Through close cooperation the Government, entrepreneurs and local self-governments need to find the best solutions to all issues in order to provide rapid economic development, new jobs, money for investments and benefits for each citizen. This message was sent from the traditional meeting of entrepreneurs with the Prime Minister, which was organized on 20th December 2016 in the Chamber of Economy of Montenegro.
In addition to Prime Minister Mr. Dusko Markovic, Vice President and Minister of Agriculture and Rural Development Mr. Milutin Simovic, Vice President Mr. Rafet Husovic, Ministers of Economy Ms. Dragica Sekulic, of Finance Mr. Darko Radunovic, of Labour and Social Welfare Mr. Kemal Purisic, of Sustainable Development and Tourism Mr. Pavle Radulovic, and Secretary in the Ministry of Transport and Maritime Affairs Mr. Zoran Radonjic took part in the meeting.
Also, the brochure “Montenegrin economy in 2016 – results, challenges and opportunities“ was presented. The publication, prepared by the Chamber of Economy of Montenegro, also contains the Government’s recommendations for promoting business conditions defined from the perspective of the economy.
The meeting was moderated by the Vice President of the Chamber of Economy of Montenegro Mr. Stanko Zlokovic.
Opening remarks by the President of the CEM
Expressing congratulations to new elected Prime Minister, the President of the CEM Mr. Velimir Mijuskovic has said that new bodies of this association, which gathers the overall economy, were elected at the end of the last year. These bodies include 593 representatives of the companies from all industries which in 2015 generated income of over 2,5 billion EUR, which is 70% of the overall income at the level of Montenegrin economy.
– Such a structure and business methods are our greatest strength since there lies the basis for presentation of and representing the business community interests in general. Thanks to intersectoral structure and cooperation we can identify the source of economic problems in a fast, efficient and reliable way and propose solutions acceptable to everyone, Mr. Mijuskovic clarifies.
According to him, this is the reason why the suggestions by the Chamber of Economy of Montenegro have always been qualified as very useful.
Speaking about “Montenegrin economy in 2016”, he explains that this brochure represents the most important economy’s views, as well as the proposals for resolving problems, and it is the result of over hundred meetings and other events organized throughout the year and attended by the Government representatives as well.
He has reminded that the CEM presented the analysis “Economy of Montenegro 2006-2015“ in July, and dynamic growth in this period was emphasized at the 6th Economic Conference organized by the Chamber of Economy of Montenegro.
– Current parameters show that macroeconomic trends in 2016 have been also characterized by the growth of the most indicators. Nevertheless, high unemployment has continuously been underlined as one of the main issues of Montenegrin economy, Mr. Mijuskovic says.
According to him, there are many reasons for this situation – economic structure, non-alignment between education system and its needs, labour market inflexibility which resulted in extremely high unemployment rate of nearly 20%. According to the Global Competitiveness Index, Montenegro has dropped 12 places compared to the previous year. A decline in the ease of doing business has also been recorded.
– Even though it is evident that significant results have been achieved in promoting business environment, certain system elements failed to be approached in an adequate manner, which caused such a bad result. Often, the need for rapid fulfillment of requirements related to the accession to the European Union has questioned the quality, or implementation of regulations passed – said the President of the CEM.
He has emphasized that passing good and applicable regulations require the constructive discussion and adjustment to economic needs. The most recent example of the aforementioned is application of Methodology for setting regulatory revenue and prices for use of electricity transmission system which the Chamber will have discussion on so as to mitigate the “impact” affecting nearly 2,500 companies.
– I am afraid that we are not sufficiently aware of the adverse multiplier effects of this rise in price, if it occurs, not only in economic but also social terms – said Mr. Mijuskovic.
He has pointed out that the regulations need to improve and regulate substantially the issues related to companies, labour relations, trade in the broadest sense, as well as public procurement.
It is necessary, he thinks, to prepare a comprehensive and concise Law on enterprises, which will regulate all details relevant to this field.
– Improving labour productivity is crucial for achieving the growth strategy based on investments. Its increase is closely linked with the quality of the labour force, which can only provide a flexible labour market. This completely excludes the current legal solution which is comprehensive and restrictive.
