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Traditional annual meeting of the business community with the Prime Minister


The traditional annual meeting of the business community with the Prime Minister and ministers took place on 30 December 2019 at the Chamber of Economy of Montenegro. The results achieved this year, advantages and challenges related to the economic development were discussed during the meeting. The analysis "The Montenegrin economy in 2019" done by the Chamber of Economy of Montenegro was presented as well.

The traditional annual meeting of the business community with the Prime Minister and ministers took place on 30 December 2019 at the Chamber of Economy of Montenegro. The results achieved this year, advantages and challenges related to the economic development were discussed during the meeting. The analysis "The Montenegrin economy in 2019" done by the Chamber of Economy of Montenegro was presented as well.

In addition to the Prime Minister Duško Marković and the representatives of the business community, the meeting was attended by the President of the Montenegrin Chamber Vlastimir Golubović, the Ministers of Finance Darko Radunović, Economy Dragica Sekulić, Labour and Social Welfare Kemal Purišić and the State Secretaries in the Ministry of Sustainable Development and Tourism Dragana Čenić and the Ministry of Agriculture and Rural Development Đuro Žugić. The meeting was moderated by the Vice President of the Chamber Ivan Saveljić.


From the perspective of the Chamber President

The President of the Chamber of Economy of Montenegro has reminded on activities conducted by this association in 2019 in partnership with the Government such as the organization of the conferences, defining the Smart Specialization Strategy, business friendly certification, promotion of the business community on the international fairs and within the project "Homemade flavours”.


- This year the business activities were characterized by the sound business environment, the steady decline in unemployment, low inflation, increase in investments and consumption financing from real sources. These indicators, in addition to the achieved economic growth, deserve to be emphasized and praised, says Golubović.

The achieved economic stability and economic growth are the foundation for launching a new investment cycle primarily through planned projects in the fields such as transport, energy, tourism and agriculture. New investments are based on the expectations that our economy will keep recording positive trends including the constant alignment of the regulatory framework with the EU acquis.

According to him, when it comes to the development of transport infrastructure, Montenegro is making big steps forward, thus contributing to better positioning our country as the regional transit hub, in addition to better utilization of the port capacities. The construction of the highway can produce multiplier effects in relatively short period. He added that significant results were achieved in the air transport, which has been indicated by the record number of passengers of the Montenegroairlines and our airports. 

The completion of the submarine cable between Montenegro and Italy showed that our business community can equally participate in the implementation of the strategically important projects for Europe, says Golubović.

- The submarine cable and planned investments in new hydro, wind and solar power plants open up the possibility for the expansion of our energy sector and for Montenegro to grow into a significant exporter of electricity, which will contribute to reducing the foreign trade deficit, says Golubović and emphasize the importance of the Pljevlja Thermo Power Plant for the stability of the energy system. 

The tourism sector keeps recording impressive results. The President says that the built capacities of high category hotels and other tourist facilities strengthen the status of Montenegro as a prestigious tourist destination. Our country, especially Kotor, have been recognized as one of the leading cruising destinations in the eastern Mediterranean, while the additional quality of our offer was given by the newly built marinas, which contribute to the development of yachting tourism.

- Preservation and modernization of the existing capacities in Igalo and Meljine and transforming the former Institute “Vrmac” into the Blue Bay hotel will create conditions for dynamic development of health tourism. We are pleased that Montenegrin national parks and ethno villages attract more tourists year by year, thus strongly contributing to rural development and the excellent results achieved in tourism. I expect the beginning of the investment cycle in tourist facilities in the north, and above all the development of infrastructure in ski centers to contribute to positioning of our country among the popular destinations for winter tourism, says Golubović.

Thanks to the increase in the agro-budget and introducing a series of incentive measures, in addition to successful use of available international funds, agriculture provided a strong contribution to the economic growth.

Referring to the financial sector, he says that reducing of the lending interest rates has continued, but the banks still have the perception of high credit risk of the real sector, which is best indicated by the relatively limited lending activity.

- According to the business community, lending conditions are still inadequate in terms of interest rates, collaterals, maturities, expensive and demanding procedures, particularly bearing in mind the interest on deposits, says Golubović.

He emphasised a special contribution to the development of entrepreneurship, which was given by the Investment and Development Fund.

