Majority owner of the new tobacco combine, GRAND INTERNATIONAL FZ-LLC from the United Arab Emirates, has decided to continue to invest in the development of tobacco industry in Montenegro. All the required consents have been obtained and urban and technical requirements for the construction of the Hall for primary production, worth €12 million, have been met, says in the interview with Dnevne novine Ms Savka Darmanović, director of the New Tobacco Combine.
You hold that the development project will go beyond regional framework. Does that mean that you are planning to further expand capacities?
Ms Darmanović: Already in this period accommodation capacities seems not to be enough to house all the reproduction material, finished products and other materials. We will be required to search for solutions for further extension. The future factory for primary production of tobacco will be very demanding in terms of technological and spatial conditions. It is also necessary to define special capacities for the purchase of raw tobacco, its preservation and preparation process.
How has coronaviurs epidemic affected the operations of the company?
Ms Darmanović: Our priority was to protect health of our employees. We took measures of personal protection and adhered to all measures imposed by NCB.
So the production was not interrupted?
Ms Darmanović: Production process was not suspended. Due to restrictions in transport, we directed consignment to ship transport.
I can state with satisfaction that our company fulfilled its tasks even in the period of crisis and kept investing in new business activities.
To what extent are national companies engaged in business activities of your company?
Ms Darmanović: Long-term commitment of the management and owner of the company is to use primarily domestic potentials and possibilities of domestic companies. They now have considerable share in business activities of the New combine. With new products and implementation of new techniques, they increased their capacities and placements, improving overall business and profit.
In the future we expect even greater substitution of import components. We are ready to involve in some of these projects in the form of joint investment.
An important aspect of business activities is the organization of production and purchase of tobacco from domestic growers. Are you satisfied with the results achieved this year?
Ms Darmanović: Our company has invested considerable funds in the development program. Part of our investment scheme is incorporated in the strategy for the development of agriculture production. This year, €50.000 will be earmarked for this purpose.
This is a long-term project, the objective of which is to renew and develop tobacco industry. Tobacco combine was one of the greatest Montenegrin exporters and one of the most successful companies. This branch of industry has long tradition in Montenegro. A total of 550 tonnes were purchased in 2007.
What does this data indicate?
Ms Darmanović: It indicates there’s space for the engagement of local communities in further developing this activity. The Capital city was the first to show interest and make contribution to achievement of set objectives, referring primarily to increasing areas and yields, expanding assortment, increasing quality and generating more profit.
Does production of tobacco pay off? Why should someone opt for this type of agriculture production?
Ms Darmanović: Shortly, I would like to urge every interested person to get engaged in this job.
Essentially, tobacco production is safe business and provided safe profit, with minimal initial investments. Our company provides interested people free seed and helps producers come to high-quality final product. In addition, the state offers subsidies on production, while the sale is secured by prices.
Over the past two years, we have increased prices if raw tobacco three times. They are currently among the highest in the region.
Are you considering other possibilities to help producers?
Ms Darmanović: Yes, we are. We are working on the idea of introducing mechanical harvest, given the fact that lack of workforce is seen as limiting factor of sustainable production. Also, we are willing to help producers to secure their production in emergency situations.
Restrictions and controls are very strict, aren’t they?
Ms Darmanović: The activity of producing and distributing cigarettes is under strict surveillance and control in all states. From our perspective, that’s very important. During the stay of the control and expert mission in our country, our company had the best ranking for the fulfillment of all administrative and security requirements, procedures and recommendations.
Our company has been awarded with “100 of the best in Montenegro”, a recognition only the most successful collectives in the state receive.
ADVANTAGES OF OPERATING IN CUSTOMS-FREE ZONE
How much organization of work in customs-free zone can contribute to successful business?
Ms Darmanović: Our company operates within customs-free zone, in line with provisions of the Law on Free Zones. The operation is carried out in accordance with special and strictly defined legislative and customs procedures and regulations, with some advantages defined by law. I will cite only the most important ones.
Goods and production material entering the Zone are exempt from paying customs duties and VAT. Foreign investors are equal to national legal entities in terms of property and ownership rights and can freely use their capital, make transfers, exercise other rights in accordance with regulations in place.
This organization form is very convenient for work of the companies whose primary activity is production and export.
Of course, there’s always need for further improvement of the existing regulations. I think activities on promotion of investments in free zone should be enhanced. Experience of other zones should also be taken into consideration. Local communities, as land owners, should enable the land to be exempt from some property taxes and to reduce or completely abolish paying public utility fees for the construction of production halls and other facilities.
With our products, we can be competitive
Is there a possibility for our company to go on the domestic market with its own products?
Ms Darmanović: It’s not a simple task. For several reasons. Firstly, domestic tobacco market is highly concentrated and has some popular brands which makes it more difficult for new participants. Secondly, rules and regulations about limiting the use of tobacco products are pretty demoralizing. And finally, famous distributors of cigarettes and other tobacco products have a very developed distribution and sale network, which is also a problem for the new participants in the market.
However, we rely on our references of successful company, high-quality products we have, domestic production and lower costs of production and transport… It would be real to expect that we can be very competitive with our products.
