Friday 22 October 2010

Montenegro Ranked Most Competitive Country in Balkans

Montenegro  rises  faster  than  any  other  European  country  in  the World  Economic Forum 2010-2011 Global Competitiveness Index
Montenegro’s  economy  ranked  more  competitive  than  many  European  Union members Montenegro’s  scores  for  corruption  and  organized  crime  are  lower  than  nearly  any other Balkan nation's.

Montenegro,  the Adriatic  republic  that aims  to become a  candidate  for EU membership by the  end  of  the  year,  is  ranked  as  the most competitive nation  in  the Balkans  in  the World Economic Forum’s 2010-2011 Global Competitiveness Report

Montenegro placed 49th out of 139 countries  in  the survey, 13 places better  than  its 2009-2010  rank. This represents  the biggest year-to-year  increase of any European country. Montenegro also beat out several EU member states in the competitiveness stakes: 

(Rankings from 1 to 139)  Rank  Score:  

Switzerland  1   5.63  
Bulgaria:   71   4.13 
Montenegro:  49   4.36  
Croatia:  77  4.04 
Malta:  50  4.34  
FYR Macedonia:  79  4.02 
Hungary:  52  4.33  
Greece:  83  3.99 
Slovakia:  60  4.25  
Albania:  88  3.94 
Romania:  67  4.16  
Serbia:  96  3.84 
Latvia:  70  4.14  
Bosnia and Herzegovina:  102  3.70 

The survey data also indicates that Montenegro is making strides in its battle to roll back  corruption  and  organized  crime.  Montenegro  has  the  second-lowest  rank  for organized  crime  among  the  nine  Balkan  nations,  and  fewer  survey  respondents  named corruption  as  “the most problematic  factor  for doing business”  in Montenegro  than  in  any other Balkan country except Romania and FYR Macedonia.

The survey data also  indicates that Montenegro is making strides in its battle to roll back  corruption  and  organized  crime.  Montenegro  has  the  second-lowest  rank  for organized  crime  among  the  nine  Balkan  nations,  and  fewer  survey  respondents  named corruption  as  “the most problematic  factor  for doing business”  in Montenegro  than  in  any other Balkan country except Romania and Macedonia. (See tables below) 
The  positive  assessment  follows Montenegro's  "Guillotine  of Regulations”  initiative, which reduced the opportunity for bribery by cutting state bureaucracy. Business people are  no  longer  tempted  to  "grease  the machinery"  of  government  in  order  to  obtain  their permits in a timely manner. 

The  results  pay  testimony  to Montenegro’s  success  in  building Western-style institutions on its path to Euro-Atlantic integration. A country’s institutional environment is  the  first  of  12  “pillars”  that  the World  Economic  Forum  uses  to  determine  the  index rankings. Montenegro once again topped its neighbors:

World Economic Forum Global Competitiveness Index 2010-11 
First Pillar: Institutions 
(Rankings from 1 to 139)  

Montenegro:  45  Croatia:  86 
Albania:  63  Bulgaria:  114 
FYR Macedonia:  80  Serbia:  120 
Romania:  81  Bosnia and Herzegovina:  126 
Greece:  84 

The  World  Economic  Forum,  based  in  Geneva,  Switzerland,  has  published  the  Global Competitiveness Index every year since 1979. Researchers compiled the index by determining the key factors that underpin a country's economy. Policymakers and investors use this information to assess a country's potential for productivity. The rankings are based on  information  from  international organizations, national  sources and a detailed Executive Opinion Survey distributed  to respondents  in all countries.


http://www.weforum.org/documents/GCR10/index.html

Thursday 7 October 2010

The interview with Mr. Petar Ivanovic, Chief Economic Advisor to the Montenegrin Prime Minister and CEO of Montenegrin Investment Promotion Agency

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Petar Ivanovic, CEO of MIPA, Chief Economic Advisor to the Montenegrin Prime Minister

