The key issues for maintaining macroeconomic stability at this juncture are inflation and the stability of public finances. Apart from that, the pandemic highlighted the problem – first identified many years earlier – of the unfavourable structure of the Montenegrin economy, forcing the country to consider diversifying the economy
Dr Nina Drakić, President of the Chamber of Economy of Montenegro, took on this position at a moment when global trends are very unfavourable to the economies of the countries of the region. Inflation and public finance stability, transitioning to a circular economy and digitalisation represent some of the most important topics that are being dealt with by the Chamber in an attempt to enable its members to gain appropriate working conditions and to convey to the Government the most important economic proposals for creating a favourable business climate.
How can the Chamber help businesspeople overcome these challenges?
The challenges faced by the world’s population and economy over the past two years have undoubtedly led to change in models of behaviour and doing business. The ability to adapt to the new circumstances has been largely dependent on the state of the economies of each individual country during the pre-crisis period. One could say that, with us in the Western Balkans, apart from labour market disturbances and disruptions to flows of goods and services, we’ve also seen a slowdown in the dynamics of the European integration process.
The Montenegrin business community displayed a certain degree of resilience and a high degree of social responsibility. Many managed to survive with the support of the Chamber, as their association engaged on working bodies tasked with shaping government measures to support the economy.
As an association that’s been uniting the national economy for almost a century, the Chamber has a set of defined services that help our members raise their level of competitiveness. The Chamber and the executive government are also natural partners, and through this framework – with the suggestions and proposals of our membership base – we work on the creating of a predictable and favourable environment for investing and doing business.
Support in the digital transformation process, along with the implementation of educational activities that enable our members and their employees to harmonise their knowhow and competencies with new business trends, are part of our daily work. The members of the Chamber recognise the particular importance of activities directed towards the promoting of domestic products, with the aim of reducing the country’s dependence on imports and increasing sales of high-quality goods, primarily agricultural goods, via the tourist offer. In addition to the aforementioned, the Chamber devotes great attention to the internationalisation of the economy. Through the significant number of business meetings and fair appearances that we organise throughout the year, as well as by providing opportunities offered through EU projects, we help our members establish cooperation with foreign companies.
How is your cooperation with the Government of Montenegro and to what extent is the government’s current programme aimed at supporting companies?
– Institutional cooperation between the Government and the Chamber of Economy is reflected in the creation and nurturing of a high-quality business environment, as a prerequisite to strengthen the competitiveness of domestic companies. The Chamber participates in the preparation of draft laws and other regulations, and also proposes the adoption of programmes and measures for the Government to support the economy, as well as proposing criteria for their implementation. We achieve good cooperation with the Government and I expect that to continue in the future.
The economy this year has at its disposal funds from the Programme for Improving the Competitiveness of the Economy for 2022, the implementation of which is aimed at further encouraging investment, the digital transformation of business, the transition from a linear economy model to a circular one, the introduction of international business standards, strengthening internationalisation and support for business start-ups. This programme, worth a total of 5.2 million euros, encompasses support for improving competitiveness, developing the processing industry and developing and promoting craftsmanship.
The main drivers of economic growth over the next medium-term period will be a strong tourism sector, energy, agricultural production, the processing industry and innovative activities based on accelerated digitalisation and IT sector growth
Moreover, funding has been allocated – through various programmes – to improve energy efficiency, increase the use of renewable energy sources and reduce the impact of climate change and decarbonisation. Support funding for agriculture and rural development are allocated through the Agrarian Budget (€50.9 million) and the IPARD programme.
Apart from tangible financial support, the Government will help businesses overcome the problems of the rising production input costs that they face through its recently adopted excise policy measures (reducing excise duty on fuel) and its tax policy (reducing VAT on flour, oil and salt).
What would be your most important advice to the government when it comes to maintaining macroeconomic stability and supporting economic growth?
– The key issues for maintaining macroeconomic stability at this juncture are inflation and the stability of public finances.
The crisis of the pandemic, worsened by the war in Ukraine, sparked inflation. Rising food prices on markets around the world, falling supplies of certain primary food products and raw materials, coupled with the energy crisis, have only led to the intensifying of inflationary pressures that will impact negatively on both businesses and households. The economy is facing rising production costs and the slower implementation of investment, while rising inflation has a particularly negative impact on citizens’ living standards. That’s why we must strengthen the competitiveness of domestic producers and consider the need to form commodity reserves, in order for businesses and citizens to be able to more easily handle any future price fluctuations.
