The kick-off to this year in Montenegro has been quite successful, says Luka Popovic, Partner at BDK Advokati in Podgorica, who reports a number of ongoing projects in his office.
Popovic says that, as several important political issues have been resolved, and as Montenegro joined NATO on June 5, 2017, “we can finally focus on the economy in 2018.” Popovic is enthusiastic about the opportunity, as 2017 was already a step forward. “Last year the economic indicators were better compared to 2016. We saw an increase in GDP growth and in foreign direct investment.”
According to Popovic, the focus in the tourism sector, which remains a major driver of the economy in Montenegro, has been on the diversification of the industry, combining traditional and modern types of hotels. This, he says “opens space for European investors,” as the condominium and apartment type of hotels can be sold in the market. This is especially beneficial in less-developed areas, where extra promotion can be useful. Yet the ongoing preparation of the Coastal Plan of Montenegro, a major planning document defining construction land and construction parameters for the coast, is “the burning issue” delaying the process. “It has been pending for, I think, more than a year now. So many projects are on hold because of the lack of planning documents.”
This delay isn’t always infinite, however, and Popovic reports that some laws in the Real Estate sector have made more flexible. For instance, he says, the New Act on Spatial Development and Construction which was adopted in September 30, 2017, has discarded the requirement for construction permits, Popovic says, allowing investors to start construction immediately.
“Major changes have been in the energy sector as well,” Popovic says. The government’s ongoing EUR 250 million purchase of A2A S.p.A.’s shares in Elektorprivreda Crne Gore, the major energy company in the country, following the Italian company's decision to exercise a put option, “opens up opportunities for new investors to step in,” Popovic adds. “We will see how this unfolds in the next few months.”
Similarly to the Coastal Plan of Montenegro, the country’s Labor Law and economic passport program are still on hold. While the first one will not be revolutionary, Popovic says, in the second there is “definitely economic interest in Montenegro.” This is especially true for Turkish and Chinese investors, Popovic says, who are looking to invest in the country.
Overall, Popovic says, “a fairly good job has been done in the past ten years or so. The country is already recognized as a business-friendly destination. There is of course always room for improvement, but I think we are on a good path.”