He called on the Prime Minister to put passing the new Law on Labour as well as the Law on Social Council high on the priority list in the next year. Entrepreneurs think that it is necessary to improve the capacity of the Social Council in legal terms so that this body could regulate the entrusted issues, first of all with respect to labour relations.
The trade industry also requires necessary changes. The problems facing the economy due to insufficient understanding of the complexity of this matter were the reason to ask the Government to form the Ministry of Trade.
The public procurement system remains a serious business problem, both for contracting authorities and bidders. The Working Group at the Chamber of Economy of Montenegro has been intensively working on preparing new Law on Public Procurement, and thus we expect all suggestions by entrepreneurs to be treated in an adequate manner.
– We believe that companies on the market, no matter whether they were founded or are majority owned by the state or local governments, should also be exempted from obligatoriness of public procurement procedures. Responsibility for the business operation as a whole can and must be transferred to the governing and management structures of enterprises, since they generate income on the market and are not financed from the state budget – said Mr. Mijuskovic.
In addition to the abovementioned fields, which are not adequately regulated in normative terms, the entrepreneurs think that it is very important to insist on respecting the principles of predictability, transparency and non-selectivity, then carrying out the activities on combating grey economy, resolving the issues of illiquidity and facilitating the access to finances. The economy set activities, which are carried out in order to resolve these issues, as a priority.
Speaking to entrepreneurs, Mr. Mijuskovic believes that the economy should utilize all opportunities to a greater extent, which are offered through the activities of the CEM and could have the positive effect on business operations. First of all they include a number of educational activities which were attended by over 2.500 participants in last eleven months. He also urged them to use promotion and business networking in the country and abroad and to agree Arbitration at the CEM in order to resolve economic disputes faster and easier.
– I think that the economy, independently and through the CEM, should express the need to be properly involved into cooperation with the educational institutions, thus creating human resources for its own needs, says Mr. Mijuskovic.
He called on the entrepreneurs to continue identifying and solving all problems they encounter in business, through the Chamber, since it is much more effective and fruitful approach in comparison to an individual action.
The address of the Prime Minister
The Prime Minister Mr. Dusko Markovic expressed his satisfaction for continuing the traditional dialogue between the Prime Minister, ministers and members of the CEM this December, reminding that it took place only three weeks following the elections.
– The Chamber of Economy of Montenegro, an association which brings together our economy, is an important address and the key partner of the Government in achieving the common objectives and this is the common good for the country and a higher quality of life for its citizens – says Mr. Markovic.
According to him, meetings in the CEM have always provided an opportunity to analyze the results, review the economic trends and level achieved during this year. They also provide an opportunity for the representatives of executive powers to hear firsthand how the Government can contribute to improvement of business environment in the country in the next period, but also to express its expectations of the local community.
– I believe that you all agree with me that this year has been one of the most difficult for Montenegro since the restoration of independence, the year in which the previous government has carried out economic policy in a very unfavorable international, as well as domestic environment. I would remind that it has started a number of big infrastructure projects such as the construction of the first section of the Bar-Boljare highway, continuing the construction of submarine cable between Montenegro and Italy, signing the agreement on construction of the II block of the thermo-power plant in Pljevlja, exploration of oil and gas in our seabed, as well as significant projects in tourism. Previous Government has also achieved key tasks in 2016, namely the preservation of macroeconomic stability and increasing competitiveness.
– Regardless of these facts, I believe that the effects of the progress, which Montenegro has achieved since the restoration of independence, have not been visible yet to the economy and a number of citizens. It is clear that we need dynamic economic development and stable GDP growth rates of 4-5% in the long run, in order to make up for the decades-long lagging behind the developed Europe, says the Prime Minister.
He thinks that dynamic business development, which will provide new jobs, cannot be achieved without further improvement of business environment. However, he adds, it is not only the task of the Government and economic and development policy it carries out and promotes, but perhaps, it depends more on the economic and business community.
He emphasized a commitment to strict compliance with the law.
– Therefore I would like to state clearly: if we have to, we will provide the overall tax and financial policy through increased inspection and uncompromising sanctions to the violation of the law. Both the Government and entrepreneurs need to clearly establish the practice that meeting the obligations to the State is the first, not the last duty, says Mr. Markovic.