PODGORICA (Montenegro), October 7 (SeeNews) - The interview with Mr. Petar Ivanovic, Chief Economic Advisor to the Montenegrin Prime Minister and CEO of Montenegrin Investment Promotion Agency, is part of the 2010 edition of see TOP 100. For the full content, please visit www.top100.seenews.com.
Q: Montenegro recorded a significant rise in FDI [foreign direct investment] during the past years. Do you expect this trend to continue in 2010?
A: The inflow of foreign direct investment to Montenegro in 2009 was record high – over 1.0 billion euro. However, this should not cloud our judgment but serve as a constant reminder. If we want to sustain the upward trend in foreign investment recorded in the past five years, we should make less mistakes and compromises, be faster and cut red-tape. The inflow of foreign investment in 2010 will depend on the readiness to implement big projects, because without a single major project, we will hardly reach the 2009 level of investment. The energy sector has come into focus and, in my opinion, this momentum should be maintained. The competitive advantages of the Montenegrin economic system compared to other countries will be crucial for a further, even bigger foreign investment influx. Although they are of major significance, tax rates are not the only thing investors are interested in. The rule of law, free trade, a smaller role for the government in the economy are important as well.
Q: Don’t you think it is too early for the opening up of the energy sector in Montenegro?
A: No, just the opposite. I think we are already late. Just to remind you, the privatisation of Montenegro’s telecommunications sector drew a lot of criticism. However, today we have three very prominent mobile operators, 12-13 internet providers, many new products, a downward trend in service charges, solid regulation and, what is most important, a telecommunications system that provides a basis for fast Business development. We need to have all this in the energy field as well. Without competition in the energy sector we won’t be able to meet the expectations of consumers, regardless of whether they are companies or households, and what they expect is a quality product and lower prices. We have already signed the [country’s] first contracts for the construction of wind power stations with Spain’s Fersa and Japan’s Mitsubishi, a tender for the construction of four hydro power plants on the Moraca river is in progress, while a tender has been opened for a solar power development strategy and for the implementation of the first project on this rapidly changing segment. Together with other already identified projects, the energy sector could attract investments of over 4.0 billion euro. investments of this type should not be choked off by bureaucratic and technocratic ways of understanding the economy. Do you remember the story about Professor Erhard? Many link the boom of the German economy after World War II with Ludwig Erhard – a virtually unknown professor of economics from Furth. He based the reconstruction of the German economy not on planning but on competition. When U.S. general Lucius Clay called him and asked how he came up with the idea of changing the regulations, which is beyond his responsibilities, he answered: “Pardon me, but I did not change the regulations. I cancelled them.”
Q: Is the economic crisis having an impact on the investment in Montenegro?
A: It depends. The crisis has not ended yet. Those companies that have made use of the crisis to restructure, cut costs, improve competitiveness and win new markets will have a huge advantage. The firms which have failed to do so, and there are plenty of them in Montenegro, will have to pay a price for waiting around, reacting slowly and delaying tackling their problems. This will be a year of great collapses. Some well known firms will start to disappear. At the same time, completely new and unknown ones will emerge, some of them will become leaders in the next 10-20 years or more. The challenge facing the Montenegrin Investment Promotion Agency is to identify precisely such firms.
In addition, never in the history has so much money been pumped into the system as has during the last crisis. If there is someone who reckons this will solve the problems with bad debt, failed real estate deals, expensive and inefficient Business operations, etc, they are under a big illusion. Economic problems have never been successfully solved by printing money. If it were possible, perhaps there would be no need to have an economic system.
Q: What do you think Montenegro should do to exit the crisis as soon as possible?
A: First, we should put in more work. I am constantly saying that value is created in the private sector, which is not as strong as many in Montenegro think. Next, we need to return to the philosophy of entrepreneurship and the strengthening of economic freedom. It seems to me that we have been neglecting this philosophy and investors have started to take note. Montenegro will miss out on its development opportunities if we systematically blend into the European Union. We have our own economic identity and should develop it further. In my opinion, yielding blindly to every request that comes from a European address will not strengthen but, on the contrary, will weaken our economy. To avoid any misunderstanding, I am not referring to the European economic values related to competition, free trade, free enterprise or the rule of law, but to those related to the quiet and less visible harmonization which bureaucratically and slowly wipes out Montenegro’s competitive advantages. And thirdly, we need to rely more on knowledge and less on political compromise.
Q: Not long ago, the Montenegrin government adopted a decision to allow Business people to receive a Montenegrin passport by investing in the country. How would you comment on this decision?
