Montenegro

Montenegro is a small but very picturesque country located in the western part of the Balkan Peninsula (South-East Europe). In most countries of the world, Montenegro is known as Montenegro, although the local population calls their country “Crna Gora”. However, the meaning of these names is the same: “Black Mountain”. This is exactly what the Lovcen Massif, overlooking the famous Bay of Kotor, was once called.

General information

The official name of the state is Montenegro. The country covers an area of ​​13,812 km² (155th in the world). The population is approximately 631,119 people (at the beginning of 2024).

As of 2011, the ethnic composition of the country was: Montenegrins - 45%, Serbs - 28.7%, Bosnians - 8.6%, Albanians - 4.9%, Roma - 1%, Croats - 1%. The number of refugees from the republics of the former SFRY, as well as internally displaced persons from Kosovo, amounted to 12.5 thousand people.

The majority of believers in Montenegro are Orthodox (78.1% of the population). Of the adherents of other religions, 18.7% of the country's population professes Islam, 3.2% considers themselves irreligious and atheists.

The official language is Montenegrin. Also in official use are Serbian, Albanian, Bosnian and Croatian.

The official currency of the country is the euro.

Podgorica is the capital of Montenegro, the main political, economic and cultural center of the state. Podgorica is also the business capital of the country, with most industrial, financial and commercial enterprises located here.

The wars of the period of the collapse of Yugoslavia passed Montenegro, but left the Podgorica factories without suppliers and sales markets, which caused a complete production crisis that lasted until the end of the 90s. Many businesses were closed, others fell into disrepair.

Business life began to recover only at the beginning of the new millennium. The surviving factories were privatized and have now adapted to the new conditions. The largest enterprise not only in Podgorica, but throughout the country, is the Podgorica Aluminum Plant (Kombinat aluminijuma Podgorica - KAP), owned by the Russian company RUSAL.

The most important enterprise of the city is also the Plantaze plant. It is this company, founded back in 1963, that owns more than half of the country’s vineyards (about 2.3 hectares).

The city's economy has become more focused on the financial and service sectors, which are growing rapidly. There are two exchanges in Podgorica (Montenegrin Exchange and NEX Exchange). Now the focus of business development in the city is shifting from heavy industry to telecommunications, construction and the banking sector. Many representative offices of foreign companies have opened. Investors and foreign companies that have opened their offices in Podgorica have made a significant contribution to the growth and diversity of the city's economy.

Podgorica is a major transport center for road, rail and air traffic. The Sozina tunnel (4.2 km), recently built according to modern European standards, significantly shortens the road to Bar. Podgorica railway station is the main railway junction of Montenegro.

According to the constitution of Montenegro, the city of Cetinje is one of the capitals of the country along with Podgorica; it houses the official residence of the President of the Republic and the Ministry of Culture of Montenegro. For five centuries, Cetinje has been the cultural center of Montenegrins. The basis of the city's modern economy is trade, public catering and the service sector. There are two enterprises in Cetinje - the Obod printing house and the Kartonazha packaging factory.

Niksic is the second most populous city in Montenegro after Podgorica and an important industrial center of the country. The Niksicka Zeljezara metallurgical plant, a bauxite mine, the Niksicka Pivara brewery and other large enterprises are located here.

After the collapse of Yugoslavia, many of the city's businesses were closed and others fell into disrepair. The surviving factories were privatized and have now adapted to the new conditions. However, these enterprises cannot employ as many workers as they employed during socialist Yugoslavia. Therefore, the city’s economy is gradually transforming towards a service economy.

Pljevlja is one of the largest industrial centers in Montenegro.

100% of all Montenegrin coal is mined here; mining is carried out by JSC Rudnik Coal. Due to the proximity of energy resources, the only thermal power plant in Montenegro is located in the city. The Pljevlja thermal power plant annually produces up to 950 GW of electricity, which covers 25% of the country's electricity needs.

Tin and zinc mining is carried out in the municipality. Pljevlja is also the main center of the wood processing industry in Montenegro. The region has enormous potential for the development of ecotourism and winter sports.

The city of Budva and its surroundings form the Budva Riviera - the largest tourist center in Montenegro, famous for its beaches, nightlife and beautiful examples of Mediterranean architecture. The basis of the city's economy is tourism.

