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Synergy – a key to the regional success

25/10/2019

Economic Conference, organized by the Chamber of Economy of Montenegro in cooperation with the Western Balkans Six Chamber Investment Forum, took place at the Hotel Splendid in Bečići on October 24 and 25, 2019.

Over 600 representatives of governments, international and business communities, scientists and experts participated in one of the most important economic events in Southeast Europe, entitled "Synergy – a key to the regional success”. The Conference was opened by the President of the Montenegrin Chamber Vlastimir Golubović and Prime Minister Duško Marković, followed by the address of the OECD Deputy Secretary General Ulrik Vestergaard Knudsen.

The certificates were awarded to 15 municipalities and cities in the region, including Bijelo Polje, which is the first, in this manner, certified municipality in our country.

Competent speakers, experts in European and regional circumstances within the seven panels presented the vision of the state and perspectives in the areas of importance for the economies of the Western Balkans.

During the first day the following topics were discussed: "Green Economy and Sustainable Development", "Energy in the Balkans - the current state and the future prospects", "Tourism as a regional joint product" and "Water stress global challenges in the 21st century".

The second day of the Conference was marked by panel discussions on transport infrastructure as an indicator of the regional (under) development, education, employment and demographic trends, as well as the digitization and innovation as development opportunities.

Golubović: European perspectives of the region to be strengthened with joint projects

President of the Montenegrin Chamber Vlastimir Golubović said that the Conference of this business association has been promoting partnerships in the region and the commitment to fundamental European values for almost a decade. The topic "Synergy - a key to the regional success" puts an emphasis on the regional cooperation as an essential factor of increasing stability, competitiveness and economic capacity of the Western Balkans.

- Only strong regional cooperation and pooling of resources can create a synergy which rapidly changes economic image of the region in accordance with European standards - said Golubović.

He added that the growth rate of Montenegro's GDP in the previous year amounting to 5.1%, based primarily on investments, positions our country among the top European countries in terms of this macroeconomic indicator. Regarding investments per capita, Montenegro is still the leader in the region. Growth in economic activities is followed by positive trends in the labour market. According to the World Bank October Report for the Western Balkans, the unemployment rate in Montenegro fell to the lowest level in its history.

- Economic cooperation in the region is still far below the optimal level. The need for association and joint activities in the region is imposed as a requirement of modern times, in order to reduce the lagging in productivity and competitiveness of our economies and quickly catch up with technologically advanced European countries - said the President of the Montenegrin Chamber.

Region, according to him, needs to improve and harmonize investment policies and promotes itself as a single investment destination, which requires compliance with European standards and the harmonization of technical regulations and regulatory frameworks in various fields.

- Substantial investment increase and rapid technological progress of the youngest EU member states confirm superiority of the European economic integration model, which we try to project on our region through the activities of the Chamber Investment Forum - said the President.

He stressed that further strengthening of business support mechanisms in the Western Balkans is proposed in the EUROCHAMBRES position paper, which contains recommendations to the EU Parliament and Commission. This document suggests the establishment of the European Union - CIF business platform, in order to intensify the dialogue between decision-makers and their business communities.

- The business community of the Western Balkans stresses clear commitment to strengthening business ties with colleagues in the region, aware of the need to focus on the future, in which the absolute priorities should be given to the economic development and quality of life. On behalf of the Montenegrin Chamber, I invite you to pool our resources, open new prospects of cooperation and jointly decide on the development of this area. Only concrete results and successful joint projects can demonstrate our willingness to strengthen the European perspective of the region - said Golubović, and expressed his belief that the businessmen will take advantage of the Conference to improve the existing and create new business arrangements.

At the end of his address, the President expressed his gratitude to the Chamber’s friends, who helped the preparation and implementation of the Conference, especially general sponsor - Regional Waterworks for the Montenegrin Coast.

Prime Minister: Foreign investments as a result of the commitment and quality of the business environment

The Montenegrin economy has been recording steady growth rates for over a decade, and growth achieved in the last three years clearly confirms the progress we have been making, said Prime Minister Duško Marković.

- A good FDI trend is a further confirmation of the high-quality business environment and the safety of investments, which we have created. Over EUR one billion of net foreign investment inflow in the last two and a half years is not a coincidence, but a result of commitment, Prime Minister said.

However, he pointed out that faster social and economic development could not be based on the resources already applied, but we need new ideas, entrepreneurial ventures, modern technologies and better working methods.

- Neither Montenegro nor our neighbours in the Balkans should look for them in isolated national frames, the Prime Minister noted.

He emphasised that a social and economic environment needs to be more attractive in order to keep young and educated people here, but it is needed for all of us as well.

- We need more creative jobs, researchers and scientists, new knowledge, credible international partners and centres of economic activity, which will attract not only the residents of Montenegro, but of other countries in the region as well. This is the only way we can respond to contemporary demographic challenges, PM Marković said.

The Prime Minister said that he understands the disappointment with the messages sent from some relevant European institutions in recent days, but we should not allow this to be used as an excuse for new stagnation. He estimated that the progress of our economies was closely linked to the EU accession process, but it doesn’t have to have the same dynamic.

- Montenegro has no dilemma – we are committed to progress, adopting well-designed European policies, and will be ready when the moment of EU accession comes, when both parties are ready for it. Because, I will remind, this is a process that we are conducting due to free will of the Accession Agreement signatories, the Prime Minister said.

Speaking about issues of economic cooperation and regional economic area, Prime Minister Marković said that Montenegro is genuinely committed to every aspect of regional cooperation and added that it will make all its resources available and cooperate sincerely on the development of new regional initiatives as well.

- To the extent which is not an alternative, but an addition to our European agenda, the Prime Minister said.

He praised the launching of a number of initiatives, notably the Berlin Process, while the formation of the Western Balkans Six Chamber Investment Forum is extremely important for the economy.

OECD: Regional cooperation crucial for prosperity

The Organization for Economic Co-operation and Development, founded in 1960, is aimed to: achieve a greater economic growth and employment; increase the living standard in member countries, while maintaining financial balance; contribute to the development of the world economy; help the sound economic development of the member and non-member countries in the process of their economic development; contribute to the expansion of world trade on multilateral basis, without discrimination and in conformity with international commitments. This Organization is closely monitoring developments and economic growth rates, development and perspectives of the Western Balkans.

Knudsen said that the close cooperation between the public and private sectors is the core of the OECD activities.