A: As a logical step in the further democratisation of the society! If we talk about the concept itself, it’s not news. The opportunity to get a Montenegrin passport already existed although this fact is hardly mentioned in any of the recent comments. However, with the new [citizenship programme] guidelines, this sphere becomes regulated in a more transparent way. There are more criteria. One of them is an investment of at least a million euro in the core capital of a new Business, employment of 20 Montenegrin citizens, implementation of new technologies and an increase in exports. Do you see anything that is bad for Montenegro, its citizens or for our economy in such criteria? If [Portuguese football manager Jose] Mourinho agrees to become a trainer of some football club in Montenegro and is successful, everyone will support the idea that he receive Montenegrin citizenship. But if we succeed in bringing a Mourinho into the economy and he manages to provide work for our citizens who are now jobless and increases exports, then the matter becomes controversial straight away.
Q: But is there potential for abuse that would, for example, lead to the laundering in Montenegro of the money of rich people or people that do not operate within the confines of law?
A: Firstly, the [citizenship programme] guidelines set out the criteria for assessing whether there is economic interest for Montenegro in someone receiving a citizenship. This means you will not automatically receive citizenship if you have invested a million euro and met the remaining criteria I have already mentioned.
Secondly, as far as money-laundering is concerned, all indicators point to the use of cash in Montenegro decreasing from year to year. All kinds of cross-border transactions are made through A-list banks which have well-developed procedures to trace the origin of the money. Banks do not deal with perception problems, respectively with the problem whether we think someone is laundering money, but they deal with the practical problem whether the origin of the money meets the legal requirements of this country or not. This further means that, if an investor arrives who wants to invest his money in Montenegro, he should transfer this money from his parent bank through a foreign bank that is on the A list to a bank that is active in Montenegro and only then set out to do Business. It means such an investor should first scam the bank in his home country, then one of the correspondent banks and, eventually, one of the local banks before beginning his operations in Montenegro.
Thirdly, there will always be good and bad people, good and bad investors, those who respect the laws and those who violate them. Nevertheless, the decision making instruments are in the hands of the Montenegrin institutions and not in those of potential investors who would try to abuse this mechanism.
Q: Are there any other criteria to obtain Montenegrin citizenship?
A: Yes, there are criteria applied to individuals who buy real estate on Montenegrin territory worth at least 1.5 million euro, on which they pay a value added tax, as well as criteria that apply to combined requirements for the purchase of real estate and securities and for making a deposit, on the one hand, or a donation to the Montenegrin budget, on the other, all with a total value of 500,000 euro. The verification process and procedures are the same as the ones for the investors, although here the target group is different and comprises top experts and Business people with irrefutable international reputation.
Q: What have been the first reactions of foreign businessmen and investors to the [citizenship programme] guidelines the Montenegrin government has adopted?
A: The first reactions have been positive and dominated by optimism that Montenegro, as a young country, could attract the attention of prominent Business people in this way, which would further boost our image and raise Business standards. Business is like oil, it does not mix with anything else than Business! I hope that the standards of behaviour will also change fast, especially on the political arena. It would be great when the mindset in Montenegro also changes a little bit, but this will happen. It all takes time!
Q: During your contacts with investors, have you ever experienced a desire by some of them to obtain Montenegrin citizenship?
A: Yes, I have, but not as much as people here might think. Generally, people in Montenegro pay very little attention to the efforts to understand the meaning of the term competition and the effects that competition produces. Nowadays, the competition among the countries vying to attract people who have money to invest is bigger than ever! The largest number of such people has no need to obtain another citizenship unless they see some benefit in getting it. This benefit should be provided by the system we are building. For example: lower taxes, better education, better health services, greater ease of doing Business, better connections with the world, etc. If these benefits do not exist, then there will be no need to seek citizenship. During a Formula 1 race in Monte Carlo [racing team owner] Gianni Agnelli once told a curious journalist: “They have a faster car. We have a faster driver. We could improve the car. They cannot improve the driver.” Foreign direct investment in Montenegro is the driver and we have to adjust the further development of the system to him.
FOREIGN INVESTORS - SUMMARY
In the past five years, Montenegro has not only recorded a continuous rise in foreign direct investment but has also been constantly increasing the number of active foreign companies (in the 2005-2009 period this number rose from 1,145 to 5,070). At the same time, the number of the countries the foreign investors are coming from has also increased to 86, which indicates the very high level of openness our economy has.

