to the rest of the economy. These are all challenges that the Government has identified and started to address.

■ What do you see as other reform priorities? - The World Bank sees three priorities for Montenegro: restore fiscal and financial sector sustainability; strengthen private sector growth and job creation; ensure environmental sustainability. Of these priorities, the most urgent is improving fiscal sustainability and financial sector resilience. Public infrastructure investments and last year’s increases in public sector wages, minimum pensions and social transfers have added to already high public spending, equal to almost half the country’s GDP. Borrowing to finance this spending has led to rapidly increasing public debt, which stood at 75 percent of GDP in 2016 (including guarantees). Without recently-adopted

■ What do you see as a priority for fiscal consolidation in 2018? - Given the level of tax and non-tax revenues that are already higher than in comparable countries, and one of the highest levels of public spending among small European countries, the focus of consolidation should be on rationalising spending. Priorities going forward should include addressing fiscal risks in the pension and health systems, which are under increasing pressure from aging and early with-

Growing public debt calls for decisive implementation of the recently adopted fiscal consolidation programme, to create the space for orderly servicing of the large debt drawal from the labour market, as well as downsizing public administration. ■ How will proposed tax changes impact on the overall business climate? - With the current tax rates, Montenegro remains tax competitive compared to its neighbours. Given structural imbalances in the social insurance systems, as well as high tax arrears, the focus should be on improving tax compliance that may allow some reduction in social contribution rates over the medium term.

corrective measures, it will increase to 86 per cent of GDP by 2019. Recognising the risks to tame fiscal risks and stabilise debt, the Government of Montenegro has adopted the Fiscal Strategy 2017-2020 that seeks six percentage points of GDP adjustment over the three-year period. Reducing the deficit and stabilising debt will not be easy, but is of the utmost urgency, given the need to reassure financial markets and facilitate the successful rollover of existing financial obligations, which will amount to around 16 per cent of GDP a year in 2019-2021.

However, it is very important going forward to focus on the creation of more and better private sector jobs for the Montenegrin population. This will entail unleashing the potential of the private sector to grow, fostering integration with regional markets and the EU; and ensuring that people have the required education and skills. ■ In which areas does the World Bank support reform the most? - The World Bank supported the design of the fiscal consolidation programme and the strengthening of the financial sector regulatory framework. It is also providing support in assessing the impact of potential pension policy changes that would strengthen both the social and fiscal sustainability of the system. Through functional reviews, the World Bank is assessing the adequacy of resource allocation in the judiciary and selected other ministries. In parallel, the Bank is supporting development of EU CAP-like agricultural programmes to create productive rural jobs, enhancing the energy efficiency of public buildings, as well as supporting the remediation of environmental hot spots, to provide a boost to tourism development and eliminate risks to the environment and people’s health. ■ What are the most important preconditions for huge infrastructure projects to turn into growth drivers? - Moving away from the model of stimulating growth through public spending to create a favourable environment for private sector development requires a reduction in public sector employment, restructuring of SOEs and the rationalisation of public spending. Governance has improved, but continues to lag behind EU member states, particularly in areas such as regulatory quality, control of corruption and the rule of law. Private investments in tourism need to develop backward linkages with the rest of the economy, and in particular with agriculture, catering and the IT industry. At the same time, regulatory barriers to trade need to be eliminated, to ensure the seamless transit of exports. ■ MONTENEGRO BUSINESS SECTOR 2018

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INTERVIEW

Commitment To Reform

PRAISEWORTHY Montenegro is definitely on the right track when it comes to rising interest for investment. The key factors are integration processes and the government’s activities, but also the commitment of the whole society, including the private sector, to fulfilling criteria for EU membership and as a NATO partner

CHRISTOPH SCHÖN PRESIDENT OF THE MONTENEGRIN FOREIGN INVESTORS COUNCIL (MFIC)

he list of Montenegrin Foreign Investors Council member companies is the best message for new investors to come and see what Montenegro has to offer, says Christoph Schön, President of MFIC. “They would easily find their interest in staying on the market”, says our interlocutor. While Mr Schön sees the rule of law as a precondition for Montenegro to thrive he sees two important topics that will further define the country’s success. One is finding a way to build a sustainable policy on tourism development, in order to protect the unique resources

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Montenegro has to offer, while the other is identifying a proactive approach to the digital transformation process. ■ How would you assess the effects of fiscal stabilisation measures on the overall environment for doing business? - Fiscal stabilisation measures and their impact on the business community are currently one of the hottest topics, but it would not be serious in assessing the effects at this point in time, bearing in mind that some of the measures are scheduled to be implemented only as of 1st January, such as increasing VAT.

What we all know for sure is that the implementation of fiscal stabilisation measures is a “must”, given the challenges ahead of us, and that it is of utmost importance to embed them in a strong legal and control framework, and also to monitor the impact and counter steer if necessary. These accompanying measures are crucial to avoiding expected benefits being lost to the grey economy and criminal activities. The Government is aware that it is important for the success of austerity measures to build up capacities in tax and customs control and audit functions, together

ADMINISTRATION

RECOMMENDATIONS

ENVIRONMENT

The rule of law should be a priority for the public administration and represents an area where improvement is necessary and urgent. This is crucial for the functioning of businesses

We use our White Book to collect our recommendations and opinions and communicate them to the government. The next WB, for 2016-2017, will be presented in the first quarter of 2018

The integration processes that are continuing will certainly improve the business environment and the attractiveness of the country, and we do hope that will happen sooner rather than later

with regular monitoring of the real effect on the business environment. ■ Given that significant FDI growth continued in the previous period, what, in your opinion, were the key factors contributing to this? - Montenegro is definitely on the right track when it comes to rising interest for investment. I would say that the key factors are integration processes and the government’s activities, but also the commitment of the whole society, including the private sector, that relate to moving closer to EU

membership, becoming a member of NATO, being a very active player in regional initiatives and integration.

gro could be one of two Western Balkan states that can count on EU membership?

What we all know for sure is that the implementation of fiscal stabilisation measures is a “must”, given the challenges ahead of us, and that it is of utmost importance to embed them in a strong legal and control framework, and also to monitor the impact and counter steer if necessary ■ As a long-term investor in Montenegro, how important to you is the announcement of the European Commission that Montene-

Safe and reliable transportation

- This direct message from the European Commission is very important for present foreign investors, but also for potential investors. Montenegro

Trg Golootočkih žrtava br. 13, 81000 Podgorica, Crna Gora Tel: +382 20 441 303; Fax: +382 20 601 525 Email: id@montecargo.me; Web: www.montecargo.me

being an EU member should mean a more stable economy, with the rule of law, and that is attractive to reputable companies. ■ Considering that one of the conditions for EU membership is consistency in the rule of law, how satisfied are you in this segment with Montenegro’s progress in practice when it comes to strengthening the rule of law in the field of companies’ operations? - Rule of law is the “hot topic” that is always present in our reports and discussions. Unquestionably, this is a topic that should be a priority for the public administration and represents an area where improvement is necessary and urgent. This is crucial for the functioning of businesses. ■ In which areas does Montenegro need to progress the most in order to achieve the goal of building a functioning market economy? - The main question is how to build up a competitive market economy in a regional and European context, strong “rule of law” is a precondition to give stability and investment

lenge, but also a great opportunity for businesses in Montenegro. ■ How open is the Montenegrin Government to MFIC recommendations for improving the business climate? - Communication with the government is an important task of organisations like MFIC. Finding the proper mechanisms and getting involved at different levels is essential and, in my opinion,

CHRISTOPH SCHON and DUŠKO MARKOVIĆ, Montenegrin Prime Minister

The main question is how to build up a competitive market economy in a regional and European context, strong “rule of law” is a precondition to give stability and investment security to businesses, and it also provides the opportunity to compete on a fair market with defined rules security to businesses, and it also provides the opportunity to compete on a fair market with defined rules. This is a precondition, but a competitive market economy in a regional and European context is the main issue. Here I would identify two main topics. One is a sustainable policy on tourism development, to protect the unique resources Montenegro has to offer, the other is a proactive approach to the digital transformation process. This trend is already a reality today in all developed economies, and it is irreversible, which from my perspective is not only a chal-

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to public administration, trying to understand the complexity and timeconsuming nature of some processes with which the state is dealing. On the other side, having open and critical statements should also contribute to a positive relationship, provided we agree that the improvement of the business environment is our common goal. We use our White Book to collect our recommendations and opinions and communicate them to the govern-

equally important for both sides. In most cases the Montenegrin Government expresses a readiness to openly exchanges opinions and listen to our positions, so in that sense we can say that communication is satisfying. ■ To what extent has the positive relationship between the government and the MFIC contributed to your members actively participating in proposing measures for improving the business climate in Montenegro? - One of MFIC’s main missions is to be a constructive and reliable partner

ment. I would use this opportunity to announce our next publication for 2016-2017, which will be presented in the first quarter of 2018. ■ You recently called on your members to support the UK-Montenegro Trade & Investment Forum. What are the main messages of MFIC members to new investors? - MFIC supports activates aimed at attracting new reputable investors as much as possible. The list of MFIC member companies is the best message confirming that respectable companies have been operating in Montenegro for many years, and that they have found their interest in staying on the market. The integration processes that are continuing will certainly improve the business environment and the attractiveness of the country, and we do hope that will happen sooner rather than later. ■

