MONTENEGRO• Montenegro has no access to international sources of natural gas • September 2007...

MINISTRY FOR ECONOMIC DEVELOPMENTMINISTRY FOR ECONOMIC DEVELOPMENTMINISTRY FOR ECONOMIC DEVELOPMENTMINISTRY FOR ECONOMIC DEVELOPMENT

MONTENEGROMONTENEGRO

Investment OpportunitiesInvestment Opportunities

20092009

Map of Montenegro

2009, Ministry for Economic Development

Basic data

• Inhabitants 626,048

• Surface 13,812 km2

• Border length 614 km (coast 293 km)

• Capital city Podgorica (around 180,000 inhabitants)

• Old Royal Capital - Cetinje

National parks: Durmitor, Lovćen, Biogradska Gora, Skadar Lake

• Forests - 1ha per capita

• Natural lakes - 40

• Artificial lakes - 4

Why Montenegro?

Advantages: Advantages: Advantages: Advantages:

• Political stability• Macro-economic stability • Level of Euro-Atlantic integrations achieved• Favorable tax system• Stabile-well developed banking sector • Good legislative basis for foreign investors • Liberal foreign trade system• Educated and qualified labour force • Attractive space for living• Preserved environment• Simple and expedient company incorporation procedure• Advanced negotiations for WTO accession


Liberal tax system

• Value added tax – 7% and 17%

• Personal income tax – progressive rates 15%, abatement to 12%

and 9% planned for 2010

• Company profit tax – 9%

• Average customs duty – about 6%

• No double taxation

• Establishment of Free Zones

FDI in Montenegro

• €603 million of FDI in 2006

• €1 billion of FDI in 2007 (€1,600 per capita) - according to its per capita investment, Montenegro is the leader in the region

• €832 million of FDI in 2008

• Most FDI are made through privatization

• 2007/8 marked by investment in real estate

• Investments come from 107 different countries

Time of major “Greenfield” investments is ahead of us

FDI 2001-2007

2,222,283,6501,007,683,909644,333,236392,725,67652,651,69343,797,98476,386,8024,704,350TOTAL FDI

69,890,45641,952,44819,899,9074,637,3941,422,025238,194603,1261,137,363USA

85,077,32343,009,95931,773,1667,326,4081,825,002621,316521,471Serbia

105,417,52340,249,7449,877,48722,899,35614,068,57213,233,5623,753,0381,335,763Slovenia

106,413,29338,504,16226,944,1345,063,4637,774,5105,484,10220,893,2081,749,714Germany

134,983,447108,994,33118,636,9783,449,5772,015,2841,815,82171,456Cyprus

169,939,57760,765,05929,841,82573,455,5632,259,0001,887,3721,719,93110,827Austria

193,548,10975,111,92188,473,43414,601,0676,603,2307,568,2831,170,18119,993Switzerland

208,020,72970,426,93365,233,57636,098,424692,0856,598,43028,971,281United Kingdom

285,700,480187,388,32882,534,96614,030,235669,760220,31720,000836,874Russian Federation

298,070,52029,987,055118,012,036147,668,4442,402,985Hungary

Total2007200620052004200320022001

Euro

Foreign direct investment in Montenegro- Top 10

2,222,283,6501,007,683,909644,333,236392,725,67652,651,69343,797,98476,386,8024,704,350TOTAL FDI

69,890,45641,952,44819,899,9074,637,3941,422,025238,194603,1261,137,363USA

85,077,32343,009,95931,773,1667,326,4081,825,002621,316521,471Serbia

105,417,52340,249,7449,877,48722,899,35614,068,57213,233,5623,753,0381,335,763Slovenia

106,413,29338,504,16226,944,1345,063,4637,774,5105,484,10220,893,2081,749,714Germany

134,983,447108,994,33118,636,9783,449,5772,015,2841,815,82171,456Cyprus

169,939,57760,765,05929,841,82573,455,5632,259,0001,887,3721,719,93110,827Austria

193,548,10975,111,92188,473,43414,601,0676,603,2307,568,2831,170,18119,993Switzerland

208,020,72970,426,93365,233,57636,098,424692,0856,598,43028,971,281United Kingdom

285,700,480187,388,32882,534,96614,030,235669,760220,31720,000836,874Russian Federation

