Montenegro must stop hiring in the public administration. Urgent structural industrial reforms must be implemented, especially in the agriculture and manufacturing sectors, to reduce the trade deficit, improve competitiveness and economic potential. The business community must be more involved in the preparation of laws and regulations related to business. There is a lack of a strategic approach in planning the future growth and development of the Montenegrin economy.
These are some of the main recommendations listed in the "White Book" of the Council of Foreign Investors, which was presented yesterday at the press conference.
They warn that the trade deficit and the number of blocked companies are increasing, while foreign investments are decreasing, as well as that the economy and state finances are becoming dependent on consumption, which carries a very high risk.
Problems are repeated, but not solved
Foreign investors believe that Montenegro has made very little progress in the quality of conditions for doing business, that the remarks of the business community are repeated year after year, and that the Government still has not solved the vast majority of these problems, such as the complicated procedures for hiring foreign labor. low efficiency of public administration, poor air accessibility, low rule of law, very poorly developed digital service of public administration, unpredictable business environment, high gray economy, inadequate workforce, high parafiscal duties...
The decrease in the burden on salaries and the Government's activities on joining the European Union were positively evaluated.
Most of these objections have been constantly repeated for 14 years, as long as this document has been published, which is based on the results of a survey in which directors of companies in Montenegro with dominant foreign ownership participate.
These companies account for 23 percent of the gross domestic product (GDP) of Montenegro, last year they made 202 million euros in profit, paid 72 million euros in taxes and directly employed 5.700 workers.
Foreigners increased their spending, the state is the most sought-after employer
"The period from 2022 to 2024 is characterized by the reduction of unemployment and the stabilization of public finances, but the key growth factor is consumption, increased due to wage growth and inflation. The GDP rate is also influenced by foreign citizens who, due to the consequences of the war in Ukraine and migration from other countries (especially Turkey), reside in Montenegro. According to certain data, there are more than 100.000 foreign citizens who have temporarily found a home in Montenegro. However, it is important to note that increased spending and the arrival of foreign citizens did not trigger significant investments, nor the creation of new jobs in the real sector. On the contrary, the trend of employment in the public administration, which is currently the most sought-after employer in the country, continued to strengthen", it was stated in the "White Book".
Foreign investors answered questions about business, made remarks and suggestions for improving business conditions, and evaluated business conditions in different areas on a scale of one to 10.
Foreign investors gave the ease of doing business in Montenegro an average rating of 6,5, which is only 0,1 point more than the previous year, but still significantly less than in 2021, when the rating was seven, or in 2019, when it was 6,9. XNUMX percent.
President of the Board of Directors of the Foreign Investment Council Tamas Kamarasi, said that the ease of doing business index recorded a slight increase, but that one must remain realistic and honest.
"Progress is a positive but symbolic signal. In order to continue on the path of positive changes, it is necessary to deepen the dialogue between the Government, foreign investors and the wider business community", said Kamaraši.
He stated that the "White Book" is much more than a report and that it represents the experiences and goals of the entire business community.
Government to analyze the recommendations
He also said that this year they made a strategic step forward because they published the "White Paper" in November, and not in December, as in previous years, so that the authorities would get to know investors' remarks in time before the decisions they usually make in December for the following year. .
“This change will give the Government and decision makers more time to analyze the recommendations. In the Council, we believe that the mentioned change can serve to provide a better response to the needs of the business community, as well as to achieve the results expected by the real sector faster", stated Kamaraši.
Executive Director of the Council Arijana Nikolić Vučinić, said that this year they have 23 new recommendations that are divided according to four areas that they recognized through the Council's Strategy.
According to her, of the 37 recommendations from the previous period, not a single activity was initiated for 11, while certain steps or activities were recorded for 26.
"What is not a good signal is the fact that none of the recommendations have been fully resolved," said Nikolić Vučinić.
Minister of Finance Novica Vuković, said that they are aware of how important the recommendations of foreign investors are, and how big a challenge it is to have stable and sustainable public finances, which is a prerequisite for the overall macroeconomic stability of the country.
Vuković said that in accordance with that commitment, they prepared the Fiscal Strategy and that it is the first real fiscal strategy since 2006 that can be called that.
"With the implementation of such a tax reform, Montenegro has become a country with one of the lowest tax burdens for work," Vuković added.
Tourism has the worst rating
Business conditions in tourism, the main Montenegrin economic activity, this year received the worst rating since this research was conducted at 6,1 percent, the same as in 2020, during the period of the covid-19 pandemic, when activities in this sector were completely stopped. . This rating for tourism in 2023 was 6,7, and in 2022 it was 7,1.
"The repeated drop in the rating, now for the second time in a row, with an extremely low realized value, indicates the presence of serious challenges that need to be urgently resolved," this publication stated.
The main problems in tourism pointed out by investors are insufficiently constructed road infrastructure, poor air connectivity in Montenegro and inadequate airport infrastructure capacities, complicated and cumbersome administration and insufficient efficiency when issuing work permits for foreigners, the presence of an informal economy that negatively affects business in in this area, insufficient implementation of strategic management policies in the tourism sector, insufficient promotion, especially of cultural and historical attractions, insufficiently developed and promoted rural tourism, ineffective and inadequate waste management...
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