CORPORATE

RADOVAN ORLANDIĆ, DIRECTOR OF MARINA BAR JSC

Marina With Three Gold Anchors “Marina Bar is a typical Mediterranean nautical port intended for passionate sailors and fans of sports and recreational nautical tourism,” says Radovan Orlandić, director of Marina Bar JSC, speaking in this interview for CorD

arina Bar is the oldest marina in Montenegro. Built way back in 1985, it became a joint-stock company in 2001. “Our marina is nestled in the very heart of the city of Bar, covering an area of 148,000m2 and with a capacity of 660 berths in the sea and 250 on land,” says Orlandić. - What sets Marina Bar apart from others is also the fact that it started operating at the very beginning of the development of nautical tourism in Montenegro, while it’s simultaneously among the largest marinas on the Montenegrin coast. The Marina is located at the heart of Bar Bay, in the very centre of the city, immediately beside the city beach, surrounded by high quality infrastructure and facilities, comprising hotels, restaurants, banks, a post office and the Harbour Master’s Office. It represents a tourism and nautical centre at the entrance to the Adriatic Sea, located 104 Nm from the Strait of Otranto and close to the coasts of Greece, Croatia, Albania and Italy, on developmental route B5. This marina has multiple advantages: fully equipped technically and in terms of personnel, a high level of security and care for people and property, in close proximity to the airport and railway, but also the city and numerous sights. ■ To what extent has Marina Bar succeeded in imposing itself as a serious competitor on the wider market? - Marina Bar represents a tourism-nautical

destination that’s characterised by exceptional natural and cultural-historical values that, combined with other factors, render it competitive on the nautical market. The city of Bar, as a tourist destination, can also awaken various motives among potential visitors - sailors who can receive a complete tourist and nautical product at Marina Bar. On the world map of marinas, Marina Bar is recognised as a member of numerous international associations, such as the London-based Yacht Harbour Association, which awarded us with the certificate “Marina with 3 Gold Anchors”, which represents confirmation

international conference ‘Material Handling, Constructions and Logistics - MHCL 2017’ in Belgrade. What exactly does this mean in the context of your domain of activity when it comes to respecting the principles and concept of sustainable development? - The policy of environmental protection has become an integral part of the company’s business policy. At the marina we strive to continuously improve the safety and protection of the area of the marina, in order to permanently and efficiently protect the people and material assets

Our development goals are to improve functionality and connect the marina and city promenade with the surrounding area and the city centre, creating a recognisable visual expression of the area as a whole that Marina Bar has entered the company of renowned marinas that satisfy the guidelines of this organisation to a high level. Moreover, Marina Bar has also acquired all relevant international certificates, confirming that it has met the objectives set and maintained its image in the wider regional framework of the market of Mediterranean marinas. ■ Marina Bar is committed to the concept of sustainable development, which was discussed at October’s

under its management. Particular attention is paid to protecting and improving the environment, thus Marina Bar supports legal regulations and social/ethical principles, with an awareness of its roles in the economic and social life of the coast and the city of Bar. A modern and attractive nautical centre, aligned with ecological principles, it offers nautical tourists the highest standards in services and provides employees with a high-quality working environment, while constantly advancing the values of the company. ■ MONTENEGRO BUSINESS SECTOR 2018

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INTERVIEW

Infrastructure Investments

WILL PAY OFF

The business community and the Chamber of Economy support the Government’s efforts to develop the economy through investment projects and are involved in designing macroeconomic policy measures. We take pride in learning that the Government considers our suggestions to be very useful and has included them in the set of macroeconomic policy measures VELIMIR MIJUŠKOVIĆ PRESIDENT OF THE CHAMBER OF ECONOMY OF MONTENEGRO

n this interview, the President of the Chamber of Economy of Montenegro, Velimir Mijušković, discusses the positions of the Chamber and the business community as they relate to further stabilisation measures, dual education and the role of the association in the process. ■ How have fiscal consolidation measures reflected on the economy? - According to available indicators, fiscal consolidation measures provide good results, while it is important to emphasise that these measures have not caused growth to slow down. In the first half of 2017, the Montenegrin economy achieved real growth of 4.2%, and our progress has been confirmed by analyses conducted by the World Bank, the IMF, the European Commission and relevant agencies responsible for determining ratings. However, the business commu-

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nity considers that the announced VAT increase of two per cent would weaken the competitiveness of the economy. Entrepreneurs believe that the solution for overcoming the difficulties in repairing public finances lies in broadening the tax base and reducing the grey economy. Taking part in activities and analysis conducted by the Chamber, the business community indicates that after the first phase of increasing excise duties on cigarettes and alcoholic beverages (1st July 2017), the sale of these products in legal flows fell significantly, leading to the conclusion that part of the trade in excise goods has been diverted and carried out via illegal flows. ■ Viewed in the long run, will they create a better business environment? - The business community recognises activities that could provide good results

in the long run as being further differentiation of VAT rates by introducing another, lower rate for basic products for human consumption, while the tax rate for certain product groups could be higher, and the uniform application of the lower VAT rate in all tourist facilities for hospitality services, regardless of the category, would avoid the current privileged position of high-class hotels and encourage the development of tourism as a priority sector. ■ To what extent is the Chamber involved in designing optimal macroeconomic policy measures? - The business community, via the Chamber of Economy of Montenegro, as its main partner, is involved in designing macroeconomic policy measures. Furthermore, analyses are prepared at least once a year – containing an overview, guidelines and recommended measures

for the period ahead. These analyses are also presented to the Government at meetings with the Prime Minister and ministers, when the business community has an opportunity to bring forward proposals in an open discussion. As such, the suggestions received are assessed as being very useful by the Government, which is best illustrated by the fact these suggestions are included in the set of the Government’s measures. ■ From the perspective of the economy, have you calculated the potential effects of large infrastructure projects that are currently underway and are businesspeople getting ready to utilise the development opportunities that the completion of these projects could create? - Modern infrastructure is an essential prerequisite for the country’s economic and overall development. Montenegro has become a major construction site for important infrastructure facilities, which is very important. Even though realisation of the construction of the highway, which is the main reason for the high public debt, has been questioned many times, its implementation is very important. Serious economists understand that economies like Montenegro’s must be exposed to such consequences when it comes to the construction of such large, complex infrastructure. A significant number of Montenegrin enterprises are engaged as partners of the Chinese subcontractor. This implies a high level of engagement of local equipment and labour, which is one of the most important effects of the project. The situation is quite similar when it comes to the implementation of energy projects. If we look further, the construction of the Trans-Balkan electricity corridor is undoubtedly of vital importance – not only for regional connectivity, but also for energy security and the development of tourism through the provision of an uninterrupted energy supply. ■ How is dual education accepted in the sector of the economy? - The Montenegrin Chamber of Economy is one of the initiators of the initiative to introduce a dual system to the Monte-

negrin education system. In cooperation with the Centre for Vocational Education, as the institution in charge of the development of vocational education in Montenegro, the opportunity provided by the Law on Vocational Education was taken and activities on the preparation of the realisation of dual education and the enrolment of the first generation of students started in the academic year 2004/2005. After analysing the experiences of the dual education system in Germany, it was decided to launch dual education for two professions: mechanic

vide high quality training to young people? - A great number of companies in Montenegro have the need and capacity to participate in the creation of a highquality labour force for their own needs and those of the country’s labour market. The employer has the opportunity to prepare personnel profiles that suit their business operations and hire the pupils upon graduation. Practical lessons with an employer develop a positive orientation of pupils towards a profession. The pupil acquires permanent and applicable knowledge, greater reliability and routine, which allows them to gain a privileged position on the labour market and creates opportunities for employment with the employer who educated them. ■ How would you assess the quality and supply of labour in Montenegro and where are the needs of the economy least satisfied? - In recent years, the development of human resources has been subjected to many studies, analyses and changes across Europe, as influenced by new breakthroughs in information technology, changes in the labour market, trends and needs in the field of employment, changes in the economy, social and other circumstances. Analysts have placed the main emphasis on creating such an education system

The business community considers that the competitiveness of domestic production would be strengthened through the application of a single, lower VAT rate on raw materials and products and hairdresser, which was implemented in Nikšić, Podgorica and Herceg Novi. As of this academic year, about 300 pupils will be educated at 97 renowned employers as part of this system. This year sees 17 schools from 12 Montenegrin municipalities participating in dual education with 14 educational programmes. These statistics indicate that currently 40 per cent of the total number of students attending the third degree are being educated according to the dual education system. ■ Does Montenegro have enough enterprises that are able to pro-

and training pupils that would ensure they acquire the skills, knowledge and competencies that will help them adapt better and more flexibly to new work conditions, new types of jobs and different circumstances in which it is carried out. The Montenegrin population is educated, but development of the competitiveness of our country’s labour force needs to be continued during the education process, with an emphasis on increasing the share of practical work in educational programmes, as well as increasing standards and criteria for obtaining a diploma. ■ MONTENEGRO BUSINESS SECTOR 2018

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INTERVIEW

Large Infrastructure Projects

INCREASE ECONOMIC GROWTH The transport sector’s share of GDP has had a continuous growth trend in the previous period. And we expect that this trend to continue in the future, with the construction of new infrastructure projects that will encourage better connection of certain regions within Montenegro and the better regional connectivity of Montenegro with the surrounding area OSMAN NURKOVIĆ MONTENEGRIN MINISTER OF TRANSPORT AND MARITIME AFFAIRS

ere we speak with the Minister of Transport and Maritime Affairs of Montenegro, Osman Nurković, about Montenegro’s development plans in these sectors. ■ Infrastructure connectivity within the Western Balkans represents an important step on the path to European integration. Which initiatives are the most important from Montenegro’s perspective and how is their realisation progressing? - We participate very actively in all international initiatives, and have clear priorities when it comes to the further development of transport infrastructure. Alongside the continuation of activities on construction of the Bar-Boljare Highway, where the next phase is the development of project documentation for the two sections Smokovac - Tološi-Farmaci

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and Mateševo-Andrijevica, the capital projects that we will develop further with the support of European and international financial institutions include the coastal variation of the Adriatic-Ionian Highway, with a focus on the projects of the Budva bypass and Tivat bypass with the Verige Bridge, and two railway lines: from Bar to the border with Serbia and the Podgorica-Tirana railroad. ■ In that context, how satisfied are you specifically with the dynamics and quality of the works carried out on the Bar-Boljare Highway? - Recently, together with Hei Shiqiang, CRBC executive director for Montenegro, I toured the construction site of the bridge over the Moračica, on the route of the priority section of the Bar-Boljare Highway: Smokovac-Uvac-Mateševo. The completion of works on the installing of

five pillars provided the occasion for the visit and tour of the construction site, where I had the opportunity to discuss progress to date and further plans with the management of the contractor company, our Chinese partners from CRBC. I was able to convince myself that works are being carried out along the entire route, in the true sense of the word. Of the total of 16 tunnels, excavation and primary and secondary substructure works are being carried out on 15, of which the total excavation length exceeds 55% (cca 19,300m). In addition to breakthroughs at the tunnels of Jabučki krš and Klopot, breakthroughs are also expected at the Vilac and Mrka tunnels by the end of this year. On the actual route of the highway, without on-ramps junctions and overpasses, a total of 20 bridges are planned, covering a length of 6,122km. Works are being carried out intensively on 11 bridges.