- We connected governments and business leaders in order to get a common idea and make improved policy for a better living standard of citizens - said Knudsen.

Regional cooperation, as he said, will be of crucial importance in order to reach greater prosperity of the inhabitants of this region.

- Stronger regional cooperation will allow the countries to overcome the barriers and will result in a better flow of services, goods and capital - said Knudsen.

He said that the Western Balkans has grown significantly, but the region needs to develop a new model of growth.

- The deep structural reforms are needed and they are even more important in the context of weakening global macroeconomic conditions, which are not within range of politicians in the region - said Knudsen.

According to him, there are four key areas that will enhance the development of the region. These are regulated labour market and the provision of skilled labour, developing digital, energy and transport infrastructure, improvement and structuring of the business environment in order to attract more investments from the western countries as well as increasing exports and improving trade among the countries of the Western Balkans.

- The Balkans record increased exports to the European Union, but small mutual trade. That's not good. Non-tariff barriers must be removed - said Knudsen.

Key sectors of the economies, which the region must develop in order to be more competitive, according to Knudsen, are agriculture, metal sector, industry, especially automotive.

- We support the integration process of the Western Balkans, not due to the membership in the EU, but due to the benefits for the development of your economies - said Knudsen.

Bijelo Polje the first BFCSEE municipality in Montenegro

Panel discussions were preceded by a ceremony of awarding certificates to representatives of 15 cities and municipalities with favorable business environment. This implies that 39,000 entrepreneurs and companies, as well as 900,000 people who live in them, can count on the services of the local administration up to the highest international standards. Bijelo Polje is the first, in this manner, certified municipality in our country. The Certificate is awarded by the National Alliance for Local Economic Development (NALED) and the Regional Council for a favourable business environment in Southeast Europe. In addition to Bijelo Polje, the following municipalities are awarded: Banja Luka, Bijeljina, Bosanska Krupa, Brod, Kakanj, Maglaj, Novi Grad, Prnjavor, Tešanj, Trebinje, Zavidovići, Ćuprija, Požarevac and Šabac.

The Certification program has been implemented since 2012 in Bosnia and Herzegovina, Croatia, Macedonia, Serbia, and as of 2016 in Montenegro. It provides municipalities and cities with a reform plan and clear guidelines on creating a good business climate and introducing internationally recognized standards of efficient and transparent local administrations. BFC SEE provides the economy and investors with help in identifying municipalities and cities that offer the best conditions for investments and have the greatest potentials for development. So far 54 local governments in the region have obtained the Certificate, while 33 are still in the process of certification. Analysis have shown that the conditions for doing business in these areas are 70% better than in the cities and municipalities which do not have this kind of quality stamp, and are almost three times more successful in attracting investments.

The Program was launched by a network of partner institutions from the region with the support of the German Development Cooperation – GIZ Open Regional Fund for Modernization of Municipal Services (GIZ ORF MMS), with the aim of establishing the first common standard and the seal for the business environment quality in municipalities and cities of the Southeast Europe.

- BFCSEE program has proven not only as a good instrument to improve services at the local level, but also as an excellent platform to promote regional cooperation through the exchange of experiences and good reform practices such as electronic building permits, simplified registration of workers engaged during the seasons, the cadastre reform and others - said the German Ambassador to Montenegro Robert Weber.

According to him, regional dialogue is crucial to economic connecting of the Western Balkans. Certification provides a common platform in order for the Western Balkans to be easier compared according to the standards of good governance. He points out that better business operations in the region require e-registration of the labour force engaged during the season and updating cadastre.

- Germany will continue to support the region, strengthen its business environment in order to help the region to position easier in the global economic market - said Webber.

The success of the BFC SEE program encouraged launching the initiative for its institutionalization as the Business Friendly Environment platform within which the governments of the region worked together on regulatory standardization, in order to ensure better position of the Southeast Europe on the global investment map due to the fact that investors usually regard this region as one market. Therefore, the aim is to include new countries into the BFC SEE. 

In addition to the Ambassador the certificates were awarded by representatives of the Regional Council for the Favourable Business Environment in Southeast Europe, Bojana Bošković, the Ministry of Finance and Jozo Bejić, the Federal Ministry of Development, Entrepreneurship and Crafts of Bosnia and Herzegovina.

Bojana Bošković expects that the next year more and more municipalities will be awarded with this certificate.

Circular economy generates growth and stimulates innovation

The green economy is not a trend, but a strategic orientation, since environmental preservation is an important determinant of economic identity and international image of the modern country. The region has great potential for greening national economies, making them acceptable modern world trends. On the sidelines of the Conference the Chamber of Economy signed a Letter of Intent on the creation of the Circular Economy Roadmap in Montenegro.

A green economy and sustainable development were discussed by the Deputy Prime Minister of Montenegro Milutin Simović, the State Secretary in the Ministry of Environment and Spatial Planning of Slovenia Marko Maver, founder and executive director of the Ljubljana-Brussels-Vienna-Kyoto Circular Change Ladeja Godina Košir and UNDP Resident Representative in Montenegro Daniela Gasparíkova. Moderator was PhD Mira Vukčević, University of Montenegro.

Deputy Prime Minister Milutin Simović believes that cooperation, synergies as well as green growth and sustainable development are crucial factors of the Montenegrin and regional development.

- It is good to have green days and conferences, but it is more important to go beyond rhetoric. The agreements we reach need to be implemented and included in the economic policies of each country, need to become the direction of regional cooperation and be developed by every entrepreneur and institution. This message becomes part of our lifestyle and thinking and thus we give a joint response to the global challenge in achieving the EU 2030 Agenda - said Simović.

Montenegro has established the institutional framework for the implementation of sustainable development policies and institutions for the realization of all the goals.

- In July this year we have spent the resources globally which have been intended for the entire year. We spend resources much faster than we renew them. We have to give a joint response on this issue. In Montenegro, which has limited resources, this issue is even more important - he said.

He explained that 13 percent of the total area of Montenegro is under protection while 5.7 percent is covered with national parks. If we add international protection system it is clear that over 20 percent is protected.

- Montenegro will be sustainable and eternal if it is green. The point is to find a balance between economic, environmental and social approach, to respond to the question of how to polish a gem, without damaging it. Sustainable development should guarantee prosperity, reduction of social inequalities and sustainable management or environmental concerns. All this sounds challenging but I am sure that the Conference will contribute to the solution of this equation with several unknowns - said Simović.

