We can only overcome challenges if we work together in a constructive way and if we agree to an economic strategy at the national level that’s supported by all relevant stakeholders. Implementing economic and regulatory reforms is merely the first step in that direction, and the geopolitical situation creates a window of opportunity for Montenegro to accelerate its progress towards EU membership
The Montenegri Foreign Investors Council will publish the next edition of the White Book, focused on business conditions for 2022, at the end of March this year. That’s why this interview with MFIC Executive Director Ivan Radulović focuses on the long-term messages prompted by insights into Montenegro’s reform progress, provided by movement on the index to date.
The previous edition of the White Book, covering 2021, confirms that it was a very successful year in terms of economic recovery and that tourism, which had previously been the main reason for the historical recession of 2020, exceeding 15%, was once again the driver of GDP recovering by almost 11% in 2021. “In this context, it could be said that the crisis management of the Government and the Central Bank was highly professional, efficient and sufficiently committed to support the recovery,” says Radulović.
Thus, the MFIC index in 2021 stood at 7, on a scale of 1 to 10 (with 1 representing the worst rating and 10 the best) and represented a significant increase compared to 2020, when it stood at 6.4, and was also 0.1 percentage points higher than the index for 2019, which was considered a record year according to several segments.
In which areas have you been most satisfied with the progress achieved to date?
– In short, by analysing previous years, the index for the 2015-2019 period shows that the overall business environment is stable and improving gradually. During 2019, we had a clear signal that foreign investors consider that year as being marked by more significant, tangible improvements compared to previous years.
The year 2020 exposed all the weaknesses of the economy and the necessity for systemic reforms, which equated to the MFIC index of 6.4. The subsequent growth of the index for 2021 shows that the perception of recovery in small economies can be quickly detected and that, in the case of Montenegro, sectors like tourism, telecommunications-ICT and trade recorded the most positive developments, and thereby had a significant influence on the growth of the index, which now stands at 7. In total contrast to the previous year, 2021 saw growth of individual indices recorded in all sectors: telecommunications and ICT, banking/finance, tourism, production/energy, trade/retail and transport/logistics, which is certainly understandable given the MFIC index’s large overall increase.
We will continue to participate actively in the work of the Competitiveness Council and relevant working groups, in order to achieve common goals and promote our shared interests. Through active participation and the providing of comments and suggestions regarding the most important economic-strategic documents, we will work to fulfil the Council’s mission and create better conditions for doing business
When it comes to individually important categories, we noted declines in four categories: real estate development, taxation, corporate governance and the rule of law, while the result for the labour market and employment remained the same as in the previous year. Apart from the rating for the rule of law, the most concerning rating is that for the grey market, which recorded a drop of 0.2 percentage points, with a total rating of 4.8. Such a low rating hasn’t been recorded previously and indicates a complete absence of activities and obligations related to combating the grey economy, which are visible at the political level and require additional efforts and capacity building in the respective institutions.
Multiple changes have been made recently to the leadership and composition of the Montenegrin government. Under these circumstances, how much was the government’s openness to cooperation with MFIC maintained. Which issues do you collaborate on most intensively with the ministries of the Government of Montenegro?
– Political instability has a negative impact on the economic and social environment. Investors seek a politically stable environment and predictable conditions for doing business.
Generally speaking, we enjoy good cooperation with the Government and look forward to the continuation of open and constructive dialogue. We expect reforms that have already started to continue, and all in the best interests of Montenegro’s economic growth and development, and ultimately of all citizens and the economy.
We can only overcome the challenges if we work together in a constructive way, and if we reach agreement on an economic strategy at the national level that’s supported by all relevant stakeholders. Implementing economic and regulatory reforms is merely the first step in that direction, while the geopolitical situation creates a window of opportunity for Montenegro to accelerate its progress towards EU membership. We believe that sufficient mechanisms in communication with the Government exist to adequately suggest constructive proposals through adequate forms of public discussion. Viewed in general terms, it is precisely the events of previous years, which were certainly extreme, that showed the correctness and crucial nature of the MFIC message over many years that serious reform processes must be carried out continuously within the scope of analysed sectors, and with the aim of further improving the business environment, attracting foreign investments and increasing economic standards for all Montenegrin citizens.
How do you foster cohesion and cooperation within the MFIC?
– Close and continuous communication with the Government and public administration bodies remains an important MFIC tool in supporting our members in developing and improving their operations in Montenegro. In this context, timely dialogue is vital for all interested parties, with the aim of enabling increased efficiency in business processes and avoiding consequences that are negative and harmful to the entire business community.
I would only remind readers that the Montenegrin Foreign Investors Council participates in the work of the Competitiveness Council, as the main advisory body in the area of improving the business environment, and that in the previous period, as very active members, we directed our activities towards ensuring the implementation of recommendations submitted by our members through the White Book, as well as through the work of our committees that closely monitor changes to the regulatory framework in their respective sectors and propose initiatives for improvement in areas that are important to the business operations of our member companies. Reforms of the business environment in Montenegro must be implemented more efficiently in order to create a favourable business climate and enable the faster development and recovery of the entire Montenegrin economy.
The Montenegrin Foreign Investors Council will continue to fully support reform processes in the country and its European Union accession
Our committees will closely monitor regulatory changes in their sectors and propose initiatives for improvement in domains that are important to the operations of our members
Close and continuous communication with the Government and public administration bodies remains an important MFIC tool for supporting our members