HIGHWAY

STRUCTURES

AIRPORTS

On the route of the highway, without on-ramp junctions and overpasses, a total of 20 bridges are planned, covering a length of 6,122km

We expect a higher volume of works in 2018, because there are no obstacles on either structures or the open route

When it comes to the managing of airports, partnerships with the private sector are in the focus of attention

Likewise, works are also being conducted on the open route, as well as on reinforcing walls and gaps. On one of the most demanding structures, the Moračica Bridge, works are being carried out in accordance with the planned dynamics of the contractor. The Moračica Bridge has five pillars and two supports. The bridge is 960 metres long and has a total width of 23.40 metres. The height of the tallest pylon is 180m, together with the foundation and construction, i.e. the height of the pylon itself is 161.5m. The maximum range between pylons is 190m. It is important to note the financial parameters, so we should note that this year Chinese partner CRBC carried out works valued in the amount of €127 million. Considering that we expect two more sites to be opened by year’s end, as well as the fact that it is now possible to carry out works worth a million euros a day, we can say with justification that the projected budget for this year will be utilised by the end of the year (€180-€190 million). We expect a higher volume of works in 2018, because there are no obstacles on either structures or the open route. Indeed, the figures show impressive comparative data on the scope of works, considering

■ Within the framework of this large project, but also others, Montenegro is working closely with China. What has this cooperation brought you when it comes to realising your ministry’s work plans? - The project for construction of the first priority section, Smokovac- UvačMateševo, also opened the door for other areas of cooperation, initially in the part related to railway transport, but also when we are talking about the capacities of the Port of Bar. The successful completion of

In the 2015-2019 period it is envisaged that around 220km of state roads will be reconstructed and modernised at over 20 sites that works worth about 9.3 million euros were carried out in 2016. ■ How much is the Montenegrin construction industry involved in these works and how much does engagement on these works contribute to the overall activity of domestic industry? - Alongside CRBC, another 97 companies are engaged in this project. Of this number, 80 companies are from Montenegro. According to the latest statistics, more than 3,200 people are engaged in the construction of the highway, including 1,183 local workers.

works on the highway is also a kind of entrance ticket for Chinese partners to access the markets of the countries of the region, but also further afield. Simultaneously, our companies, engaged as subcontractors, as well as young professionals, will benefit from the transfer of knowledge and work with the new technologies introduced to the Montenegrin construction sector by Chinese partners. ■ The Montenegrin port of Bar is recognised as one of the most important points on the route from China to Europe. How realistic are the chances of realising this potential?

- Thanks to an exceptional geographic position, available resources and development potentials, the Port of Bar has a realistic chance of positioning itself as a link on the route from China to Europe. On the territory of the Port of Bar there are specialised terminals for the reloading of different types of goods (dry, bulk, general and liquid), while almost the entire port area is regulated as a free zone, which creates the possibility to establish distribution centres for wider areas and launch a wide range of production activities. It is also worth noting numerous development plans – projects directed towards increasing port capacities: the construction of new terminals (liquid cargo terminals), the extension through reclamation of the coastline at existing terminals (at the Terminal for dry bulk cargo and the Passenger terminal), construction of new port superstructure facilities (a new grain silo with a capacity of 30,000 tonnes, warehousing with retractable roofing on an area of 7,500m2, new refrigeration units etc.). Ongoing projects for improving this port’s infrastructure links with the interior of the country (construction of the Bar-Belgrade Highway, reconstruction of the Bar-Belgrade Railway) will definitely provide an essential contribution to positioning the Port of Bar as a regionally significant port. ■ Returning to the issue of road transport, this year saw the launch of 30 projects of different intensity. What will the completion of these works mean when it comes to easing access to tourist facilities? - Given that this government’s goal is to develop the north more strongly, and that quality transport infrastructure is a prerequisite and logistical support for the development of the economy, primarily tourism, the result of the activities of the Ministry of Transport and Maritime Affairs is about 30 projects planned and prepared for implementation, almost half of which relate to the country’s northern MONTENEGRO BUSINESS SECTOR 2018

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sation project that will provide quality and speed of service in the long run and follow the dynamics of the growing number of tourists coming to Montenegro by air. For the time being, we have not brought a final decision regarding the financing method for this reconstruction.

region, while a certain number is being implemented with EIB and EBRD support. Apart from the modernisation of existing roads and the construction of the first section of the highway, the Government of Montenegro and the relevant Ministry is also planning and working on the construction of new road directions. ■ How much do projects in the transport sector contribute to GDP growth? - Construction recorded a significant, 35.1%, increase in the value of completed construction works in 2016, as well as a 16.7% increase in effective working hours compared to 2015. This was due, among other things, to works on the Smokovac-Uvač-Mateševo priority section of the Bar-Boljare Highway. According to Monstat data, the value of completed construction works in the second quarter of 2017 increased by 51.5% compared to the same quarter of the previous year, while it was 37.7% higher than in the first quarter of 2017. The 2017-2019 Economic Reform Programme envisages the growth of the Montenegrin economy as a result of growth in investment activity and the realising of domestic potential, primarily in the construction and transport sectors, but also multiplying effects on related sectors. The strong contribution of the construction sector will be encouraged by the involvement of domestic operators in the construction of infrastructure, new tourist capacities and energy facilities. In the operational phase of the functioning of these projects, significant growth in the potential of the economy is expected, with multiplying effects on the economy as a whole. The average projected GDP growth rate for the 2017-2019 period is 3.4%.

■ There is also interest among investors in airport management. What is the stance of the government and ministries on this issue? - The Ministry of Transport and Maritime Affairs and the Government of Montenegro are working intensively to identify the optimal development solution for the further modernisation of Montenegro’s two airports. The recent visit to Skopje

■ What are your plans when it comes to Montenegro Airlines? - The situation in that company is very complex and we are in constant communication with the management of Montenegro Airlines and the Ministry of Finance, in order for the Government to be able to analyse all options and possibilities for a sustainable and long-term solution for the issues facing the operations of the national airline. Indeed, the situation within this company was one of the biggest challenges at the beginning of my term. This is a company that transports around 550,000 passengers. Of that total, I’m sure about 70 per cent are tourists, which certainly has a major impact on the overall tourism economy and the operations of the tourism industry. The government isn’t considering the

The average share of gross investments in the 2010-2015 period was at the level of about 19% of GDP, while in the 2017-2019 period it will reach an average value of around 30% of GDP

■ The reconstruction of Tivat Airport has been discussed for a long time. How far have negotiations for credit to finance this project progressed? - Montenegro’s airports operate well, but in the government we are of the opinion that capacities are simply not sufficiently utilised, so even though the airports constantly record growth in operated planes and passengers, we need to find a better investment model and design a moderni-

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bers, relating to both those directly employed and those indirectly engaged in accompanying economic activities. This company is interested in discussing the potential of Montenegrin airports with us, so I expect we will soon hold a working meeting on this topic. Considering that we are in a financial consolidation process, partnerships with the private sector are in the focus of attention. Our goal is to provide travellers with high quality services, but also to provide the state and the budget with certain benefits.

MONTENEGRO BUSINESS SECTOR 2018

and meeting with representatives of Turkish company TAV, which has managed Alexander the Great Airport since 2012, provided a great opportunity for me to convince myself of the success of this model of ascribing the value of airports. Apart from significant financial investments as a direct impact on the Skopje airport, it has also seen an increase in the number of passengers on an annual basis (from 600,000 to two million), the number of destinations (from 12 to 37 destinations), and also an increase in the number of employees compared to increases in passenger and flight num-

option of bankruptcy, bearing in mind the importance of the national airline generally, but also considering business arrangements that have been agreed in advance. There is unity on this position in the Government of Montenegro. The task of the company’s new management at this moment is to successfully implement the agreed tasks for this season, but also to prepare serious material that will include a financial and commercial plan, which must optimise the company’s operations and offer possible solutions that the Government would consider further and possibly adopt. ■

CORPORATE

DRAGAN M. MARTINOVIĆ, MARTEX D.O.O. (LTD.)

World Standard Products From Cetinje “Since the company’s founding, we have done business successfully and achieved enviable business results, such that we’re now ranked among the several most successful companies in our branch in Montenegro,” says Dragan M. Martinovic, CEO of Martex d.o.o.

ompany Martex d.o.o. (Ltd.) was founded on 12th July 1992, initially as a small private trading company, with Marko M. Martinović its founder and executive director. The transformation of the economy and creation of opportunities for him, as one of the heads of the company Trgopromet DD Cetinje, Martinović took over a retail facility with its employees, thereby launching his own business. It has remained a family company to this day, 100% owned by the executive director. The head office is in Cetinje, Jabucka Street BB. The company is registered to operate in trade, production, tourism and services in the field of transport. A wholesale division was formed already by 1994, and in 1996 the production and processing of dry meat products from pork began at the company’s own “Sušara” facility in Bajice near Cetinje. The company has grown to become a well-known producer of quality cured products, such as: Prosciutto-style pršuto, salted loin, collar, Pancetta-style bacon, sausages, spare ribs, hams, knuckle etc. Besides wholesale and production, Martex has several retail outlets located in Cetinje. We also work intensively with foreign trade. In 2003 we founded sister company “Martex MDM”, headquartered in Belgrade, Serbia, to cover the need to distribute all dried meat products. Alongside Serbia, the company has also expanded its products to the markets of Macedonia and BosniaHerzegovina. The company implemented the HACCP system of quality and control at the end of 2005, and in 2015 the ISO9001 2008 standard was also introduced, the application of which

enables the company to enter the EU and U.S. markets. At the beginning of December 2013, we became a recipient of the certificate for the first product codified according to NATO standards, as well as a certificate for an obtained Entity code with NATO, issued by the Ministry of Defence of Montenegro.