Administratively, the territory of Montenegro is divided into 24 communities. The communities are named after their central cities.

History, geography, culture, mentality

The Slavs came to Dalmatia in the 6th century, when these lands belonged to Rome. In 1042, the Serbs managed to achieve the independence of their own country, which they called Duklja. The state was recognized by the Catholic Church, after which it received the status of a kingdom. However, in the 12th century, the Serbs gradually lost part of the conquered lands, and were soon completely absorbed by their stronger neighbors.

According to Byzantine chronicles, the principality formed on the site of Dukla was named Zeta - in honor of the river flowing in the western part of the Balkan Peninsula. Zeta did not retain its independence for long: due to the threat of capture by the Turks, the principality came under the protection of the Venetians.

However, the Ottoman Empire still took control of these territories, and in 1376 the former principality was named Montenegro in the official documentation of Dubrovnik. This was her first written mention.

In the period from the 16th to the mid-19th century, Montenegro was an ecclesiastical state led by bishops. Then the government system became secular again, and princes and kings began to rule the country.

At the beginning of the twentieth century, wars took place in the Balkans region, during which Montenegro managed to conquer new territories. In 1918, the country became part of the Kingdom of Serbs, Croats and Slovenes, and after World War II - into socialist Yugoslavia. The collapse of this entity led to a tragic armed conflict. This is a rather painful topic for local residents, so it is better not to raise it.

The country was part of the federal Yugoslavia from 1992 to 2003. Then she was allied with Serbia for several years. In 2006, following a public referendum, the country gained independence.

From the southwest, Montenegro is washed by the Adriatic Sea. The country has land borders with Croatia in the west, Bosnia and Herzegovina in the northwest, Serbia in the northeast, the partially recognized Republic of Kosovo in the east, and Albania in the southeast.

Most of Montenegro is occupied by the Dinaric Highlands (Bioč, Durmitor massifs - up to 2522 m high, Prokletije and others), dissected by river valleys and canyons. The highest point of the country is Mount Bobotov-Kuk, whose height is 2522 meters. The Tara River canyon is the deepest in Europe (1300 m).

Minerals of Montenegro - bauxite (deposits - Zagrad, Kutsko-Brdo - in the central part, east of the city of Niksic), copper-lead-zinc silver ores (Brskovo, Vishnica, Žuta Prla - in the northeast, near the city of Mojkovac) , brown coal (Plevljana basin in the north), marble, natural building materials. The shelf of the Adriatic Sea is promising for oil and gas (Adriatic basin).

More than half of the country's territory belongs to the rivers of the Danube basin (for example, the Lim and Tara rivers). The rest belongs to the Adriatic Sea basin. Montenegro owns 60% of the water area of ​​Lake Shkoder. The country also has reservoirs with a total volume of 1 km³ for hydropower needs.

Montenegro has a number of significant cultural and historical attractions, including monuments from the pre-Romanesque period, Romanesque art, Gothic and Baroque, and Ottoman architecture.

The Montenegrin coastal region is especially famous for its religious monuments, including the Cathedral of St. Tryphon, the Basilica of St. Luke, the Cathedral of St. John the Baptist in Budva, the Church of Our Lady of the Rock (Škrpela), the Savina Monastery, the Cetinje Monastery and others.

This area, sometimes called Venetian Montenegro or Venetian Albania, is full of Venetian architecture, mainly Cattaro (Kotor) and Perasto (Perast): the ancient city of Kotor is listed as a UNESCO World Heritage Site.

Byzantine influence in architecture and religious art is especially noticeable in the interior of the country.

Montenegrins are a very independent and proud people, but at the same time extremely tolerant and peaceful towards all other cultures. You won’t find interethnic hostility here; respect for any faith and belief clearly reigns here. The two most important moral principles for Montenegrins are bravery and courage. Here they say “bravery protects you from others, courage protects others from you.” Local residents highly respect their history and traditions, moral values, and customs that have developed over many centuries. The people here are very hospitable and sociable, friendly and open. Montenegrins have centuries-old traditions of collectivism, communityism and a certain old-fashionedness in upbringing. Family traditions, concepts of clan and clan play a big role in Montenegro. People always help each other.

When meeting, Montenegrins shake hands, regardless of religion. In more southern regions, kissing and hugging are acceptable between close people, but not with strangers. Locals really value the ability to speak and carry on a conversation. You can meet people conducting lengthy dialogues everywhere, be it a bar, a cafe or a private home.

