Western Balkans Competitiveness Outlook 2024: Montenegro

2. Investment policy and promotion

Abstract

Creating an attractive environment for investors is essential to stimulate economic activity and to foster sustainable economic growth. This chapter assesses the scope and effectiveness of existing policies and strategies that aim to enhance investment volume and quality. The first sub-dimension, investment policy framework, assesses the robustness of legal framework for investment, the efficiency of dispute settlement mechanisms, as well as intellectual property rights enforcement and awareness-raising capacity. The second sub-dimension, investment promotion and facilitation, focuses on investment promotion agency structures, investment promotion strategies and investor incentives, all geared towards attracting foreign direct investment. The third sub-dimension, mobilising sustainable investment, explores the strategic framework for a sustainable investment governance, while also reflecting on the scope of financial and technical support allocated to sustainable investment.

Key findings

Momentum in the improvement of Montenegro’s performance in the investment policy and promotion dimension has slowed but remains positive. The economy’s score increased slightly from 3.2 to 3.4 between the 2021 and 2024 Competitiveness Outlook (compared to 2.6 in the 2018 assessment), with notable progress in investment promotion and facilitation. Montenegro also outperformed the regional average in mobilising sustainable investment (Table 2.1).

Table 2.1. Montenegro’s scores for investment policy and promotion

Dimension	Sub-dimension	2018 score	2021 score	2024 score	2024 WB6 average
Investment policy and promotion	1.1: Investment policy framework			3.7	3.9
	1.2: Investment promotion and facilitation			3.3	3.3
	1.3: Mobilising sustainable investment			3.0	2.8
Montenegro’s overall score		2.6	3.2	3.4	3.4

The key findings are:

• Handling commercial cases shows limited progress, with the average time from filing to decision increasing from 197 days in 2021 to 442 days in 2022.

• While the e-Firma portal was introduced in 2021 to offer eight electronic services tied to the Central Register of Business Entities (CRPS) and the Register of Beneficial Owners, the majority of business registration procedures can still only be completed offline.

• Since the last assessment, the adoption of 20 new business laws has significantly changed and clarified the legislative environment.

• There have been several legislative amendments to strengthen the intellectual property rights (IPR) framework since 2021. Moreover, the government adopted a new Intellectual Property Strategy 2023-26, poised to improve the effectiveness of the intellectual property rights registration and enforcement.

• Montenegro's strategic and legal framework prioritises sustainable investment, yet the approach is fragmented across various strategies.

State of play and key developments

Unlike most other economies in the region, Montenegro did not experience a decline in inward foreign direct investment (FDI) flows in 2020 and 2021 during the COVID-19 pandemic. Rather, inward FDI has increased year-on-year since 2019, reaching some EUR 877 million in 2022, levels not seen since the pre-2010 period (UNCTAD, 2023[1]). Average net FDI inflows increased from 9.3% during 2017-19 to 12.4% during 2020-22. On this measure, Montenegro is the largest recipient of FDI flows among the Western Balkan 6 (WB6) (World Bank, 2023[2]). The accumulation of significant net inflows has seen the economy maintain its position as the leading investment destination in the region, its stock of FDI reaching 97% in 2022 (UNCTAD, 2023[1]). In 2022, the European Union accounted for 33% of total FDI inflows, a small decrease from 36.4% in 2021 (European Commission, 2023[3]).

Sub-dimension 1.1: Investment policy framework

Montenegro’s legal framework for investment remains relatively clear, comprehensive and conducive to business operations, both foreign and domestic. Recent years have seen the adoption of some 20 new business laws that have changed and clarified the legislative environment. Notable legislative reforms since 2021 involve laws on labour, value added tax, contributions for compulsory social insurance, spatial planning and building construction, and innovation activity, all in accordance with the EU acquis. Within the framework of the Europe Now1 reform programme, the government introduced changes to the economy’s tax system. The Law on Personal Income Tax and the Law on Corporate Income Tax have introduced a new progressive tax schedule, departing from the previous flat tax rate system. Additionally, as of 2024 the new law on Property Transfer Tax has been enforced, incorporating a progressive tax system to replace the previous flat tax rate. The Law on Public Private Partnerships (PPP), which entered into force in 2020, is aligned with Directive 2014/23/EU2 on the award of concession contracts and Directive 2014/24/EU3 on public procurement. Both the PPP Law and the Law on Public Procurement, which was adopted in parallel, stipulate that PPP projects should be subject to competitive bidding processes. While the Laws do not include specific provisions around contract renegotiation, responsibility for this is the preserve of the relevant public contracting authority. The Ministry of Finance is responsible for ongoing monitoring of the legal regime governing PPPs while its positive assent is required for the approval of any PPP project. Two PPP projects have been initiated under this framework since January 2021, although both remained subject to approval as of early 2024.