298,070,52029,987,055118,012,036147,668,4442,402,985Hungary

Total2007200620052004200320022001

Euro

Foreign direct investment in Montenegro- Top 10

Total

Investments in

local

companies and

banks

Capital

invested in

foreign

companies and

banks

Montenegrin

residents real

estate purchases

abroad

Selling of a

share in

another

domestic

company

Real estate

investments

Intercompany

debt

EU442.0

161.8 4.6 0.2 0.003 109 166.9

Other 390.1

98.2 1.1 1.3 0.457 210 79.0

TOTAL FDI 832.1 259.9 5.7 1.5 0.460 319 245.9

mil. euro

• Cyprus (128.8 mil euros)• Russian federation (126 mil euros)• Great Britain (69.3 mil euros)• Switzerland (65.9 mil euros)• Austria (47.2 mil euros)• Greece (41.1 mil euros)

FDI in 2008


Success stories

€22 mil in hotel industry –

investment in both the North

and South of Montenegro

Societe Generale Group

purchased 64.4% shares of

"Podgoricka banka" at

€358 /share

Owner of three hotels:

“Bluestar”, “Montenegro” and

“Splendid”, over € 100 mil

T-mobile purchased 51% of

Telecom shares for €114 mil,

additional 22% shares in stock

market. €67.3 mil investment

planned over the next 5 years

In 2002 it became the majority

owner, with 54.4% shares in

Jugopertol AD Kotor. Hellenic

paid €65 mil for shares and

invested €35 mil more.

Belgian Interbrew boughtTrebjesa brewery in Niksicfor €21.5 mil

Telenor Mobile Communication

AS is a 100% owner of the first

mobile operator in Montenegro.

A total of €90.0 mil invested so

far.

Hypo Alpe-Adria-Bank

Group opened leasing and

Bank in Montenegro

Success stories...


• Further development of private entrepreneurial initiative, which calls for an

accelerated development of national infrastructure, in order to achieve

success in broader economic freedoms, develop free competition and

create an open system;

• Significant capital inflow into new development projects, primarily

Greenfield projects, but also in export-oriented projects, labor-intensive

activities, tourism, financial sector, power supply sector, technology and

industry parks, information communication technology, etc.

Priorities


• InvestInvestInvestInvestment in road infrastructurement in road infrastructurement in road infrastructurement in road infrastructure

• InvestInvestInvestInvestment in energy infrastructurement in energy infrastructurement in energy infrastructurement in energy infrastructure

• Communal infrastructure Communal infrastructure Communal infrastructure Communal infrastructure ((((water, waste water, solid wastewater, waste water, solid wastewater, waste water, solid wastewater, waste water, solid waste))))

Pre-requisites for investment

Quality infrastructure is a pre-requisite for further dynamic economic development of Montenegro

• Spatial Plan of Montenegro (a condition for development of lowerlevel plans) has been adopted

• As part of Special Purpose Spatial Plan for Coastal Zone, 17 locationstudies (at the stage of Draft Plans) are currently being developed

• As part of Special Purpose Spatial Plan for Skadar Lake National Park,3 location studies are currently being developed

• Drafters of Special Purpose Spatial Plan for the Mt. Bjelasica and Mt. Komovi area have been selected, and planning activities have started

Pre-requisites for investment (cont.)



The following spatial-planning documents are under preparation:

• Durmitor Mountain region

• Skadar Lake region

• Multi-purpose artificial lakes on the Morača River

Privatization or PPP models:

• Power Supply Company of Montenegro (EPCG)

• Montenegro Railways Company

• Port of Bar

• Montenegroairlines

• Lovćen Insurance Company

• Tobacco Company Podgorica

• Adriatic Shipyard Bijela

• Pobjeda Newspaper

• Dairy Plant Zora

• Montenegro Post



Creating pre-requisites for investment

• New Law on Spatial Planning and Building Construction:

– a significant step towards lifting administrative barriers and simplifying the legal and regulatory framework in this sector, while preserving the environment

• Licenses and permits – positive movement

• Action Plan for elimination of administrative barriers, Barrier Elimination Council has been set up, chaired by the Prime Minister

Opportunities for investment in the energy sector

Many investment opportunities offered under “Energy Development Strategy ofMontenegro by 2025’’:

• Tender for capital increase of EPCG published in February 2009• Construction of the second unit of Thermal Power Plant Pljevlja (225 MW)• Open pit mine Maoče• Construction of 4 hydro power plants (‘HPP’) on Morača River (HPP Andrijevo,