A recipient of a large number of notes of gratitude and thanks from associations of contractors, athletics associations, local communities, primary schools, medical institutions etc. Martex is itself a common topic of newspaper articles and various informative publications. During the course of all these years, we have been the patrons of many events, sponsors of various events and participants in many sporting, cultural and humanitarian activities. We participate in the Adriatic Fair in Budva, the Agriculture Fair in Novi Sad, and the Prosciutto Festival in Drniš Hvatska. As a sponsor, we have been the

Martex devotes a great deal of attention to improving and modernising production processes, introducing new technologies and expanding the range of dried meat products, in order to satisfy the needs of modern consumers fully That same year saw the implementation of a new software system, Hubie, which connects and unites the entire trade and financial operations of retail and wholesale. We employ 90 workers, whose personal contributions are regularly paid, and conduct all necessary activities to further train and improve workers, in order to keep pace with modern market trends. Moreover, we also employ between 20 and 30 seasonal workers every year. In its operations, Martex selflessly assists and goes out of its way to help many companies, foundations and individuals.

patrons of Judo Club Crnogorac, Football Club Loćen and others. In 2014, following the demise of founder and CEO Marko M. Martinović, the ownership structure of the company changed when it was inherited by Dragan M. Martinović. Annual imports of fresh meat now exceed 5,000 tonnes, while the annual processing capacity exceeds 2,500 tonnes. The company owns 30 chambers for freezing and preserving dry and fresh goods. Martex owns a fleet of nine haulage vehicles with a thermal system and six passenger vehicles. ■ MONTENEGRO BUSINESS SECTOR 2018

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INTERVIEW

We Are Meeting

THE WISHES OF TOURISTS The diversification of the tourist offer is a process that is constantly being implemented and that will be further developed in order to prolong the season, and attracting tourists whose main factors for holiday are the sea and beaches. We see a great opportunity in congress, sports, rural, cultural and health tourism, as well as in various forms of active tourism PAVLE RADULOVIĆ MONTENEGRIN MINISTER OF SUSTAINABLE DEVELOPMENT & TOURISM

ere we speak with Minister of Sustainable Development and Tourism Pavel Radulović about Montenegro’s long-term plans in the field of tourism and ecology. ■ How successful was last year’s tourist season for Montenegro compared to the previous one and how are preparations going for the promotion of the new season? - I’m pleased to say that this year’s tourist season fulfilled our expectations and, according to the official statistical data relating to the first nine months of 2017, it was more successful than the previous one, and, according to the estimates of the tourism economy, was the most successful in the past few years. From the beginning of the year until the end of September, there were close to 825,000 tourists in collective accommodation, which is an increase of 17% compared to the same period last year, and over 3.5 million overnight stays were realised, or 10% more than in last year’s comparative period. Preparations for the upcoming winter

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tourist season are massively underway and are focused on the enrichment of supply, preparation of infrastructure and promotion. Optimistic expectations from this part of the season are based on the readiness of mountain tourist centres, new high category hotels, rich festive

accommodation compared to September 2016. Considering the data we receive from the field, we expect the results for October, which will soon be published, to be at the same level. In addition to the high quality and increasingly diversified tourist offer, these results are further

Funds generated through the economic citizenship programme will largely be directed towards development projects and development, especially in the north, as the underdeveloped part of Montenegro programmes along the Montenegrin coast and significant confirmed bookings. ■ You said recently that you expect a lot from the postseason and, in particular, an increase in visitors to the natural beauty of the north. What results have been achieved in this segment? - Year after year, the number of tourists in the pre- and post-season periods is increasing, so this year in September we had 15% more tourists in collective

enhanced by the improved accessibility of Montenegro by air, with several new flight lines to Western and Central Europe, Scandinavia, Russia and the Middle East having been established this year. Considering the fact that tourists’ preferences change and now they are increasingly seeking an active and authentic experience of the destination in order to get to know nature, culture and gastronomic specialities, the natural beauties of the north are among the greatest potentials of Montenegro.

DEVELOPMENT

TOURISM

PROJECT

Funds generated through the economic citizenship programme will largely be directed towards development projects and development, especially in the north, as the underdeveloped part of Montenegro

In 2016 some €263 million was invested in the tourism sector, which is almost 35% of total investments in Montenegro

The “Programme for establishing an Eco Fund Montenegro” project is implemented by the Ministry of Sustainable Development and Tourism, in cooperation with UNDP

Statistics and reports from the tourism industry indicate that from year to year the number of tourists in the north is growing, which is also the case with this year, with 12% more tourists staying in collective accommodation during the first nine months of this year than in 2016. ■ How much does Montenegro invest in monitoring tourist trends, improving the technology and diversifying the offer? - We are monitoring tourist trends around the world with great care and are working on improving the offer in order to provide a better-quality response to market trends. It is precisely for this reason that we are currently developing the Strategic Marketing Plan for the next five years, which will include detailed analyses and forecasts of future trends, as well as guidelines for the further development and promotion of Montenegrin tourism. In line with these trends is the development of technology that has drastically changed the way tourists operate, but also the tourism industry. Thus, the development of new technologies and their use for attracting tourists and giving them a better experi-

■ According to your estimates, how much foreign investment in tourism will there be in 2017, and how many new hospitality facilities will be opened in the period ahead? - The investment environment in Montenegro is constantly advancing, through various improvements in the legal conditions of the business, as well as through incentives and stimulating measures for investments in tourism. Investors now recognise Montenegro

In 2016 some €263 million was invested in the tourism sector, which is almost 35% of total investments in Montenegro ence in our destinations is an important factor of further development. ■ What are expectations in the field of rural tourism? - Rural tourism can be a significant driver of the development of rural areas and a factor in the overall tourist offer of our destinations. Considering the growing interest of tourists in the north of Montenegro, we believe the time is right to adopt a strategy that will give clear guidelines for the further development of this type of tourism, which generates total consumption of around €26 billion in Europe.

as an attractive and safe destination for investment. Government efforts are also aimed at creating conditions for larger investments in the north of Montenegro, which is achieved through significant improvement of the traffic and tourist infrastructure. The result of the noted activities is investments worth €263 million in the tourism sector in 2016, which is almost 35% of total investments in Montenegro (according to the report of the World Council for Tourism and Travel). We expect this amount to increase by six to seven per cent this year. When it comes to the number of

new hospitality facilities, so far in 2017 some 33 new hotels have been opened, 22 of which are 4- or 5-star categories. ■ What are your plans when it comes to branding the southern part of the coast? - The southern part of the Montenegrin coast has extremely high potential for the development of tourist capacities and we intend to place this capacity in its natural function of tourism by improving planned preconditions and infrastructure, and by maintaining regular contact with interested investors. I think that what we did when it comes to the northern part of the coast, especially the Bay of Kotor, best illustrates our goal. These are renowned investors who will recognise our commitment to the development model, creating conditions for the arrival of large tour operators and the joint realisation of significant investments. The agreement recently signed with the Karisma Consortium, and which includes the return of TUI, as Europe’s most important tour operator, is the first tangible result of this policy. ■ What does the Law on Spatial Planning and Construction bring when it comes to simplifying procedures for investments in the field of tourism? - An important novelty is the abolition of construction and usage permits, as administrative acts that form the basis for the construction and use of buildings. A building can be constructed on the basis of a building application which, with the prescribed documentation, is submitted to the competent inspection body. The revised main project can also now be changed after submitting the application for construction, but only on condition that the change is in accordance with the urban-technical conditions and until the application for the structure’s entry into the real estate cadaster. This is also a significant new introduction for tourist facilities, as MONTENEGRO BUSINESS SECTOR 2018

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it often happens that changes with the hotel operator make it necessary to make changes to the technical documentation, which was almost impossible to realise under the previous legal solution. I would also highlight the new system that will treat payments of communal equipment after the adoption of the General Regulatory Plan. Specifically, the Law envisages the charging of fees for the regulating of unregulated land, which will be paid by all owners of unregulated construction land, and not only by interested investors, as has been the case to date. Until the adoption of the General Regulatory Plan of Montenegro, the investor is obliged to pay fees or is free from paying fees in accordance with the derogated Law on Spatial Planning and Construction, which is important for high category tourism infrastructure facilities, which will reap the benefits related to freeing them of the obligation to pay utilities in the next three years. ■ You recently announced a programme for acquiring economic citizenship. Can you tell us more about this? - Following the implementation of an international public invitation for the development and implementation of a special programme for acquiring Montenegrin citizenship by admission, six renowned companies in this field submitted proposals for the concept of this programme. The Government of Montenegro established an inter-ministerial working group, which should formulate a proposal for the concept of economic citizenship on the basis of the proposals received. After the Government of Montenegro accepts the concept, legal and other preconditions for its realisation will be created. The working group is still working to define the concept of the proposal. Provided it is well considered and implemented, the programme should bring benefits to Montenegro. The preconditions are that the programme is transparent and competitive with other similar projects that are being implemented in several countries in Europe and around the world. ■ A question that often arises in public is whether the development

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of tourism takes place at the expense of the quality and preservation of the environment. How do you reconcile these two objectives institutionally? - Montenegro is one of the first countries to formally declare the sustainability of its future development with its proclamation as an ecological state. In accordance with the Law on Environmental Protection and laws on strategic impact assessments and environmental impact assessments, for each project that could possibly endanger the environment it is necessary to carry out an impact assessment and