- Since the establishment, the IDF provides Montenegrin companies with favourable loans. The announced establishment of a guarantee fund, as a new financial support instrument for improvement of entrepreneurship, will encourage investment activities, opening up the new businesses and job creation, says the Chamber President.

The institutional partnership between the Chamber and the Government, reflecting in participation of the business representatives in the activities of the government bodies and working groups for drafting the law, provides contribution to creating a more favourable business environment.

Although it can be regarded as a step forward in comparison to the previous regulations, the Labour Law has not still been based on the modern, market business principles, which require a more flexible organization of work.

- We insist on reforms which will more closely follow market logics in the regulation of relations between employers and employees and thus accelerate the pace of job creation and raise the competitiveness of the economy, with respect to all rights, belonging and guaranteed to employees, says Golubović.

Speaking about the regulation, he especially mentioned the Consumer Protection Law and the Law on Copyright and Related Rights.

- Montenegro is the only country in the world, which introduced the obligation of marking the certain products in Braille. Apart from labelling the names of medicines, such obligation does not exist even in the most developed countries of the world. The business community is unanimous in its opinion that this obligation, under the Consumer Protection Law, must be abolished due to its inapplicability, says the President.

The fees which are paid for the use of musical works represent business barriers. The payment of fees for the use and reproduction of literary works is also announced.

- We believe that the current tariff for PAM and the proposed Agreement for the use of written works are not appropriate, especially if we take into account comparative experiences and practices of the region, he adds.

The Law on Space Planning and Construction has largely improved business climate, which can be best seen in the Doing Business Report of the World Bank. However, business community believes that the procedures related to the process of facility legalization need to be simplified.

- A large number of economic activities take place in facilities built without or with even exceeded building permits. We propose the legalization through the development of geodetic study, registration in the real estate cadastre and payment of duties. All issues related to urban parameters should be left for the forthcoming period and regulated through the General Regulation Plan or the development of urban schemes, says Golubović.

Although the national economy achieves remarkable results, the business community believes that there are still plenty of opportunities for improvement, particularly with regard to combating the gray economy and unfair competition. 

According to Golubović, our common goal is a competitive and stable tax system based on clear, simple procedures and efficient administration.

- The share of the taxes and contributions in total labour costs, the so-called tax wedge, amounts to 41.3% and it is above the average of the OECD countries, which is not sufficiently stimulating for the business environment. Although the compromise cannot be made with those who disrespect the law, a part of businesses operating illegally, would be introduced into the system of payment of taxes and contributions through the reduction of currently high duties on salaries. The high duties for labour costs result in a low rate of formal employment, high unemployment and a significant volume of the gray economy in the labour market, says the President.

In addition to appropriate increase in the minimum wage and stricter control of the competent inspection, the business community expects the significant reduction in contributions to result in expanding the tax base and thus preserving the stability of public finances.

Burdens at the local level adversely affect the business. High costs of communal land equipment in the process of obtaining building permits imply that the businesses should be exempted from paying any additional fees for access to the road infrastructure. The business community still emphasizes the high rate of property tax in some municipalities.

Golubović spoke about the benefits of the resolving commercial disputes before the Arbitration Court at the Chamber of Economy of Montenegro, the need to invest in education and the key role of this institution into a dual education system, green and circular economy and digital transformation.

- The Chamber and other business associations submitted an initiative to the Government for the establishment of a body, which would be chaired by the Prime Minister, and due to the synergy of all stakeholders in this process it would guarantee successful digital transformation of our society, says the President Golubović.

This year the Chamber analysed the structure of enterprises and the results achieved on the basis of financial statements received by the Tax Administration. The results of this analysis indicate positive trends in 2018, because 22.5% more companies submitted balance sheets and number of employees increased by 14%. Reported revenue increased by 6.9% and profit by 15.8%

The President expects the implementation of new capital projects and adequate fight against the gray economy to contribute to the achievement of high growth rates and increasing the number of employees next year.

- I am confident that the current reform process and our synergy will result in raising the level of living standard, economic and social prosperity, concluded Vlastimir Golubović.


The attitudes of the business community

The President of the Tourism Association Board Ranko Jovović presented the record results achieved during the 2019 summer tourism season – Montenegro was visited by 2,4 million tourists, who accounted for 13,3 million overnights, while the revenues amounted to EUR 1,16 billion. According to him, the success in the tourism sector depend on the attractiveness of the destination throughout the year. 