In Montenegro, the market is open with very limited exceptions to national treatment. The economy’s score in the OECD FDI Regulatory Restrictiveness Index was 0.03 in 2018, reflecting minimal restrictions present particularly in the transport sector. This score is lower than that for the average OECD economy (0.064), indicating a less restrictive FDI regime (OECD, 2020[4]).

A new model bilateral investment treaty (BIT) was introduced in July 2021. The model includes a conventional transparency definition, excluding the application of United Nations Commission on International Trade Law (UNCITRAL) Rules on Transparency4 and encompassing solely the obligation to publish laws and regulations related to investments. It defines “investor” in such a way that for a legal entity to be classed as foreign, it should conduct substantial business activities in the home contracting state, these being determined by case-specific evaluation. The new model BIT also includes reformulated provisions as to the investment dispute resolution system while the government is actively negotiating a BIT with Hungary that incorporates these reforms. For example, the model stipulates that consultations should be the first port of call in the event of a dispute, a process that may include the use of non-binding, third party procedures, such as conciliation or mediation. The new model BIT was developed on the basis of, among others, Montenegro’s experience in investment disputes in preceding years.5

Steady reform efforts continue to improve the dispute settlement environment. While Montenegro has had a domestic arbitration regime in place since 2015, it put mediation on a reformed, statutory basis with the adoption of the Law on Alternative Dispute Resolution (ADR) in July 2020. The Centre for Alternative Dispute Resolution (CADR), established at that time as a successor to the Centre for Mediation, has since engaged in efforts to raise awareness of mediation as a viable alternative to litigation, leading to year-on-year growth in its uptake (Council of Europe, 2022[5]). Under the Law on ADR, parties are obliged to try to solve the dispute through mediation before initiating court procedures in disputes with claim regarded as being of small value.6 In order to get a licence, mediators need to pass basic training covering all types of disputes (family, commercial, civil cases, etc.) while advanced training on specific topics, including mediation in commercial disputes, is organised by the CADR on an ad hoc basis. Under the 2015 Law on Courts, Montenegro established a dedicated commercial court, which has first instance jurisdiction in commercial matters. While its judges receive specialist training to hear complex commercial disputes (OECD, 2021[6]), the commercial court remains challenged by the complexity and weak implementation of laws, limited capacity and other operational issues (US State Department, 2023[7]). Moreover, the average time from filing the commercial court case to reaching a decision increased from 197 days in 2021 to 442 days in 2022 (European Commission, 2023[3]). There has also been little progress on the implementation of judicial reforms. Advancement was observed on high-level court appointments, as in February 2023 the parliament appointed three new judges to the Constitutional Court, following six months without a quorum; however, there is still one vacancy to be filled, which could lead to a backlog of cases (European Commission, 2023[3]).

Montenegro continues to reinforce its Intellectual Property Rights (IPR) legal framework. There have been several new and amended legislative measures since 2021, notably the Laws on the Protection of Trade Secrets, Law on Copyright and Related Rights, Law on Patents as well as amendments to the Law on Trademarks and Patents. In October 2022, Montenegro acceded to the European Patent Organisation, following its deposition of its instrument of accession to the European Patent Convention in July 2022. Notwithstanding progress to date, it is important that momentum be maintained with implementation of the national IPR strategy for the 2023-26 period, with priority given to further legislative alignment with the EU acquis on copyright and neighbouring rights as well as on industrial property rights. The primary objectives of this strategy revolve around enhancing the administrative capabilities of institutions tasked with registering and enforcing intellectual property rights. Additionally, the plan aims to elevate public awareness regarding intellectual property and to facilitate more effective enforcement of these rights. By addressing these key components, the strategy seeks to create a robust framework that safeguards intellectual property and promotes its responsible use. There has been modest progress in recent years; for example, in March 2023 the Ministry of Economic Development and Tourism approved the 2023 Action Plan for the Working Group combating infringements of intellectual property rights. However, IPR enforcement and awareness raising require further strengthening, as public awareness of IPR issues remains limited (US State Department, 2023[7]).