HPP Raslovići, HPP Milunovići, HPP Zlatica)• HPP Komarnica • Construction of small hydro power plants • Construction of buildings using renewable energy sources (wind, waste, biomass,

solar energy) • Reconstruction of existing power plants• Projects on energy transmission and distribution by regions • Projects aiming to improve energy efficiency

YEAR OF ENERGY EFFICIENCY, FROM OCTOBER 2008


• Oil potential in Montenegrin seabed - 12.5 billion tons

• Potential oil reserves ≈ 7 billion barrels

• Potential reserves of natural gas - 425 billion m3 of geological reserves

• Oil supply system not planned before 2020

OIL AND GASpotential

NATURAL GAS strategy

• Montenegro has no access to international sources of natural gas

• September 2007 – Ministerial Declaration (Montenegro, Croatia, and

Albania) for the construction of Ionic-Adriatic Gas Pipelines (400 km for a

total of €230 million, Montenegro contribution is €60 million).

Tourism in Montenegro

• World Travel & Tourism Council (WTTC ) classified Montenegro four years in row as one of the three fastest growing tourism economies in the world

• 2007 – 1.1 million tourists, with 7.3 million overnights (increase of 20%), income from tourism – € 450 million (increase of 40% from 2006 )

Tourism in Montenegro

• According to the predictions of WTTC, in 2016 Montenegro will have an income of EUR 1.5 billion from traveling and tourism

• Our goal is sustainable development – economically, sociologically

as well as environmentally

• Montenegro is becoming an elite tourism destination

M O N T E N E G R OM O N T E N E G R OM O N T E N E G R OM O N T E N E G R O

Success stories

Budva region

•City Hotel Sveti Stefan – Aman Resorts 30 years

lease. Reconstruction ongoing. Opening for the

2009 season.

• Hotel Milocer – Aman reconstructed and opened

Aman Spa will begin to work in 2009 and a new

hotel in Queen’s Beach in 2010.


Success stories

Tivat region

Porto Montenegro – Port for Mega yachts• Government of Montenegro fulfilled all the prerequisites• By the end of 2009 the first phase will be finalized• Agreement has been signed with world known operator of luxury hotels and resorts – Four Seasons.


Ulcinj region

Velika Plaza (Long Beach)

Area: 14.5 million m2 (1.450 ha) - Challenge of a Lifetime - 13 km long, the longest beach in the Adriatic;

60 -100 m wide, wider zone up to 2 km

Vision:up to 30,000 hotel beds in 4 to 5 star resorts and 6 resort development zone with natural corridors

Invitation for an expression of interest responded by 5 companies. Tender to be called in next couple of months

www.velikaplaza.info

Velika Plaza covers an area of approx.

1,450 ha, some 60 % being owned by the

state of Montenegro. It is the intention of the

Government to enter into a long-term lease

agreement for Velika Plaza, with the right to

develop and operate a unique selection of

up-scale market resorts with a range of

leisure and recreational facilities. It is

expected that the resort will be a flagship

project in which the natural surrounding and

leisure facilities coexist and complement each

other.

Velika Plaza (Long Beach)


The decision on the winner of the Velika Plaza Master planning Contest and the announcement of the winner has been made in London, on

the WTM, on November 11, 2008.

The winning company is:

Van Den Oever, Zaaijer & Partners, architecten Amsterdam / Stijlgroep Landscape and Urban Design Rotterdam

Two runners-up are:• PRP Architects• Crawford Architects.

And two special commendations went to:• Archipelagos / Aedas and• SSSCCM + PM.

The winning five entries also presented their work of the Velika Plaza in Cannes, December 2-4, 2008.


Van Den Oever Zaaijer & Partners

Holland2009, Ministry for Economic Development

Van Den Oever Zaaijer & Partners

Holland2009, Ministry for Economic Development

PRP Architects

United Kingdom2009, Ministry for Economic Development

Crawford Architects

USA2009, Ministry for Economic Development

Archipelagos/Aedas Team

USA / HK2009, Ministry for Economic Development

SSSCCM+PM

Italy2009, Ministry for Economic Development

M O N T E N E G R OM O N T E N E G R OM O N T E N E G R OM O N T E N E G R O

Ada Bojana Island– River Delta

Surface: 5.2 million m2 (520 ha); Planed development: 100 ha; Vision: Development of Eco and Spa settlement up to 2500 beds. Planed hotels 4+ or 5 stars and brand name tourism operators

Unique place, rich with biodiversity

9 companies expressed interest during the public invitation. A public tender announcement for the investors is expected in next couple of months