One of the most critical aspects of our tourism is a high concentration of visitors in short periods of time and Montenegro needs to be recognized as a destination worth visiting during the entire year. The complete tourism offer includes extended season as well as providing development impulse to the northern region. 

As main challenges faced by the companies in this filed, Jovović mentioned gray economy and labour force shortage. 

- Barriers which impede the tourism business operation can be resolved by means of strategic cooperation, partnership and joint activities of the business community and the public authorities. 

Tourism is the strategic economic branch, which has great potential, creates additional opportunities for new jobs, GDP growth and exerts strong impact on the other industries. Therefore, the Tourism Association Board of the Chamber of  Economy of Montenegro initiates the establishment of the Ministry of Tourism in order to provide optimal impact on economic development, promote tourism destination, says Jovović.

The President of the Trade Association Board Jovan Lekić has said that this sector records positive trends, its share in GDP is 12,6 percent and it employs the highest number of workers – 40.000, whose salaries are below the average. There are opportunities for the increase in the salaries through the introduction of non-taxable part of the salary, modelled on the experiences of the countries in the region. 

He emphasized extremely high trade deficit, which amounts to EUR 1,6 billion, but also the encouraging trend when it comes to growth in services. According to Lekić, low income tax of 1.6% means that the economy is experiencing "the process of latent productivity drop" and its competitiveness needs to be improved with stimulating measures. 

He also referred to the key regulation for the trade sector. He reminded that the Work-Free Sunday Initiative has been submitted by the Trade Association Board, but the worded solution does not correspond to the needs to the business community, which advocated for one-shift work on Sundays in order to avoid great business losses. He believes that in future it is necessary to analyse the effects of work-free Sunday, losses of the business community and the country and take into consideration the comparative experiences of the region in terms of this issue.  

The Trade Association Board requests the amending of the Rulebook on labelling products in Braille. 

- The Rulebook is non-functional, its application is irrational in the economic terms and we would like to ask you to find pragmatic solution to this issue, which provides great barrier to the business community, said Lekić to the Government officials. 

The President of the Transport Association Board Deda Đelović thinks that this sector could record better results in the short-run if the transit of goods were intensified through Montenegro. All barriers preventing the achievement of this aim need to be eliminated in cooperation with the Chamber and public authorities. 

- I am confident that there are plenty of opportunities to provide short-term measures in order to encourage exporters and importers from the region to utilize road and railway infrastructure and the Port of Bar capacities, said Đelović.

According to him, it is necessary to attract more users of the Free Zone of the Port of Bar, which requires introduction of new incentives.  Đelović advocated for the projects related to the Port of Bar to be listed among the priority development ones.  

In the forthcoming period it is necessary to work on amending the Law on Spatial Planning and Construction of Structures in terms of complex engineering structures in order to define this field more precisely. This is an opinion of Mile Gujić, the President of the Civil Engineering Association Board.  

- There is an illogical situation that a permit has not been issued to a tourist resort, while the transmitting station within the resort operates in line with the required construction permit and other procedure, says Gujić.

According to him, procedures need to be unified by Law for both building construction and structural engineering construction in order to eliminate unnecessary procedures for complex engineering structures.  

He emphasized the efforts of the business community to extend the legalization of facilities registration period, which would include each and every facility on the orthoimage. Simplification of procedures through the amendments to the Law would impact on legalising greater number of facilities. According to him, the business community is very pleased with the new concept of installing and construction of temporary facilities, which requires that the state and municipal architect evaluate the facility appearance as well as the distance from the hotels and restaurants, thus reducing disloyal competition when it comes to these jobs. 

The construction sector has an issue related to the qualified labour force shortage, which will be more prominent in 2020 when our workers will have the opportunity to enter the German market. He urged the competent authorities to find mechanism to resolve this problem. 

Vladan Tabaš, the President of the ICT Association Board pointed out that when it comes to the communication segment, Montenegro does not fall behind Europe, unlike the IT which needs to be improved significantly. 

- We live in the era of 4.0 industry based on the artificial intelligence and machine learning, which is the segment Montenegro falls behind significantly. Our country must accelerate the progress in this area, as the slow progress, which characterizes us in this rapidly growing industry such as IT can be regarded as stagnation, says Tabaš. 

