Montenegro - Market OverviewMontenegro - Market Overview
Since regaining independence in 2006, Montenegro has adopted an investment framework to encourage growth, employment, and exports. Although the continuing transition has not eliminated all structural barriers, the government recognizes the need to remove impediments, ensure business-friendly policies,improve transparency, and open the economy to foreign investors.
Montenegro makes no distinction between domestic and foreign companies. Foreign companies can own 100 percent of a domestic company, and their profits and dividends can be repatriated without limitations or restrictions. Exceptions to this policy are the small number of cases dealing with defense-related industries.
As a candidate country on its path to join the European Union (EU), Montenegro is making steady progress in opening negotiating chapters with the EU. To date it has opened 26 out of 35 chapters and has provisionally closed two chapters. Montenegro received an invitation to join NATO in December 2015, which is historic and perhaps the most important event since its independence in 2006. The ratification process is almost complete and 27 countries including the United States have already ratified the accession protocol; it is expected that Montenegro will formally become the 29th member of the Alliance by mid-2017.
Montenegro offers foreign investors low, fixed tax rates, a business-oriented economy, significant economic freedom, a stable currency (Euro), and openness to incentivize investors. Montenegro is a beneficiary of the Generalized System of Preferences program, which provides duty-free access to the U.S. market in various eligible categories. The Euro is the official currency in Montenegro, which stabilizes financial flows and results in lower transaction costs. This is an informal arrangement with the European Central Bank, and Montenegro is not part of the Euro Zone. Private ownership is protected by the Constitution and includes equal treatment of foreigners. The IMF has cautioned Montenegro that its economic system is vulnerable to external shocks due to its high public debt-to-GDP ratio. Montenegro’s public financial situation is relatively weak, with a debt-to-GDP ratio of 65.9 percent, with forecasts of growing indebtedness based on projected infrastructure development needs.
Montenegro has a favorable tax regime with the lowest corporate tax rate in the region at nine percent; Moody's downgraded Montenegro's sovereign ratings to B1 from Ba3 in May 2016. Approximately 90 percent of government-owned enterprises have been privatized, though many larger assets remain in government hands. For 2016, Montenegro’s economy grew by 3.0 percent while the unemployment rate was 17.1 percent.
Montenegro attracts considerable interest from foreign investors. According to data released by the Montenegrin Investment Promotion Agency (MIPA), €6.6 billion have been invested in Montenegro since 2006 with the total inflow of FDI in 2016 of €640 million. Montenegro is a leading country in FDI, as measured by investment per capita in the region. Since 2006 it has averaged around 18 percent of GDP.
More than 100 countries have invested in Montenegro, with no single country dominating the market. The most significant investments have come from Austria, the Netherlands, Russia, Hungary, Norway, Serbia, Great Britain, Slovenia, and Italy, with new interest coming from the Emirates, Azerbaijan, China, Turkey, Poland, and the United States.
Montenegro Trade Development and Promotion