Recognised as an ecological country with great material and intangible cultural wealth, Montenegro represents a world brand that must be represented adequately, promoted strongly and validated sustainably
Following the good post-Covid recovery of the economies of our part of the world, particularly in Montenegro, came the conflict in Ukraine, which has also had a significant impact on the world economy. That’s precisely why we began our interview with Montenegrin Minister of Economic Development and Tourism Goran Đurović by asking him about the impact of these trends on Montenegro’s economy.
“The Montenegrin economy began its recovery in 2021. Although the collapse of tourism was the main reason for the Covid- 19-fuelled recession that the country experienced in 2020, it was also tourism that proved to be the driving force behind the revival of 2021. We now have a new world crisis caused by the war in Ukraine. These tough junctures for the globally sustainable system have also spilled over onto Montenegro, which – as a small country with an open economy that’s dependent on import – is feeling the negative consequences. With the right decisions, I’m completely certain that the series of extreme situations in the world economy will only have a short-term impact on Montenegro,” says our interlocutor, before adding that economic development is one of the two key pillars for the new government. “This government will initiate new reforms and maintain and reinforce ongoing economic reform processes that have the aim of improving the quality of life of all citizens and the investment climate, with which foreign direct investment in Montenegro will increase,” says Minister Đurović.
“We are very optimistic when it comes to the upcoming summer tourist season. We can expect the complete recovery of tourism this year, and the level of revenue projected in the 2022 budget. It is important to note that record levels were achieved during the winter tourism season and, if we judge according to the pre-season, we can estimate that the period ahead will provide a dose of security to our economic and financial stability.”
What kind of support can the companies in Montenegro that are the most exposed to the risks of global inflation, as well as disruptions to the energy market and supply chains, count on receiving from your ministry?
– I don’t believe that the negative impact of Russian aggression in Ukraine will greatly imperil the economy and tourism. We must be optimistic and believe that the Montenegrin economy is resilient, that the current situation will resolve itself and that we will have the normal GDP growth that we expect. When it comes to GDP growth estimates, we don’t consider that to be the only economic variable that we must monitor, but rather as being part of a larger number of indicators that we monitor with the aim of gaining a broader overview of the bigger picture of the Montenegrin economy.
A developed economy reflects a stable and developed country, and a highly developed sector of micro, small and medium-sized enterprises, which comprises a large percentage of Montenegro’s total economic activity. Our task is to provide these companies with a transparent and predictable environment for doing business and ensure their participation in the adoption of policies and regulations, but also to provide specific forms of support.
Montenegro is resolute when it comes to accelerating its European integration and achieving EU membership and we expect objective recognition of the efforts we’re exerting in this process
During the previous period, through three support packages for the economy, support worth over five million euros was provided for business start-ups, equipment procurement, expanding operations and consulting, as well as for hiring new employees. The aim is to increase financial, technical and legislative support each year, in order for our economy to become even stronger and more resilient, but also more competitive. SMEs are hugely important, and that’s not only from the aspect of them as mere generators of economic growth, but also due the fact that their development creates an increased need to employee more citizens and develop other value chains.
Aware of the fact that entrepreneurs require new methods and sources of financing, the state raised the issue of a Credit Guarantee Fund, which is now in the final stage of being established. Funds from the CGF are intended for enterprises or entrepreneurs with limited access to finance. Thus, apart from micro company and SME sector, which represents the dominant segment of the Montenegrin economy, this funding is also intended for special groups, such as companies that are majority-owned by women, independent farmers, tourism enterprises, IT and renewable energy companies, and many others.
What do you consider the ministry’s most important priorities when it comes to creating a favourable climate for investment and entrepreneurship?
– The priorities of the work of this Government are European integration and sustainable economic development. Montenegro needs an open path to Europe, a smooth integration process, rule of law, the combatting of the grey economy and corruption, an improved standard of living and the creation of a society in which one has confidence and a sense of security in the institutions of the system. Each further stride we take in these directions actually represents the main driver and incentive for enticing new investments.
Our aim is to create a favourable climate for entrepreneurship and a predictable business environment, thereby laying the foundations for future generations who should choose to remain in Montenegro instead of leaving, as is the case now. As such, we will pay special attention to providing strong support to all enterprises and entrepreneurs that create new value in our country.
We must devote much more attention to micro companies and SMEs, as they represent the backbone of our economic system, which is itself burdened by various charges, fees and financial contributions that are often unnecessary.