- Activities on creating the conditions for opening one of the most complex chapters are progressing with a satisfactory dynamic. I would remind that in March 2017 Montenegro was informed by the EU Council of Ministers that, after considering the Report on fulfilling the initial benchmark for Chapter 27, all 28 Member States unanimously concluded that Montenegro is ready to start negotiations at this stage on Chapter 27, with which we were formally invited to deliver our Negotiating Position. The first Draft Negotiating Position was submitted to the EC in early April 2017 and we received the first set of comments in late July 2017. We prepared answers to all comments, which included numerous cross-sectoral consultations on future plans, and finalised the Negotiating Position. Certainly, when Chapter 27 will open in negotiations between Montenegro and the EC depends on the completion of demanding procedures in the competent EC bodies. ■ When do you expect the Eco Fund to come to life, which should contribute, among other things, to financing obligations under Chapter 27? - The “Programme for establishing an Eco Fund Montenegro” project is implemented by the Ministry of Sustainable Development and Tourism, in cooperation with UNDP, and after the conducting of the tender procedure, the Hrvoje Požar En-

We expect the opening of at least 50 high category hotels in the next few years ensure its environmental compatibility. In this regard, the development of projects in the tourism sector follows the guidelines defined in the Strategic Environmental Impact Assessment and Impact Assessment (EIA) Strategies and harmonise the projects’ further development accordingly. As such, the development of tourism does not imply the endangering of the environment, provided it takes place in a sustainable manner, with clear guidelines for preserving nature. ■ Do you expect EU accession negotiation Chapter 27 to be opened by year’s end?

ergy Institute was engaged and prepared the Proposal of the model for the functioning of the Eco Fund in Montenegro and other documentation necessary to establish the Eco Fund. In recent days the Institute presented us with an optimal model for the functioning of the Eco Fund, which was prepared for the needs of Montenegro, for which we will provide our stance, in order for the government to be able to establish this legal entity in 2018. The Eco Fund will represent a key mechanism for collecting financial resources and their targeted placement in environmental programmes and projects (so-called “polluter pays principle”). ■

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INTERVIEW

Modern Administration

READY FOR EU INTEGRATION ESSENTIAL The basic aim of reforms is to create an administration that will provide services to citizens effectively and professionally. Equally important is an administrative apparatus that can respond to the needs of EU integration, but also obligations linked to NATO membership SUZANA PRIBILOVIĆ MONTENEGRIN MINISTER OF PUBLIC ADMINISTRATION

ministration, digitisation and the preparing of all levels of the administration to respond effectively to the challenges of Euro-Atlantic integration.

iscal consolidation is a prerequisite for the development of any system, especially small ones like Montenegro’s. In the previous period, the leading of an adequate fiscal policy led to the creation of conditions in which we can today talk about development, and not about consolidation and stabilisation measures, which gave the Montenegrin Ministry of Public Administration a green light to continue initiated activities For this special edition we spoke with Montenegrin Minister of Public Administration Suzana Pribilović about improvements in the work of public ad-

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■ To what extent has fiscal stabilisation sped up the process of reforming public administration? - Stable public finances mean the stability of budget contributions, such as to pensions, salaries, capital projects, social services, allocations for, e.g., priority areas that we will implement in cooperation with NGOs and others. It would be difficult in a society where these preconditions have not been met to talk about innovation, digitisation, electronic services, reform of the civil service system, reforms coordinated by the ministry I head, if we don’t have a stable system that improves the lives of our citizens.

■ How much should savings reduce the number civil servants and their professionalisation? - It’s still early to talk about tangible numbers and savings. Our primary goal is the optimisation of the capacity of the personnel we have available in the public administration. This implies us defining in all areas the optimal number of employees who will provide an efficient and high-quality service. This doesn’t mean we have surplus staff in all areas, so the adequate analysis that we are now working on, and which forms the basis for the development of the methodology and the Plan for optimising the number of employees, will provide us with a summary of the situation that we can use as the basis upon which we will be able to plan in the future. ■ What are the key objectives of the process of optimising the work of the

EFFICIENCY

TRANSPARENCY

SAVINGS

We want to optimise the capacities of the personnel we have in public administration and offer citizens an efficient and high-quality service

The Government web portal, on which we publish all information about works undertaken and future strategic plans, is visited by millions of people every year, both from Montenegro and abroad

By developing the portal of electronic sessions of the Government, we have achieved exceptional savings for years, but also achieved efficiency of work at the actual sessions

public administration, independently of these measures carried out within the framework of fiscal stabilisation? - The basic aim of reforms is to create an administration that will provide services to citizens effectively and professionally, and that means everyone knowing their place in the system. The aim is also to streamline those systems where there is a surplus of personnel, and to strengthen areas that are of importance to us in the European integration process. Expectations from this process are high. it is important to note that the Ministry of Public Administration is the coordinator, and that each ministry is responsible for supporting the process in a way that clearly identifies and demonstrates its staffing needs.

developing the information society as a whole and from the aspect of information security. Modern trends in business, as well as the everyday life of the individual, are increasingly turn towards ICT, and it is our obligation to apply modern technological solutions and innovations within the institutions of the system and make them accessible to citizens and businesses. Evidence for this is also provided by the adoption of strategic documents, such as the strategy for the development of the information society,

■ How important is the achieving of these goals for the country’s overall European integration process?

The goal of optimising the work of the public administration is to unburden those systems where there are excess employees, and to strengthen those places that are important to us for the European integration process - It is very important that we have an administrative apparatus that can respond to the needs of EU integration, but also obligations linked to NATO membership. All of these activities related to public administration reform are also linked to obligations we accepted and are fulfilling as a NATO member, but also a future EU member state. ■ Where is digitisation on your list of priorities? - Digitisation is always at the top of our priorities, both from the aspect of

the public administration reform strategy and, finally, the cyber security strategy. ■ What can citizens and businesses expect specifically from the digitising of public services? - Citizens and the economy, first and foremost, can expect a more efficient and service-orientated administration. This means that the way citizens communicate with the state and local institutions will change in both directions. Citizens can already, from home or work, complete the procedure of submitting a request

via a computer, instead of needing to go to a counter, and receive information vis email on the status of the procedure. The electronic exchange of data between state bodies will enable them, ex officio, to exchange data required in administrative procedures, instead of citizens needing to submit documents as evidence for data that already exists in the registers of the competent authorities. ■ Are you considering the development of m-government alongside e-government? - m-Government has already come to life to a certain extent. Specifically, the e-Government portal has its own mobile version, which will further improve in the coming period. With the adoption of the Law on Electronic Identification and Electronic Signatures, the implementation of mobile digital certificates has been enabled, which already exists in EU countries. Plans also included the development of mobile versions of some systems that are used in ministries, such as the information system for document management. ■ What are the effects of the work of e-Government to date? - We can already talk about results with which we are satisfied. First of all, we have created a normative framework that forms the basis for creating the environment and rules under which the entire process must unfold. The web portal of the government has been functioning for several years now and has millions of visitors every year, both from Montenegro and abroad. Information on the work of state administrative bodies, the availability of all regulations, future plans and strategic goals are just one way of opening the government up more to citizens and the economy. The eGovernment portal allows citizens to replace waiting times at counters with the electronic submission of requests. Thousands of young people have MONTENEGRO BUSINESS SECTOR 2018

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used the portal in the past two months to submit student loan applications or apply for the Vocational Training Programme for higher education students. When it comes to the business sector, we know that companies in Montenegro have for several years been reporting their tax using the Tax Administration’s e-services. Results are also evident in the administration itself. By developing the portal of e-sessions of the Government, we have achieved remarkable savings for years, but also achieved the efficiency of work at the sessions themselves. Moreover, the information system for document management contributes to increasing efficiency in the work of the ministries, because the recording and processing of cases occurs electronically. Apart from the further development of electronic services, we need to work on greater promotions of e-Government, but also improving tools for measuring citizen satisfaction, in order to have clear indicators regarding the effects of digitisation. ■ With the new Law on the Capital City, Cetinje has had its cultural and historical significance restored. What will this mean tangibly for the local self-government and citizens of Cetinje and Montenegro? - I must say that I’m really proud that, by passing this law, we have resolved for the long-term the issue of the institutional, cultural and economic development of Cetinje. Social and political consensus has been achieved regarding this Law in Montenegro. The application of this law will ensure the respect of the capital city in the institutional sense, adequate representation and confirmation of the true value of Montenegro’s cultural, historical, spiritual and academic heritage, the participation of a representative of the Capital in bodies of state public service management headquartered in Cetinje, as well as improving methods of planning and financing the development programmes of the Capital City. This law proposes the allocating of budget funds for the development of the Capital, in the amount of one per cent of the projected value of the current budget of Montenegro (presently at around €8 million) for each fiscal year. These funds will be

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used to finance projects of importance to the development of the Capital City. ■ The previous period saw your Ministry work actively on preparation of the Law on Local Self-Government. What is the significance of this law when it comes to further improving the work of local self-government? - With the proposed solutions we endeavoured, amongst other things, to provide a more advanced legal framework for the successful functioning of the local self-government system, in which normative assumptions are more precisely regulated for exercising the rights of citizens with the local

of clear reasons for their mandates to be terminated, or when they can be relieved, and so on. ■ How prepared are employees in institutions and citizens to accept new ideas and innovations? - Time is required for all innovations and changes, both for the administration and for citizens. We have already progressed in this process, so I believe we have entered the stage when we have overcome the fear of such challenges. Certainly, through adequate communication we are working on increasing and raising awareness about the importance of new technologies for the development of public services. ■ How satisfied are you with the quality of cooperation with the sector of civil society and where do you see its role in responding to developmental challenges in Montenegro? - I believe that in the previous period we showed that their experiences are important to us. Representatives of two NGOs are members of the Public Administration Reform Council, which is a unique practise in the region. We have completed the legislative and institutional framework for cooperation with this sector by passing the Law on Amendments to the Law on NGOs. The National Office for Cooperation with NGOs has been

The Law on the Capital City envisages the relocating of the headquarters of several state bodies and institutions, including the Ministry of Foreign Affairs – thereby restoring Cetinje's status as a centre of diplomacy self-government, as well as improving existing solutions that have not yielded positive effects. The emphasis was placed on the process of professionalisation, the role of the main administrator has been strengthened normatively, the normative strengthening of the managerial function towards moving from the current administrative to the managerial-development function has been proposed, solutions related to issues linked to the accountability of senior management personnel have been improved with the establishing

established within the Ministry of Public Administration, while the Strategy for Improving the Enabling Environment for the Activities of Non-Governmental Organisations 2018-2020 is under preparation. NGOs are very important partners in the development of a democratic society, regardless of sometimes differing views of certain challenges in the public administration, I believe that in the previous period they provided a significant contribution to increasing transparency and democratisation, and to the European and Euro-Atlantic integration of Montenegro. ■

CORPORATE

Lazure Hotel & Marina Lazure Hotel & Marina reside on the Adriatic coast of Montenegro at the entrance to the picturesque Kotor bay, next to the beautiful medieval city of Herceg Novi

OLD PICTURE LAZARET IN MELJINE

RESTAURANTS AND BARS

MARINA

able to any type of special event, including weddings, anniversaries, forums, meetings, and conventions.

