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Meeting with the Prime Minister and ministers

31/12/2018

Traditional annual meeting of business community with the Prime Minister and ministers was organized in the Chamber of Economy of Montenegro on 26th December 2018. It provided an opportunity for direct discussion between the Government and the business community in order to analyze the effects of economic policy and propose measures for its improvement.

“Montenegrin economy in 2018”, an analysis prepared and presented by the Chamber, contains detailed information on the structure and results of the companies’ operations.

President of the Montenegrin Chamber Vlastimir Golubović expressed satisfaction with the results and the reforms carried out by the Government. He also expressed gratitude towards the business community, who contributed to this success. 

- In 2018 macroeconomic stability was achieved, public finances were consolidated, while financial sector stability was strengthened. We need to keep addressing the structural issues in the economy i.e. removing obstacles to improve competitiveness in order to achieve the necessary economic growth rates - said Golubović.

Then he focused on issues recognized by the business community as constraints to successful doing business and development. 

- Fundamental rights of employees need to be respected, but the business community expects their interest to be protected through the Labour Law, so as to manage business processes in an adequate manner. We expect new Law to define easier procedures of concluding and terminating employment contract, thus ensuring greater employability, successful business operations and faster development of companies – said Golubović.

The business community is always committed to hire domestic labour force, but we need to take into consideration the reality on the labour market, which does not allow conducting some business activities without employing foreign labour force.

- Electronic submission of application for issuance of temporary residence permits to foreigners and the conclusion of temporary employment contract with the Tax Administration until obtaining a permit would significantly contribute to the reduction of operating in the grey zone – said the President.

Business community is not satisfied with Proposal for a Law on Public Procurement. 

- Increasing the amount of the bid guarantee from 2 to 3% of the estimated value of the subject of purchase or the guarantee of the contract execution from 5 to 10% of the contract value represent the unnecessary burdens, which significantly reduce the credit potency - said Golubović.

It is important to define the deadlines within the appeal procedures and Methodology for defining sub-criteria for selecting the best offer in order to adequately apply the principle “best value for money“.  

The competitiveness of the economy requires adapting the system of education to labor market needs. The Chamber and the Ministry of Education are working on bringing the knowledge and skills of the population closer to the needs of labour market thorugh a system of training and dual education. The dual education includes 285 companies. The Chamber has provided funds for 30 scholarships.

Informal economy remains the biggest obstacle to increasing the level of competitiveness of the domestic economy and its development. 

- Synergy of the economy and the Government can result in reducing the informal economy to a minimum. Strengthening the capacity of public administration for the consistent implementation of the law would narrow the opportunities to conduct activities in the gray zone. Through media campaigns it is necessary to stress the importance of tax culture for the development of education, health and other areas - said Golubović. 

Reducing labour costs and increasing the minimum wage may affect the size of the informal economy in the labour market. The proposal is to increase the minimum wage and reduce contributions, which are calculated at the expense of employers. This would increase the employees’ earnings on which the contributions must be paid, and reduce the fiscal burden paid by the employer.

It is necessary to relieve business entities of paying profit tax, which is reinvested in expanding production capacity and improving technological processes. 

The amendments to the Property Tax Law should reduce range of tax rates, and provide more favorable tax treatment for production facilities. Some taxes and fees should be abolished, while some of them need to be reduced.

Lower VAT rate should be applied to the services of preparing and serving food and beverages in all the hotels as well as to services in the ski centres. Business community proposes that certain foodstuffs are taxed at a lower rate. 

This year, the Chamber dealt with the analysis of the structure of companies, after visiting more than 1,300 companies. The data indicate the specific structure of the economy and pronounced regional differences. It is an imperative to create new stimulating measures to encourage entrepreneurship in order to ensure balanced development.

- The implementation of large infrastructure projects in transport, energy and tourism justifies the initiative to build a cement plant in Pljevlja, since this area is rich in basic raw material marl. The potential for the development of the north lies in the timber industry as well, where the focus should be on the final production - said Golubović.

During the meeting the business community pointed to the necessity of bringing the informal economy to sustainable levels and raising awareness of the importance to buy local products. They talked about the burning issue of the lack of adequate labour force, high taxes at the state and local level, the shortcomings of public procurement procedures, the need to adequately valorise the potentials of the Port of Bar, forest certification, digital transformation.

The informal economy is a serious challenge and a key deficit of the entire economy, which must be addressed by the Government together with business community, said the Prime Minister Duško Marković.

"The informal economy has a devastating impact not only on the employment and business operations of companies, but also on the consciousness of our people. We need to show that the informal economy is unethical, unreasonable and punishable by the law," said Marković.

According to the Prime Minister, it is illogical to have 9,000 companies in Montenegro with only one employee and he added that it represents a fraud.

He added that the Government must give an answer, but it needs the support of the economy, because everything cannot be solved only by amending the law, but also the manner of behaviour needs to be changed.

- We cannot give a nod of approval to those who work illegally in your surroundings. We need to make them aware that they are taking the future away from our children - said Marković.

He noted that the previous year was characterized by an impressive result, which was not expected or projected.

- According to the result, in the first quarter of this year a growth was estimated at 4.5 percent, while in the second it amounted 4.9 percent and 5 percent in the third quarter, which is third highest growth in Europe. This is our common result, based on the courage and vision - said Marković.

He recalled that in the ten-month period there were over 9.4 thousand employees more, and EUR 320 million were allocated for the capital budget.

He announced that by the end of January the Parliament will hold an extraordinary session, in which the economy would be relieved of the burdens of more than two million on the basis of various taxes.

Deputy Prime Minister Milutin Simović said that managers, employees and farmers, who worked on their lands, take credits for the economic result this year, which stems from the engaged work and fair approaches of all social partners. He said that the Montenegrin economy needs fast and bold decisions in order to maintain the current growth rates.

The planned activities of the ministries were presented by ministers of economy, transport and maritime affairs, sustainable development and tourism and labour and social welfare, Dragica Sekulić, Osman Nurković, Pavle Radulović and Kemal Purišić, as well as State Secretary of the Ministry of Finance Nina Vujošević.