Montenegro and UNDP have agreed on the project of management of food surpluses and its waste.

- We start this project with the UNDP, the Chamber of Economy and the entire business community, and we expect the results. Montenegro wants to define a circular economy roadmap - said Simović.

This activity also implies raising public awareness about the importance of circular economy, strengthening the education system, tax reform.

- Why do not we impose higher tax rates to those who damage the natural environment, and support the entrepreneurs who develop green business - asked Simović.

The State Secretary in the Ministry of Environment and Spatial Planning of Slovenia Marko Maver said that the environmental footprint we leave must be reduced.

- We need system approach and Slovenia approached to this issue by involving all sectors in the circular economy - said Maver.

Slovenia aims to reduce the use of plastic bottles and bags.

- You can develop the best policies, but without implementation and inclusion of all actors in this they will remain a dead letter - he said.

He stressed that Slovenia has set the goal to be carbon neutral by 2050.

Daniela Gasparikova, UNDP, said that the 2030 Agenda which defines 17 goals is the most ambitious one created so far.

- The goal of this Agenda is to eradicate poverty by 2030 and to achieve this goal without endangering limited resources - said Gasparikova.

According to her, commitment to recycling is not enough, but it is necessary to reduce the amount of the waste produced.

- Circular economy can transform the way of generating growth and encouraging innovation, which 180 countries worldwide have devoted to. We have to invest not billions but trillions in achieving this goal and most of that money should come from the private sector - she said.

Gasparikova said it is not enough that this kind of transformation takes place in individual countries, but in the entire common market. Montenegro needs to intensify cooperation with all countries of Western Balkans on this issue.

Ladeja Godina Košir called for concrete steps which will be taken after the discussions and the expressed political will for transformation towards a circular economy.

- It is necessary to agree on the concrete action, and in order to succeed it is necessary to recognize a personal interest in a circular economy. It must become the core of the business - said Godina Košir.

According to her, it is of the key importance to maintain and upgrade the resources we already have.

- The Region must protect its most valuable resources. You have everything, do not gamble it, but make a success story, as the Western Balkans can become a significant factor in Europe in this area - she said.

Participants concluded the discussion with a message: "Act together integrally and without delay. Do not wait for others. Invest more in research and innovation. Resource management is essential and must become part of the business model".

Submarine cable is changing the energy image in the region

Energy image in the region has been significantly changed by installing of the submarine cable between Montenegro and Italy. It is a new transit route connecting the power systems of the Western and Eastern Europe, which is positioning Montenegro as one of the most important energy hub of Europe.

"Energy in the Balkans - the current situation and the future prospects" were discussed by the President of the Energy Regulatory Agency Board Branislav Prelević, Minister of Economic Development of Kosovo Valdrin Lluka, CEO of TERNA Montenegro-Italy Gianluca Vettese, board member of CROPEX, Croatia Ivica Toljan and CEO of Elektroprivreda Crne Gore Igor Noveljić. The panel was moderated by energy market analyst of Alpiq Energy SE Pavle Grbović.

Gianluca Vettese announced that the submarine cable, which is to be 450 kilometres long, will be in commercial use by the end of the year.

- We are completing the cable testing according to international and the EU standards - said Vettese.

He stressed that this is the first phase of the project, whose total installed capacity is planned to be over 1000 MW.

- The plan is to lay another undersea cable to Italy, in order to complete the whole project - he said.

Igor Noveljić stressed that energy industry is the most important economic branch and major development opportunity for Montenegro. He said that in the next two years EPCG will realize investments into the four existing plants, which is to amount EUR 170 million.

- In the forthcoming period we will complete the activities on the modernization of hydro power plants Perućica and Piva as well as the ecological reconstruction of TPP Pljevlja, which will cost 40 million, while 20 million will be invested in the rehabilitation of the landfill Maljevac - said Noveljić.  

He announced the construction of a solar power plant in Ulcinj worth EUR 200 million and wind plant Krnovo worth EUR 50 million.

- The project plan for the hydropower plant Komarnica, which construction should end in the next 10 years, is developed - he said, adding that it is an investment which amounts to EUR 700 million in total or 500 MW of new installed capacities from renewable energy sources.

- Annual production of EPCG will increase by 900 GWh - said the CEO.

Valdrin Lluka spoke of the power capacities of Kosovo, which has the lowest electricity prices in Europe, after Ukraine.

- Kosovo has planned to invest three billion euros in the construction of new power plants. First, it will begin construction of the power plant of 450 MW in order to use the energy from renewable sources to meet domestic needs and to ensure stability in the energy system - said Lluka.

Kosovo signed an Agreement with Germany on building wind farms, while the Turkish investors have already built a solar plant in the area.

- In the forthcoming period we will have 400 MW of renewable energy - said Lluka.

According to him, regional connecting in the energy sector is of key importance.

- We believe that the prospects in the economic sector are very good, because we have significant potentials - he concluded.

Branislav Prelević said that the topic of this panel is the focus of all major conferences across Europe. He put emphasis on discussions on a new EU regulation - IV energy package.

- The EU member states share the same opinion about electricity, being aware that the EU is the most vulnerable in this area. It imports 53 percent of the needed energy and for this purpose it spends $ 400 billion. Only this year it pays $ 30 billion for electricity per month - Prelevic said.

He pointed out that the EU is in unfavourable position, because its main supplier is Gazprom from Russia.

- The European Union plans to invest 1,000 billion in the energy development in the next 10 years - he said.

He stresses that Montenegro is well ahead in the energy community and is a leader in terms of implementation of EU policies. The Montenegrin Regulatory Agency is an ACER member even though our country is not an EU-member.

- Energy community wants all EU policies to be implemented in the region, but the Region is rather inert and slows down these processes- he said.

Ivica Toljan said that conferences such as this one organized by the Montenegrin Chamber are very valuable, because decision makers have the opportunity to hear important information in one place.

- Cable to Italy is a major contribution of Montenegro to the stability of the European energy system. The fact is that these cable systems do not operate badly anywhere in the world - says Toljan.

According to him, all power plants will have to comply with the policy of the European Union which energy is increasingly based on renewable resources.

- A country cannot become an EU member with carbon dioxide emissions from power plants - said Toljan.

He concludes that the national exchange is a foundation of the energy industry and that there is no obstacle for Montenegro to join the European Energy Exchange although it is not an EU member yet.

