Investment ambient and opportunities of Montenegro

Towson, April 12th 2010.

H.E. Miodrag Vlahovic Ambassador of Montenegro to United States

Macroeconomic data2006 2007 2008

GDP growth % 10,09 13,5 11,0

Inflation % 2,0 6,7 4,0

Employment growth rate % 4,4 5,7 3,7

Unemployment rate % 14,7 12,2 10,8

Export growth % 36,9 14,6 12,1

Import growth % 54,7 20 8,5

Trade balance % of GDP 31, 59 35,87 33,27

Deficit/surplus % of GDP 3,4 3,1 0,7

Public debt % 25,15 21,15 19,97

Productivity growth (GDP per capita) % 3,5 1,3 3,2

2009: GDP growth -4%, Deficit 2,6% of GDP-a (90 mil €), Inflation-app. 3%

Investment IncentivesThe Law on Foreign Investment – 2000 (Amendments 2007)

Corporate income tax rate – 9% - lowest in the region

Value added tax – 17% (7% for tourism and IT products;

0% for some basic products) Personal income tax –12% in 2009 and 9% in 2010 42 agreements avoiding double taxation Average customs duty – 6,6% Business registration procedure – 4 days

Advantages• Political stability• Macroeconomic stability • Level of achieved Euro-Atlantic integrations (EU and

NATO)• Achieved level in negotiations for WTO accession• Efficient and transparent tax system • Reformed banking sector• Simple and fast business establishment• Liberalized foreign trade system (in accordance with

WTO)• Educated and qualified labour • Attractive space for living• Preserved environment

Good basis for foreign investors

“Foreign investor” > 25 % of total capital investedForeign companies in Montenegro are guaranteed

equal legal treatment as local onesNo limit on the amount of capital invested in

MontenegroCEFTA membershipFTA – Free trade agreement with Turkey and Russia

FDI in Montenegro2006-2008 FDI per capita 1.000 €

First nine months of 2009 FDI 857,5 €; 15,3% more then in 2008

Companies and banks – 628,2 million €

Greenfield investments 3,338 billion € in 2008

FDI in Montenegro by countries 01.01. – 30.09.2009.

Italy – 439.608.540,94 € Russian Federation – 49.070.450,70 € Austria – 43,172,143.28 € Great Britain – 41,076,071.75 € Cyprus – 36,198,692.75 € Hungary – 30.380.518,01 € Netherlands – 29,767,341.74 € Switzerland – 26,383,175.37 €

Montenegro – success story in 2009

Electric Power Holding Company of Montenegro – EPCG

Closure of transaction on 30th of September 2009

A2A registered as owner of 43,7% of the shares of EPCG

To increase power of production capacities on 90 MW

Provide profit of 300 million €

Structural and legislative reforms Labor Law

Decrease of taxes

Concession Law

Property Law

Construction Law

Elimination of business barriers

Improvement of infrastructure (transport, water

supply, electricity supply, treatment of waste and

waste waters, IT)

…

Major results in privatization processTelecommunication – 100% private ownershipBanking sector – 100% privatizedCapital market – 100% private ownershipAgriculture – 100% private ownershipServices – 100% private ownershipOil import and distribution – 100% private ownershipTourism – mostly private ownership

EBRD – small scale privatization 3.7 (evaluation scale 1-4+)

– large scale privatization 3.3 (evaluation scale 1-4+)

Planned privatizations (1)Montenegro Airlines

National flying company

99,88% share owned by the Government of Montenegro

Five Fokker 100s and two Embraers 195

In September 2009 adopted model for capital increase of 30%

Planned privatizations (2)AD “Montecargo”

Company provides services of transportation of cargo Announced a public tender for sale of the majority stake in

AD “Montecargo” in October 2009 Acquisition of a majority stake – 87,6358% of total capital

Tobacco Company Podgorica

Announcing a public tender for the sale of the majority stake in the Tobacco Company is planned for 2010

Acquisition of a majority stake Basic activities – primary processing and preparation of

tobacco, cigarette production, whole sale and retail sale Installed production capacities enable monthly processing

of 400 t cigarettes (4800 t/year)

Planned privatizations (3)HHydro ydro PPower ower PPlants on lants on MoračMorača a RRiveriver

HHPPPP Andrijevo Andrijevo HHPPPP Raslovići Raslovići HHPPPP Milunovići Milunovići HHPPPP Zlatica Zlatica

■■ Total installed capacityTotal installed capacity 238 238,4,4 MWMW Annual Annual productproductionion 721 721 GWhGWh Time frame for construction of all power plantsTime frame for construction of all power plants 6 6 yearsyears Construction costsConstruction costs 540540 millionmillion €€

Planned privatizations (4)Adriatic Shipyard “Bijela”

Announcing a public tender for the sale of the majority stake in the Institute “Adriatic Shipyard “Bijela” is planned for 2010

Acquisition of a majority stake Company is the largest ship repairing yard in the southern Adriatic Reparation of navigable vessels of all types and for all purposes of up to

120.000 deadweight capacity Capacities for manufacturing of navigable vessels – barges for various

purposes with and without own drive, pontoons, working platforms, and other steel constructions

Shipyard field in area of 120.914 m2

LLC “Maritime Affairs” Bar

Company is in ownership of “Port Bar” Announced a public tender for sale of 100% stake in LLC “Maritime Affairs”

Bar in October 2009 Concession for the period of 30 years

Health Institute “Simo Milošević”

Multidisciplinary health centre Total area of facilities: 86.206 m2 Announcing a public tender for sale of the majority stake in the Institute is

planned for March 2010 Acquisition of a majority stake – 56,4806% of total capital

Hotel-touristic company “Ulcinj Riviera”

Service and tourist company Hotel “Bellevue”. Capacity - 770 beds, consists of three pavilions: Avala, Borik

i Cer. Accompanying facilities include: two restaurants, cocktail lounge, terrace, souvenir shop etc.

Hotel “Olympic”. Capacity - 252 beds; rooms: 24 single, 96 twin-bedded,12three-bedded. Accompanying facilities: swimming-pool, terrace, congress hall etc.

Car park “Neptun” around 60.000 m² Car park “Češki kamp” around 70.000 m² Announcing a public tender for the sale of the majority stake in the HTP

“Ulcinjska rivijera” is planned in 2010 Acquisition of a majority stake (60,7311% of total capital)

Planned privatizations (5)

Thank you for your attention!

H.E. Miodrag Vlahovic, Ambassador of Montenegro to United States