Foreign direct investments have great significance for Montenegro, as we are a country that’s rich in huge potential that’s unexploited to a significant extent. However, we must understand that, alongside foreign investments, domestic investments are also very important to us, which we must use certain measures to stimulate, to further and improve business operations. We also plan to develop Montenegro further in the areas of agriculture, green energy and infrastructure, while the tourism development potential, in both the south and north of the country, is infinite.
One of the great unknowns is the tourism season and the correct forming of pricing, given the inevitable absence of Russian tourists this summer. What are your predictions and expectations?
– To the satisfaction of us all, 2021 represented a year of recovery for Montenegrin tourism. Unfortunately, the world has been hit by a new crisis prompted by events in Ukraine, but, in some way, we’ve still developed a level of resilience that will help us ensure that this summer’s tourist season is also better than the previous one.
Montenegro needs a new image as a green and sustainable tourist destination that’s able to offer its visitors experiences that differ from those they’ve had before, a diversified tourist product, new experiences that are based primarily on active tourism, presenting the potential of the northern region, which will ultimately also result in tourists returning or extending their stay post-season.
While working on preparations for the season, we focused our attention on opening new markets and strengthening existing ones that have huge potential. The closure of the airspace of the Russian Federation, Belarus and Ukraine is resulting in aviation routes shifting to a great extent, hindering access to certain destinations, such as those in the countries of the Middle East and Southeast Asia. This will actually have the impact that Europeans will focus on Europe, the countries of the Mediterranean, Montenegro. Here I’m primarily thinking of the countries of Western, Central and Northern Europe, with special emphasis on Scandinavia, France and Germany, but also Israel, Kazakhstan, Saudi Arabia and many others.
Furthermore, we’re becoming an increasingly attractive destination for tourists from the Middle East, and we implemented a significant promotion of our potential at the recently concluded World Expo 2020 Dubai, which had 24 million visitors over the course of six months. Montenegro also tops the list of the most desirable destinations for people in the Benelux countries, particularly Luxembourg, and it’s been announced that increased numbers of tourists will be coming from Kazakhstan, as a market that opened last year. Saudi Arabian low-cost airline Flynas is establishing flights from Riyadh to Tivat, and negotiations to date suggest that increasing interest will lead to the scheduling of new flight rotations, which is almost a certainty given this market’s size and importance.
We can expect the complete recovery of tourism this year, and the level of revenue projected in the 2022 budget… We see huge potential for the successful realisation of the summer tourist season – as has been the case to date – in the countries of the region, especially Serbia
Following two years of great expectations and enthusiasm, restrictions on sea cruises that were introduced in response to the Covid-19 pandemic have now been eased. The latest news is that Montenegro has also been included on the EU’s white list of “third countries” for cruising. Testifying to the importance of the lifting of restrictions on Montenegro is the fact that a total of 66 large cruisers and more passengers have sailed into the Port of Kotor since the start of the year than during the whole of 2021.
Given everything already mentioned, but also announcements, the state of reservations and data related to tourist numbers in the preseason period, we can be very satisfied and can expect that we will this year generate revenue of between 90% and 100% of the total earned in the record year of 2019, which means a figure of around a billion euros.
Existing investors remained faithful to their investments in Montenegro during the pandemic. When it comes to tourism, what are your expectations of upcoming investments? What kinds of trends do you expect and in which segments do you see the highest investments?
– Sustainable development is a concept that’s mentioned today in all spheres of society, and thus also in tourism. Tourism has recorded continuous growth over the last few years, and thus become one of the world’s fastest growing industries. Sustainable tourism represents one of the key pillars of Montenegro’s development. In our further actions and projects, we will always make our starting point the pure importance of the tourism product to our overall advancement, taking care that we assign the proper value to resources in a sustainable, environmentally-friendly and green way, thus protecting the natural environment.
Montenegro is recognised as a competitive tourist destination, which opens new markets year after year, attracts ever more tourists and increases the profitability of the tourism industry. It is precisely for these reasons that we see a large number of investors interested in investing in Montenegro, or in the Montenegrin tourist offer.
We also have the aim of increasing the number of interested investors by creating a climate convenient for investment, particularly when it comes to the tourism offer of the north of the country, with which we would reduce regional disparity in tourism. To ensure the higher quality development of the tourism product of the North, it is essential to invest in adequate road infrastructure that will connect northern Montenegro with the countries of the region, and thus numerous EU transport corridors.
