You are here

The meeting of businessmen with the President of the Government

05/01/2015

Montenegro needs a new concept of economic growth that is based on the economics of innovation, competitiveness and sustainability, it was the traditional annual meeting of businessmen with Prime Minister Milo Djukanovic, who has organized the Chamber of Commerce of Montenegro on 12 December 2014.

At the meeting, which was attended by Deputy Prime Minister Vujica Lazovic, ministers Radoje Žugić, Vladimir Kavarić, Predrag Boskovic, Petar Ivanovic as well as the Governor of the Central Bank Miloica Dakić, presented an analysis of "The Montenegrin economy in 2014, with proposed measures to improve the business environment "that was prepared by the Chamber of Commerce of Montenegro.

The present document represents the sublimation views and opinions of the Montenegrin economy, which in analytical and professional manner identify its problems.

Word of the host

Chamber of Commerce President Velimir Mijušković also mentioned the condition of the Montenegrin economy and the operations conducted in conditions of world economic crisis. Nonetheless, he said, Montenegro has achieved growth in the last year and is expected to be completed and so this year. According to him, poor diversification and competitiveness of the economy and transport connections are common denominators economies of the Western Balkans. President of the Chamber noted the extremely negative trade balance that best reflects the structure and low competitiveness of the domestic economy.

- To set the economy on a sound basis, it needs to be significantly focused on the development of domestic production. The economy would be placed on a sustainable basis, using all the competitive advantages that we have. The main prerequisite for it is certainly an improvement of utilities and transport infrastructure - considered Mijušković.

To achieve this goal, he added, is an important development of small and medium-sized enterprises.

- When it comes to the manufacturing sector concerned, I think that is the most cost and at the same time the most rational model of development through small and medium enterprises, which would be export-oriented and organized industrial zones. Montenegrin Chamber of Commerce is looking at the situation of former industrial zone in virtually all Montenegrin municipalities came to the conclusion that most of these areas in a relatively simple manner can be made available to investors. The total area of these regions, based on our research, is slightly more than 5,700 ha, well equipped secondary utilities and transport infrastructure - said the president of the Chamber.

According to him, the increase in final production is one of the economic growth of the country.

- It is well known that the existing production at our products based on the low level of processing. However, there is a real opportunity to develop manufacturing a high level, and thus of greater value. Encouragingly, there are companies, primarily from the agrarian economy and wood, which shows in their development plans clear intention to improve production and that we must support them, because exactly these companies strongly encourage the development of primary production. Some of them are already working on the realization of these plans - said Mijušković.

Speaking of the investments in our country President of the Chamber recalled that the majority of tourism, but also in energy, transport and utilities infrastructure. It is expected that implementation of large investments that are underway, which will be considered, Montenegro provide a high position on the world tourist map.

- Investments in energy, transportation and infrastructure, some of which were started and will also generate our development, both after their putting into operation, and during the actual construction of these facilities. The Chamber of Commerce carefully, this paper discusses the scope and structure of work on their construction, coordinated action to help domestic enterprises to engage in the process of realization - he said.

Speaking of improving the business environment, said that Montenegro is continually advancing the Doing Business list (36 place out of 189 countries ranked by ease of doing business), as well as in terms of economic freedom and global competitiveness. Progress has been made in facilitating the process of issuing building permits, the flow of goods at borders, increased transparency of customs procedures, a high-class hotel in certain municipalities exempt from paying utilities. In his opinion, made qualitative improvements by introducing notary system and institute enforcement agents.

- No, there is still much work to be done to perfection and the attractiveness of the business environment have led to a level that is set as the target. There is a need for an urgent amendment of a number of laws whose provisions badly generate many problems in business - said Mijušković.

He conveyed the opinion that the economy is necessary to adopt new laws on Companies, Labour and Social Council. It is expected that the improvement of the Law on Accounting and Auditing, which should contribute to financial discipline and more reliable reporting of business. Chamber of Commerce of Montenegro was actively involved in the process of drafting a new law on public procurement which is expected to properly regulate this area.

Mijušković said that the gray economy threatens the operations of many companies.

- In the last two years systematic action of the competent authorities shadow economy has decreased, but we have to admit that she is still very much present. True, combating shadow economy often stands in the way of the lack of consolidated application of the regulations. Unfortunately, the cash amounts sanctions for illegal operations are still significantly below the level of earnings that can be realized from operations in the gray zone. For this reason, it is necessary to introduce stricter penal policy for these offenses - he said.

He pointed out that the amount and payment procedure by the local utility taxes, the introduction of new, as well as frequent changes in their number and amount, the issues raised in almost all meetings of businessmen. They also point to the consequences of monopoly position that has a number of enterprises in the field of public utility services, which are usually reflected in the high prices that do not monitor the quality of services.

- Closing the exposure that I extend to you an invitation respected businessmen, in the future, and more using the Chamber of Commerce as a state institution in its full capacity and width of the range of services that it provides. Also, invite representatives of the Government of the more closer cooperation with the Chamber, so that together we come up with the expected economic development of our country, because there is no doubt that the partnership and synergy precondition that - said the Mijušković.