Sub-dimension 1.2: Investment promotion facilitation

Recent years have seen Montenegro consolidate its investment promotion agency structure and strategy. Following the adoption of the new PPP law in October 2019, the Montenegro Investment Agency (MIA) was established in 2020 with significantly more employees and a much broader set of responsibilities than its predecessor bodies. The MIA is a government-funded, autonomous public agency. In addition to investment promotion and facilitation, the agency is tasked with realising PPP projects, promoting innovation, and providing investors with information on all the necessary steps and contact points for business registration. By the end of 2022, the MIA had 30 employees. However, the MIA might not yet have sufficient financial and human resources with which to deliver on its broad mandate. The agency’s strategy for prioritising economic sectors for investment promotion is guided by the economy’s Smart Specialisation Strategy, and includes sustainable and health tourism, sustainable agriculture and food production, energy, and information and communication technologies (ICT). In support of Montenegro’s digital transformation efforts, the MIA promotes digital clusters,7 targets outreach to relevant investors and projects, and has been actively participating in the working group for creating the strategy for digital transformation.

While some advances were observed in investment facilitation and business registration, there is scope for improvement. The establishment of the MIA was expected to reinforce Montenegro’s investment facilitation services and aftercare activities. The Competitiveness Council has proved itself to be a valuable public-private consultative platform for discussion on topics such as business registration procedures, obtaining licences, and business barriers. In early 2021, a working group co-ordinated by the Secretariat of the Competitiveness Council (SCC8) was established to reform the company registration process, with membership from both state institutions and the private sector. The aim of these efforts is the full digitalisation of registration of all forms of businesses. In mid-2021, the e-Firma portal was launched to provide eight electronic services related to the work of the Central Register of Business Entities (CRPS) and the Register of Beneficial Owners (RSV). This allows businesses to register changes with the CRPS for existing companies electronically, and to submit a request for the issuance of the last statement and certificate with data on the registered business entity from the CRPS’s unique information database. Services also include delivery of digitally signed documents from CRPS records via email, which is one of the first such digitally available public services in the economy. As of early 2024, however, only a minority of the procedures to establish a business are available on line. The MIA uses several other digital tools to support its investment facilitation, retention and aftercare activities. These include its website, social media accounts and virtual meetings and webinars. Moreover, the MIA has plans to establish a customer relations management system, although the implementation timeline will depend on the availability of financial resources.

The MIA also has a dedicated department for aftercare which uses targeted field visits to gather intelligence, which is then channelled to policy makers as part of the agency’s advocacy role in policy design and development. Aftercare services provided include regulatory and administrative assistance (including with respect to real estate), conflict mitigation, matchmaking between foreign investors and local firms, and facilitation of high-level networking with academia and research and development (R&D) institutions. The MIA also operates voluntary programmes aimed at promoting linkages between domestic and foreign firms to maximise the spillover effects. Increased high-quality and well-informed investments create opportunities for small and medium-sized enterprises (SMEs) in investment-prone market segments to establish connections with larger multinational enterprises (MNEs) supplier networks.