He thinks that a separate ministry needs to deal with the ICT development. He expressed his gratitude towards the Prime Minister for accepting the invitation of the Montenegrin Chamber and other business associations to chair the Digital Coalition, which will lead the digital transformation process. Tabaš thinks that digital transformation strategy needs to be adopted next year, which the ICT sector can provide great contribution to.

The PresEdent of the Agriculture Association Board Milutin Đuranović thinks that the Government needs to provide support to farmers in terms of the well designed strategy and logistics in order to raise their competitiveness, thus creating assumptions to increase export.  

In order to strengthen the agricultural industry, he recommends competent authorities to affirm measures of the latent, selective protectionism modelled on the developed countries as well as to continue with the implementation of the national campaign in order to increase buying of domestic products. 

- I suggest Government to allocate certain interest-free funds, which would be used by trade chains for regular payment of obligations to domestic producers, providing that the Montenegrin products would be better positioned on the market shelves, says Đuranović.

Speaking about the payment of the premium for the processing on the rural households, Đuranović points out that these households cannot be leaders of the cattle production development. 

- The industrial processing is the leader worldwide. Therefore we suggest the Government creating the same incentive measures within the agro-budget for the industrial as well as the rural households processing, says the Board President.  

The co-owner of the Srna Dairy Zorka Šljukić has said that the dairy sector in Montenegro reached a certain level with the construction of the plants, a wide range of products, collaboration with customers, suppliers, sub-contractors. However, according to her, the sector cannot be further developed without better positioning of the domestic products in the retail chains.

Due to the VAT increase on medical devices and equipment from 7 to 21 percent, which will take place from 1 January 2020, Petar Popović, the President of the Pharmaceutical Industry Coordination Board, conveyed the request of 14 companies from the industry asking for the VAT invoicing to the public institutions as well, which has not been the case so far.

Boris Kovačević, Hemomont, pointed to the issue of this company related to the property rights over the land, where their business premises are located. He asked for the Government support in resolving this issue, which may adversely affect the business prospects of Hemomont, as an important export company.

The ministers’ responses

The Government creates an environment for the development of economic activities, said the Minister of Finance Darko Radunović, noting that the Law on Public Procurement, the Law on Public Private Partnership and the Law on Concessions were adopted in the last quarter of 2019.

- I agree that a tax burden on labour in Montenegro, amounting to 41%, is very high, while in the EU member states it amounts to 36.5%. This year we have reduced the employer-based health insurance by 2 percents, and from the New Year the crisis tax will be reduced by 2 percents and we have increased the minimum labour cost and I think it is a pretty good trend, Radunović said.

He emphasised that this decrease had little effect on the increase in the average salary, as it did not reflect on the employers.

When it comes to the electronic fiscal system, he stated that we failed to timely complete the tender with the World Bank, which delayed its application for one year. Furthermore, the minister emphasised that a good bidder will be selected during 2020 and the electronic fiscalization represents a good tool in the fight against the grey economy.

Changing the way and the model of the tax burden on labour need to be examined very carefully, said Radunović.

- We have created fiscal stability and we control two of the most important macroeconomic indicators - deficit and public debt, but we have to take into account any revenue that goes into the budget. We are under the fiscal consolidation measures and we have to keep that in mind, says Radunović.

The Minister of Economy Dragica Sekulić said that the line ministry has been contributing to the improvement of the competitiveness of the economy through six financial and 4 non-financial programmes.

- In 2019, over 300 businesses have benefited from these programmes. About 160 companies have used the assistance through financial support and subsidy programmes and about 140 companies have used non-financial programmes (business plans, loan applications ...). EUR 2 million will be allocated for the Competitiveness Strengthening Program in 2020, says Sekulić.

The Minister said that this year the Ministry of Economy, in cooperation with the Chamber of the Economy of Montenegro, worked on a set of laws particularly the Law on Companies, the Law on Concessions. In the following period the Law on Copyrights and Related Rights will be the focus.  

Commenting on the work-free Sunday in retail trades, Sekulić said that this decision has been effective for only nine weeks, which is not enough time to analyze its effects.

- The Ministry of Economy will soon review the application of the Ordinance on the list of products, labelling manner and type of facilities, which should emphasize notification about goods in Braille. We will establish a working group for drafting the Ordinance, which will consist of all stakeholders, and thus create conditions for its effectiveness in practice - she said.

