The coronavirus pandemic did slow down, but it has not stopped the inflow of foreign direct investment. More than 1.2 billion euros have been invested in Montenegro in 20 months, the executive director of the Council of Foreign Investors of Montenegro, Mr Ivan Radulović, said in an interview for Dnevne novine daily.
– Here are the key moments from the interview –
To what extent has the coronavirus pandemic negatively affected the business and investment environment, both globally and in Montenegro?
Radulović: The coronavirus pandemic has resulted in extensive socio-economic impacts, putting a significant number of companies at risk of closing down. The crisis has particularly affected small and medium-sized enterprises and their employees. The biggest challenge SMEs are facing today is access to finance, which was a challenge for many companies even before this crisis began. Every crisis is at the same time a chance, so new opportunities are open for small and medium companies for the transition to digital business and transformation. This was especially evident in the field of e-commerce.
For many developing countries, foreign direct investments play a key role as a source of funding, with the potential to strengthen the economic resilience of these countries during the crisis and support employment growth and economic transformation through the recovery phase. The coronavirus has dramatically affected globalization, which resulted in the disruption of the flows of foreign direct investments. According to UNCTAD, global FDI flows are expected to decline by 30 to 40 percent during 2020/21. If the contraction of global foreign direct investment takes some time, the consequences for developing countries will be serious.
How has Montenegro’s entry into NATO contributed to our country to position itself before investors as a country where investments are safe?
Radulović: Since Montenegro became a full member of NATO in 2017, there has been a significant increase in the inflow of foreign direct investment, with almost half of it coming from NATO member states in 2018, according to official data.
The coronavirus outbreak did slow down, but it has not stopped the inflow of foreign direct investment. Preliminary data show that over 9 months of 2020 €506.8 million was invested in Montenegro. If we know that FDI in 2019 amounted to €778 m, it shows us that over 1.2 billion euros have been invested in Montenegro in 20 months. This trend will be continued during the 2020-2022 period when around €1.5bn worth of investment is expected.
Are there any announcements about the arrival of new investors in Montenegro? Is Montenegro still attractive for investment?
Radulović: We believe that the Montenegrin economy will continue to be strongly influenced by investments in the coming years. A limiting factor could be the lack of diversification of the Montenegrin economy, which could completely reduce the positive effects of foreign investment. It is of special importance to continue with the implementation of measures in the areas of rule of law and efficiency of legal protection, improvement of economic conditions and business climate, improvement of infrastructure and implementation of new infrastructure projects, maintaining stability, while maintaining confidence in the financial sector.
Is there any interest in investing in the northern parts of the country?
Radulović: The north of Montenegro has for a long time been recognized as our great development opportunity. We are all looking forward to the first kilometers of the Montenegrin highway that will be opened this year. It seems to me that the ski infrastructure with new trails and cable cars has been significantly strengthened and provides a good basis for the North, especially the region of Bjelasica and the Komovi Mountains, to become a serious regional ski center in a few years. Therefore, I am really encouraged that a dozen serious, new hotels are currently being built in Kolašin and Žabljak, mainly thanks to the implementation of the Citizenship by Investment Program, which allows applicants who pass serious international eligibility tests to invest in these hotels.
Do you expect the new government to speed up administrative procedures that investors previously labeled as an aggravating factor in doing business?
Radulović: Courageous, responsible decisions should be made in the coming period in order to stimulate the development of the economy in all sectors. We believe that the new government will respond to these challenges in the right way and that it will continue the partnership with the business community in Montenegro to build a stimulating business environment. We also sincerely believe that the Government, in accordance with the decision adopted at the session of the Competitiveness Council in December 2019, will establish a “digital coalition” as coordinating and advisory authority for digital transformation composed of representatives of relevant government institutions, business representatives and scientific and academic communities. The participation of all social actors who have the knowledge, competencies, and experience in these jobs is crucial for a successful digital transformation. Montenegro is a small country and has the potential, knowledge, and resources to become a digital zone in this part of Europe.
How do you see the further development of the Montenegrin economy?
Radulović: Further development of the Montenegrin economy and society implies digitalization as a development and transformation policy and we expect digital transformation to be one of the key policies of the Government in the coming period. Successful digital transformation represents a great chance for the economy. The Foreign Investors Council will be a partner to the new government in all these activities.