Montenegro retains a complex and multi-layered investor incentive scheme in place to attract investment. Recent years have seen the addition of several incentives targeting support of the digital transformation. While tax incentives are typically offered on an automatic rather than discretionary basis, and are under the purview of the Ministry of Finance, they are not all contained within the main body of the tax law and, on occasion, may be granted outside of the economy’s tax and investment laws.9 In 2022, in co-operation with the World Bank Group, the Ministry of Economic Development developed a comprehensive Investment Incentives Inventory. While this should help in cataloguing and navigating the various incentives on offer, there remains a need for significant streamlining. Moreover, there is a need for reinforced evaluation mechanisms to ascertain the costs, benefits and appropriate duration of investor incentives. The publication of such an analysis would additionally bolster transparency regarding investment incentives, thereby further advancing investment facilitation and promoting good governance (OECD, 2023[8]).

Sub-dimension 1.3: Mobilising sustainable investment

Although it is much broader ranging, Montenegro’s National Strategy for Sustainable Development by 2030 (NSSD; Box 2.1) also provides a high-level strategic framework and governance for sustainable investment. Similarly, the NSSD has informed subsequent economy-wide and sectoral strategies, notably including the Industrial Policy of Montenegro 2019-23, the Smart Specialisation Strategy of Montenegro 2019-24, and the government’s Economic Reform Programme (ERP) 2022-24. Moreover, in January 2024, the government implemented a new ERP for the period 2024-26. The economic policy's primary strategic objective is to attain intelligent, sustainable, and inclusive economic growth, aiming to enhance the overall quality of life for citizens. While Montenegro’s strategic and legal framework places emphasis on attracting sustainable investment, it remains fragmented across different strategies, lacking a cohesive and streamlined structure. This dispersion may hinder the effectiveness of the overall efforts, pointing to the need for a more integrated and consolidated approach to maximise the impact of sustainable investment initiatives in the country.

Box 2.1. Advancing the Sustainable Development Agenda in Montenegro

Already in 2016 Montenegro adopted a NSSD, closely aligned with the Sustainable Development Goal (SDG) framework agreed at the UN in 2015. In the thematic area of financing for sustainable development (6), the NSSD adopts as one of its strategic goals enabling the introduction of the green economy by mobilising funds for sustainable development (6.2). To deliver on this goal, one of the principal measures (6.2.2) is the establishment of a favourable regulatory framework for investments in the green economy. In turn, 1 of the 14 sub‑measures calls for the development of “a good climate for inclusive and sustainable investments from private sector, with transparent and stable rules and standards, and fair competition, all with the aim to foster the achievement of sustainable development goals in the economy” (6.2.2.3).

Efforts to promote the green economy have subsequently been mainstreamed into economy-wide and sectoral policies, while the concept itself has been under development. For example, the Industrial Policy of Montenegro 2019-23 included a focus on the creation of new jobs through investments in renewable energy sources, organic production, the introduction of international environmental standards, waste management and recycling, the development of low-carbon tourism, sustainable management of forests and water, etc. Similarly, the Smart Specialisation Strategy of Montenegro 2019-24 has set the groundwork for upcoming green investment initiatives by outlining priorities and key areas for sustainable and environmentally friendly growth.

The NSSD included establishment of a system for monitoring the sustainability of national development, including monitoring the implementation of goals, measures and tasks contained in the Action Plan integrating global SDGs. The latest report marked progress in poverty reduction, but challenges persist due to data limitations. Early childhood education has improved, alongside women's empowerment, but achieving gender equality faces significant challenges. Progress in implementing the ecosystem approach and designating protected areas in the sea is observed but weaknesses in management and data pose challenges.

It is also planned to connect the national reporting system with the United Nations Environment Programme (UNEP) live platform. Moreover, in late 2022 Montenegro’s Office for Sustainable Development, in co-operation with the Directorate of Statistics and with the support of the Office of the Resident Coordinator of the United Nations and the UN Economic Commission for Europe (UNECE), developed a platform for monitoring progress across a range of sustainable development indicators: www.sdgmontenegro.me.

Sources: Ministry of Science (2019[9]); Ministry of Sustainable Development and Tourism (2017[10]); Government of Montenegro (2024[11]).