Referring to the energy sector, the Minister points out that due to the cooperation between the Montenegrin Electrical Transmission System (CGES) and Montenegrin Electricity Distribution System (CEDIS) a lot has been done in terms of strengthening the electricity network, in which EUR 90 million will be invested.

- We developed the draft new Energy Law, which will provide faster and easier connections to the energy network, Sekulić concluded.

Commenting on the Labour Law, the Minister of Labour and Social Welfare Kemal Purišić said that the document is the result of patient social dialogue.

- The Law was supported by the representatives of the business community, trade unions and the Government. I expected satisfaction with this Law by all attending this meeting, but obviously we are not, so I perceive today's discussion as a new cycle of negotiations on this Act. It is a good approach, because these days we have heard the assessment that the Labour Law is developed in a way to correspond to the employers, but we wanted this Law to represent a sustainable balance between the interests of the business, employees and the Government - added Purišić.

An essential step forward when it comes to this Act is that earnings can be determined by collective agreement or general act of the employer, the Minister said.

Speaking about certain provisions of the Labour Law, he added that the calculation of salary will have the effect of enforceable document, and that, for a year or two, we will have to find even more rigid solution, which provides once a month payroll.

Responding to questions posed by a businessman, the State Secretary in the Ministry of Sustainable Development and Tourism Dragana Čenić announced that a proposal to extend the deadline for legalization will be considered.

- If there is already an orthoimage of all the constructed buildings, there is no fear that anything can be misused through this procedure - said Čenić.

The State Secretary in the Ministry of Agriculture and Rural Development Đuro Žugić said that the project "Good. Better. Homemade." will not be interrupted and urged businessmen to be more involved in its implementation. 

- I invite you to increase the consumption of local products and to use the grant support of the Ministry of Agriculture and Ministry of Economy to improve competitiveness - said Žugić.

The Prime Minister’s conclusion

The Prime Minister Duško Marković expects Montenegro's economy growth above four percent, further consolidation of public finances and reducing tax burden on labour for the business community.

- The following year should be characterized by higher growth rates. I expect the growth to be about four percent or above - said Marković.

He said that it is necessary to continue with consolidation of public finances and increase of salaries in education and health, in order to create conditions for the increase of pensions.

- We must work to reduce the tax burden on labour in our economy. We do not want the economy only for the Montenegrin market, but the one which can be competitive with the regional and European markets. We do not have to look outside of Montenegro for construction companies that will be working on large projects or highways, when we can make consortia consisting of our companies and have stronger and cheaper construction contractors - said Marković.

He reminded that currently the Montenegrin economy is one of the fastest growing in Europe.

- This year we continued with good growth rates. This is not an ad hoc action and not a one-time boom, but a result of well-designed policy and sustainable development - said the Prime Minister.

He said that in the last three years the unemployment rate was reduced and even EUR 850 million from the Capital budget were allocated for development.

- Therefore, the construction activities have been conducted throughout Montenegro, from Herceg Novi to Gusinje. We are devoting all our efforts to those issues which represent key obstacles to the businesses such as the capital infrastructure - said Marković.

As for the revenues, he said that the inflow to the state budget for three years amounted to more than EUR 3 billion, which is 170 million more than planned.

- At the same time we reduced due tax debt by over EUR 190 million. Also, this is the best tourist year in our history. Income from tourism will amount to 1.1 billion. Only this year we have opened 49 new hotels with 3,700 beds - said Prime Minister, adding that 103 new hotels were built in the last three years.

He pointed out that 2019 was a good year for the energy sector, noting that undersea cable between Montenegro and Italy, Možura wind farm and three small solar plants were put into operations. These plants, according to Marković, "provide 10 percent of low carbon power ".   

Speaking of legal acts concerning the economy, the Prime Minister is sorry that the Company Law has not been passed in December, due to "overcrowded" Agenda of the Montenegrin Parliament, but, as he said, it will be adopted in March.

- When I saw the list of laws which are in the procedure for the adoption, maybe the Government will ask for an extraordinary session of the Parliament in late January or early February - said Marković.

The Prime Minister underlined the importance of meetings with the business community in the Chamber and proposed these meetings to be held twice a year. He also stressed the importance of the analysis "The Montenegrin economy in 2019", which is an important platform and input for the Government in creating economic policies.