- Montenegro will become the energy hub thanks to this cable - he concluded and emphasized the need to organize trainings to exploit the opportunities of this project properly.

Diversity of tourist offer in a small area represents a big advantage

The Western Balkans should aim the natural and cultural potentials to tourism offered in line with the modern requirements of the world market. Montenegro has profiled as a prestigious tourist destination, but only unified, diverse and expanded tourist offer of the region can be better valorised on the international market. The national chambers of Montenegro, Serbia, Bosnia and Herzegovina and North Macedonia have already been dealing with the issue, by creating joint tourist products. What needs to be improved and how to respond to the challenges was discussed at a panel dedicated to the joint tourist product.

This topic was spoken on by the State Secretary of the Ministry of Sustainable Development and Tourism Damir Davidović, CEO of Azmont Investments Stevan Milić, the director of the Slovenian Provobis Darja Radić and a tourism project manager at the Regional Cooperation Council Snježana Derviškadić. Moderator was Almir Peštek, a professor at the University of Sarajevo.  

Damir Davidović said that tourism is the most important economic branch in Montenegro, and that the past 15 years were characterized by continuous growth. Last year generated income amounted to over one billion euros, but this year is estimated to be even better, because 200,000 more tourists and 600,000 more overnights are recorded.

- This has been contributed by long-term government policy which resulted in the opening of many hotels in recent years. There are 6,000 new beds this year. The aim was to categorize more than 50 percent of capacities with 4 and 5 stars, and now it is 56 percent - said Davidović.

He said that several hundred million euros are invested in the Montenegrin tourism projects per year. Tourism development, especially in the north of our country, will be contributed by a highway, whose first phase will be completed in September 2020. The large driving force of development is also the construction of ski resorts in the north, in which 140 million euros were invested.

- This year we opened ski resort in Montenegro, which is expected to be one of the largest in this part of Europe. We want tourism in the northern part of Montenegro to take a significant share in GDP in ten years - said the representative of the Ministry.

He concludes that Montenegro has reasons to be satisfied with tourism.

- All the results achieved represent a strong basis for the development and the impetus expected in the next decade. Tourism can also be a strong basis for recruitment and knowledge transfer. Destination management will require changes in order to maximally exploit resources - he said.

Executive Director of Azmont investments Stevan Milić said that billions of euros worth projects are implemented in the area of our coast, where brands, which cannot be found anywhere in the region, are represented. Among the most valuable projects is investment of Azmont - Porto Novi, worth one billion euros with the hotel One & Only, the first one in Europe.

- I think we're on the right track. In my opinion, Montenegrin investment climate is very positive, because it makes investors feel welcome. Overall business environment, favourable regulations and administrative support have contributed to creating an attractive environment - he said.

He added that a great variety of offer in a small area is a key to the development of Montenegrin tourism. He concludes that Montenegro and the region need to be connected in order to create a joint tourist product. However, the limiting factor for the joint product is still inadequate transport connection.

Darija Radić believes that the development of tourism requires creating an environment in which the private and public sectors will cooperate in order to attract investments. Slovenia has put such a requirement into the strategic document with a concrete action plan, which clearly stated division of duties. Tourism in 2018 generated incomes of EUR 2.7 billion to Slovenia.

- In developing tourism, we first focused on infrastructure development, and then began to design tourist products where we can be the best, such as wellness-spa, ski resorts. All support went to these products. In the third phase we worked intensively to promote and designed a slogan I Feel Slovenia, which we then complemented with I Feel Green, Healthy and Active. We “stick to” this slogan, because it reflects the identity of a global market by which we are recognized - said Radić.

Now Slovenia, she added, has everything but human resources, as they go to Western Europe and the United States in order to look for better living conditions.

- People from the Balkans do not look for a job in our country, therefore it is more challenging to ensure that local human resources stay at home - she said.

She concludes that the development of tourism requires cooperation with countries in the region, especially when it comes to entering the distant markets such as Asia. Slovenia has already been cooperating with Croatia in this field.

- If the countries of the Balkans join their forces in this respect, it would be a great benefit to the entire region - said Radić.

Snježana Derviškadić presented the Regional Council as a platform, one of which segments is tourism.

- Currently we are working on realization of the joint product of six IPA economies, which is contributed significantly by the Tourism Expert Group - TEG which gathers representatives of ministries, NTOs and private sectors and chambers of commerce. The primary task involves the possibility of developing regional programs and routes of adventure and cultural tourism - said Derviškadić.

According to her, the market requires regional programs. The richness of our heritage is the common feature that also contributes to the similarity of our diverse offer.

- In adventure tourism we already have Via Dinarika as a distinctive product, mountaineering transversal passing through Dinaridi, from Slovenia to the border of Kosovo and Albania. There is an interest in including the mountain of Šar through Macedonia in this route - she said.

Three cultural routes being developed are Iliricum Trail with the Roman heritage in the region, connected with Roman Emperors Vine Rout which is certified by the Council of Europe, then the Balkan Monumental Trail which represents a monument heritage of World War II and the Crossroads of Civilizations which is based on the historical heritage of the region. We are developing management and promotion plans for all the routes.

It was concluded that in order to strengthen tourism it is necessary to ensure a smooth and rapid crossing of the borders in the Western Balkans, i.e. to simplify the movement of people within the region.

We must protect our huge water wealth

The closing panel of the first Conference day addressed the global water stress challenges in the 21st century. An issue of harnessing hydropower potential along with promoting sustainable development requires economically and ethically responsible decisions which affect the way and quality of life of future generations, which is why the main word must be left to professional argumentation and the fact-based policies.

This important topic was elaborated by the proven water experts: Goran Jevrić, Director of the Public Enterprise “Regional Water Supply of the Montenegrin Coast”, Francesco Fiorillo, Professor from the University of Sannio, Italy, Vladimir Taušanović, Vice President of the International Association of Water Supply Companies in the Danube River Basin and the Director of the Directorate for Water Management, Damir Gutić. It was moderated by Zoran Stevanović, professor at the University of Belgrade.

Not more than 0.8% of the total water balance is used on Earth, but the problem is its availability, given that the largest quantity of water is unusable since it is part of glaciers. Most countries are in a state of water stress, which is also greatly influenced by the increased use of water for industrial purposes, which has increased consumption seven times. Nowadays, our water demand is fifteen times higher and this exponential growth will increasingly cause water stress in some parts of the planet. The water scarcity is already felt in agriculture. The climate changes are the biggest threat to water stress.