Although Montenegro’s coastal region has already affirmed our country as a recognisable destination, we will continue attracting renowned brands. Ada Bojana, Velika plaža, Bar, Kotor, Luštica and many other gems of our coastline create the space for the Montenegrin tourist offer to become even more attractive.
Air Montenegro recently introduced new commercial flights from Tivat and Podgorica to Serbia. How many tourists from the region do you expect?
– We see huge potential for the successful realisation of the summer tourist season – as has been the case to date – in the countries of the region, especially Serbia. The National Tourism Organisation of Montenegro presented our offer at the recent 43rd International Tourism Fair, IFT 2022, in Belgrade, which represents one of the most important tourism industry events in this part of Europe.
According to data of MONSTAT, the Statistical Office of Montenegro, the number of tourists coming from Serbia last year totalled approximately 430,000, and they accounted for around 27% of the total number of tourists, with more than three million overnight stays, which is around 33% of the total number of overnight stays. Considering the muchimproved situation with the Covid-19 virus this year, and increased aviation connectivity, we expect to record better results this year compared to last year.
The Podgorica-Kolašin Highway is set for completion this year. What does this roadway mean for flows of goods and people to Montenegro?
– The priority section of the Smokovac- Mateševo Highway will be opened this year, which will impact on an improved summer tourism season when it comes to tourists from the region, by relieving certain routes, but will also create a kind of comfortable journey for all those opting to travel to the Montenegrin coast in this way. In the context of the market and goods flows, improving infrastructure is certainly something that contributes to the overall development of the country, along with everything we do on the internal front with the aim of creating the best possible environment on the market. In order for us to continue the kind of economic growth that we achieved during 2021, it’s important for us to create a single elaborate system, which will encompass infrastructure, the legislative framework, harmonisation with EU standards, the regulating of the internal market, the creation of certain breaks/benefits etc.
How important to you is the “Open Balkan” initiative that promotes open borders in the Western Balkans?
– Cooperation between Western Balkan countries, particularly in the field of economic integration, is very important to Montenegro and contributes to us better presenting ourselves to the European market. In this way, we can consider the creation of a common offer, strengthening capacities in areas where we’re already competitive, especially by taking into account the enhancing of opportunities on the internal front when it comes to industry, innovations, IT technology etc. In that sense, a common regional market allowing the free movement of goods, services, capital and people would contribute to the further economic development of Montenegro, while at the same time preparing us for what’s to follow when we become a full member of the EU.
Montenegro will – with its responsible approach to regional policy – be a reliable and responsible partner in the region, and one that’s fully committed to political dialogue and the further development of regional relations in all areas
The abolishing of certain barriers to regional investment offers leads to geographically diversified operations and the better distribution of resources within the scope of that common market, with which we would create new value when appearing on the international market. Montenegro is also in the process of reforming bilateral investment agreements and defining a new model that will strike a balance between the interests of the state and protecting the rights of investors, which is very important for all projects that will be implemented.
During these tough moments for Europe, we’ve seen the story of the region’s path to Europe intensified once again. From the perspective of your ministry, what do you see as the main directions of action towards developing the Montenegrin economy as part of the European Economic Area?
– Montenegro is resolute when it comes to accelerating its European integration and achieving EU membership, and we don’t expect a privileged position in light of that, but rather objective recognition of the efforts we’re exerting in this process. Moreover, Montenegro will – with its responsible approach to regional policy – be a reliable and responsible partner in the region, and one that’s fully committed to political dialogue and the further development of regional relations in all areas.
What’s most important is that Montenegro, as part of the European Economic Area, will also be part of the European Union’s internal market. All free movement, which implies – among other things – the freedom of movement of goods, services, people and capital, then the possibility of studying or working abroad without a work or residence permit, customs restrictions or other barriers to export etc., is good for Montenegro and its economic and tourism prosperity, and for the well-being of our citizens.
Montenegro needs a new image as a green and sustainable tourist destination that’s able to offer its visitors experiences that differ from those they’ve had before, as well as a diversified tourist product
I don’t believe that the negative impact of Russian aggression in Ukraine will greatly imperil the economy and tourism
Record levels were achieved during the winter tourism season and we can estimate that the period ahead will provide a dose of security to our economic and financial stability