Montenegro provides financial and technical supports for sustainable investment relevant to three of the four SDG-linked objectives, namely i) productivity and innovation, ii) decarbonisation, and iii) gender equality. In terms of financial supports, for example, the Ministry of Economic Development and Tourism, Innovation Fund of Montenegro and Investment Development Fund of Montenegro all have credit or grant lines for either productivity, innovation, gender equality or decarbonisation. These institutions provide favourable credit lines for investors. In addition, tax incentives, subsidies, and incentives for, respectively, low-carbon investment, female entrepreneurship and investment in female-dominated sectors are provided on a non-differentiated basis between foreign and domestic firms. These financial supports aim to address market failures relating to labour immobility, access to finance and environmental externalities. Technical supports meanwhile consist of training and skills programmes, entrepreneurship programmes, internationalisation programmes, digitalisation programmes and dedicated supports for women. In particular, these aim to address the market failure evident in significant skills gaps. Each year, as part of the programme for improving the competitiveness of the economy, the Ministry of Economic Development and Tourism assesses the need and scope for further financial and technical supports for sustainable investment.

Overview of implementation of Competitiveness Outlook 2021 recommendations

Montenegro’s progress in implementing the 2021 Competitiveness Outlook Recommendations has been mixed, although with strong progress in improving the investment facilitation framework through the establishment and expansion of the MIA (Table 2.2). Moderate progress was achieved in promoting the use of alternative dispute mechanisms and streamlining investment incentives and evaluating their cost-effectiveness. Scope for improvement remains in improving the transparency of policy making, while limited progress was achieved in reinforcing MIA’s green investment promotion activities.

Table 2.2. Montenegro’s progress on past recommendations for investment policy and promotion

Competitiveness Outlook 2021 recommendations	Progress status	Level of progress
Improve the transparency and inclusiveness of policy making	Limited progress has been made in this respect. The public is not consistently involved in formulating strategies and laws, and obtaining information on line is hindered by limited availability.	Limited
Continue efforts aimed at encouraging the use of alternative dispute mechanisms	The Law on Alternative Dispute Resolution was adopted in July 2020, instituting mediation on a firm legal footing and establishing the Centre for Alternative Dispute Resolution as an implementing authority.	Moderate
Accelerate the establishment of the MIA, clarify its aftercare mandate, and reinforce its capacity and resources in order to improve its investment facilitation and aftercare services	The MIA was established through the PPP Law in 2020. It has a dedicated aftercare division and provides a range of aftercare services.	Strong
Streamline the multiple investment incentives and reinforce mechanisms for evaluating their cost and benefits, their appropriate duration, and their transparency	The Ministry of Economic Development, in co-operation with the World Bank Group, has created a comprehensive Investment Incentives Inventory. New investment incentives have also been introduced to support the digital transformation. It is not clear, however, that there have been efforts to streamline the multiple investment incentives, nor that their evaluation mechanisms have been reinforced.	Moderate
Further reinforce the MIA’s green investment promotion activities	As part of the NSSD, Montenegro sees “green investments into key economic sectors” as central to the “financing platform for sustainable development of Montenegro by 2030”. MIA has intensified its investor targeting in the renewable energy sector with outreach and promotion campaigns, and has initiated mapping areas suitable for sustainable renewable energy production.	Moderate

The way forward for investment policy and promotion

Montenegro has maintained its impressive record of attracting investment and continues to consolidate the institutional framework for investment promotion introduced in 2020. In some respects, however, reform momentum has stalled in recent years. To regain this momentum and cement the economy’s position as a leading regional destination for sustainable investment, policy makers should:

• Improve the efficiency of the commercial court. Given the deterioration in the time between filing a commercial claim and its resolution, which more than doubled from 2021 to 2022, room for improvement remains in the enforcement of dispute settlement laws. This delay in the resolution of commercial disputes has serious implications for businesses and the overall legal system; the court procedures and processes involved in handling commercial claims should be reviewed and streamlined. This may involve restructuring the court system, as well as identifying and eliminating unnecessary bureaucratic steps, ensuring a more straightforward and expeditious legal process (Box 2.2). The increased uptake of alternative dispute resolution mechanisms had little effect on easing the caseload for commercial courts. Further encouraging the use of alternative dispute resolution mechanisms, such as mediation and arbitration, could therefore be an effective strategy.