- Only with a good protection of water resources and sustainable development we will be able to cope with the challenges in this area – as concluded at this panel.

Montenegro is one of the leaders in terms of water availability, especially when observing data per capita, but it is already the time, through the cross-border connectivity, to make necessary efforts to prevent the problem of water scarcity. The conclusion of the experts was that the cross-border cooperation projects contribute significantly to this.

Vladimir Taušanović, Vice President of the Danube River Basin Association, established with the mission of preserving water resources in the countries of this river basin, stated that water is the basis of life, and therefore it is declared a human right.

- Water is becoming an increasingly important resource without which we cannot go further into development - Taušanović said.

According to him, our resources have been greatly used.

- Now we use resources for one and a half planet. The most developed ones spend the most, at the expense of the underdeveloped. The main question is how we will cope with all these challenges, one of which is water stress - he said.

He said that 70% of the total water quantity is used for food production, 20% for industry, and only 10% for the population supply. For the production of one kilogram of chocolate it is necessary to provide 17 000 liters of water.

- The region has enough resources, but it does not mean that we do not have to use them evenly, rationally and hand over them to the generations to come. This should be our mission - said Taušanović.

The network losses, which range from 30% to 60 % depending on the country, are the challenge.

- It's a pure waste of resources. We are trying to find solutions to improve infrastructure and reduce losses to below 20%. In the most developed countries, they are below 10% and 5% - Taušanović said. Another challenge is managing the wastewater, which needs to be treated and purified before being released into nature, on the contrary, human will be the cause of pollution.

Montenegro is recording a significant progress in this area. The development of tourism requires regular water supply and waste water treatment in order to preserve nature- said he.

Goran Jevrić elaborated the situation before and after the construction of the Bolje Sestre natural source, which is the largest water intake built in the Mediterranean in the last 25 years.

- With the restoration of the Montenegrin statehood, there were no more excuses for not supplying the Montenegrin coast from the domestic sources. The first quantities of water from the Bolje Sestre source were delivered in 2010, which significantly contributed to the fact that tourism revenues have increased three and a half times since then, and exceeded 1.1 billion euro in 2018- said Jevrić.

He pointed out that the economic activity can also contribute to water stress.

- Let us not undermine the basic principles of sustainable development by having economic activities that will disrupt the resources of future generations. We must better use the advantages of having at disposal the sufficient quantities of this resource - said Jevrić.

The Regional Water Supply estimates show that water demand will rise by 58 % over the next five years.

 - We are investing EUR 10 million in the construction of the second phase of the Water Supply System, which we are realizing seven years before the deadline, in order to deliver 750 liters of water per second to Boka Bay municipalities - said Jevrić.

Among the future activities, he mentioned connecting Herceg Novi to the network, while one of the challenges is also connecting 20000 facilities in Bar, including four-star hotels.

- Out of 164 countries, Montenegro is ranked 121, which means that water stress is not expressed, but we have to protect our huge water wealth - Jevrić said.

Damir Gutić estimated that water is an irreplaceable alternative resource and that the management of this resource is a responsibility towards present and future generations.

Montenegro is among the richest water areas. It receives water from the Danube and Adriatic basins.

- Hydrological analysis reveals a great deal of uneven water presence. Montenegro is rich in the average values, but there is no enough water in the crisis hydrological periods, when the demand is highest - said Gutić.

He finds it necessary to improve monitoring, quality preservation and elimination of network losses.

He stated that the European directives are transposed into domestic regulations governing the management of this resource.

- Sustainable administrative and financial capacity should be established in order to improve governance. We expect the establishment of a water information system. We need strong institutions in this area and coordination with all competent authorities. It is necessary to improve monitoring, raise awareness of the rational use and protection of watercourses. Water can no longer be considered as a social category - said Gutić.

Professor Francesco Fiorillo was talking about the history of Roman aqueducts that are represented worldwide, including in France and Israel (1000 years old).

According to him, Italy is mostly supplied with the water from karsts terrain sources, characterized by exceptional quality. He especially emphasized the Karsts source of Campania from which the population of Naples receives water.

- There is a unique distribution system in the South Italy where water supply systems are connected into a complex network –said Fiorillo.

The second Conference Day was marked by panel discussions on the transport infrastructure –an indicator of the (under)development of the region, education, employment and the demographic trends, including digitalization and innovations as a development opportunity.

Transport infrastructure

The second day of the Conference on Economy “Synergy – the key to the success of the Region”, organized by the Chamber of Economy of Montenegro, was marked by panel discussions on the transport infrastructure –an indicator of the (under)development of the region, education, employment and demographic trends, including digitalization and innovations as a development opportunity.

The cooperation in the area of transport connectivity is becoming an imperative, while the recent establishing of the Western Balkans Transport Community confirms the importance of the harmonized development of the transport network in the region. With the completion of the planned infrastructure projects, an aspect of attracting foreign direct investments will gain its full intensity and importance for improving the competitiveness of the regional economies. This is also why the Transport Connectivity Agenda is high on the Berlin Process's priority list. Has the Western Balkans Investment Framework allocated enough money to develop transport infrastructure? How important is to have synchronized actions within the Region in the area of transportation? These are the topics discussed by Angelina Živković, the State Secretary at the Ministry of Transport and Maritime Affairs of Montenegro, Saša Dalipagić, Deputy Minister of Communications and Transport of Bosnia and Herzegovina, Velibor Peulić, Professor of Pan-European University of APEIRON, Bosnia and Herzegovina and Bojan Rosi, Dean of the Faculty of Logistics in Celje, the University of Maribor. The moderator was Anja Kossik, editor of the Austrian magazine “Transportation”.

Angelina Živković said that the region is becoming a major construction site.

- The traffic contributes to that and represents a generator of the economic and commercial development - said Živković.

She said that the Balkan countries have recognized the transport and energy sectors as limiting factors for the competitiveness of the Region, and that a better flow of capital and people is needed.

According to her, much has been done in the previous period in terms of policies, strategies and project implementation. Montenegro is constructing the highway, one of the largest capital projects in the Region. The priority section that connects the south and north, that is, our country with the Corridor 11 passing through Serbia, is coming to an end - said Živković, who added that the project value is EUR 810 million.

