The Chamber of Commerce of Montenegro provides a strong professional contribution to improving the business environment for the development of all sectors of the economy. With the new Chamber of Commerce Law, the foundations of the Chamber have been additionally strengthened, while a legal framework has been created for advancing partnerships with the Government, state bodies and local governments
Montenegro, as an EU membership candidate country, seeks to harmonise its national aims, directions and economic development policies with the policies of the EU, thus creating a favourable and efficient business environment for establishing new business and improving the operations of existing businesses.
The most important prerequisites for the growth and sustainable development of domestic enterprises are an adequate regulatory framework, access to financial resources, combatting the grey economy and harmonising the education system with the needs of the labour market. “Montenegro is marked by continuous progress when it comes to the regulatory framework,” assesses Montenegrin Chamber of Commerce President Vlastimir Golubović.
How do you, in the Chamber, evaluate the country’s overall economic environment?
– Conditions for doing business are relatively favourable, which is also confirmed by the latest World Bank report on the ease of doing business for 2020, in which Montenegro is ranked 50th on a list of 190 ranked countries. Compared to last year’s report, Montenegro’s position is unchanged, while the total number of points – based on 10 areas evaluated – has increased from 72.7 to 73.8. The most significant advancement, of as many as 35 places, was achieved in the area of issuing building permits, while Montenegro also improved its position in the area of cross-border trade by six places.
The business environment in Montenegro is made favourable and competitive by the tax system, as well as an entire range of incentive measures for domestic and foreign investors. The Government of Montenegro, in accordance with its Programme for Stimulating Direct Investments and Improving Competitiveness 2019, provides financial incentives for new investments, particularly in less developed areas, then incentives for promoting innovation, introducing international standards, modernising the manufacturing industry, incentives in business zones, such as exemptions in the payment of utility costs or other fees, favourable prices for the lease/purchase of land, reductions or exemptions for the payment of surcharges on personal income tax, reducing the real estate tax rate and more.
The constant improvement of the business environment, along with the reduction of business barriers hindering the operations of businesses, are priorities that Montenegro will continue working on in the future.
Promoting local products – through the projects ‘Good from Montenegro’, ‘We Buy domestic’ and ‘Domestic Flavours’ – are activities that will be in the focus of the Chamber during the coming period
Considering the adopted smart specialisation strategy, which sectors do you recognise as the drivers of Montenegro’s development?
– With the adopting of the Smart Specialisation Strategy in June this year, Montenegro became the first non-EU country to have such a document. The objective of the Strategy is to monitor flows of contemporary economic development while improving traditional sectors through technological and social innovation. The Montenegrin economy, like all small economies, has not diversified to a significant extent. Specialised innovation economies are those that achieve the highest degree of competitiveness today, so innovations are considered the basic driver of the socio-economic development of national economies, especially those which, due to their size, opt for such development principles. By focusing on innovation, research and development of defined priorities, the creation of numerous value chains are set in motion, in which many entrepreneurs and companies from all other sectors of the economy can find their chance.
Strategic areas of intervention have been identified through analysis of the advantages and potentials of a country’s economy. In that sense, Montenegro has identified as priority areas: sustainable agriculture and food value chains, health tourism, energy and sustainable environment, with technological ICT support, as an essential prerequisite for the development of all individual sectors. The essence of smart specialisation in these areas is in the possibilities for market potentials to be effectively launched with appropriate knowledge.
What does the economy recognise as constraints on successful operations and development?
– Over the course of 2018 and 2019, employees of the Chamber’s Professional Service visited more than 1,800 businesses in all Montenegrin municipalities. This was an opportunity to receive, through direct conversations, information about businesses, constraints, the challenges they face, but also opportunities for advancing the business environment.
The most common barriers highlighted by business leaders are the grey economy and unfair competition, a lack of qualified personnel, the high burden of labour costs, i.e. high contributions to wages, labour legislation, taxes and various types of remuneration at the local level, insufficient efficiency of the state administration, frequent changes to regulations and more.
How is your cooperation with the Government of Montenegro when it comes to advancing the business environment?
– The Chamber of Commerce of Montenegro is a place where institutional cooperation is realised between the state and the economy, which is also established under the Law on the Chamber of Commerce. Gathered together in the Chamber, companies actively influence – through their representatives – the flows of economic development and the
realising of common interests. On the other hand, the Government has a reliable partner the Chamber of Commerce for comprehensively overviewing the challenges that entrepreneurs face, as well as their requirements and recommendations aimed at creating a more favourable business and investment environment, which are prerequisites for strengthening the competitiveness of enterprises.
Sustainable agriculture and food value chains, health tourism, energy and sustainable environment, with ICT support, have been recognised as engines of Montenegro’s economic development
At the end of 2018, the Chamber submitted a proposal to reduce contributions on earnings and to increase the minimum cost of labour. In this regard, after conducting analysis, in July, the government raised the minimum monthly income to 222 euros and reduced health insurance contributions by two percentage points. This represents an example of good understanding and cooperation, but we consider that this should continue in the direction of unburdening employers, reducing labour costs, while simultaneously expanding the tax base as a result of strengthening the fight against the grey economy.
Moreover, the Chamber also recognised that restrictions on operations were represented by numerous taxes and fees at the local level, and thus initiated the adoption of a new Law on Administrative Charges and Law on Local Utility Fees. The new Law on Administrative Charges, which was passed this year, reduced 72 charges, or 11% of the total, and abolished 49 fees, or 7% of the total number. The Law on Local Utility Fees abolished the possibility of local governments introducing fees on five grounds, such as for arranging music in hospitality establishments, for holding asphalt concrete bases and bases for crushing and processing stone and producing sand, and the like.
What advantages has the new law brought to the Chamber and how has its implementation proved in practise?
– With the new Law on the Chamber of Commerce, the foundations of the Chamber have been further strengthened and a legal framework has been created for promoting partnership with the Government, state bodies and local governments.
The applying of the new Law on the Chamber of Commerce further strengthened the Chamber’s work in improving the business environment and raising the competitiveness of Montenegrin companies. With this act, our association has become an institutional partner to decision makers at the state and local levels, which has resulted in numerous benefits for the economy. The economy has now been given the opportunity to consider, via the Chamber, the text of any law that impacts on business, before referring it to the Government. In the previous part of 2019, the Chamber analysed over 50 regulations and initiated the adoption of new regulations, as well as amendments to existing laws and by-laws.
What are your priorities when it comes to the year ahead?
– The key challenges facing Montenegro in the coming period are represented by the sustainability of economic development, the implementation of structural reforms and the implementation of regional and strategic projects.
In the period ahead, we will continue monitoring and analysing economic developments in Montenegro, the countries of the neighbourhood and other economies, and informing members and other interested parties about these developments, all with a view to improving the understanding of the economic reality and achieving faster economic growth.
We will also continue with activities to promote economic potential and attract foreign investment by organising business forums and exhibiting at trade fairs, publishing promotional publications and catalogues, presenting the economy via the internet and other promotional activities. Promoting local products – through the projects ‘Good from Montenegro’, ‘We Buy domestic’ and ‘Domestic Flavours’ – are activities that will be in the focus of the Chamber during the coming period.
Considering human resources as one of the most important factors for the success of each individual company, but also society as a whole, we will continue participating in the development of the education system to meet the needs of the economy and conducting standards of practical knowledge and the preparation of business education curricula, as well as organising formal and informal forms of business education, the perfecting and training of personnel in the economy through specialised courses, lectures, seminars and workshops.