Box 2.2. Streamlining the judicial system in Bulgaria

Bulgaria has an established Inspectorate to the Supreme Judicial Council (SJC), comprising an Inspector General and ten inspectors who are elected by a two-thirds majority of the Members of Parliament in the National Assembly. The Inspector General serves a five-year term, while the inspectors' term is four years. The Inspector General and inspectors function independently under the law. The Inspectorate acts on its own initiative or in response to citizens, entities, or state bodies, including judges, prosecutors, and investigators. It communicates signals, proposals, and reports to state and judicial bodies. Additionally, the Inspectorate shares public information about its activities.

The Inspectorate is the main body, through which the Ministry of Justice can reform the justice system with the goal of improving its efficiency and reducing the duration of legal proceedings. In February 2021, the Judges' College of the SJC adopted a roadmap for the restructuring of district and appellate-level courts. The plan aims to bolster the judiciary by expanding the number of judges, enabling specialisation, implementing mandatory court-ordered mediation in specific cases, and enhancing overall efficiency. This involves optimising judicial workload distribution across courts and judges, which will entail:

• Consolidating of regional courts with the view of reducing the caseload.

• Restructuring of judicial staff contractual status, with personnel categorised into permanent and non-permanent roles. The former will be assigned to regional courts, while the latter will be integrated into higher court staff.

• Increasing the number of judges in district and appellate courts.

• Implementing a workload rate for judges in regional, district, and appellate courts, enhancing the ability to anticipate the specific requirements of judges in each region. The rate will be annually revised using actual workload data to facilitate systematic planning for the judiciary’s regional needs.

The concept provides a remedy for current challenges such as uneven workload among courts at a similar level, judge specialisation, the efficiency and quality of justice administration, personnel planning, optimisation of judicial budget costs, and predictability in judges' career development.

Sources: OECD (2022[12]); Inspectorate to the Supreme Judicial Council (2007[13]); European Commission for the Efficiency of Justice (2022[14]).

• Simplify the various investment incentives and strengthen mechanisms for assessing their costs, benefits, duration, and transparency. It is crucial to enhance the cost-benefit analyses of these incentives and make their outcomes accessible to the public.

• Ensure that the MIA is adequately resourced to deliver on its mandate, and to consolidate and extend its existing activities. This should ensure adequate resourcing of the agency’s aftercare activities, including the planned customer relations management.

• Centralise the strategic framework for sustainable investment. The existing economic reform priorities and broad economy-wide strategies in Montenegro already incorporate sustainability objectives, explicitly aligned with the SDGs. These strategies also encompass aspects related to sustainable investment. Therefore, centralising these elements within a unified framework would not only enhance coherence but also capitalise on existing synergies, ensuring a more robust and impactful approach to sustainable investment in the economy.

References

[5] Council of Europe (2022), “Centre for Alternative Dispute Resolution launches an awareness raising initiative about benefits of mediation “Through mediation to an agreement - choose an alternative””, https://www.coe.int/en/web/podgorica/-/centre-for-alternative-dispute-resolution-launches-an-awareness-raising-initiative-about-benefits-of-mediation-through-mediation-to-an-agreement-choos (accessed on 1 March 2024).

[3] European Commission (2023), Montenegro 2023 Report, https://neighbourhood-enlargement.ec.europa.eu/system/files/2023-11/SWD_2023_694%20Montenegro%20report.pdf.

[14] European Commission for the Efficiency of Justice (2022), Evaluation of the Judicial Systems (2020-2022), https://rm.coe.int/bulgaria-2020-en/1680a85c77.

[11] Government of Montenegro (2024), Economic Reform Programme 2024-26, https://wapi.gov.me/download/97a5b5fd-9e83-4b63-82fa-c8692a242f82?version=1.0.

[13] Inspectorate to the Supreme Judicial Council (2007), Inspectorate to the Supreme Judicial Council, https://www.inspectoratvss.bg/en/page/2.

[9] Ministry of Science (2019), Smart Specialisation Strategy of Montenegro 2019-2024, https://www.gov.me/dokumenta/ea1d661e-922a-4d42-af8d-ae55bc53988e.