ROOMS AND SUITES

PARK AND WEDDING LAWN

HISTORY Lazure Boutique Hotel revives the historical premises of Lazaret, an 18th-century landmark of the Bay of Kotor, then under Venetian Republic rule. This prominent building has been carefully renovated and brought back to life as a luxury boutique hotel offering exceptional standards of service inspired by Montenegrin hospitality values. Recognizing the great historical value of the Lazaret, investors and architects of Lazure Hotel & Marina preserved the unique atmosphere of this complex and expanded its functionality.

location, it perfectly suits affluent leisure and business travelers. RESTAURANTS AND BARS Our restaurants and bars celebrate traditional Montenegrin hospitality and freshness of local produce. You will have a chance to taste Mediterranean cuisine at its best, try local wines, and enjoy comforting marina view. CONVENTION AND SPECIAL EVENTS VENUE Lazure Hotel & Marina offers a conference room (160m2), two courtyards (155m2 each) and an outdoor garden venue (880 m2) adapt-

SPA AND FITNESS Atmosphere Spa and Fitness offers a luxurious retreat for hotel guests and visitors, including swimming pool, a variety of saunas, hammam, jacuzzi, massage, body care treatments, hair and beauty salon, gym, hall for fitness, yoga and dancing classes as well as outdoor grass lawn in the Mediterranean garden for open air yoga workouts featuring marina view. LAZURE MARINA Lazure Marina is perfectly located inside the UNESCO protected Boka bay, safe from the open sea winter storms, but close enough to the entrance and thus very convenient for sailors and motor boats travelling along the coast or crossing Adriatic sea. Lazure Hotel and Marina plans to open the doors and light the beacons for the first guests and visitors by the summer season of 2018. â&#x2013;

LUXURY SUITES AND ROOMS Lazure Boutique Hotel is one of the leading hotels in the region offering privacy of 25 modern rustic-style guest suites and deluxe rooms and suites featuring sea, garden, or courtyard view. Personal service with attention to details is considered a natural privilege of every guest at Lazure Hotel & Marina. With its extraordinary design, unique architecture, and ideal MONTENEGRO BUSINESS SECTOR 2018

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MONTENEGRIN TREASURE

Wine, Beer,

BRANDY AND SUN

Wine â&#x20AC;&#x201C; Sun, water and the soil in Montenegro play an important role in every part of life. When it comes to wine, these three segments fuse to provide an aroma to the drink of gods that is specific to this part of Europe

he south of Montenegro is characterised by two kinds of grapevine: Vranac and Krstac. Today these are by far known brands which carry the wine from the area of Zeta valley and the area of Crmnica. On Cemovsko polje (Cemovsko Field ), not far from Podgorica, vineyard which is managed by Plantaze, gives exquisite wine of high quality which undergoes a carrying technological process of production so it is no wonder that nowadays more and more often it is found in the tables in the North America. Vranac, black wine â&#x20AC;&#x201C; as the red wine is called in the

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majority of Slavic languages, is characteristic for the area of Serbia, the Republic of Macedonia and Montenegro. It is made of extremely coarse and dark grape which is picked from the middle of September to the end of October. Especially interesting is the way of production of wine in Crmnica which today is almost a cult place when we are talking about the Montenegrin enology. Days of wine and bleak in the nearby Virpazar are an opportunity to meet at least 20 producers who in the technologies which are even several centuries old are producing white and red wine.

Most often they keep it during the year in large barrels made from walnut tree in which the aroma and the taste are preserved in best way, sometimes even for several decades. It is recommendable that it is served at the room temperature, and it goes well with the smoked meat or grilled meat, as well as with all strong cheeses. Beer – Nikšić beer today is a real trademark of Montenegro. With a taste on which much bigger producers in the world would envy it, today it is a regional leader when we are talking about the taste and the quality. Nikšić beer is made of barley, hard mountain water and bitter and aromatic hops. It is usually being served cool at a temperature of 5ºC. It contains 11, 8% extracts and about 5% alcohol. Today on the market you can find it in packages of Nik, Nik Gold, Nik Cool, and Nick dark. Each of them has its own specific taste, and beer connoisseurs know which one to choose for every occasion. During the summer months extremely refreshing Nik Cool with lemon or draught dark beer will be a real choice for you. Nikšić beer is something you Especially interesting is the way of production of wine in must not miss when we are talking Crmnica which today is almost a cult place when we are talking about the offer of drinks on the Monabout the Montenegrin enology tenegrin dining table. Brandy – Scotland has whisky, of these brandies bears the name of the fruit from which Greece has metaksa, and Montenegro has rakija (brandy). it is made, so in that way we can differ “lozovaca” or “loza” Montenegrin vineyards, especially the ones in Zeta valley (made from grape), “šljivovica” or “šljiva” (made from plum), and Crmnica area, are characterised by exquisite grapes and “kruška” (made from pear) etc. even better maestros in preparation of this strong alcoholic The highest quality brandy, Prvijenac, is obtained by drink. The brandy is therefore made from the grapes in first boiling in production and, besides the fact that it is special boilers, where they ferment almost during the whole extremely aromatic, it is also the strongest brandy according day and, drop by drop, you get a drink similar to Russian to so-called grades (degrees). Prvijenac or the first flow of vodka, but stronger and with a stronger aroma. the grape brandy is the best quality by far when it comes to Besides the grapes, for the production of brandy in Monany kind of brandy. In some areas the brandy is re-distilled, tenegro apples, especially the small and half wild ones from with which its aroma, taste and look are changed and we the north of Montenegro, plums and pears are also used. obtain “prepečenica” (over-cooked brandy). The old Montenegrins boiled it even from figs and cornel, Local brandy is served as an aperitif and goes well with and while a special kind is made from juniper berries. Each “meze”, famous savoury snacks. Slices of some fruit are sometimes served with brandy. There almost doesn’t exist a greeting and feast in Montenegro that happens without brandy and an accompanying toast. The technique of producing this beverage is known to almost all households in Montenegro, and for every head of the house his brandy is his pride, and something you must praise no matter the personal taste. Today the leading regional producer of top notch wines and brandies, Agrokombinat “13 jul” and the enterprise Plantaze, offer a wide palette of drinks: Kruna, Prvijenac, and Lozova rakija (grape brandy), each with a specific taste that makes them dominant on the market, and if you wish to take a part of Montenegro home with you, a high quality brandy Prvijenac, presented in a stylish package, will certainly be the right choice. ■ MONTENEGRO BUSINESS SECTOR 2018

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By Anja Marković

MILO MILUNOVIĆ AND PETAR LUBARDA

Painters Of Time,

SPIRIT AND PEOPLE

MILO MILUNOVIĆ

The lives of the two most famous painters originating from Montenegro, Milo Milunović and Petar Lubarda, were continuously intertwined all the way until the demise of Milunović. Both painters originate from Cetinje (Lubarda from the surrounding area), both moved away permanently at an early age; Milunović headed from Florence to Paris, while Lubarda hoped that Paris would offer him more than Belgrade 56 |

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PETAR LUBARDA

ut whenever their painter’s spirit needed some inspiration, they returned – one to Cetinje, the other to Primorje. Nevertheless, all this time, their painting was fully expressed in terms of technique. Lubarda claims that his ignorance protected him, while Milunović celebrated all his role models, openly acknowledging his artistic adorations, particularly with a great accent on Cézanne. One is known for painting still life, while the other celebrated landscapes. Lubarda’s paintings don’t appear considered, mathematically calculated, while with Milunović one gets the impression that he was guided by all the rules of painting, with nothing even a millimetre out of place. Milunović is known as an unparalleled colourist, while Lubarda was more concerned with the issues of form. When we compare

these two painters roughly, everything looks completely opposite. However, if you delve a little deeper into the painting they left behind, it can be seen that they started from the same place in a lot of things and achieved the same effect using different methods. Lubarda spent his childhood in Ljubotinj, where they certainly played the gusle constantly. The mentality of the people living in that unseen karst, people who spent more time in war and hunger than in peace and abundance, has a special tragic quality that Lubarda managed to capture and transfer to the canvas. When speaking about Lubarda’s works, Isidora Sekulić described it in this way: “God didn’t joke in Montenegro. The earth and sky are serious, there are ashes in colours, tough history, proud language, a strict moral code according to which

dead greats are classed as living, and many who live are classed as dead”. In this picture, Lubarda presented everything that Sekulić spoke about perfectly. Manliness and heroism were the greatest law, with famous heroes speaking through folk songs, alongside the gusle, constantly reminding that cowardice and a lack of manliness were not considered. In one version of the painting “The Guslar” he turned to stone. No Montenegrin was ever more shaped than that violet, and Lubarda also shows that symbolically. The “Guslar” has no face. But pain can be very clearly read on it, almost a scream that so perfectly enhances emotion alongside the gusle. “Entering the painter’s consciousness is an element of a folk song with a special role. This element is far more present in the awareness of this painter than any other.” Milunović didn’t grow up much differently. He said on one occasion: “I listened to stories and poems about Turkish times most often beside a gusle at my grandmother’s place in the village or at home on holidays with the dust of the hearth”. And in some rare Milunović works, that inspiration from the folk tradition would emerge in a subtle way. Among his favourite books were Examples of Manliness and The Hero by Marko Miljanov and Vuk’s Folk Songs. But Milunović was more attracted to the Mediterranean life, which was not so far away from Cetinje. “Among other things, that closeness was also felt in the air and the sun. Kotor is no further than four kilometres away as the crow flies, and I always wanted to head down”. The painting Young Man With a Pot