- This project should be regarded as an injection to the economic development of Montenegro, and the job creation. Over 30% of this section is covered by domestic companies, while young engineers acquire knowledge which they will pass on to new generations and across the region - she said.

She added that the priority is to continue the construction of the northbound highway for which there is the EU support.

The railway in Montenegro is being intensively reconstructed and modernized. Over 45% of the railway has been modernized, with a projected speed of 80 km/h.

- It is important to create a high quality hinterland for the Port of Bar, a logistics chain and the possibility of developing multimodal transport - said Živković.

The Port of Bar is one of the most significant potentials of Montenegro; it is recognized as very significant in the Adriatic and is part of the Blue Corridor. She emphasizes the importance of connecting the Port of Bar with the Adriatic and Mediterranean ports.

She added that another important corridor for Montenegro is the Adriatic-Ionian, which will consist of a capital facility crossing the Boka Bay and bypasses around coastal cities. Montenegro has received EUR 40 million from the EU to construct a bypass around Budva, which is part of this route.

Saša Dalipagić said that connecting with neighbours is vital for the Region. The Corridor 5C is a priority for Bosnia and Herzegovina, as it is the only pan-European road passing through this country, while connecting 85% of the population, numerous tourism and trade potentials.

The corridor connects the south and north of the country, as well as B&H with the Port of Ploče, which is strategic for this country. Seven sections of this road are being under construction in Bosnia and Herzegovina.

- There are around 220 km of highways in operation in B&H - Dalipagić said.

As for the Adriatic-Ionian road, Bosnia and Herzegovina has completed the study documentation for the Adriatic-Ionian road section, for which they hope it will pass through that country.

- The roadway Pošted –Neum –Trebinje –Montenegro is 102 km long and EUR 750 million worth. This road would be important for B&H, for the development of the transport infrastructure in that part of the country, and the welfare of the population and the economy - he emphasized.

He recalled that there is an agreement with Montenegro for the bridge on the Tara River near Šćepan Polje, and that B&H has made a major project for that facility and the access road.

They are actively engaged on the project of Sarajevo-Belgrade highway, although he notes that there is a lot of delay when compared to Serbia, which has already started with the section from Sremska Rača to Rača.

- We have agreed about the bridge near Rača, while Turkey is supposed to be an investor in this project, as well as in the reconstruction of individual routes. The section of that road would be an expressway Sarajevo-Pale-Rogatica-Višegrad-Gradište. This project is very expensive, worth three billion euros –said Dalipagić.

Velibor Peulić congratulated the Chamber of Economy for having managed to bring together all the relevant factors during the debate at the Conference.

- I'm sorry that the Transport Community Center is not in Montenegro - said Peulić.

He pointed out that for the transport of goods and freight in the region, the most engaged companies are those from the road transport, whose costs are relatively high, which is included in the cost price.

- Our transportation costs are much higher than in other countries in Europe - he emphasized.

According to him, it is necessary to accelerate the construction and integration of transport infrastructure, which will contribute to the desired synergy needed for the economic development of this area.

- Where the highway passes through, another 50 km of roads will develop in perspective. The profit from 5C Corridor in Bosnia and Herzegovina is EUR 5 billion. Obstacles in the existing infrastructure must be removed in parallel. We must also reduce retention at the borders. We want to achieve that waiting of one transport unit at the border crossing do not exceed 15 minutes. Our companies lose 100 days at the border crossing annually. No one can resolve this issue except us - said Peulić.

He stressed out the need to take advantage of the connectivity of the corridors and ports of Bar, Ploče, Rijeka and Kopar to improve their competitiveness in order to cope with Thessaloniki, which is ahead when it comes to cargo transshipment.

Bojan Rosi said that several years ago Slovenia had the same discussions and concerns regarding the transport infrastructure. He confirmed that they have resolved a lot, but it took them a lot of time. All Slovenian corridors are now in the Trans-European Transport Network, although they had to meet a number of conditions to enter this network. The EU assistance was significant, but a great effort was needed also at the national level.

- What we have invested has turned into a profit and we have become competitive in the EU market, ready for an equal match with other members - said Rosi.

In Slovenia, he said, there is still a lot of exchange of views about the Fifth, Tenth, Mediterranean and Ionian Corridors, which additionally connect this country with the Region.

- The corridors are great, but we have problems with delays on all our roads, and it turns into a waste of money. Together with the academic community, we are dealing a lot with this challenge, and I urge you to learn from our mistakes, and not your own. We are already looking for alternatives to the corridors, which do not represent the shortest route - Rossi said.

According to him, Slovenia is gravitating towards the Balkans, seeking opportunities to work together on projects to speed up traffic.

- 100 km of highway is worthless if you stay long at border crossings. Also, if you want to raise the quality of railway, it must have passengers, not empty trains. We need to better set things up, set standards and remove barriers”, Rosi concluded.

Investing into knowledge –the Region’s vital interest

According to the official data, the Western Balkans region is characterized by unfavourable demographic trends. The migration of the population, mainly to the countries of the Western Europe and the lack of manpower, are the main challenges which our economies are facing. The Chamber Investment Forum pays particular attention to connecting human resources and establishing a flexible education system that responds to changing labour market requirements and enables the acquisition of knowledge for the higher quality professional development. It is necessary to show the ability, willingness and interest to gather and activate all the human resources from the region, in order to jointly seek the optimal solutions to the challenges we are facing.

Education, employment and demographic trends were discussed by Mubera Kurpejović, Director of the Higher Education Directorate at the Ministry of Education, and professors from the Faculties of economics in Belgrade, Zagreb and Ljubljana, Dejan Šoškić, Ljubo Jurčić (who is also the president of the Croatian Society of Economists), and Janez Malačić . The moderator was Mladen Perazić, Director of the Sector for Education and Quality Management at the Chamber of Economy of Montenegro.

The Region's labour market is characterized by 231000 new jobs, an employment growth rate of 3.1%, and a low activity rate among women and young people. Nearly one-third of residents lives outside the region, 230000 have emigrated. Emigrants are usually young people with a higher education. The long-term loss of these staff has a negative impact on the economic growth.

Mubera Kurpejović pointed out that investing in the youngest is essential. Montenegro has significantly invested in a large number of pre-school facilities, which is linked to the objectives of the Europe 2020 Strategy. In Montenegro, over 70 % of children have been enrolled in pre-school education in the last year. This is the first step towards the improvement of our children's education.