He clarifies that the practices regarding frequent planned induction of financial insolvency and bankruptcy in order to outwit the state and business partners and at the same time open new companies and continue business operations should be stopped, because they devastate healthy tissue of any economy.
– You, who are creating new values, and the administration, which carries out economic policies – must not allow the devastation of the State and the economy. Therefore, in addition to structural reforms with direct fiscal impact, the Government will concentrate its efforts on further strengthening of the rule of law and contract execution security, says the Prime Minister.
The Government will consider very carefully the credibility of those who ask for support regarding business development, he adds. Establishing public-private partnerships will be conditioned with the demanding business standards, business criteria and relevant assessments, since the Government will create partnerships exclusively with those who are on the “white list”, not with tax debtors and insolvent companies.
He reminds that the Government has recently passed the new proposal of the Law on Budget for 2017 with the Fiscal Consolidation Plan. This was a precondition, says Mr. Markovic, for reduction of the budget deficit and slowing down the increase of the public debt. He believes the negative scenario, which would be inevitable without measures of consolidation, was eliminated in this way.
The Government was considering the burden of savings to be borne equally by all employees and the economy itself, says Mr. Markovic.
– We decided to try another approach: we protected employers and employees, neutralizing the effects of the necessary restrictions to the economy. Therefore, this set of measures did not involve an increase in tax rates as well, which would create additional pressure on the economy and disrupt the predictability of the tax environment. In this way we have also protected attractiveness of our country as an investment destination – he said.
Mr. Markovic emphasizes that investments from abroad, knowledge and experience are necessary, but overall progress cannot be achieved without the developed local business community. The Government will treat all business initiatives in the same way, it does not matter whether they come from local or foreign entrepreneurs.
The Government will continue to consider carefully the problems which the entrepreneurs are facing in everyday business as well as their suggestion which are very important when determining the priorities of structural reforms and overall measures of economic policy.
– Therefore, the Council for Competitiveness will be established soon, and we expect it will make a contribution to eliminating barriers towards further improvement of the business environment and increased competitiveness of Montenegro, says the Prime Minister Mr. Dusko Markovic.
Entrepreneurs’ views
Mr. Aleksandar Mitrovic, Secretary of the Economic Legislation Board, emphasized the significant problems which the public procurement procedures create to commercial companies owned by the state.
– A number of contracting authorities, inadequate preparation of tenders, the implementation of an administrative procedure in public procurement are the factors generating numerous opportunities for complaints, refuting and prolonging the procedure, which needs to pay attention to when preparing a new law if we want to improve the public procurement system – said Mr. Mitrovic.
He has also stressed the need for amending the Law on Salaries in the public sector (earnings cannot be defined in the same way to state authorities and companies in its ownership), specifying the deadline by the Health Insurance Law when the state can reimburse funds based on sick leave. According to him, entrepreneurs expect that the Government does not issue a permit for the collection of municipal fees to the local governments because the conditions for this have not been created without disrupting business environment. He also focused on the Law on Administrative Fees – their necessary reduction, and the Law on State Survey and Cadastre, according to which entrepreneurs have also been burdened by the high fees.
President of the Construction Association Board Mr. Milan Bozovic thinks it is necessary to create a system to protect domestic manufacturers in this sector from unfair competition coming from the region and reduce the impact of grey market. He welcomed the implementation of the Government’s regulation according to which investors from abroad are required to employ a minimum of 30 percent of domestic operative units i.e. use products from Montenegro.
– It is necessary to stimulate and protect the final products in the construction industry: made of stone, mortar, skim plasters etc. whose raw materials are from Montenegro – said Mr. Bozovic.
Mr. Stevan Karadaglic, President of the Trade Association Board has emphasized that the legal obligation to label shampoos and liquid detergents in Braille poses a business barrier, and the Ordinance regulating this issue should be repealed under urgent proceedings. If this is not possible, its implementation should be postponed.
