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White Book

The Pandemic Exposed The Montenegrin Economy’s Vulnerability

We cannot undo the damage caused in the past, but it is up to us to give our all for us to emerge from the crisis as soon as possible. That’s why we should focus on removing barriers to doing business and jointly combating the virus

The country fell significantly on the Ease of doing business index last year compared to 2019, as a result of the coronavirus pandemic that impacted negatively on the Montenegrin economy and tourism sector, noted Montenegrin Foreign Investors Council President Christoph Schoen.

Speaking at the presentation of the 11th edition of the annual White Book, Schoen said that last year had been characterised by huge challenges that were caused directly by the global crisis in response to the pandemic, but which had existed before and had only sharpened.

“Coming to the fore in particular was the vulnerability of the Montenegrin economy caused by its strong focus on tourism, so it’s no surprise that the Ease of doing business index fell significantly compared to 2019,” said the MFIC president speaking at a press conference.

Montenegro last year had an Ease of doing business index rating of 6.4, on a scale of one to ten. It had stood at 6.9 in 2019. Schoen explained that the pandemic had led to social and economic impacts resulting in the closures of a significant number of companies and job losses.

We cannot undo the damage done in the past, but it is up to us to do our best to get out of the crisis as soon as possible. We need to focus on a timely dialogue between all stakeholders, in order to provide full support to improving operations,” said Schoen, who is also CEO of Addiko Bank.

According to him, the focus should be on removing barriers to doing business and jointly combating the virus.

“We strongly support the measures of the Government that aim to make Montenegro a secure destination as soon as possible, as well as vaccination, which is key to recovery,” assessed Schoen.

MFIC Executive Director Ivan Radulović said that the significant fall in the ease of doing business was to be expected because of the COVID crisis.

“There were evaluations of six sectors, relating to telecommunications, ICT, banking and finance, tourism, production and energy, trade and retail, and transport and logistics, which recorded declines,” noted Radulović.

Schoen: “We strongly support the measures of the Government that aim to make Montenegro a secure destination as soon as possible, as well as vaccination, which is key to recovery”

He said that last year’s most significant decline was recorded in the tourism sector, which fell from a rating of 6.9 to 6.1.

Due to the pandemic, last year proved to be extremely difficult for the tourism sector. MFIC gave the sector a rating of 6.2, while companies operating within the sector gave it the lowest rating, of 5.3.

“When it comes to the rule of law, the drop is significant. It returns us to the period of 2013,” added Radulović.

He said that it was essential to have a predictable business environment and the rule of law as basic preconditions for further improvement of the business environment.

MFIC recommendations relate to the need to more efficiently implement reforms, further modernise the work of the cadastral register and notary services, as well as the creation of the foundations for further investments in infrastructure. It is also necessary to continue implementing measures aimed at increasing labour market freedom and flexibility, the policy of improving the work of the administration and raising efficiency at all levels, further developing the Montenegrin economy and society through digitalisation, as a policy of development and transformation. MFIC recommended forming the basis for the further public finance policy, making special reference to new investment activities that could contribute to stabilising public finances by reducing the deficit and maintaining the level of public debt.

MFIC Board Member and Saga Montenegro Executive Director Ivan Bojanović said that the ICT sector doesn’t demonstrate significant changes when viewed in terms of the figures contained in the White Book.

“The ICT sector was one of the few not to suffer from any problems during that period. A certain level of growth exists, which should mean that we have no right to complain, because we preserved jobs,” said Bojanović.

He also noted that, on the other hand, all digitalisation processes were linked to the situation with the Coronavirus pandemic. “It is encouraging that we had a meeting with the competent ministry, at which we jointly agreed that the need exists to amend legal regulations for all areas that could be part of digitalisation,” said Bojanović. He explained that they offered to make a donation on behalf of the Council, which was accepted by the Government, and that, accordingly, all information regarding the coronavirus and scheduling vaccinations will be made available to citizens via Viber.

MFIC Board Member and Crnogorska Komercijalna Banka (CKB) Executive Director Pal Kovacs said that all ratings fell last year, mostly as a result of the impact of the pandemic.

“Due to the epidemiological situation, we proposed the digitalisation of all services, particularly banking procedures that relate to loan applications,” added Kovacs.

He considers close cooperation with the ICT sector as being important, because they have many common goals regarding the digitalisation of the administration and public services.

MFIC members reiterated the fact that the White Book is a key document in which foreign investors highlight the main challenges confronting them in their operations in Montenegro.

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