The pandemic highlighted the problem – first identified many years earlier – of the unfavourable structure of the Montenegrin economy. As such, diversifying the economy is a prerequisite for strengthening and increasing the economy’s general resilience against any kind of external shock. The greatest sustainable growth potential has been recognised in the agriculture, energy, tourism and ICT sectors, as well as in turning to green ways of doing business.
Due to the tourism sector’s importance and multiplier effect on other industries, it is necessary to work on expanding and innovating the tourist offer, making it more competitive and attractive for investment, providing high quality for each individual guest. Activities should also be directed towards attracting higher numbers of tourists beyond the period of the main tourist season, as well as attracting tourists from new markets.
Likewise, the digital transformation of society and increasing innovativeness of micro, small and medium-sized enterprises provide opportunities to further diversify the economy and improve the quality of its position on the international market.
Adequate infrastructure is an essential precondition for the development of every economy, and there’s ample room to act in this segment. When it comes to transport infrastructure, that means continuing the construction of the Bar-Boljari highway, but the Adriatic-Ionian expressway is no less important, and is simultaneously also a bypass around major coastal cities. This will provide additional impetus to the further development of tourism and transport, and thus all other associated areas.
Montenegro owes its economic growth to the inflow of foreign direct investment to a large extent. How much have domestic companies become part of the story of economic growth and investment?
– Foreign investment continues to be one of the drivers of Montenegro’s economic growth and development. Inflows averaged 16.5% of GDP over the previous five years, equating to 1,117 euros per capita.
Post-pandemic recovery provides a unique opportunity to direct the country towards green technologies, digitalisation and smart specialisation, which will secure stable growth and sustainable public finances. Alongside FDI, an extremely important role is also played by domestic investments, especially “green” ones, which require an efficient and transparent regulatory environment, but also an adequate tax policy for this area.
If we exclude current global challenges, what are the most important topics for the Chamber in 2022?
– The focus of our work during this year is on the internationalisation of business operations, the implementation of international projects and education, while digitalisation and the greening of the economy have a particularly important place. The plan is to more intensively promote the economy with a special emphasis on domestic products and values.
Our members are focused on the promoting of domestic products, with the aim of reducing the country’s dependence on imports and increasing sales of high-quality goods, primarily agricultural goods, via the tourist offer
The modernisation of the Chamber’s work, which is underway, implies the improving of services, i.e., making a set of services in digital form available to the economy. Apart from improving our services and increasing the efficiency of our communication with members, we will thus also contribute to the process of digitalising the economy.
You are the first woman to head this most influential of business associations, which has been bringing the entire Montenegrin economy together for 94 years. Does this mean that times have changed and there are now more women among company owners and managers in Montenegro?
– Representing and heading an institution like the Chamber of Economy is both an honour and a great responsibility for me. The fact that I’m the first woman to head this institution makes me proud and motivates me to contribute to improving its work and position as much as possible.
Various research projects and analyses on the state of gender equality show that women have a worse position than men on the labour market, especially when it comes to the availability of management functions, and particularly in the area of self-employment.
Nonetheless, despite the gap between men and women in the business environment existing, it is narrowing. This is a long-term process, the success of which – apart from shifting consciousness and overcoming gender stereotypes – also requires the creation of conditions and the implementation of programmes and activities that will contribute to women’s economic empowerment.
You are simultaneously also the first doctor of science to hold this function and the youngest president to take on the post. Could you tell us how important the topics of education and youth employment are for the Chamber, in light of the digital transition of the Montenegrin economy?
– The Chamber is an important partner in building the education system and ensuring it functions. The contribution we provide to harmonising the offer of schools with the needs of the labour market is continuous. Apart from the Chamber’s professional services, businesspeople are also directly involved in this process. Our association also devotes great attention to connecting higher education and scientific research institutions with the economy, with the aim of strengthening innovativeness and competitiveness, especially among micro companies and SMEs. We are also committed to implementing activities related to the process of lifelong learning and the economic empowerment of women and the youth.
Post-pandemic recovery provides a unique opportunity to direct the country towards green technologies, digitalisation and smart specialisation
With us in the Western Balkans, apart from labour market disturbances and disruptions to flows of goods and services, we’ve also seen a slowdown in the dynamics of the European integration process
The Chamber and the executive government are natural partners… We achieve good cooperation with the Government and I expect that to continue in the future