2.7 km long and 35 meter wide sandy beach

The Bay of Valdanos

The surface of the military tourism complex : 3.2 million square meters (320 ha) Vision:Exclusive hotel resort with five stars or more and villas

Wind protected, romantic bay with 500 meter pebble beach with wooded green field, natural shade for rest and relaxation and 18,000

ancient olive trees

11 companies expressed interest during the public invitation. A public tender

announcement for the investors is launched end of 2008 and

it lasts until April 2009

Budva region


The Bay of Buljarica

Surface: 3.5 million square meter (350 ha)Vision: golf courses, resorts and villas with up to 6.000 bedsWide bay with sloping hillsides and central natural habitat1800 meters long and 20 meter wide pebble beach

The Bay of Jaz

• Green areas • Central location

• 1.4 km long • 50 m wide • Sandy beach


Tivat / Kotor region


Flower Island

Surface: 120,000 square meters

Vision: Exclusive Hotel Village Settlement with 4+ and 5 stars

Very attractive location in the Bay of Tivat

300 meters long, 200 meters wide, with a beach surface of 1200 square meters

Small sandy beach ideal for Water Sports

12 companies expressed interest during the public invitation

A public tender announcement will be launched soon


Lustica

The Government of Montenegro decided to assign the state-owned land to the newly formed enterprise: Luštica Development Company.

All the citizens of Montenegro have the opportunity to take part in that process.

End of July, the Government of Montenegro announced a public invitation for strategic partners to sell 90% of capital shares. One company applied (Orascom Hotel Development).

Estimated investments: EUR 1.1 billion


Herceg Novi region


Kumbor

Ex-military base complex, with an area of 250 000 sq.m

A public tender announcement will be launched soon

Kumbor is only 6 km away from Herceg Novi, located in the west of the Montenegrin coast


The North of Montenegro


Complex Mediteran - Zabljak

Surface: 14 000 sqm

Zabljak is a city located 1456 m above sea level, which makes it the town on highest altitude in the Balkans

A new public tender announcement will be launched soon

The location that was used as a resort is a natural jewel in the scope of the National Park ’’Durmitor’’ and Black Lake is just 200 m away.


Bjelasica and Komovi region

The mountain region of Bjelasica and Komovi on the north of Montenegro covers the area of 3,200km2, which is approx. 23% of the territory of Montenegro.

The development of master plans is underway for 1000 km2 of picturesque, completely flat territory, offering the possibility for the construction of ski resorts at minimum10 locations.

Locations will be defined and designed by a planning company that is in charge of the Winter Olympics in Sochi in 2014.

Greenfield in Tourism Industry

Location Location Location Location Location studyLocation studyLocation studyLocation study Ownership Ownership Ownership Ownership

Velika Plaza Finished (Module 1) 60% Government , 40% private

Ada Bojana In preparation 100 % Government

Valdanos Finished 100% Government (one part is

planned to be privatized)

Buljarica In preparation 80% private, 20% municipality of Budva

Flower Island In preparation 80 % Government

Lustica In preparation 100% Government

Bigovo In preparation 100% Government

Kumbor In preparation 100% Government

Complex Mediteran Zabljak In preparation 100% Government

Planning today in MontenegroHierarchy of plans in Montenegro and their mutual complianceMontenegro – investment opportunities

Real Estate Development Conference and Exhibition, Montenegro Oct. ‘08

Towards a new generation of plans in MontenegroAdopted state planning documentsSustainable development – basic principle of spatial development


Real Estate Development Conference and Exhibition, Montenegro Oct. ‘08


World Travel Market – LondonNovember 2008

Press Conference Judge Panel

MONTENEGRO at:


MONTENEGRO at:


MONTENEGRO at:


www.agencijacg.orgwww.mipa.cg.yuwww.nasme.cg.yuwww.velikaplaza.info

www.montenegroinvestments.info/www.energy-conference.com/www.bjelasica-komovi.com

Useful links


MINISTMINISTMINISTMINISTRYRYRYRY FOR ECONOMIC DEVELOPMENTFOR ECONOMIC DEVELOPMENTFOR ECONOMIC DEVELOPMENTFOR ECONOMIC DEVELOPMENT

Tel:+382 20 482 112; 482 119

Fax:+382 20 234 131

http://www.minekon.vlada.cg.yu/

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MONTENEGRO• Montenegro has no access to international sources of natural gas • September 2007...

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