PETAR LUBARDA: The Guslar

has similar iconographic solutions. Like The Guslar, a young man is shown sitting, while one holds a gusle, the other has a pot in his hands. The spaces in which they are located are vague. Neither is the young man’s realis-

skull wants to eat the skeleton of the fish, this symbolically tells us that the people in these parts were starving. In a pot is found the catch, but most of the pot is empty. Although at first it doesn’t appear to be a tragic work, it reveals the difficult life that unfolded on the coast. Fishermen often lived only from catches, with barrels and empty pots meaning hunger for entire families. Apart from fish, there wasn’t much to eat on the coast, except mangel greens, dandelions and similar plants. That’s why it was so important that there was trade in goods in Kotor between the coast and Cetinje (some brought salted fish, oil and salt, while those heading the other way brought cheese and cured ham). Some lived from the mercy (or not) of the Karst, while other from the sea. Symbiosis was the only way to survive. Both Lubarda and Milunović, demonstrated the tragedy of the poor nation extremely suc-

Both Lubarda and Milunović, demonstrated the tragedy of the poor nation extremely successfully, and this isn’t much different than in any other impoverished part of the world, because again all these symbols are universal and understandable to every observer tically shown, but some melancholy may be read. And Milunović makes the image slightly more abstract, but the form is not lost at all. At the bottom of the young man’s legs there are a barely noticeable skull and the skeleton of a fish. As it appears as though the

MILO MILUNOVIC: Tragic Twilight, 1965, oil on canvas

cessfully, and this isn’t much different than in any other impoverished part of the world, because again all these symbols are universal and understandable to every observer. Emotions themselves are so human and it is so easy to identify with their pain. One showed the pain of the karst part of the country, while the other showed the heaviness of life by the sea. Each served their own artistic expression, but while carrying the same story. In the interwar period, both painters painted a large number of still life works. It was appropriate to use as a medium to show the citizenry and the spirit of the times. These were clippings of new interiors in which the gusle replaced the violin, plates on wooden tables adorned with vases of flowers and sculptures, and suddenly the pictures began to breathe with urban leisure. It is true that these images were also suitable for practise and were, as Lubarda himself noted, forms suitable for learning. In those still life images – where they painted chess, paintings, violins, guitars, vases with flowers, fruits - they remained as a record of a special lifestyle that MONTENEGRO BUSINESS SECTOR 2018

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PETAR LUBARDA: Dawn over Belgrade, Petar Lubarda

PETAR LUBARDA: Sun and Olives

remained unique and, as such, stuck between the two wars, and which showed one urban population in decline, but also the rural peasantry in its rise and cultivation. Although they were still learning with such paintings and still hadn’t reached their greatest painting achievements, such compositions enabled them to master the canvas. Both painters were extremely sensitive and viewed the world as children, marvelling at everything and approaching everything with special care. Perfectionists and searchers for inspiration, for the rest of their life they drew from the people and nature, fusing that on PETAR LUBARDA: Horses

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canvas and making masterpieces. These paintings, although not always figural despite often being in imaginary spaces, managed to provide a broad picture of one region. It is very interesting to study the relationship between these two artists. With very similar ports of call in life and completely different lives and art, they form a special story about art, which perhaps today, from this aspect, is easily romanticised. Lubarda certainly emerged as a much more famous and renowned artist among the lay people, about the problem of his political position and expression there is even an argument today, unfairly, completely taking out of context Lubarda’s art and attributing to

it new, present-day, political problems. And Milunović also left a big mark. As an incredible pedagogue, he moulded many younger painters who remain very attached to their teacher today. According to numerous anecdotes, besides being a remarkable transmitter of knowledge, he was also infinitely interesting. He once walked into the studio at the Academy disguised as Hitler “all printed and greased”. Many spoke of him as an extraordinary actor, imitator and comedian. However, there was also great intolerance between Milunović and other professors at the Academy, and he would often would ignore the students if their works were of a different visual language, ignoring “his” rules. Lubarda and Milunović collaborated a lot, but their friendship was never too intimate, because a lot stood on the road between them. “He had an ambivalent relationship towards Lubarda. They had mutual respect for one another, but there was also a gap between them. Montenegrins and great artists, they measured themselves against each other. And others did so too. Ready to defend Lubarda’s painting (when it was attacked during the 1960s), Milunović also held some resistance. This was especially so when they worked for the same venue (the Ceremony Hall of the New Court and the Serbian Academy of Sciences and Arts) or created in one locale (in Cetinje in 1947 and 1948. Then their painting methods grew closer and for some of the works it is difficult to say whether they are Petar’s or Milo’s). Their first encounter was in Paris. Lubarda told Olga Perović about that meeting in 1974 in Miločer. “Milo Milunović was also there. That’s also how I met him for the first time. I still remember that moment well. He squinted, as always. And he asked me when I came to Paris and, because he was from Cetinje, and I’m from

there too, he asked me what I was doing, where I live etc.”70 There began a friendship between these two artists. And testifying to the claim that Milunović, as Lubarda’s senior colleague and fellow countryman, helped him is the fact that “for Petar Lubarda, Milunović said that as a young child, half starving, he came to him, and he give him food, clothes, paints. He showed him how to paint and how to hold a brush in his hands”. Lubarda continued to tell Olga Perovic how Milunović was immediately interested in Lubarda and his work, so Lubarda gladly showed him works, after which Milunović concluded that he had a lot of talent and needed a lot to work. When Lubarda was almost destitute and returned home due to life struggles, Milunović said that this was not an option. “He encouraged me a lot. So we got to know each other better and were together often. I went to see what he was doing.”74 Generally, in Paris and later in Belgrade, artists who became friends there remained in good relations after returning. Milunović struggled to cope with the death of his great friend Sreten Stojanović, while he remained friends with Čelebonović, who helped him a lot in Paris, until the end

MILO MILUNOVIĆ: Saint Stefan, 1954

man who, when he grasps the palette and colors, and makes at least a few moves of whatever kind, they carry within them such a rhythm that it must excite us in the same way as when a great musician strikes new chords on the piano that cause us to tremble

Milunović and Lubarda’s art almost don’t touch, but they are constantly close to one another, in museums, galleries, accounts in books, critiques, in the same spaces in which they worked of his life. They resided and painted together on the Budva coast in the 1950s. According to Lubarda, Milunović showed his affection by defending his art and raising its profile: “I’m writing this as a friend and comrade of Petar Lubarda. Even his greatest opponent would have to admit that he is a

MILO MILUNOVIĆ: Wind from the Adriatic, 1940

and plunge deep into our hearts.” Conversing with Lubarda, Aleksa Bojović once asked him who he sees as his successor. Lubarda didn’t want the public to discover that, but he replied nonetheless, “I should be the closest to that artist who followed in my

footsteps from that quarry under Mount Lovćen to Paris”. Although he was talking about Dada Đurić, as the conversation progressed if was as though he were talking about Milunović. “It is only that between his and my art there isn’t much of that painting intimacy or uniformity, which I consider to be good, even very good. Both of us are just our own, I would even say that the branches of our painting almost don’t touch one another, though they grow on the same tree, I mean artistic”. And the truth is that Milunović and Lubarda’s art almost don’t touch, but are close to one another, in museums, galleries, accounts in books, critiques, in the same spaces in which they worked. ■ Excerpts from “Petar Lubarda and Milo Milunović: relatedness and differences”

MILO MILUNOVIĆ: 'Vrsa' - oil on canvas, 1967 MONTENEGRO BUSINESS SECTOR 2018

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ECOLOGY

Great Natural And

ECOLOGICAL POTENTIAL

GRBAJA VALLEY AND PROKLETIJE MOUNTAIN

Montenegro is an ecological state. On 20th September 1991 the then Parliament of the Republic of Montenegro adopted the Declaration on the Ecological State of Montenegro

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n the relatively small area of Montenergo, nature has produced unique contrasts; the quality and diversity of its natural and anthropological values makes Montenegro one of the most attractive regions in the Mediterranean. Over a span of only 100 km in a straight line, three natural environments are distinguishible: the seaside, the karst field zone and the high mountain region. Thus, the tourist has the the possibility of taking a swim in the lakes or in the sea, rafting down the river and skiing on the mountain slopes - all in the same day.

Many famous travellers, poets and painters “discovered” Montenegro and fell in love with it. Lord Byron wrote: “ At the moment of the creation of our planet, the most beautiful merging of land and sea occured at the Montenegrin seaside... When the pearls of nature were sworn, an abundance of them were strewn all over this area...” From the top of Mt. Lovćen, Bernard Shaw exclaimed: “Am I in Paradise or on the Moon?!” As far as the development of tourism is concerned, the most attractive resource is the 200 km long Adriatic coastline, with a multitude of beaches and inlets. Natural beaches are over 55 km long, including more than 31 km of sand strips, LAKE SKADAR some of which are kilometers long and others only a dozen meters. The beaches are of the extreme quality Ecological treasury of Europe, Montenegro is rich in many and many of them have been clasplant and animal species. There are 40 lakes, 80% of the sified as extra category and among territory is covered in forest, natural pastures and meadows. the most beautiful in the MediterIn area which makes up only 0.14% of the territory of Europe, ranean by WTO experts. Captain grows about 2,833 species of plants, accounting for nearly a Jaques Custeau, who investigated quarter of the European flora the pollution in the Mediterranean with his scientific team, described the Adriatic as the cleanest area - particularly its southmountain, Durmitor mountain, Biograd mountain, Skadar Lake and Prokletije mountain. Geologic and geographic ern part - the Montenegrin coast. This is mainly due to characteristics of Montenegro, its flora and fauna, and the fact that there are no industrial polluters along the nature in general, have been studied exclusively by forcoast of Montenegro. Its attractivness is particularly enhanced by the mountainous hinterland - and the Bay eigners for a long time, and researchers from neighboring of Kotor - the most beautiful fjord in the Mediterranean. countries in later period. The origins of this research are Given the natural and ecological potential of Montenegro, which must be preserved for future generations, five areas hold the status of the national park: Lovćen

