Montenegro sees a boom in foreign investment

1109.jpgDue to free market economy and low taxation, Montenegro received 505m euros in Foreign Direct Investment (FDI) last year. According experts, FDI is expected to increase to 850m euros this year — and continue to rise progressively.

With a population of 620,000, Montenegro stands third in Europe in investment per capita, after Estonia and the Czech Republic.

“Rising investment shows that we have good prospects in further development. We estimate around 850m euros in FDI this year,” said the Montenegro Investment Promotion Agency (MIPA) CEO, Petar Ivanovic. “Foreign investments have been steadily rising since 2004.”

The biggest investments in the country stem from the financial sector. New investment funds, well-known banks and broker’s houses have entered Montenegro’s market.

According to MIPA, tourism is a close second in bringing in investments, with the construction of new, or reconstructing existing, hotels. As Montenegro’s economy is mainly based on tourism, an increased number of foreign guests — around 450,000 — are expected to visit the Montenegrin coast this year, 30% more than last year. More than half a million tourists are expected from the former Yugoslav republics — Serbia, Bosnia and Herzegovina and Macedonia.

“If we want to develop elite tourism, we must improve our service sector,” said Ivanovic.

Industry is third in terms of attracting investment, and transportation sector places fourth.

Norway-based Staatkraft is ready to invest a starting sum of 1.5 billion euros in the Montenegrin energy sector. “The plan is to build new hydro plants, with the aim for Montenegro to become an energy exporter. In addition, a United States-based company, Bechtel, plans to invest in the road infrastructure across Montenegro,” Ivanovic said.

Domestically, some have said there is too much Russian investment. The Russian Federation has purchased the aluminum factory in Podgorica and a bauxite mine in Niksic. However, according to Ivanovic, Montenegro should not curb the investment freedom of foreign investors.

“Curbing investment freedom is discrimination. It is important to remember that foreign investors do not pass laws, they are not in the parliament, in the government and its agencies. They are not responsible for the rules,” he said.

All of the major investment in the new country is also expected to draw a type of more personal financing. By improving the infrastructure of the area, with money being ploughed into roads, airports and railways, many individuals are not searching the country’s real estate prospects.

According to a report last week by real estate experts Colliers International, the property boom in Montenegro has grown by 400% — fostered by investors from the UK and Russia.

This constant trend in property investment comes on the heels of a report by the World Travel and Tourism Council which said Montenegro is expected to become the fastest growing travel and tourism economy in the world.

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