Corriere Della Sera on Montenegro: Invest in One of Most Dynamic Economies in Europe

By , 18 Dec 2018, 16:28 PM Business
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December 18, 2018 - One of the most influential Italian journals "Corriere della Sera" - "L'Economia", in the section "Investments abroad" published the article titled "Montenegro invites Italian small and medium enterprises" (Il Montenegro corre e chiama le Pmi italiane). According to the reputable newspaper, the Montenegrin GDP has been multiplied four times since 2000.

The appeal to the president of companies: "Open here. Do business with Montenegro.

A young nation, by numbers, opportunities, the desire for growth and the capacity to attract foreign investors," it read, with a guide to business opportunities published by Honorary Consulate of this Balkan state in Milan: from opening a company, through customs procedures, to average salaries and permits.

The aim is to distribute information on the economic potentials of the state that not only grows but also has great ambitions for the future, bearing in mind its EU entry: integration will be officially completed in 2025. Montenegro is 42nd out of 190 in the classification "Doing Business 2018" by the World Bank.

"We have national sovereignty that is older than a millennium and a turbulent history," Montenegrin President Milo Djukanovic said. Montenegro, precisely in the view of its strategic position between the mountains and the sea, at the crossroads of roads and the army, had to spill a lot of blood to remain an oasis of freedom of the Balkan peninsula. Also, until the collapse of socialist Yugoslavia, our country, although developed from an industrial point of view, has nevertheless remained extremely poor."

However, after a political departure from Serbia, the Montenegrin republic began to build an industrial, tax and economic system for itself: from choosing to use the euro (the first option was the German mark) in 2002, until joining the World Trade Organization in 2012.

"Strategies are designed, among other things, to attract foreign investors," notes Djukanovic - especially the United Arab Emirates, Italy, Germany and Switzerland. They achieved significant results in just a few years: in less than 20 years, the gross national product of Montenegro, a country with 700,000 inhabitants, has been multiplied by four, from 1 billion in 2000 (984 million) to 4,77 billion euros in 2017, with almost 700 million foreign investments. Economic growth since 2006, the average economic growth rate is 3.3 per cent, but with years when the growth was even 10 per cent. Growth initiates primarily tax policy based more on consumption taxes than on income. The average VAT rate today is 21%. While the rate of corporate income tax is very favorable, the lowest in the Balkans.

Companies pay a unique tax rate of 9%: in Albania it is 10%, while in Serbia, Slovenia, Croatia it is 20%. An attractive tax policy follows the development of more sectors. First of all, agriculture, a sector that, with renewable energy, is considered to have great potential. The government's plan envisions funds for rural development in the amount of 4.5 million euros, thanks to the candidacy of Montenegro to enter the European Union, and an additional $50 million allocated from the Abu Dhabi Fund.

Another growing sector is construction: the value of construction facilities amounted to 453.6 million euros in 2016, out of which 171.8 million were spent on infrastructure and transport.

There is also tourism. According to the World Travel and Tourism Council, the direct share of this sector in national GDP (+6.7 per cent in 2017) will grow in the coming years. It is estimated that the total share will be 31.2 per cent in 2027, with a total value of 1.6 billion euros.

Bearing pillars of Montenegro's development are small and medium-sized enterprises (among them Italian ones). Since 2014 the state has been included in the EU program "Competitiveness of small and medium enterprises" but also numerous support and development programs for foreign companies. Information on investments and incentives in 23 Montenegrin municipalities can be found on the portal

Regarding Montenegro, according to the paper, two are encouraging factors for Italian investors:

"The road to the European Union and the significant surplus Italy has in its exchange with this country." Therefore, for Erika Kosuta, the president of Ocean Montenegro, a logistics company with a turnover of 40 million, which has just invested three million in this country, this is the nation to focus on. "The Balkans is a strategic space between the East and West markets," says Kosut. After all, there are already many national companies that have found commercial opportunities there, especially in the areas of luxury and food industry."

The energy sector is in a dynamic increase.

"Terna - says the entrepreneur, ends the first submarine cable to transfer energy from one coast to the other, while ENI launched an open-sea exploration with Russian Novatek. Montenegro is a political one, except that it is an economic opportunity. "Investments concentrate on the energy sector: the disparity between the production and consumption of electricity forces Montenegro that almost 40% is imported from international markets. Although the hydroelectric power industry has reached a good level of development, the deficit of energy use of wind, solar and biomass energy remains."

Montenegro "has reduced commercial legislation and an understandable tax system: costs are costs, and revenues are revenues, a thing that for one Italian has the taste of miracles. Providing the investor with the conditions to think about his job, and not to replace the state, is something that makes Montenegro a country to invest, according to Sigilfred Montinari, chairman of the Supervisory Board of Hipotekarna bank from Podgorica. It is the second bank in Montenegro and a technological leader with 18 branches and 220 employees. In the opinion of Montinari, the state has become attractive to investors, especially for Italians.

"In addition to the stronger sides made in Italy, such as food and fashion, said Montinari, the immediate opportunities are classical for a country with strong growth: construction and infrastructure."Terrain for large companies such as “Terna”, which is implementing an electric power interconnection that will connect the Balkans with Italy and “Pizzarotti”, which builds a tourist settlement worth over 600 million.

For small and medium-sized enterprises, on the other hand, "there are opportunities in the areas of lighting, furnishing, special equipment and facilities". But also "in wood processing - Italy is the leader in the production of woodworking machines - and in the areas of renewable energy, tourism, agriculture: for the last two sectors, the state gives incentives."

Text by Corriere della Sera , on December 17th 2018, read more at CdM

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