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connected with the second decade of the 19th century, which coincides with the time when the studies started in other Balkan countries. Due to the diverse environment with very rich flora and fauna, Montenegro represented a challenge. Ecological treasury of Europe, Montenegro is rich in many plant and animal species. There are 40 lakes, 80% of the territory is covered in forest, natural pastures and meadows. In area which makes up only 0.14% of the territory of Europe, grows about 2,833 species of plants, accounting for nearly a quarter of the European flora. The structure of the flora of this country always surprised both local and foreign biologists. Together

OLD HOUSE IN THE VILLAGE POSELJANI, ON LAKE SKADAR

with the botanists Pančić, Adamović, Kazanin, many famous botanists from other countries carried out their research in Montenegro. In 1929. British botanist Terrill had registered 270 new, mostly relict, species of plants. Only in Biograd National Park 86 types of trees grow, including Christmas trees, fir, beech, elm , oak, maple, ash, lime - typical representatives of various climate zones. Without taking into account the part of Perućica in Bosnia, Biogradsko Lake repre-

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SUNRISE OVER KOTOR BAY

NATURE PARK PIVA

Lake. Bears and wild boars inhabit the wetlands. In the high mountains , where shepherds still live semi-nomadic lifestyles and herd livestock for the summer in the mountains, wolves and bears are often encountered. The rarest bird that lives here is the golden eagle, which lives on Prokletije Mountain. In Bukumirsko lake, located at an altitude of 1,430 m/asl, an unusual vertebrate - the water lizard - lives. Three-quarters of all species of European avifauna live in Montenegro. In the waters of

DURMITOR WINTER SCENERY

ADA BOJANA TARA RIVER RAFTING TOUR

sents unique, pristine rainforest in Europe (in the natural forest of Biogradsko Lake up grow trees aged 500 - 1000 years. Even medieval lords of Montenegro understood and evaluated the uniqueness of these forests and took them under protection, thus creating the basis of ecological culture of the country. In Durmitor , Sinjajevina and Prokletije, rare alpine Edelweiss grow. In the village Piva, scientist O. Blau discovered the plant which he named the mountain cornflower. Botanist PantoÄ?ek, in the early twentieth century, in the mountains Komovi, discovered two new species of violet, one of which he named in honor of the king of Montenegro, Nicholas I. Animal life Montenegro is also diverse and rich. Deer, doe, royal eagles, live in the region of Biogradsko

Lake Skadar there is the largest colony of birds in Europe. There are also colonies of pelicans, cormorants, herons and black herons. Lake Skadar is also rich in fish, boasting large stocks of carp, bleak and trout. â&#x2013;

PGS MONTENEGRO D.o.o. PACORINI GROUP Obala 13. Jula, bb, FTZ Port of Bar 85000 Bar - Montenegro (MNE)

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MONTENEGRO

Beautiful

MONTENEGRO

KOTOR

Montenegro is one of those fabulous places where you can spend the morning on the beach, be in the mountains for lunch and return to any of the picturesque old towns in time for dusk and dinner. These are just some of the highlights you can expect

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KOTOR The Montenegrin town of Kotor dates back to Roman times and is surrounded by 4km of city walls which encompass both the city and the mountains behind.

ŽABLJAK Žabljak is the seat of Žabljak Municipality (2011 population: 3,569). The town is at the centre of the Durmitor mountain range and, at an altitude of 1,456 metres, is the Balkan town at the highest elevation.

DURMITOR NATIONAL PARK This breathtaking national park was formed by glaciers and is traversed by rivers and underground streams. Along the Tara river canyon, which is among the deepest gorges in Europe, dense pine forests are interspersed with clear lakes and harbour a wide range of endemic flora.

LAKE SKADAR Lake Skadar is located in the Zeta–Skadar Valley and surrounded by mountains. It is just seven km from the Adriatic Sea. Two-Thirds of Lake Skadar lie in Montenegro, with the other third in Albania. Depending the water level, the lake covers an area ranging from 530 to 370 km2 and is considered 44 km long and 14 km wide.

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TIVAT

DURMITOR NATIONAL PARK

ŽABLJAK

LAKE SKADAR NATIONAL PARK

BULJARICA Buljarica, located around a kilometre from Petrovac, is one of the most beautiful seaside towns on the Montenegrin coast. Buljarica is still an untouched gem of the Adriatic, with its own unique sandy beach stretching for more than 2,250m. TIVAT Tivat is located in the central part of the Bay of Kotor. Although it is the youngest town in the Boka region, Tivat boasts lots of interesting and attractive destinations. An internal airport, the luxury Porto Montenegro yacht harbour, the Buca renaissance summer house and “Flowers’ Island” are its most beautiful features. ■

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CORPORATE

PROKOPIJE PERIĆ, CEO, PLUS D.O.O. PODGORICA

Listen And Fulfill Market Needs

High quality premium brands are our priority because of their ability to gain a quick following and loyal consumers

earing in mind that 2017 was a very important year for us with all the activities that we had, I have to admit that I am more than happy with the achieved results. Cigarettes definitely make one of the most important segments of our portfolio. Our plan is to attain a leadership position, together with the JTI Company, in the following two years, which is quite certain to happen.

■ What are the key challenges and trends you are facing on Montenegrin market? Compared to other regional markets, the Montenegrin one is a lot smaller, but undoubtedly more complex. The expectations of Montenegrin consumers, as well as tourists that visit Montenegro, are very high especially in terms of quality of products they buy regularly. The distribution is also quite demanding considering Montenegro’s geography and the tourist season which stretches logistics capacities to the maximum. If

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you don’t sell today, you are not going to be able to compensate for that sale tomorrow, especially if we are talking about consumer goods. The product portfolio that we import and sell on the Montenegrin market has to be planned and analyzed in detail because, in Montenegro, there is a wide array of available products in every segment. High quality

with the globally renowned brands like L’Oreal, Garnier, Mixa, Maybeline, Zewa, Libresse, GSK and many others. ■ How satisfied are you with your company’s results in 2016 and in 2017 so far? - Taking into account that, for us, 2017 was a very important year with all the

I am especially pleased about us successfully acquiring a local distribution company in late 2016, and by doing so, expanding our portfolio with the globally renowned brands like L’Oreal, Garnier, Mixa, Maybeline, Zewa, Libresse, GSK and many others premium brands are our priority because of their ability to gain a quick following and loyal consumers. In 2016, we started collaborating with Italian companies PATA (snacks), Colfresh (chewing gum) and Paulani (croissants). I am especially pleased about us successfully acquiring a local distribution company in late 2016, and by doing so, expanding our portfolio

activities that we had, I have to say that I am more than pleased with the results. Our biggest success is definitely selling cigarettes produced by JTI in which we recorded a 40% hike relative to 2015 which, in turn, resulted in Winston becoming the cigarette brand no. 1 in Montenegro with a total market share of 17%. What are your future plans regarding the two main segments of your portfolio?

Our plans are always huge. Of course, cigarettes are one of the most important segments of our portfolio. Our plan is to attain a leadership position, together with the JTI Company in the forthcoming years, which is quite certain to happen considering our growth trend in the last 18 months. The same goes for the Bulgartabac Company as we are poised to conquer a large portion of the market in the slims cigarette segment. We have signed contracts with two more international cigarette producers with one already present on Montenegro’s market, and the second one planning to market its products in this part of Europe for the very first time. With the recent acquisition, we assumed a great responsibility of further developing the brands L’Oreal, SCA, and GSK so this is going to be one of the things we are going to heavily focus on in the following period. We are also planning on acquiring two local distribution companies and the negotiations with them have entered a final stage so I expect the contract to be signed and the acquisition to start by the year end. Because we have signed a confidentiality agreement, I am not able to divulge more information, but I can tell you that these companies distribute products that are leaders in their respective segments. Recently, we have formed a HORECA division bearing in mind that we import and represent brands such as Hausbrandt coffee, Ronnefeld teas, and San Benedetto non-alcoholic beverages and water. Our company’s strategy is to carefully monitor the development of tourism as one of the most important economic branches. We still have to work hard and invest a lot in this segment of our business ■ How much do the country’s economic growth and the arrival of elite clients affect the offer and the sale of our products? - The opening of luxury tourist facilities definitely affects the arrival of the clients from a big spending bracket which is very important for us, and in line with our company’s strategy to focus on high quality premium products. All of this

does require investing much more effort into understanding the needs of these clients, but that’s why we are here – to listen intently and fulfill the market needs. ■ What are the advantages of your company in relation to others on the Montenegrin market? - It might sound conceited but I have to say that the Plus Company has, by far, the widest range of products. With the planned acquisitions, which are

■ Does the State treats equally domestic and foreign investors? - We actively participate in all programmes geared towards overcoming business obstacles, and we are trying to create a business environment that is going to facilitate a more efficient business growth for us. Maybe we, as a domicile company, would like for the state to have a more preferential treatment towards companies like ours in relation to foreign investors,

I deeply believe that the arrival of foreign companies and investors can only be beneficial to all companies here because we are going to form a chain that will benefit us all, especially in terms of creating more new jobs in Montenegro supposed to be carried out by the year end, this range will become an even wider. Still, we think that our employees give us the biggest advantage over our competitors. Today, providing you have enough money, you can build the most advanced logistics facilities, and buy the newest cars, but the most important thing is to have a sufficient number of wellmotivated professionals who make the core of your company. We are not perfect, but we are striving towards perfection every day.

but we completely understand the government’s stance regarding this, because, as we are drawing closer to the EU membership, it becomes futile to expect any preferential treatment over foreign companies. Anyhow and regardless of the aforementioned, I deeply believe that the arrival of foreign companies and investors can only be beneficial to all companies here because we are going to form a chain that will benefit us all, especially in terms of creating more new jobs in Montenegro. ■ MONTENEGRO BUSINESS SECTOR 2018

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