Word of businessmen

The owner of the company likes Dragan Bokan praised the analysis developed by the Chamber, stating that in a qualitative way cover issues of importance for the competitiveness of the economy. He pointed out that businessmen major problem is the unfair competition because of that, but other factors, had closed some retail chains. He stressed the need for new law to be better regulated business with the food, which would eliminate the gaps in the store with her.

As a good example of cooperation between the private and public sectors Bokan stated redemption center, a joint project of the State, Capital and his company, which has significantly contributed to the promotion of agricultural products easier.

Tomislav Čelebić, owner of "Čelebić", he pointed out two problems - the legalization of illegally constructed buildings which 100,000 in Montenegro and on education, because, in his opinion, inadequate knowledge of market needs, the source of all the problems in the economy. Special emphasis in education, he believes, should be given to the acquisition of language and literacy. The market should be a rapper college enrollment policy, he concluded.

The President of the Assembly Chamber of Commerce Vlastimir Golubovic, Veletex, he said, among other things, that it is positive that in the current year, stabilized public finances, but that cares high trade deficit in foreign countries, due to the lack of competitiveness of domestic products. He believes that it is necessary a new labor law liberalizing employment contracts, which will contribute to increasing productivity and competitiveness.

Stevan Karadaglić, owner of the company Kastex, emphasized the importance of public procurement law, which largely determines the operations of the company. He noted that in practice when these tasks adequately evaluate the criteria for selection of bidders, that is presumed quality low price offer. Therefore, he argued, the methodology for the selection of the bidder shall further elaborate the new law governing public procurement.

President of the Montenegrin tourist association Zarko Radulovic claims that next year will be difficult for tourism, if as soon as possible nothing is done in terms of bringing new low cost company in Montenegro. He believes that without that tourism will not be able to reach this year's revenue of around 710 million euros, but will, he says, he will be below 600 million. He believes that Montenegro will need another 700,000 tourists that provide low cost carriers, but also the need to reduce prices by 35 to 40 percent.

Executive Director of Montenegro Airlines Zivko Banjević said he has nothing against the introduction of low cost companies to those markets with which there is no established national airline flights, but in the case of all other destinations wish to obtain the same conditions as competitors.

Milic Popovic, director of Vektra Jakic, said that in this factory invested 100 million euros, that employs 175 workers and has a monthly capacity of 15,000 cubic meters of finished products. In the final phase of the investment in pellet that will drive the market to deliver 45,000 tons per year. All the wood raw material that Montenegro exports, Vektra Jakić can process, he said, and urged the rigid control of exports. He urged the country to amend the concession contract to the company could fully employ its capacity.

Chairman of the Board of Agriculture Milutin Đuranović Chamber of Commerce, Director Šimšić Montmilk believes that concern large imports of agricultural and food products, even those that Montenegro can produce. He considers it necessary national branding of local products, thereby contributing to the development of agro-industry, substitution of imports with domestic production and reduce the trade deficit. He spoke about the project affirmative Chamber of Commerce Good from Montenegro who has significantly contributed to the growth of confidence in local products (from 32 to 57 percent).

Risto Drekalović, owner KIPS, supported the Government's conclusions regarding the abolition of communal fees for land development. He believes that the lack of revenue municipalities can compensate for the decrease in costs and improved tax collection. He believes that the fee for municipal waste unfair, and that makes it difficult for business enterprises.

Radomir Zec, director of HTP Ulcinj Riviera, agreed with Radulovic that the tourist season 2015 will be difficult. Considers it necessary to attract more visitors from Germany and the Scandinavian countries, for which tourism workers need government assistance and experts. The requirement for all that, he adds, are the lower cost of transport and accommodation to adapt the quality of service.

The Governor and Ministers

Governor of the Central Bank Miloica Dakić said that this institution in 2015 to lead a policy of maintaining monetary and financial stability. The basic characteristics of the banking sector this year, according to him, were the stability and liquidity, but that is not satisfactory was the support of the banking sector economy. The main obstacle and the limiting factor for economic development of Montenegro is, and remains, a high level of non-performing loans, of 16.4 percent, he said.

- The total amount of non-performing loans compared to last year, nine percent lower, but they are still obstacles to the development and the limiting factor, which is necessary for the early adoption of the Bill of voluntary financial restructuring - said Dakić.

He said that commercial banks operating in Montenegro comply with the recommendations of the CBM lowering interest rates, so that the decrease recorded at nine.

Dakić said that the weighted average effective interest rate for the first ten months of this year was negative, and that the CBM in the next period to monitor the situation and react measures in case of unintended consequences.

Finance Minister Radoje Žugić said that fiscal policy must be sustainable and credible, especially because the state is the largest employer.

- We must be seriously addressed by strengthening competitiveness. Structural problems are high public spending and labor market rigidities and the fact most do - he said Žugić.