– Ordinance regulating this issue is adopted without prior analysis of the effects of measures and influence on the business of the economy. On the basis of a comparative analysis of the European Union legislation, the existence and application of such a solution have not been reported anywhere, says Mr. Karadaglic, stating that the obligation of manufacturers to label drugs and dangerous chemicals in this way is an exception.
He says that the Law on Consumer Protection is not harmonized the actual conditions of trade in goods and services on the market, and its provisions prevent the operation of the Board for the extra-judicial settlement of disputes.
President of the Agriculture Association Board Mr. Milutin Djuranovic says that buying domestic products is considered a lifestyle in many countries, and a positive attitude towards own products is a way of expressing the determination to one’s own progress. In our country this is still sporadic, rhetorical subject of attention, and not a persistent activity as it should be.
– The issue of supporting domestic producers is not regulated by law in the world, but it is the matter of overall policy and commitment of the Government to create stable foundation for social and economic progress through affirmation of the consumption of local products, says Mr. Djuranovic.
He has emphasized the problem regarding the record deficit in terms of agricultural and food products and thinks the solution lies in substituting import with domestic products rather than increasing the inflow through the export growth.
He believes that the long-term, intensive and sustained campaign for the affirmation of buying local products would produce many positive effects, if it was supported by the introduction of protective measures. He hopes that the Government will work on solving the issue in this way.
Mr. Radomir Mikan Zec, CEO of HTP Ulcinjska rivijera, says that the business environment of this company is very difficult. He thinks that during the last decade 200 thousand m2 of attractive land of the state-owned company have been “occupied” by illegal facilities operating without work permit and thus making guests and serous investors leave, he thinks.
Mr. Vladan Vucelic, President of the Communal Infrastructure Association Board has said that it is necessary to amend the set of system laws which directly affect the efficiency of solving the problems in this sector. These are laws on communal infrastructure, construction of facilities, salaries of civil servants and state employees, public procurements. It is also necessary to pass a law on municipal wastewater and water used for human consumption.
He says that it is necessary to carry out projects in environmental protection which are a prerequisite for further sustainable development. These projects are related to the construction of facilities for wastewater treatment in Podgorica, disposal of sewage sludge, construction of sanitary landfills, resolving the issue of dangerous animal and construction waste etc.
Mr. Dragan Bokan, owner of Voli has reminded that the trade has the greatest share in GDP of Montenegro (12% in 2015) and it is necessary to maintain a sound trade sector and regulate it legally in an adequate manner.
– Trade sector is facing the great challenges such as increased competition, concentration and consolidation, the introduction of new technologies, competition from the informal sector, grey economy etc.
He has emphasized the adverse effect of moonlighting, informal employment – insurance on minimum wage and payment of income in cash. Business operations have also been burdened with high taxes, when exporting or importing.
Mr. Milovan Gojkovic, President of the Woodworking Association Board, has reminded that offering various incentives the State attracted investors, who have been creating new jobs in this sector.
– New plants were opened in Gusinje, Andrijevica, Berane, Bijelo Polje, Pljevlja etc. However, these plants are not operating or function with the reduced capacity due to the lack of raw materials. The reasons for this situation lie in uncontrolled export of raw materials in the region, as well as the delay in the adoption of planning documents and granting forests to be utilized by entrepreneurs – said Mr. Gojkovic.
There are natural resources, as well as the serious investors, but manufacturing capacities need to be modernized and developed.
– We need a serious and strict policy of managing the forest resources. We should not allow the situation in which our producers would not operate half a year due to the delay of allocating timber, since it is devastating for the state and entrepreneurs regardless of their size – he concludes.
President of the Transport Association Board Mr. Deda Djelovic presented the priorities in road, rail and maritime transport.
The entrepreneurs from this sector are committed to increasing the level of traffic safety, renewal of the motor pool with advanced, environmentally friendly vehicles, combating illegal business, improvement of the railway infrastructure and the management model of port infrastructure in Bar, the realization of investments in the Port of Kotor. The general priorities are the training of staff for transport in accordance with the needs of the economy, strengthening ties with institutions of higher education, continuous commitment to improving the regulatory framework for the operation of transport companies in accordance with the practice of developed countries, the elimination of business barriers and logistic integration of entities in the transport system.