Tuesday 5 October 2010

Adriatic’s Answer to the Côte d’Azure

Adriatic’s Answer to the Côte d’Azure

Montenegro property seems to be back on the map. With an array of developments of luxury holiday homes, hotels and marinas, it is little wonder the country has been grabbing headlines across Europe. Tourist numbers have increased by seven percent and the country being named as one of the top ten destinations for luxury travel by Lonely Planet is certainly helping to reinforce the buzz.
The crisis hasn’t been kind to Montenegro. According to the International Monetary Fund, the country’s economy contracted by seven percent in 2009. With a quarter of the Montenegrin economy relating to tourism and the property sector being one of the main drivers of growth prior to recession, the government is actively looking for real estate investors. The hope is that such investments will increase employment and bring long-term capital to the struggling economy. And it seems its wishes are coming true – though this is perhaps not surprising considering the country’s massive potential.

Luxury potential

It is going to be a busy autumn on the Montenegrin coastline with numerous new resorts and marina developments springing up, particularly in the area between the Bay of Kotor in the north and the island of Sveti Stefan, near the popular Budva resort. These include Porto Montenegro’s super yacht marina and accompanying development of holiday homes near Tivat; Orascom’s development of a marina, town centre, commercial facilities and 2,350 apartments over 6.8 million square metres on the Luštica peninsula, also near Tivat; and The Royal Montenegro Grand Resort near Sveti Stefan.
Close to Porto Montenegro lies perhaps one of the most attractive developments in the country – the island of Sveti Marko, the only ‘island resort’ in Europe. The island used to belong to Club Med but will now host a Banyan Tree hotel, 100 bungalow villas, and 74 more spacious villas as well as boutiques and entertainment premises – all due for completion by 2014. The bungalow villas will cost from EUR 420,000 and will be sold on a leaseback basis. This is in line with the government’s efforts to make its property market more attractive for investors by introducing new models of properties to sell including leaseback, timeshare and fractional.
As the recession seems to be easing in the development aspect of the sector, prices have stabilised following a surge in the summer of 2008. Some developers are now willing to give 30 percent discounts on already lowered prices and some sellers would go as much as 50 percent lower, depending on the urgency to sell. The prices vary – while a tiny studio in Kotor old-town would cost over EUR 200,000, a 100-square metre apartment in Herceg Novi old-town would cost the same. New turnkey apartments cost from EUR 900 per square meter upwards, depending on location and closeness to the sea.

The other side of the coin

But the news isn’t uniformly good. Miramax, the Russian development company, is reported to be moving out of its offices in Budva. The company has been at the centre of corruption charges over its Astra Montenegro development on the attractive hill of Zavala near Budva. The luxurious development has seemed doomed from the very beginning with reports that building works were started without acquiring the regular building permit. With 60 percent of construction now complete, Miramax has run out of cash and the works have stalled since last year. Those who have paid EUR 6,000 per square metre in advance for apartments that are now unfinished are looking for justice.
This is not the sole example currently shaking the Montenegrin property market. Banks in Montenegro are following in the footsteps of their European partners and making it almost impossible to acquire a loan. The result is that the number of unfinished sites for sale has increased. While developers elsewhere have proved reluctant to lower their prices and preferred to wait for better times, those in Montenegro are willing to acknowledge the current realities of the market. As a result, bargains can be found. The other explanation for this willingness to lower prices is the lengthy procedure of acquiring planning permission in Montenegro. This means that land owners who had to wait for their building permits during the worst of crisis now have land they bought cheaply available for sale – complete with planning permission.
Though the coastline remains the main attraction for investors in Montenegro, the north of the country is increasingly becoming popular with profit seekers, especially the areas around Bjelasica, Komovi and Durmitor mountains. In short, there are many attractions in Montenegro – and it seems the country is attracting the right investors to justify its impressive ranking by Lonely Planet.








http://www.sloveniatimes.com/en/inside.cp2?uid=DBD3E4C3-C8CE-3108-5EF0-961AA5E8D5A6&linkid=news&cid=AF88828F-AB51-3532-9238-96209D725982

Montenegro on 4th place among most popular buyer's destination in Russia

Russian overseas property portal 1-Property.ru has published figures on the most popular buyer destinations among its Russian visitors.

In the July and August, the portal recorded 359,173 searches.   Interestingly, 60% (215,504) of the searches were for apartments and condos which perhaps reflects a preference among mass market Russian buyers to purchase in larger developments where their friends already own property.

More predictably the top overseas buyer destination was Bulgaria with the country topping the top 30 country chart and Sunny Beach and Sozopol coming first and third respectively in the top 50 regional table.

The second most popular destination is Spain with the country coming second in the country table and the Costa Blanca in the same position in the top 50 regional list.

Increased interest in Turkey, Italy and Egypt



Although we have no like-for-like figures as it is the first time aiGroup have published their data, Turkey, Italy and Egypt appear to be more popular than we analysed the market in 2008 using Yandex figures.

Although the increases may be a statistical error, the conclusion certainly chimes with our experiences recruiting speakers and delegates for our forthcoming Russian Summit event in Moscow.