The government, according to him, in fiscal policy adopted a set of seven measures for boosting the economy, which includes incentives for the development potential, manufacturing, agriculture, tourism and energy in the part of large capital projects.

- For these sectors we planned the release of all freight and public revenues in the process of capacity building, where it will burden the investors, both domestic and foreign. We hope that this will cause more attention and better valorisation of resources - said Žugić.

He said that the government in fiscal policy adopted by the introduction of new fiscal liabilities, which will not jeopardize the competitiveness of the economy. It is the taxes on the sale gazranih drinks, coffee, followed by games of chance. Source of income will be the fight against the gray economy.

- We will introduce radical measures, and the suggestion is that the payment of net earnings without public income is treated as a criminal offense. A bylaw will arrange rescheduling of tax payment obligations for companies that are solvent and not liquid, but with collateral Žugić he explained.

According to him, is defined by the crisis tax reduction and increase in social security contributions.

Economy Minister Vladimir Kavarić believes that a major problem in the business sector is a significant number of bankruptcy proceedings, which are often the result of an intention to evade payment of liabilities.

- It is necessary to review responsibilities when it comes to bankruptcy proceedings, because they intentionally causing offense - said Kavarić.

He added that should encourage investment in the energy sector and to find an optimal model of investing in a business zone, which is a project that is about to enter the final phase.

Minister of Labour and Social Welfare Predrag Boskovic, said that labor legislation should not be an impediment to development and agreed with the assessment of entrepreneurs that it would have to be better.

- I asked him to send me suggestions and propose solutions for improving the Labour Act, but for two years, as far as I'm in this position, I have not got. Again, I invite you to submit suggestions and proposals, not a wish list - said Boskovic.

Minister of Agriculture and Rural Development Petar Ivanovic believes that the priority investment in agriculture with emphasis on the processing, then jobs and production.

- All subsidies are paid. Next year will be provided approximately eight million euros for investment in agriculture, and we will work to create jobs. We focus on the growth and production of products with which we can create conditions for further growth or stronger binding of agriculture and tourism - said Ivanovic.

Assistant Minister of Tourism and Sustainable Development Željko Radak Kukavičić, said that in the coming year is expected arrival of new low cost companies, for which the state has allocated some funds.

She said that the main challenges in tourism remains a lack of high-class accommodations and seasonality.

- Growth in the future must be based on the postseason, especially by extending the tourists from the German and Scandinavian markets - she said.

Deputy Prime Minister for Economic Policy Vujica Lazović talked about what has been done to the National Plan of economic reforms, which the government established priorities.

- It is essential to increase competitiveness and economic growth, and has been recognized and policy priority traffic, not just transportation infrastructure but also availability. The priority is the growth and development of small and medium-sized enterprises, with a particular focus on the availability of funding sources. We need to create conditions for the loans are awarded to those who really need - said Lazovic.

Among the priorities are education and structural unemployment, business environment, strengthening the external trade position of the country, the policy of spatial planning and development of electronic services.

Word of the Prime Minister

The Western Balkan countries are facing a third recession, which is why the Montenegrin economy can not hope for anything good, said Prime Minister Milo Djukanovic.

- Regionally and globally, hence we lurking danger. The Western Balkans before the third recession. Although it seems good that Montenegro and this year will have an increase of two to 2.5 percent, the economy operates on the principle of connected vessels, however, because of what we see in the environment, we can not hope for anything good - said the Prime Minister.

He said that Montenegro successfully consolidate public finances and was seriously committed to reforms and modernization of society. Progress has been made and when it comes to ease of doing business and competitiveness of enterprises, but, says Djukanovic, it is not enough.

- Progress has been made and we have to be satisfied done, but it is by no means enough. If you want faster to achieve European quality of life, we must achieve a growth rate of five percent, so the imperative of policy in the future will be more dynamic economic growth - Djukanovic said, adding that it is necessary to use resources especially in tourism, agriculture and energy.

The Prime Minister said that a new concept of economic growth that is based on the economics of innovation, competitiveness and održivosti.Ekonomiju adds, can not be based on large series, but production growth based on the additional value.

- Montenegro lacks entrepreneurial knowledge and culture, what we have ■ Focus on the level of alliance Montenegrin Chamber of Commerce and the Government, including universities - said the prime minister, adding that the education market must be in close conjunction with the labor market, without which no competitiveness neither dynamic growth.

The Prime Minister also spoke about the biggest infrastructure project - the construction of the motorway Bar-Boljare, stating that they met all the prerequisites to start work on a priority share Mateševo - Smokovac. He said he has no doubt that the Chinese partner CRBC perform works worth 809 million euros in the period, according to the highest standards.

- Now it's up to us to see how we can find here and how much of that amount go through our companies - said the prime minister.

He said that these days, the construction of exclusive tourist resort in the village Pržno in Tivat, which is implemented by Qatari Diar, and expected imminent release of a dilemma when it comes to investment at the site Dubovica.

- Montenegro must see himself as a destination of high tourism, for what is necessary to provide better transport links, because the existing sentenced to propast- concluded Djukanovic.