Foreign investment in Montenegro: essence and implications

Investments in Montenegro at the moment, according to Investitor, are mainly related to the purchase of real estate, while investments in the economy and production are sharply declining. According to Pobjeda interlocutors, Montenegro, as an investment destination, should have a clear vision and take concrete initiatives to realize this vision, in order to avoid a situation where investors leave the country and move to other countries that once learned from Montenegro.

Regardless of how officials currently interpret the situation, according to economic analyst and Preokret member, Mirza Krnic, foreign investments are mainly related to the purchase of real estate. "There is no doubt that such investments exist, the state receives taxes, but we have a double problem: as these investments increase, housing prices remain high and are rising, and interest rates on loans are also rising, so it is difficult for renters to solve the housing issue. On the other hand, investments in real estate lock up capital, no new values are created, no new people are hired, except perhaps real estate agencies, which has little effect on the unemployment problem," Krnić said.

He noted that regardless of the above and the constant rise in housing prices, investors still decide to buy apartments, which means that they consider it risky to invest in the economy or start production. He said investors have assessed that the risk of losing money is too high and the returns are not guaranteed, so it is not worth taking the risk. "This clearly shows the kind of environment for investment in Montenegro, and in this I see the responsibility of the current and previous governments, each of them in one way or another pushed away investors from whom the community could have benefited. By the way, of the four countries from which the largest investments are coming, none of them is a member of the EU (Serbia, Russia, Switzerland and Turkey)," Krnić said.

In general, the expert said, they have a problem in defining the values they stand for and on which they build their alliances - including economic ones. "We need investment from a system that has a culture of business on sound fundamentals. Clearly, we are not attracting such capital sufficiently. This clearly indicates what the perception of investors from developed countries is about our business environment. It would be valuable for us to have people coming in who are investing, opening new jobs and introducing knowledge and skills into our business system," Krnić said.

Milovan Novakovic, representative of the well-known international consulting company Colliers International (MRICS), stated that the current investment environment in Montenegro can be significantly improved, and because of some slowness in making strategic decisions, we risk that investors will abandon their planned investments, as time is the most important resource for them.

As he emphasized, without a clear and sustainable strategy to be implemented by experts in their fields, everything can be reduced to a wish list of good wishes.

He said that we notice that some neighboring countries are doing some things much faster, exactly the things that we need to improve. And these countries are attracting serious investments that could potentially be investments for Montenegro. "They once learned from us, and now what happens is that because of our slowness or lack of practical knowledge, lack of concrete vision, political instability, investments move to other countries," he said.

He said that because of this, it can be concluded that some investments that were planned in Montenegro have been frozen and investors are considering the "exit" scenario. "The point is not to criticize, but to state the problem and not dwell on it, but to say that it is a challenge. See what we can do to capitalize on that challenge. A challenge can turn into a benefit if we have smart people coordinating the system. We definitely need to show that we are a system that has a clear strategy for what we want. If we don't, we will not be able to justify the trust of existing investors and win it from new investors," Novakovic said.