Doing Business in Montenegro

1
Doing Business in Montenegro
Mr Milorad Katnic Deputy Minister of Ministry
of Finance
2
Basic Economic Facts
  2004 2005
GDP real growth 2.7 4.1
Budgetary deficit 2.1  1,6
Inflation rate 4.3 3.5
External public debt 32.7 30.6
Total public debt 44.8 40.1
Current account deficit 9.2  
Unemployement rate 22.6  21,6
3
Economic Reforms- Basic elements of concept -

• Openness
• Accepting a credible currency (EURO)
• Low level of business regulation
• Low level of taxation

4
According to OECD, Montenegro is champion in the
region for business registration
80
Bosnia and Herzegovina
Serbia
70
Albania
60
Macedonia
Croatia
50
Romania
Number of days to register a company
Moldova
40
Bulgaria
30
20
Montenegro
10
0
0
2
4
6
8
10
12
14
16
18
Number of procedures to register a limited
liability company
5
Bussines Regulation

• Business entry
• Requared amount of capital for Limited Liability
  Company is 1  
• Procedure reacquires three documents and it takes
  four working days
• Business exit
• Law on Bankruptcy maximal length of liquidation
  process 8 months

6
Bussines Regulation

• National treatment of foreign investors
• Free movement of capital is introduced with the
  new Law on Capital transactions
• Free profit repatriation
• EURO is legal currency
• 99 of prices are freely determined
• Government tries to identify and eliminate
  various business barriers

7
Tax Regulation

• Value Added Tax Flat rate 17
• Personal Income Tax progressive rate 15-22
• Corporate Income Tax 9
• Average tariff rate approximately 6
• Challenges are further simplification of the tax
  system, continual reduction of the government
  expenditures and tax burden and compliance with
  eurozone Mastrichts criterion

8
Privatisation and FDI

• After slow down in 2003 the FDIs increase in 2004
  and especialy in 2005
• Goal for 2005 achieved in the I quarter with
  succesful privatisation of Telecom
• In first nine months FDI reached 231.8 mln euro
• Further privatizations in 2005 KAP, Podgoricka
  Bank, Shipyard, part of the energy sector, hotels
  and military property

9
Privatisation and FDI (1)
10
Privatisation and FDI (2)

• Telecommunication 100 private ownership
• Banking 90 private ownership
• Capital market 100 private ownership
• Services 100 private ownership
• Gasoline import and distribution dominante
  private ownership
• Tourism mostly private ownership (just a
  few hotels remain in majority ownership of the
  state)
• Industry mostly private ownership

11
Banking Sector Positive trends

• Deposits increase
• Decrease of interest rate
• Concentration
• Privatization

12
Capital market

• Over 151000 transactions have been made in period
  2001 2005 with turnover of 226.4 mln
• About 110 mln of foreign capital is invested in
  Montenegro by buying securities
• General capitalization is 560 mln in September
  2005. which is 34GDP

2001 10,8 mln
2002 14,3 mln
2003 43,5 mln
2004 42, 8 mln
Sep-05 114,8 mln
TOTAL 226,4 mln
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Stock Exchange Indexes
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Growing sectors-Telecommunication-

• Total revenue was increased for 90 in period
  2001 - 2004
• Total revenue in 2004 reached 11 of GDP (record
  in the region)
• 1.1 mobile phone per capita (8/2005)
• 60.43 SMS per capita (8/2005)

15
Growing sectors-Tourism-

• For the first eight months on 2005 Montenegro has
  been visited by 666.018 tourists which is 16.83
  higher than in same period 2004
• Total tourism revenues in the first eight months
  of 2005 were 21.8 higher than in same period
  2004
• According to the WTO latest research Montenegro
  is worlds fastest growing travel and tourism
  economy in the world

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Do you need a good reason to invest in Montenegro?

• 1.We treat foreigners and nationals equally
• 2.We are champions in business registration
  procedures you can register
• a Limited Liability Company for 1 euro, within 4
  working days and by
• submitting three documents.
• 3.The Euro is our national currency.
• 4.There are no restrictions on ability to remit
  profit, dividend or interest.
• 5.We do have the lowest corporate tax rate in
  Europe 9.
• 6.Value added tax is one of the lowest in Europe
  17.at rate.
• 7.Personal income tax is progressive with rates
  between 15.5 and 22.5.
• 8.Montenegro has access to the Adriatic Sea.
• 9.Montenegro has over 180 sunny days per year.
• 10.Visas are not required for Montenegro.

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Welcome to Montenegro and have a good
business!Ministry of Finance of the Republic of
Montenegro81000 Podgorica, 2 Stanka Dragojevica
Streettel 381 81 242 835 fax [phone]
450 e-mail mf_at_mn.yuwww.ministarstvo-finansija.v
lada.cg.yu