Responding to the moderator's statement that our children had poor results in PISA testing, Kurpejović said that Montenegro has been participating in this testing for two years.

- PISA testing shows what needs to be changed in order for our children to have better general knowledge and competences. Countries in the region have a similar result, given that we have the same education system and it needs to be changed by reforms. The next generations will achieve better results - she said.   

She concluded that the synergy of all actors in education and the society can lead to better results in PISA testing and retaining the educated staff in the country.

Ljubo Jurčić believes that the unsatisfactory results of the PISA testing are due to a system error.

-Education is a public good and it enters all pores of society. What we are learning are the systematic experiences of the generations before us. We have got into the crisis of social values, where one of the victims is education - said Jurčić.

According to him, Croatia has reached a breakpoint- the teachers, who are now on strike, have been declared officials in order not to be physically attacked. On the other hand, teaching is the least paid job compared to other public activities.

- Our students are not as bad as the tests show. We have excellent results in the world competitions. Our young people are often in the top three or five in math and physics. It shows that we have high-quality children, regardless of this system, primarily thanks to the family education. Such students, unfortunately, cannot find a job in the region, but are easily employed in America, Ireland, Finland and other countries for a much higher salary - said Jurčić.

He believes that the necessary changes cannot be done in isolated segments, but that they should cover all social activities.

Dejan Šoškić believes that the Region is lagging behind in the quality of education at all levels. He estimated that the young population who are now taking studies is less functionally literate than ten years ago.

- The vital interest of our countries is to invest in knowledge and the strength of educational institutions - Šoškić said.

According to him, the problem is that the use of calculators and computers is forbidden in schools, there is an insistence on the repetitive knowledge and less on its development in the problem solving direction.

He emphasized that it is very difficult to predict which competencies will be required from the present students in the future, but it is very important that their knowledge is applicable in the economy. That is why, according to him, it is necessary the faculty councils to include the representatives of businesses, who would convey to the program creators their views on this issue.

Today's students, more than before, should be aware that education does not end with graduation, but that lifelong learning is necessary, added Šoškić.

- There is a need to work on the change of consciousness in order to understand the education as a continuous process that lasts a lifetime - emphasized Šoškić.

He estimated that the region's statistics, which refer to the number of highly educated people in relation to the EU average, are depressing.

- The competitiveness of the national economy cannot rest on making decisions based on uncompetitive knowledge. That is why education is on the first place in all countries of the world - concluded Šoškić.

Janez Malačić said that tertiary education (faculties) is the most important since around 60% of new jobs require this level of knowledge.

In Slovenia, there are now a number of shorter study programs in which development the economy has been significantly involved.

- I would not advocate the need for tertiary education institutions to focus their programs on the current needs of the economy, since the technology is developing so rapidly that it is not known what kind of knowledge will be needed in ten years - he said.

Therefore, he indicated that educational program creators need to be affiliated with research institutions in order to gain insight into new technologies and products being planned. Therefore, the American programs are created by the colleges in cooperation with the Association of Engineers, which is again affiliated with the research institutions.

According to him, there are different recipes for the success of leading economies, but the education is at the core of each of them.

He pointed to the problem of inflation of diplomas obtained at the faculties in the Region, while he sees the solution in the introduction of testing of graduates about the basic concepts of the sciences they have learnt.

- The problem in the region is that the state institutions employ students from private faculties, while the private sector is searching for the graduated students from the state universities - said Malačić.

Through digital transformation to the benefits of the modern economy

The contemporary trends in the field of digitalization provide enormous opportunities for improvement in all areas of business, but they also pose a serious challenge to the capacities of the countries in the region to systematically encourage businesses to digitally transform not only some processes, but their entire business. Encouraging the development of innovative solutions, no matter whether it is about the development of innovative products or an innovative approach to business, is an imperative for successful business and market survival.

The great changes brought about by the digital age have to be understood by the business community as a unique opportunity to reduce the technological gap with the developed economies. 

Montenegro is the first country outside the European Union to adopt a Smart Specialization Strategy and thus make a respectable step in this area, and the Chamber of Economy of Montenegro has made a valuable contribution to its creation. For the Region's economy digital transformation is a task to which it must respond equally well.  

Digitization and innovations as a development opportunity were the focus of participants in the closing panel of the Conference. These are Milan Srzentić, the State Secretary of the Ministry of Economy of Montenegro, Marko Čadež, President of the Digitalization Committee of the EUROCHAMBRES, Vladan Tabaš, Director and Founder of the company ČIKOM doo from Podgorica, and Igor Zorko, founder of the Slovenian ZZI doo. Vladimir Vulić, a founder of the non-governmental organization digitalizj.me, moderated the panel.

Vladan Tabaš said that the terms digitalization and digital transformation are often mistaken.

- Digitization is the current and final process. Digital transformation is a change in the way we have lived so far by using digital technologies. It is a complex, evolutionary process. It contains multiple digitization processes and it is a much more complex story - said Tabaš.

Panelists devoted much of their discussion to the position of the countries in the region in this area when compared to Europe, as measured by the Digital Economy and Society Index (DESI).

According to Tabaš, in addition to this, other indicators should also be taken into account, such as the Global Competitiveness Index, where Montenegro is 71st out of 140 countries in the world, noting that this position was significantly better ten years ago.

- We cannot be satisfied and that is why we need to start the synergy of everyone in order to move forward. For achieving this, an eGovernment services are very important, which we do not yet use sufficiently. The education system is unadjusted, given that there are no subjects that need to teach children about the future. It has to keep up with the dynamic changes that are happening in technology. The goal is to teach children how to use technology, and not just teach them theoretically about it. We have to seriously work together and only then can we realistically compare by all indexes. We need to understand that it is a process - said Tabaš.

The Montenegro's IT sector is facing large staff shortages.

- Montenegro has 705 IT companies, with 1880 employees, which are 2.87 employees per company. We have a phenomenal development strategy that gives us the wind at the back, but I'm afraid that this wind will push us away, not push us forward”, he said.

He believes that for the digital transformation, the energies of all business associations, educational institutions, the Government, NGO sector must be joined. Only the synergy of this coalition can result in positive effects in this significant area.

Igor Zorko believes that we are in a period of development which is comparable to the beginnings of industrialization. Digital transformation is necessary to harness all the benefits that the modern digital economy brings with it, and also to be equal players who use all the potential of the virtual market.