Power

Montenegro is a parliamentary republic. According to the constitution, powers are divided into legislative, executive and judicial powers. The President is not formally included in the system of separation of powers.

Legislative power belongs to the Assembly - the country's parliament, and executive power belongs to the President and Government of Montenegro - Vlad.

The President is elected for a five-year term by universal direct secret ballot.

The Assembly is the country's unicameral parliament, consisting of 81 deputies. Deputies are elected by popular vote for a term of 4 years. Elections are held according to a proportional system. 76 deputies are elected plus 5 Albanian representatives are nominated from the Albanian minority.

Executive power is exercised by the Government. The composition of the government is approved by the Assembly at the proposal of the Prime Minister.

The judicial system is two-tiered. The Supreme Court of Montenegro ensures the unity of law enforcement practice throughout the republic.

In addition to the two-tier judicial system, there is also a Constitutional Court.

Economy

As the smallest country in the Balkans, Montenegro has a relatively fragile economy that is transitioning to a market system and is based on financial investment, especially in the energy and tourism sectors (private investment accounts for about 1/5 of GDP). The first half of 2023 saw real GDP growth of 6.6% year-on-year, driven mainly by robust private consumption.

In January 2024, the Montenegrin government announced its goal of achieving average annual economic growth of 3.2% between 2024 and 2026.

In Montenegro, the working population is about 284,000 people. Agriculture, which according to the latest World Bank data accounts for 6% of GDP (about 60% livestock and 40% farming) and 7% of the labor force, continues to suffer from outdated practices. Agricultural land makes up 19% of the total land area (FAO) and the sector is dominated by small family farms, with the average farm size being less than 5 hectares. The coastal region, which benefits from a Mediterranean climate, has widespread citrus and olive crops, seasonal vegetables and tobacco can be found in the central parts, and the north benefits from extensive sheep farming. The main exported products are wine and beer, although an increased emphasis on tourism over the past decade has contributed to the decline of agriculture, increasing the country's dependence on food imports. As Montenegro moves forward in EU accession negotiations, the country is working to improve its agricultural sector as one of its EU accession requirements.

Industry accounts for 13% of the country's GDP and employs 18% of the workforce. The steel and aluminum industries make up a significant portion of Montenegro's exports and are expected to stimulate economic development. The manufacturing sector is still underdeveloped and accounts for only 4% of GDP. According to the National Statistical Institute, industrial production in Montenegro increased by 6.4%, driven by increased production in the utilities and mining sectors.

The tertiary sector contributes 61.5% to GDP and employs almost 3/4 of the workforce (74%). Tourism is the third largest industry and consumes about a third of total investment. It alone provides 20% of GDP. The sector has been in full bloom in recent years, especially on the Adriatic coast: every year Montenegro receives three times more visitors than its total population. The country aims to improve its tourism infrastructure and develop its ecotourism industry to exceed 30% of GDP by 2027. The government is trying to attract large foreign hotel chains that can provide hospitality standards similar to those in Europe. Montenegro's hotel infrastructure has been underdeveloped, but with several major infrastructure projects this is beginning to change. On the other hand, the country is also seeking to diversify its economy to be less dependent on tourism. Montenegro's banking sector is relatively small but growing rapidly and has undergone significant reforms in recent years, with the government implementing a number of measures aimed at improving financial stability and increasing competition.

The main export items of Montenegro: aluminum and products made from it, mineral oils, fuel, wood and products made from it, charcoal, iron and steel.

Main import items: mineral fuels, oils, machinery, mechanical devices and tools, electrical machines and equipment, pharmaceutical products.

Main export countries: Switzerland, Serbia and Bosnia and Herzegovina.

Main import countries: Serbia, China and Greece.

Membership in international organizations: UN, WTO, IAEA, OSCE, Council of Europe, SEECP, NATO, ILO, FAO, Adriatic-Ionian Initiative, Adriatic Charter.

Business climate

Montenegro is a member of the WTO Joint Initiative on Investment Promotion for Development. The Central Register of Business Entities (CRPS) is responsible for business registration procedures. The register maintains an electronic database of registered business entities, as well as financial leasing agreements and pledges. The process of registering a business in Montenegro takes on average 4-5 working days. The minimum financial requirement for a limited liability company (LLC) is only 1 EUR (1.1 USD), and three documents are required: the founding resolution, the articles of association and a copy of the passport (if the founder of the company is an individual) or a registration form for a certain type companies.