The President of the Metallurgy Board Association Mr. Miras Djurovic stressed the importance of large systems in this sector, since they are the driving forces for small and medium-sized enterprises’ operation.
He believes that in line with the practice of developed countries Montenegro needs to have a development vision of ferrous metallurgy. In this regard, a new business model is needed in the education of staff for this purpose. Then he referred to the operation of the Institute for Ferrous Metallurgy, the only joint-stock company of Zeljezara (Iron and Steel Plant) Niksic which still operates. He seeks support for resolving the status of the Institute, which employs 70 workers, and is majority owned by the state.
– Without investments in laboratories and production of special steels and castings we cannot be competitive, says Mr. Djurovic.
Mr. Himlija Franca, owner of the company Mesopromet, says that it is necessary to create a stimulating business environment in order to increase production and create new jobs in the northern part of Montenegro, which foreign and domestic investors may provide contribution to. He pointed out the problems of funding, expensive loans of commercial banks, inadequate infrastructure and staff. In his opinion, prescription for development lies in the public-private partnership.
The ministers have said…
Deputy Prime Minister for Economic Affairs and Minister of Agriculture Mr. Milutin Simovic has said that several important conclusions can be drawn from entrepreneurs’ discussions such as expectations regarding compliance of all laws, eliminating business barriers, economy branding, developing infrastructure projects, combating grey economy, unfair competition, amendments to the Labour Law. He believes that the Labour Law, which, as he said, everyone is not satisfied with, needs to be amended so as to provide greater flexibility in the labour market and guaranteed rights of employees.
– There will be challenges in 2017 as well. A number of opportunities are not utilized in the economy of Montenegro. In cooperation with you and the other social partners we can take advantage of them for the benefit of the country and each citizen – said Mr. Simovic.
When it comes to protection of the competition, the Minister of Economy Ms. Dragica Sekulic says that the Government is not in the position to favour anyone.
– I warn you that in the previous period there was a lack of farmers’ interest in grants, introduction of business standards and establishment of clusters, says Ms. Sekulic.
She called on entrepreneurs to discuss the problems with the Government in the forthcoming period and try to find solutions together.
Minister of Labour and Social Welfare Mr. Kemal Purisic says that the amendments to the Law on enterprises have been initiated, and a new labour law which will be much more flexible in accordance with the requirements of the economy is being prepared. Shortening the disciplinary proceedings and extending the probation period to three years are being considered and the final agreement will be reached after the Social Council states its opinion.
– In my opinion the good labour law is the one which will satisfy all three parties in the negotiations. We have planned to adopt this law by the end of 2017 – says the Minister.
Minister of Finance Mr. Darko Radunovic says that the legalization of informal settlements and labour force could be the source of budget increase.
– We are thinking about reducing taxes and contributions on personal income. Taxes will not rise, but base will be expanded – said Mr. Radunovic.
Minister of Sustainable Development and Tourism Mr. Pavle Radulovic believes that the problems must be addressed systematically.
– System solutions need to be brought. It must be known who makes the decision for temporary facilities, who issues them and why – said Mr. Radulovic and concluded that tourism is development generator.
A representative of the Ministry of Transport, Secretary Mr. Zoran Radonjic says that every legal document adopted in this area needs to be previously discussed in the Chamber of Economy of Montenegro, which is a practice we will continue with.
– The Government of Montenegro has recognized the need for investment in projects of transport infrastructure as a generator of further economic development, and in this sense it allocated 283 million EUR from the capital budget for the coming year. Out of this amount, 200 million EUR are allocated for the highway – said Mr. Radonjic.
The Prime Minister Mr. Markovic says in his closing remarks that it is not coincidence the dialogue on the needs of Montenegrin society has started with the business community, the University of Montenegro and the Montenegrin Academy of Sciences and Arts, in order to boost results achieved during the decade of independence, and create new opportunities for the country and its citizens.
– The rule of law, education and infrastructure development are necessary to achieve this. We need to deal with issues of development in the short run and therefore we need an efficient administration which will take into account the ideas of business and encourage its development, the Prime Minister Mr. Dusko Markovic concludes.