The DESI index is one of the frameworks, and we should work together to achieve some of its criteria in the Region.

- McKenzi's analysis says that if every small business took over the basics of digitalization, Slovenia's GDP would increase by 3.5 % - said Zorko.

He agrees that a digital coalition of the state, the economy, the scientific community and the education system must be established in the region.

The problem is if domestic companies do not get jobs from the state administration. So, how can they keep the employees? In our country, the state administration software is copyright of Slovenian companies. We have 3500 companies and 25000 computer programmers. We have to ensure jobs for them. The domestic IT sector is very important for the development of the economy - said Zorko.

He advocated that commitment to the standardization of regulations, e-government and business operations should be in the focus of the future digital coalition.

Milan Srzentić pointed out that in the state administration, in terms of digitalization and new technologies, it is very difficult to reach new high-quality people.

- Digital transformation is a multidimensional process that also applies to the digital transformation of entrepreneurship, management and staff. The European Union measures its digital transformation through a composite DESI index composed of 37 parameters. We in the Western Balkans are not yet ready to measure all indicators in the DESI index, but we can define 80% of them. Comparatively, the bad news is that we are lagging behind the EU countries in digitization, but this gap is narrowing every year. Especially when it comes to network infrastructure where we have already outperformed some EU member states by some parameters - said Srzentić.

He believes that through cooperation, the countries of the region can strengthen the capacities for digital transformation.

He stated that Montenegro adopted the Smart Specialization Strategy, as the first non-EU country. Three development areas horizontally linked by ICT have been identified. However, it is not only this sector that is in the focus of decision makers. Our state has also allocated EUR 4.5 million to encourage start-up entrepreneurship, especially for building quality infrastructure to start a business.

- Therefore, yes to DESI, but not only to DESI - Srzentić concluded.

He estimated that more work needed to be done to popularize electronic services, especially those requiring the most frequent contact between citizens and the administration. Also, it is very important for eServices to have the highest level of user interaction.

Marko Čadež began his presentation by stating that the entire Region is already in the EU, given that it is economically tied to it.

He believes that thanks to IT companies, the region has a competitive advantage over EU countries for the first time.

- Whatever portal you use, anywhere in the world, there is a huge chance that a significant part of it is done in the region. There is no better institute for digital transformation of agriculture and industry than the Novi Sad located BioSense Institute. Also, we are very strong in the blockchain technology and gaming industry. There would be no Microsoft Cloud if the company Fame System from Niš by their solutions did not ensure its speed. Ryanair and Viber use solutions designed in the Region. The first electronic driver's license was created in Kosovo. Slovenia was first to start with the e-Bill project 18 years ago. In Serbia, we are starting now with a cloud system of certification signatures. We have introduced the first instant pay system of the Serbian Chamber of Commerce in cooperation with the National Bank. We may have originated from a conservative environment and understanding, but we are learning fast and for the first time we have a world-class competitive advantage, said Čadež.

Conclusions of the Conference “Synergy - the key to the success of the Region”

The Conference conclusions were presented by the Prof. Saša Popović, University of Montenegro.

  • The participants of the Conference assessed that the organizer has fully recognized the need for closer integration of the national economies of the Western Balkans and by the selection of the topic, it offered the opportunity to seek solutions at the expert level. This Conference is exactly a synergistic act.
  • Having in mind that the Western Balkans region encompasses small economies, it must seek its place on the global economic scene based on synergistic effects and articulate a common business profile and offer that is in line with the principles of economies of scope.
  • The Western Balkans region is rich in significant natural resources that it must protect and use in a sustainable way, in order to reduce uncertainty about its future economic, social and political destiny.
  • Stability, efficiency and energy independence are the basic imperatives for the power systems of the Western Balkan countries.
  • Although the tourism development parameters show the growing trends, a joint tourism promotion of the region is a huge potential of its future growth. This requires high quality joint traffic, comprehensive, promotional and other initiatives.
  • The Western Balkans is not exposed to high water stress risks. It is its natural comparative advantage, which needs to be preserved and enhanced. There is a clear need to cover new water needs as a result of the construction of new housing, tourism and other capacities.
  • Although there are valuable infrastructure initiatives in the Western Balkans region, the transport costs are extremely high while the time lost at border crossings is unjustifiably long.
  • Education is a public good and often the victim of the collapsed social values. “Brain drain” is still a serious problem in the Western Balkans, for which there are still no adequate solutions.
  • Digitization and digital transformation are not the same. Digitization is the first step towards digital transformation, which in addition to technical and technological changes, implies socio-cultural changes as well. The key factor for digital transformation is human.

Recommendations:

  • Political trust built by the Western Balkan countries needs to be turned into real economic benefits based on synergies in different areas of economic and social life. Therefore, it is necessary to act: together (in terms of coverage), integrally (in terms of sectoral policies) and without delay (not in terms of the time ahead, but in terms of the time we have lost).
  • The Green Economy concept offers a solution for formulating new development models of the countries from our region: resource efficiency, low carbon development and social inclusion. The circular economy sublimates ideas that we should apply in everyday life, at all levels.
  • Make significant efforts and strategic plans in order to abandon conventional and increase the share of renewable energy sources, which is a necessary prerequisite for the integration of the Western Balkans, especially given that the EU is one of the most vulnerable regions in the world in terms of electricity import dependency.
  • Market mode of electricity supply involves the interconnection of producers and consumers of electricity based on the principles of stock exchange business and on the platforms on which electricity demand and supply are adjusted daily. This type of business enhances moulding of new institutions, business practices and experts.
  • For this reason, it is no longer the goal to educate more engineers, economists and managers, but to create such experts who combine these three profiles in one person.
  • The private-public partnership is the basis of synergy in tourism at the national level, but the promotion of national tourism potentials should also have regional promotion, which is not a big challenge in the conditions of digital marketing.
  • Greater harmonization efforts should be made, regarding an integrated water management, both nationally and in terms of transboundary initiatives.
  • An infrastructure support from the EU and the international financial institutions is needed to advance the established flow of goods and services in the region.
  • Pro-creative demographic policies, stronger integration into the European Higher Education Area and incentives for new knowledge and competences towards higher employment in our region are an important recommendation for the Western Balkan countries.
  • The business sector feels and proposes a digital coalition in Montenegro. Good examples are coming from Serbia and Slovenia.

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