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Technological Development Is Our Future

An indispensable element of encouraging economic growth based on technological innovation is the introduction of 5G to Montenegro. It is essential to secure an adequately stimulating and pro-investment business environment for its implementation, which will enable further technological development

Podgorica recently hosted the Digital Summit of the Balkan States and confirmed its commitment to the Digital Agenda. The Montenegrin Foreign Investors’ Council (MFIC) is exceptionally committed to digital transformation in the country, which we discussed with MFIC Executive Director Ivan Radulović.

“The Montenegrin Foreign Investors’ Council welcomes Montenegro’s commitment to pursuing the digital agenda,” says our interlocutor.

Recognising the importance of the digital agenda, MFIC – as a business association comprising foreign investors – together with other business associations and the ICT community, participated in the process of preparing the Digital Transformation Strategy 2022- 2026, which should define the preconditions and initiatives required to create a digital environment.

“Digital transformation isn’t a goal in and of itself, but rather represents a continuous process that should include all stakeholders in society for the sake of its development. It is very important to secure an adequate regulatory framework that will provide both the basis and incentives for projects and cooperation among all relevant actors on the path to digital transformation. And when talk turns to digital transformation, an inevitable segment is technological development, which can also be monitored through the availability and quality of internet connections,” notes Radulović.

According to the results of measurements for 2021, which have been published by Cable. co.uk, the average speed of internet connections in Montenegro is 40.14 Mb/s, which ranks Montenegro 57th among 224 ranked countries, representing a better position compared to previous years.

An indispensable element of encouraging economic growth based on technological innovation is the introduction of 5G to Montenegro, and it is essential to secure an adequately stimulating and pro-investment business environment for the goal of implementation, which will enable further technological development. “Unfortunately, the e-government services that have been available for 10 years have still not been sufficiently brought to life in practise, despite an increased number of available services, and there is room to improve the efficiency and efficacy of services, with the aim of reducing administrative costs and the time needed to conduct individual administration services,” says the MFIC executive director.

To what extent were your members in a position to keep pace with trends in the transition to online work, which was already commonplace among their parent companies?

– The current health and financial crisis caused by the COVID-19 pandemic, as a global problem, has made the issue of digitalisation and digital channels of communication particularly pertinent. At the time of the initial outbreak of the pandemic, MFIC recognised the importance of digital communications and, in cooperation with the competent state bodies, provided the possibility to interact with users via digital channels of communication on a larger scale.

Moreover, our members immediately adjusted their operations to the online system, in order to preserve the health of employees, provide services to their customers and continue their activities with the fewest possible negative consequences to operations. Bearing in mind that the COVID-19 pandemic is ongoing, the online system of operation is our reality, whether as an exclusive or combined system of operation among our member companies.

The Montenegrin government has launched the “Marshall Plan – Europe Now”. How does the MFIC assess this plan from the perspective of retaining existing investors and attracting new ones?

– The Montenegrin Foreign Investors’ Council welcomes the announced “Marshall Plan” initiative for Montenegro launched by the Minister of Finance and Social Welfare in the Government of Montenegro.

We believe that the announced set of fiscal policy measures will have a positive impact on combating the grey economy, fostering fair competition and stimulating economic development through significantly improved purchasing power. Together with the introduction of progressive taxation, which has proven to be the main pillar of a fair socioeconomic policy, this set of measures could have a significant positive impact on both the economy and society.

When it comes to progressive taxation, as a form of tax that exists in most developed countries, we believe it will have an impact on reducing social inequalities and protecting vulnerable segments of society by shifting the burden of fiscal consolidation to the richer segments.

On the other hand, we see the securing of additional resources on the budget revenue side via the more efficient collection of taxes and rational expenditure.

We are particularly pleased that all draft laws singled out for essential amendment by the Foreign Investors’ Council in the previous edition of the White Book have found themselves on the Government’s agenda

How much do the government’s plans demonstrate respect for the recommendations of the 2020 White Book?

– It was on 6th April this year that we published the 11th edition of the White Book: Investment Climate in Montenegro 2020, in which the Ease of Doing Business Index for 2020 stands at 6.4 (on a scale of 1 to 10).

2020 was a year characterised by huge challenges that came as a direct result of the global crisis caused by the COVID-19 pandemic, as well as challenges that already existed and only intensified over the course of last year.

The Montenegrin economy’s vulnerability was particularly pronounced due to its strong focus on tourism, which means it’s no surprise that it recorded a significant decline on the Ease of Doing Business Index compared to 2019. The MFIC monitors the activities of government bodies, in an effort to ensure that the envisaged implementation of measures also encompasses the recommendations provided by members of the Council, primarily through the White Book, cited with the aim of creating conditions for doing business in the country that match the level investors enjoy in the developed economies of their home countries. In this area, our recommendations aim to define measures to advance the rule of law and the efficiency of legal protection, improve economic conditions, the business climate and infrastructure, and implement new infrastructure projects and maintain stability while preserving trust in the financial sector.

In your opinion, what is the most important thing to secure today to ensure the continued inflow of foreign investments to Montenegro?

– In accordance with the findings of the White Book, “Rule of Law” is recognised as the most challenging precondition for the development of business. By analysing the ratings to date, following three years with a rating of 5.6, we record a slight increase to 5.7 in 2019. However, 2020 also had a very negative impact on this area, where we recorded a fall of 0.4 points. A “predictable business environment”, which implies transparency in the work of state bodies, is also of crucial importance.

Our members also recognise tax “discipline”, or the lack of systematic and strict tax collection, as a serious concern to the economic stability of the country. It is our opinion that “discipline” has a direct impact on the competitiveness of companies on the market and unfair working conditions.

Further attention should be paid to implementing reform processes in the sectors analysed in the White Book that our members gave low ratings (labour market and employment, real estate development, taxation/contributions, corporate governance, rule of law), in order to advance the business environment, entice foreign investment and create conditions for improving the economic standards of all Montenegrin citizens.