“As much as we don’t want to deal mess with politics – it seems to be messing with us,” says Milena Roncevic Pejovic, Partner and Head of the Montenegrin practice at Karanovic & Partners. “Montenegro is waiting for the new government to form, and until that happens, everything is on hold, more or less.”
Roncevic Pejovic says that, following the parliamentary elections this August, Montenegro is facing a deadline to see a new government formed on December 2, and this waiting period has led to projects slowing down or being put on hold. “Investors are erring on the side of caution,” she says, “and are quicker to place proceedings on hold in order to wait and see what the new administrative landscape will look like – whom will they have to address for permits and regulatory approval, what policy changes there will be, and so on.” She notes that the new government will have 12 ministries – down from 18 – and that it “remains to be seen which department will be picking up what slack from which old one.”
However, Roncevic Pejovic is confident that the deadline to form the new government will be met, especially because “it has already been prolonged and extended before and it is evident that it cannot be prolonged anymore. Things need to get going and work needs to resume.” She is confident that, after the government forms, deals and projects will get going once again. “What matters most for investors is that there is somebody on the other end, in the governmental, administrative, and regulatory bodies that they can talk to – as soon as that happens, things will pick up the pace.”
Given this protracted waiting period – not to mention the effects of the ongoing Covid-19 pandemic – Roncevic Pejovic says that, from a legislative perspective, there hasn’t been much new to report on. “Following the changes of earlier this summer to the corporate and labor legal frameworks, before the elections, nothing much has been done,” she says.
Nonetheless, she says, “there have been rumors that the new Fiscalization Act and the new Credit Institutions Act might be delayed.” These two acts were originally expected to enter into force on January 1, 2021, but she reports that, with “the government not being formed yet and the pandemic not slowing down, it is possible we won’t see them in action before January 1, 2022.” She says that this would allow businesses and investors to adjust properly and fully prepare for the new frameworks.
Finally, Roncevic Pejovic says that the Montenegrin market has been experiencing a free-fall, like other countries in Europe. “Uncertainties increase, unemployment rates rise, and projects are on hold,” she says, citing as an example of the tender process for the construction of the Solaren Power Plant in Podgorica. “The tender process should have started already, but it has been postponed until the end of the year. Hopefully, this and other projects will pick up speed soon.”