[10] Ministry of Sustainable Development and Tourism (2017), National Strategy for Sustainable Development of Montenegro 2030, https://www.gov.me/en/article/174209--national-strategy-for-sustainable-development-by-2030-nssd.

[8] OECD (2023), Improving Transparency of Incentives for Investment Facilitation, OECD Publishing, Paris, https://doi.org/10.1787/ab40a2f1-en.

[12] OECD (2022), OECD Investment Policy Review: Bulgaria, OECD Investment Policy Reviews, OECD Publishing, Paris, https://doi.org/10.1787/6a0325b7-en.

[6] OECD (2021), Competitiveness in South East Europe 2021: A Policy Outlook, Competitiveness and Private Sector Development, OECD Publishing, Paris, https://doi.org/10.1787/dcbc2ea9-en.

[4] OECD (2020), FDI Regulatory Restrictiveness Index (database), http://www.oecd.org/investment/fdiindex.htm (accessed on 28 May 2024).

[1] UNCTAD (2023), UNCTADstat, https://unctadstat.unctad.org/wds/ (accessed on 28 May 2024).

[7] US State Department (2023), 2023 Investment Climate Statements, https://www.state.gov/reports/2023-investment-climate-statements/montenegro/.

[2] World Bank (2023), World Development Indicators, https://databank.worldbank.org/source/world-development-indicators (accessed on 28 May 2024).

Notes

← 1.  Europe Now is a set of economy-wide reforms, which aim to create a more inclusive and sustainable economic growth model. The programme encompasses reforms in taxation, SOEs, employment and social policy and innovation.

← 2.  Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts Text with EEA relevance, https://eur-lex.europa.eu/eli/dir/2014/23/oj.

← 3.  Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC Text with EEA relevance, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32014L0024.

← 4.  The UNCITRAL Rules on Transparency in Investor-State Arbitration based on treaties encompass a set of procedural guidelines aimed at fostering transparency and making such arbitrations accessible to the public.

← 5.  Of the eight disputes brought against the economy, three were filed with the International Centre for Settlement of Investment Disputes (ICSID), four were filed under the Arbitration Rules of the United Nations Commission on International Trade Law, and one was brought before the foreign District Court.

← 6.  The threshold for commercial cases is EUR 7 000.

← 7.  In December 2021, the government signed an agreement with the ICT cluster in Montenegro, ICT Cortex, for support for the development of the strategic priority of the Smart Specialisation Strategy of Montenegro – Information and Communication Technologies. The total amount foreseen for the implementation of the work programme of the ICT cluster Cortex for a period of three years amounts to over EUR 1 million. The programme is being supported by the Ministry of Economic Development in the amount of over EUR 500 000, while these public funds will be matched by the IT companies that are members of the cluster: https://ictcortex.me/en/over-a-million-euros-for-the-development-of-the-it-industry-in-montenegro-mer-and-ict-cortex-signed-a-contract-worth-over-a-million-euros.

← 8.  The SCC is supported by the European Bank for Reconstruction and Development (EBRD) in collaboration with the UK Good Governance Fund, and has been fully operational since February 2019 based on a signed Memorandum of Understanding between EBRD and the government of Montenegro. The main goal of the Secretariat is to support the work of the Council on a daily basis and thus impact the efficiency and improvement of public-private dialogue in Montenegro. Some of the key activities of the Secretariat related to Council are: preparation of the proposal of the Council’s Annual Work Plan and Annual Report on the Work of the Council; follow-up of the implementation of the conclusions from the meetings of the Council; collection of relevant opinions for the topics envisaged in the Council’s Agenda; and continuous communication with the members of the Council, state institutions and business community in order to define measures to improve the business environment. Additionally, SCC provides expert support to the working groups dealing with priority topics defined by Council.

← 9.  If the investment project has been declared as vital or of strategic importance for the government, a special law can be adopted, granting a different set of tax incentives. For example, at the end of 2014, the Parliament of Montenegro adopted the Law on Bar-Boljare Highway, excluding contractors from VAT, income and personal income taxes, contributions for compulsory social insurance for foreigners involved in the project, and customs on building materials, equipment and facilities in relation to construction of the highway.