Dražen Vlaović MIPA Project Manager

1. Dražen VlaovićMIPA Project Manager Montenegro Investment Climate

2. Dražen VlaovićMIPA Project Manager Montenegro Investment Climate

3. ABOUT MIPA

4. Role of MIPA • Set up in March 2005 MIPA operates under the Prime Minister Office and serves as a platform for marketing foreign direct investment opportunities on behalf of the Government. • The President of MIPA’s board is Prime Minster, while members of the Board are ministers and representatives of private sector. • Basically, MIPA has a triple role: #1 To assist foreign investors in setting up their businesses; #2 To recommend GoM to remove red tapes for doing business; #3 To provide statistics to the GoM about foreign investments;

5. About Montenegro

6. Recent past • 1994 - 1997 UN Sanctions; • 1999 - NATO bombing; • 2000 - 20% of total population were refugees; • 2000 - introduced DEM; • 2002 - introduced EUR; • Montenegro – the only ex-YU republic on which territory there was no war and with the stable government for 16 years; • 2006 – Montenegro recover its independency;

7. Montenegro Today • The highest FDI per capita in Europe (2007 & 2008); • According to Fraser Institute - the highest level of economic freedoms in the region; • Largest share of privatized capital in the region; • The most dynamic capital market in the region before crisis; • Budget surplus (2007 & 2008); • The only state in the region that use EURO; • The lowest unemployment rate in the region; • The lowest inflation rate in the region;

8. Montenegro Today • Telecommunication – 100% private (3 GSM); • Banking– 100% private (11 banks); • Capital market– 100% private (13 broker houses); • Agriculture– 100% private; • Services– 100% private; • Oil import and distribution– 100% private; • Tourism– mostly private; • Industry– mostly private;

9. Why Montenegro? • Safe and stable; • Predictable macroeconomic policies; • Ability to remit profit, dividends and interest; • National treatment of foreigners; • Euro – no hidden inflation; • Flat Tax System (CT 9% - PIT 9% - VAT 17% ); • Easy Business Start Up (1 € + 4 days); • International Accounting Standards (IAS); • Location and climate; • Increasing economic freedom;

10. World Bank Doing Business

11. Heritage Foundation Report

12. World Economic Forum Global Competitiveness Report

16. Investments

17. FDI’s are crucial • FDI’s are changing way of thinking; • Speeding up the reform processes; • Changing the structure of the economy; • Contributing to GDP, GDP growth, employment, budget revenues, export/import… • Developing regional cooperation – business language is unique language;

18. Origin of Investors • Investors are coming from 88 countries; • There is no domination of any country relative to the number of registered investors ; • Based on the value invested, investors from following countries are leaders: Norway, Austria, Russia, Slovenia, Hungary, Great Britain.

19. FDI in 2000-11 (in million €)

20. FDI were increasing due to: • Unique investment opportunities; • The reform of the financial services sector; • The positive experience of existing investors; • The ability to serve customers in Western and Central Europe; • The quality of service MIPA provides

21. FDI downward trend lately: • Global Economic and Financial crisis; • Tenders that were cancelled, unrealized privatization plans and lack of spatial plans that encourage Greenfield investments.

22. FDI per region:

23. FDI per region: • Thanks to investments in the tourism sector, the southern part of Montenegro improved, once more, its position in relation to central Montenegro. • An adopted Regional Development Strategy, if supported by relevant ministries and municipalities could have a fundamental impact on promotion of projects in the northern part of Montenegro

24. FDI per sectors

25. # of foreign companies

26. Challenges • Privatization of the energy sector; • War in fiscal incentive measures in SEE; • Level of transparency and efficiency of the administrative system; • Potential outflow of foreign capital;

27. Services Including banking Infrastructure Energy Investment Opportunities High Tech Tourism

28. Energy • MNE is using only 20% of its hydro potential. • 25% of the primary energy in period 2000-04 was produced from renewable resources. • GoM adopted Strategy for Energy Development (2010-25) and Action Plan. • One of the goals is new 15-20MW from Small HPP on over 40 locations until 2015.

29. Energy • Solar energy – 2,500 hrs/year. • Thermo energy – Coal pit Maoce, Pljevlja (2x250 MW) and Coal mine in Berane.

30. Energy – Oil and Gas • Legal framework exist (Law on Exploartions and Productions of Hydrocarbons and Rules on Safety at Work in Marine Seismic survaying); • 311 km2 of 3D seismic surveys are completed; • Two deep exploration wells have been drilled: JJ-2 (3,700 m) oil was registered; JJU-1 contained oil traces • AVO seisimic analyses estimate that the gas exploration risk is low.

31. Energy – Oil and Gas

32. Expected Tenders • AD “Montecargo” Podgorica • “Budvanska Rivijera” AD Budva • HTP “Ulcinjska rivijera” AD Ulcinj • Electrodes plant “Piva” AD Plužine • “Montenegro Airlines” AD Podgorica • ICM Nikšić

33. Concessions details • Concessions shall be awarded under the equal, transparent and non-discriminatory requirements, for the usage of natural wealth, goods in general use and other goods of general interest, performing activities of the public interest, and enabling infrastructure development and functioning. • The Concessions act regulates the conditions, manner and procedure for granting concessions.

34. Concessions details • Concessions shall be awarded by a public announcement. The process of public bidding and selection of bidders, according to the public notice, conducted by an ad hoc commission appointed by the tender competent body for the subject area to which the concession applies.

35. Concessions details • Montenegro has great potential for investment growth through the application of the concession model. Particularly stand out natural and social resources: large quantities unused water, forest and woodland, agricultural land, tourism potential, travel, rail, air and maritime transport.

36. MIPA Publications

37. Montenegrin Investment Promotion Agency Jovana Tomasevica 2A Podgorica 81000, MNE Phone: (00 382 20) 203-140; 203-141; 202-910 E-mail: Drazen.Vlaovic@mipa.co.me Web site: www.mipa.co.me

38. Thank You !