Montenegro Investment Climate: Opportunities and Advantages for Foreign Investors

1. Dražen Vlaović, MScMIPA Project Manager Montenegro Investment Climate

2. ABOUT MIPA

3. Role of MIPA • Set up in March 2005 MIPA operates under the Prime Minister Office and serves as a platform for marketing foreign direct investment opportunities on behalf of the Government. • The President of MIPA’s board is Prime Minster, while members of the Board are ministers and representatives of private sector. • Basically, MIPA has a triple role: #1 To assist foreign investors in setting up their businesses; #2 To recommend GoM to remove red tapes for doing business; #3 To provide statistics to the GoM about foreign investments;

4. About Montenegro

5. Recent past • 1994 - 1997 UN Sanctions; • 1999 - NATO bombing; • 2000 - 20% of total population were refugees; • 2000 - introduced DEM; • 2002 - introduced EUR; • Montenegro – the only ex-YU republic on which territory there was no war and with the stable government for 16 years; • 2006 – Montenegro recover its independency;

6. Montenegro Today • The highest FDI per capita in Region (2007 & 2008); • According to Fraser Institute - the highest level of economic freedoms in the region; • Largest share of privatized capital in the region; • The most dynamic capital market in the region before crisis; • Budget surplus (2007 & 2008); • The only state in the region that use EURO; • The lowest unemployment rate in the region; • The lowest inflation rate in the region;

7. Montenegro Today • Telecommunication – 100% private (3 GSM); • Banking– 100% private (11 banks); • Capital market– 100% private (13 broker houses); • Agriculture– 100% private; • Services– 100% private; • Oil import and distribution– 100% private; • Tourism– mostly private; • Industry– mostly private;

8. Why Montenegro? • Safe and stable; • Predictable macroeconomic policies; • Ability to remit profit, dividends and interest; • National treatment of foreigners; • Euro – no hidden inflation; • Flat Tax System (CT 9% - PIT 9% - VAT 19% ); • Easy Business Start Up (1 € + 4 days); • International Accounting Standards (IAS); • Location and climate; • Increasing economic freedom;

9. World Bank Doing Business

10. Heritage Foundation Report

11. World Economic Forum Global Competitiveness Report

15. Investments

16. FDI’s are crucial • FDI’s are changing way of thinking; • Speeding up the reform processes; • Changing the structure of the economy; • Contributing to GDP, GDP growth, employment, budget revenues, export/import… • Developing regional cooperation – business language is unique language;

17. Origin of Investors • Investors are coming from 88 countries; • There is no domination of any country relative to the number of registered investors ; • Based on the value invested, investors from following countries are leaders: Norway, Austria, Russia, Slovenia, Hungary, Great Britain.

18. FDI in 2000-13 (in million €)

19. FDI were increasing due to: • Unique investment opportunities; • The reform of the financial services sector; • The positive experience of existing investors; • The ability to serve customers in Western and Central Europe; • The quality of service MIPA provides

20. FDI downward trend lately: • Global Economic and Financial crisis; • Tenders that were cancelled, unrealized privatization plans and lack of spatial plans that encourage Greenfield investments.

21. FDI per sectors

22. # of foreign companies

23. Services Including banking Infrastructure Energy Investment Opportunities High Tech Tourism

24. Energy • MNE is using only 20% of its hydro potential. • 25% of the primary energy in period 2000-04 was produced from renewable resources. • GoM adopted Strategy for Energy Development (2010-25) and Action Plan. • One of the goals is new 15-20MW from Small HPP on over 40 locations until 2015.

25. Energy • Solar energy – 2,500 hrs/year. • Thermo energy – Coal pit Maoce, Pljevlja (2x250 MW) and Coal mine in Berane.

26. Energy – Oil and Gas • Legal framework exist (Law on Exploartions and Productions of Hydrocarbons and Rules on Safety at Work in Marine Seismic survaying); • 311 km2 of 3D seismic surveys are completed; • Two deep exploration wells have been drilled: JJ-2 (3,700 m) oil was registered; JJU-1 contained oil traces • AVO seisimic analyses estimate that the gas exploration risk is low.

27. Energy – Oil and Gas

28. Tenders • AD “Montecargo” Podgorica • “Budvanska Rivijera” AD Budva • HTP “Ulcinjska rivijera” AD Ulcinj • Electrodes plant “Piva” AD Plužine • “Montenegro Airlines” AD Podgorica • ICM Nikšić

29. Expected Tenders • During this year, the implementation of already published tenders has been continued, encompassing the following companies: Pobjeda AD Podgorica, Institut "Dr SimoMilošević" AD Igalo,Container Terminal and General Cargo AD Bar. Public tender procedure for the privatization of Container Terminal and General Cargo JSC Bar was closed. Following the successfully finalized negotiations with the bidder, Global ports Holding, Istanbul, Turkey, draft agreement on the sale of 62,09% of the company’s share capital was adopted.

30. Expected Tenders • Number of sites and establishments will be offered for lease through the establishment of private-public partnership. The emphasis is thereby placed on Ada Bojana, Velika Plaza, Bjelasica-Komovi, Skadar Lake, Morskodobro, Durmitor etc.

31. Concessions details • Concessions shall be awarded under the equal, transparent and non-discriminatory requirements, for the usage of natural wealth, goods in general use and other goods of general interest, performing activities of the public interest, and enabling infrastructure development and functioning. • The Concessions act regulates the conditions, manner and procedure for granting concessions.

32. Concessions details • Concessions shall be awarded by a public announcement. The process of public bidding and selection of bidders, according to the public notice, conducted by an ad hoc commission appointed by the tender competent body for the subject area to which the concession applies.

33. Concessions details • Montenegro has great potential for investment growth through the application of the concession model. Particularly stand out natural and social resources: large quantities unused water, forest and woodland, agricultural land, tourism potential, travel, rail, air and maritime transport.

34. MIPA Publications

35. Montenegrin Investment Promotion Agency Jovana Tomasevica 2A Podgorica 81000, MNE Phone: (00 382 20) 203-140; 203-141; 202-910 E-mail: Drazen.Vlaovic@mipa.co.me Web site: www.mipa.co.me

36. Thank You !