Montenegro is one of the fastest growing and dynamic tourist destinations in Europe with well over two million international visitor arrivals in 2018, an increase of 10.2 per cent year on year. The turbulent history of this small country has left behind an invaluable treasure trove of numerous historic monuments throughout the country. The blue sea with endless beaches, restless waters of the clear rivers and beautiful mountain massifs, mixed with the spirit of the old times have given Montenegro everything needed for a memorable tourism experience. Montenegro occupies a land area of 13,812 square kilometres and shares borders with Serbia, Kosovo, Albania, Croatia, and Bosnia and Herzegovina. Its ethnically diverse population stands at around 630,000 in 2019.
The capital and largest city is Podgorica with a population of around 156,000, or 30 per cent of Montenegro’s population. While having a typical Balkan history, the city was largely rebuilt following world War II into a modern, planned city and is the home of the country’s parliament. The government of Montenegro is a parliamentary republic that gained full independence from Serbia in June 2006. Montenegro is governed by independent executive, legislative, and judicial branches. The president is the head of state, elected directly for a period of five years. The unicameral parliament of Montenegro is led by a prime minister.
The government signed a Stabilisation and Association Agreement (SAA) with the European Union (EU) in 2007 and received formal candidate status in December 2010. Negotiations for it accession continue with 32 negotiating chapters opened and 3 that have been closed so far. Montenegro also joined the World bank and IMF in 2007 and is a member of the World Trade Organisation (WTO).
Montenegro has largely transitioned to a market economy since the fall of communism. Around 85 per cent of its state-owned companies have been privatised, including the entire banking and telecommunications sectors. Positive GDP growth rates of over 4 per cent in recent years are the result of high levels of investment and growth in the tourism sector, and construction of highway infrastructure. Economic growth in 2019 will be dependent on new private sector investment and productivity gains. The fiscal deficit and growing public debt are being addressed by the government through the adoption of their ‘Montenegro Economic Reform Program 2019 – 2021’.
The service sector accounts for around 70 per cent of GDP with tourism being a major sub-sector and alone, contributing 23.6 per cent to GDP. Forthe industry sector, the main areas are steelmaking, aluminium and consumer goods, while tobacco, citrus fruits, olives and grapes are important agricultural sub-sectors.
Economic Indicators – 2018
Foreign Direct Investment (FDI) in Montenegro
The Montenegrin Investment Promotion Agency (MIPA) is a national investment agency set up by the Government in 2005 to promote foreign investments and facilitate economic development in Montenegro. The MIPA partners with foreign and domestic investors, public and private sector, international organisations and private individuals to boost business opportunity and overseas investments in Montenegro. Benefits available to investors include:
- Foreign companies in Montenegro are guaranteed equal legal treatment as local ones. Foreign investors can operate in Montenegro either as a legal entity or a private person. The term ‘foreign investor’ applies to a company that has been set up in Montenegro by a foreign citizen or foreign legal entity, whose share of investment capital is higher than 25 per cent of total capital invested;
- There is no limit on the amount of capital invested in Montenegro. Foreign investors are encouraged to invest freely within any industry and to transfer all assets, including profits and dividends;
- Foreign investors can acquire rights to real estate such as commercial property, office space, residential space and construction land. All major insurance companies around the world insure investments in Montenegro;
- Montenegro’s tax regime has become one of the most competitive in the whole of Europe with a 9.0 per cent corporate profit tax rate. Value Added Tax is 19.0 per cent (reduced to 7.0 per cent for Tourism);
- For a small country, of only 620,000 inhabitants, Montenegro offers a highly skilled work-force at competitive costs. Every year, approximately 1,300 students graduate from universities and colleges in Montenegro;
- Foreign investors can participate in local privatisation processes generally on the same terms as locals; and
- A limited liability company can be set up in Montenegro within four working days, with founding capital of one Euro, and by submitting three documents: Founding agreement, Bylaws and forms are available at the web site: crps.me.
Tourism in Montenegro
Montenegro offers its visitors rugged mountain ranges, authentic medieval villages and a picturesque strip of sandy and pebbly beaches along its 293 kilometre-long Adriatic coastline. The Bay of Kotor, resembling a fjord, is dotted with coastal churches and fortified towns such as Kotor and Herceg Novi. Durmitor National Park, home to bears and wolves, encompasses limestone peaks, glacial lakes and the 1,300 metre-deep Tara River Canyon.
Budva, is a perfect example of the contrasts of Montenegro’s tourism offering. Once a small and quiet coastal town, today it’s a centre of tourism and one of the loudest and most packed towns on the Montenegrin coast during the summer. Its life began on the headland two and a half millennia ago and has poured out of the ramparts towards luxurious yachts, new buildings, restaurants, bars, and nightclubs. Budva has its own retreat – an island opposite the city with beautiful beaches, ice cold refreshments and seafood specialties.
Montenegro is a competitive and dynamic destination with the clear strategic objective of developing a sustainable tourism portfolio whilst protecting its dramatic and beautiful natural resources. Montenegro’s coastline of 73 beaches and the spectacular mountainous north drive the tourism sector. As part of its re-branding as a ‘best kept secret’ luxury destination, Montenegro has attracted the industry’s global brands and also successfully created its own recognisable brand.
While the market is focused on hotels and resorts along Montenegro’s coast, a broader based tourist industry is being developed with Montenegro’s abundance of scenic beauty (rural tourism, cultural and historic tourism, and ecotourism) and geographic diversity. Water sports, bird watching, horse-back riding and fishing are ripe for development, and on the coast, marinas for yachts and ports for cruise ships.
Montenegrin tourism representatives hope to shift a greater percentage of the tourist trade away from low-revenue package tours into more luxurious and upscale 4 and 5-Star projects. Montenegro also plans to become a centre for business and convention meetings (MICE).
New cruise ship routes, more flights, a popular land border with Croatia and stories amongst travellers are drawing an influx of tourists to this extraordinary tourist destination. A buzz with new five-star luxury hotels and new high-end international restaurants, Montenegro is the emerging ‘must-see’ destination of the Adriatic.
Tourist Arrivals over past 5 Years
Accommodation Profile -2018
Location of Overnight Stays – Seaside (94.9%); Capital (2.2%); Mountain Resorts (1.7%); Others (1.2%)