According to the World Bank's Doing Business Report, Montenegro has ranked 42 out of 190 countries in terms of ease of doing business, proving that its fast and easy-functioning bureaucracy facilitates trade in the country. The facilities recognized in such matters as obtaining construction permits, title deeds, access to credit, quick application, etc. pave the way for foreign investors.
The country's business environment and potential investment areas are open to development thanks to the favorable economic environment provided by the government. Hundreds of small and large-sized companies from many countries, are engaged in major initiatives in Montenegro. As of 2017, investments of Turkish firms across the country exceeded US $ 201 million.
Forestry and Furniture Sector in Montenegro
In Montenegro, forests cover a large area of 627,168 hectares. One third of this area, which is very convenient for the furniture sector, is open to use as raw material. If foreign investors develop joint investments in furniture production, there is capacity to influence the direction of the furniture sector worldwide. In Montenegro, 67% of forest land belongs to the state.
Agriculture and Livestock in Montenegro
Fertile agricultural areas make up 38% of the country's total area. 65% of these agricultural areas belong to private property. Corn, potatoes, grapes and wheat are the most grown products. These crops are grown in only 12% of the existing agricultural land, so there is a large gap in the country’s agricultural sector for investment.
As for livestock; sheep, goat and cattle production is at the forefront. The contribution of fisheries and honey production to the national economy is also important but not at the desired level. The Montenegrin government has designed large-scale incentives for domestic and foreign investors who plan to invest in livestock and agricultural sectors. In particular, it provides convenience to encourage investment in milk and its by-products.
Other important vegetables and fruits grown in Montenegro include edible mushrooms, blueberries, olives, apples, plums, cucumbers, tomatoes and peppers.
Montenegro's Infrastructure Development and Its Impact on the Commerce
All regions in a country must be connected to each other with modern infrastructure In order to be accepted as a developed country. The Montenegrin government has made significant strides in this regard and has designed highway and regional road plans to ensure that no isolated spots remain throughout the country. The European Union has opened several funds to support Montenegro for infrastructure arrangements. According to IMF data, Montenegro achieved a growth rate of 4.4% in 2017 thanks to the new roads built and developing tourism sector.
The first highway of the country was built by a Chinese company between 2015-2019. The 41 km highway connects the capital, Podgorica to Kolasin.
Montenegro Foreign Investor Rights
There is no discrimination between domestic and foreign investors (legal or real) in Montenegro. Foreign investors have equal rights with Montenegrin citizens. Domestic and foreigners benefit from tax and employment incentives within the same rights. The rights to buy&sell real estate and tax rates are also applied in the same way for both Montenegrin citizens and foreigners.
Potential Investment Areas for Foreign Companies
• Food Production
• Home Appliances Production
Tax Incentives Applied by Municipalities in Undeveloped Regions
Underdeveloped municipalities in northern Montenegro offer incentives for tax exemptions and tax credits to newly established companies in their regions. New production facilities established in these regions are exempt from tax for up to 8 years. The maximum tax exemption rate for this eight-year period is € 200,000. Agriculture, transportation, fishing, steelmaking and catering facilities cannot benefit from this exemption.
Hotel, Pension and Restaurant Investments
Nearly 2 million tourists visit Montenegro every year. Government opened many new areas around touristic regions for construction which should be utilized by foreign investors. The planned budget for the marina, hotels, residences and stores is over 1 billion Euros. These regions, which are of great value for both construction companies and tourism investors, will be fully developed in the next few years.
Due to its geographical location, Montenegro is only 2 hours flight away from the farthest center of Europe. This situation increases the number of tourists coming to the country exponentially every year. At the same time, there is a constantly increasing number of visitors from Turkey to Montenegro. The fact that Montenegro does not require visas for Turks and the historical and cultural ties with the region contribute to the large number of citizens visiting Montenegro during the summer months.
Investment Property in Montenegro
Investing in real estate in Montenegro will yield high earnings due to growing rental income. Land purchase, construction, housing purchase and sale has become a very profitable investment instrument in touristic areas. Average rents start at 2000 Euros in towns such as Kotor and Budva and it is very difficult to find vacant apartments. A second advantage is that the real estate you buy is valued at an annual rate of 8%. Land prices and construction costs are quite favorable in Montenegro, if you are experienced in this sector there are many opportunities available for you.
Small Scale Investments
According to Monstat data, there are 28,268 small tradesmen in Montenegro as of 2016. The number of personnel working in small-scale enterprises, which increased by 8.9% compared to 2015 and 21.28% compared to 2014, constitutes ¾ of the total employees throughout the country. In order to accelerate development in this sector, the Montenegrin government has improved the financial instruments in the banking system and facilitated loan and factoring services. It also provides free interns to newly established enterprises during the development period.
Montenegro Industrial Production
Within the framework of the Production Development Strategies implemented between 2014-2018, Montenegro's industrial policies aimed at strengthening the competitive environment and realizing the utilization of the existing potentials. For this purpose; the main objective is to attract foreign direct investment to the country for industrial production, to facilitate the functional procedures of existing international companies and to increase the number of workers working in these sectors. Government provides cheap land and facilities, employment support and tax exemption for foreign enterprises.
Montenegro has achieved sustainable growth with its strategic incentive regulations. 11.22% of the 2,184,883,984.17 Euro funds spent for the development of the economy and attracting foreign investors were financed partly from 1.46% European Union funds, 20.94% from loans, 1.10% from donations and the remaining 65.28% from private funds (MONSTAT). It is planned to provide advanced macroeconomic order for short and long term economic growth and to involve more foreign investors in production, tourism, agriculture and construction sectors. The market has been optimized for investment in Montenegro when compared to other European countries.