Montenegro legislation allows the creation of six types of companies: entrepreneur, limited liability company, joint stock company, general partnership, limited partnership and part of a foreign company. All entities engaged in business activities in Montenegro must open an account with a local bank. After opening a bank account, the company reports to the tax authority to obtain a tax identification number (PIB) and a VAT number (VAT).

Investment climate

Since regaining independence in 2006, Montenegro has adopted an investment framework that encourages growth, employment and exports. The country remains dependent on imports from neighboring countries, despite its significant potential in some areas of agriculture and food production. The government recognizes the need for further economic reforms to maintain competitiveness, improve the business environment, open the economy to foreign investors and attract additional foreign direct investment, although structural barriers remain following the country's political transition.

In general, there are no differences between domestic and foreign companies. Foreign companies can own 100% of a local company, and profits and dividends can be repatriated without restrictions or restrictions. Foreign investors can participate in local privatization processes and can own land in Montenegro, usually on the same terms as local residents. Property can only be expropriated for a “compelling public purpose” and compensation must be paid at fair market value.

Business registration procedures have been simplified and can now be completed entirely electronically. In addition, bankruptcy laws were simplified to make it easier to liquidate a company; accounting standards were brought into line with international standards; and customs regulations were simplified. There are no mandatory performance requirements for business registration. To improve transparency and ease of doing business, Montenegro has adopted specific legislation defining guarantees and protections for foreign investors, and has adopted more than 20 other business-related laws in line with EU standards.

To better promote investment and promote economic development, the government adopted a new Public-Private Partnership Law in December 2019 and created the Montenegrin Investment Agency (MIA), combining the Montenegrin Investment Promotion Agency (MIPA) and the Development Projects Secretariat. MIA strives to promote the country as a competitive investment destination by promoting investment projects in the country. Together with the Privatization and Capital Investment Board, MIA promotes investment opportunities in various sectors of the Montenegrin economy, with a particular focus on tourism, energy, technology and the agricultural sector. The two institutions will maintain a constant dialogue with investors already present in Montenegro, while at the same time seeking to promote future projects and attract new investors to the region.

The Montenegro Foreign Investment Law, passed by parliament in 2011, sets the framework for investment in the country. The law eliminates previous investment restrictions, extends national treatment to foreign investors, allows for the remittance and repatriation of profits and dividends, provides guarantees against expropriation, and allows exemption from customs duties on equipment imported as natural capital. There are no restrictions on foreign control and private ownership or on the formation of companies in Montenegro. There are no institutional barriers for foreign investors. As an EU candidate state, Montenegro monitors and implements best practices regarding foreign investment, government officials say, and the country is in the process of developing a screening mechanism for incoming foreign investment.

Business and investment support structures

In Montenegro there are several structures that support business and investment. Here are the main ones:

• Montenegro Investment Promotion Agency (MIPA). This is a government organization that provides information and support to foreign investors. The agency helps with the procedure for registering a business, finding suitable places for investment and provides advice on legal issues.
• Economic Chamber of Montenegro. This organization represents business interests, promotes economic cooperation and supports entrepreneurs. The Economic Chamber organizes seminars, trainings and events for businessmen.
• Agency for the Development of Small and Medium Enterprises (APPR). This agency provides assistance and advice to small and medium-sized businesses, and also organizes support programs such as grants and soft loans.
• Montenegro Development Investment Fund (IRF). This fund provides financial support to various projects, including start-ups, innovative enterprises and infrastructure projects.
• Banks and financial institutions. Local and international banks offer a variety of financial products and services for businesses, including loans, leasing and investment products.
• Business incubators and accelerators. There are several business incubators and accelerators in Montenegro that provide startups with resources, mentoring and support for rapid growth.
• Associations and unions for entrepreneurs. There are various professional associations and unions that help entrepreneurs establish connections, exchange experiences and receive support.
• International organizations and programs. Montenegro has programs and projects funded by international organizations such as the European Union, the World Bank and others, which are aimed at developing business and improving the investment climate.

These structures and programs help create favorable conditions for doing business and attracting investment to Montenegro.