Misleading numbers?


The figures from aiGroup provide interesting reading but the lower end of the market is so large it is undoubtably skewing the figures.

During our programme research for Russian Summit it became clear that there are actually three core segments to the Russian buyer market:

  • (Lower) Middle class buyers – Under €100k with Bulgaria and Montenegro accounting for the lion’s share of volume
  • Investment segment – A growing section of the upper middle class (business owners) who are looking for secure investments in “safe” locations. 
  • High-net worth individuals- Multi-millionaires buying second homes for lifestyle in top cities and affluent holiday home destinations around the world.
The top line figures are interesting but the Russian buyer market is so big, they don’t necessarily reflect the  size of the opportunities available on a micro level.
For more information on the Russian buyer market, please visit www.russiansummit.com.

Top 30 countries

    
  1. Bulgaria — Under 5%
  2. Spain — Under 5%
  3. Turkey — Under 5%
  4. Montenegro — Under 5%
  5. Cyprus — Under 5%
  6. Italy — Under 5%
  7. Greece — Under 5%
  8. Germany — Under 5%
  9. Czech Republic -  Under 5%
  10. Egypt  - Under 5%
  11. Croatia — Under 5%
  12. France — Under 5%
  13. Finland — Under 5%
  14. Hungary — Under 5%
  15. United States — Under 5%
  16. Switzerland — Under 5%
  17. United Arab Emirates — Under 5%
  18. Panama — Under 5%
  19. Serbia — Under 5%
  20. Latvia — Under 5%
  21. Australia — Under 5%
  22. Israel — Under 5%
  23. Portugal — Under 5%
  24. United Kingdom — Under 5%
  25. Malta — Under 5%
  26. Albania — Under 5%
  27. Austria — Under 5%
  28. Ukraine — Under 5%
  29. Costa Rica — Under 5%
  30. India — Under 5%



Top 50 regional searches



  1. Sunny Beach (Bulgaria)
  2. Costa Blanca (Spain)
  3. Sozopol (Bulgaria)
  4. Alanya (Turkey)
  5. Herceg Novi (Montenegro)
  6. Prague (Czech)
  7. Paphos (Cyprus)
  8. Calabria (Italy)
  9. Hurghada (Egypt)
  10. Limassol (Cyprus)
  11. St. Vlas (Bulgaria)
  12. Northern Cyprus (Cyprus)
  13. Bar Riviera (Montenegro)
  14. Budapest (Hungary)
  15. Antaliya, Konyalty (Turkey)
  16. Crete (Greece)
  17. Malaga (Spain)
  18. Nesebr (Bulgaria)
  19. Halkidiki (Greece)
  20. Florida (USA)
  21. Bansko (Bulgaria)
  22. Varna City (Bulgaria)
  23. Alicante (Spain)
  24. Costa del Sol (Spain)
  25. Costa Brava (Spain)
  26. Cavarna (Bulgaria)
  27. Mallorca (Spain)
  28. Belek (Turkey)
  29. Golden Sands (Bulgaria)
  30. Kemer (Turkey)
  31. Costa de Almeria (Spain)
  32. Dalmatia (Croatia)
  33. Budva (Montenegro)
  34. Kushadasi (Turkey)
  35. Pamporovo (Bulgaria)
  36. Berlin (Germany)
  37. Dubai (United Arab Emirates)
  38. Sutomore (Montenegro)
  39. Antaliya (Turkey)
  40. Panama City (Panama)
  41. Nice (France)
  42. Provence-Alpes-Cote-d`Azur (France)
  43. Kotor (Montenegro)
  44. Burgas (Bulgaria)
  45. Athens (Greece)
  46. Bodrum (Turkey)
  47. Sharm el-Sheikh (Egypt)
  48. Dobra Voda (Montenegro)
  49. Jurmala (Latvia)
  50. Camyuva (Turkey)

Top Property types


  • Apartment / Condominium — 60%

  • Villa / Detached House — 22%

  • Country House / Finca — 6%

  • Plot Only — 3%

  • Town House — 3%

  • other — 6%


  • Interest by price bracket


    < 50.000 EUR — 25%
    50.000 EUR - 150.000 EUR — 32%
    150.000 EUR - 300.000 EUR — 17%
    300.000 EUR - 500.000 EUR — 6%
    500.000 EUR - 1.000.000 EUR — 6%
    1.000.000 EUR - 2.000.000 EUR — 5%
    > 2.000.000 EUR — 6%










    Russia 50 top buyer's destination