1. Doing Business in Montenegro Mr Milorad Katnic Deputy Minister of Ministry of Finance

2. Basic Economic Facts 20042005 GDP real growth2.7%4.1% Budgetary deficit2.1% 1,6% Inflation rate4.3%3.5% External public debt32.7%30.6% Total public debt44.8%40.1% Current account deficit9.2% Unemployement rate22.6% 21,6%

3. Economic Reforms - Basic elements of concept - Openness Accepting a credible currency (EURO) Low level of business regulation Low level of taxation

4. According to OECD, Montenegro is champion in the region for business registration Romania Macedonia Montenegro Albania Moldova Croatia Bosnia and Herzegovina Serbia 0 10 20 30 40 50 60 70 80 024681012141618 Number of procedures to register a limited liability company Number of days to register a company Bulgaria

5. Bussines Regulation Business entry: –Requared amount of capital for Limited Liability Company is 1 € –Procedure reacquires three documents and it takes four working days Business exit: – Law on Bankruptcy: maximal length of liquidation process – 8 months

6. Bussines Regulation National treatment of foreign investors Free movement of capital is introduced with the new Law on Capital transactions Free profit repatriation EURO is legal currency 99% of prices are freely determined Government tries to identify and eliminate various business barriers

7. Tax Regulation Value Added Tax – Flat rate 17% Personal Income Tax – progressive rate 15-22% Corporate Income Tax – 9% Average tariff rate approximately 6% Challenges are further simplification of the tax system, continual reduction of the government expenditures and tax burden and compliance with eurozone Mastrichts criterion

8. Privatisation and FDI After slow down in 2003 the FDIs increase in 2004 and especialy in 2005 Goal for 2005 achieved in the I quarter with succesful privatisation of Telecom In first nine months FDI reached 231.8 mln euro Further privatizations in 2005: KAP, Podgoricka Bank, Shipyard, part of the energy sector, hotels and military property

9. Privatisation and FDI (1)

10. Privatisation and FDI (2) Telecommunication – 100% private ownership; Banking – 90% private ownership; Capital market – 100% private ownership; Services – 100% private ownership; Gasoline import and distribution – dominante private ownership; Tourism – mostly private ownership (just a few hotels remain in majority ownership of the state); Industry – mostly private ownership;

11. Banking Sector – Positive trends Deposits increase Decrease of interest rate Concentration Privatization

12. Capital market Over 151000 transactions have been made in period 2001 – 2005 with turnover of 226.4 mln € About 110 mln € of foreign capital is invested in Montenegro by buying securities General capitalization is 560 mln € in September 2005. which is 34%GDP 2001 10,8 € mln € 2002 14,3 € mln € 2003 43,5 € mln € 2004 42, 8 € mln € Sep-05 114,8 mln € TOTAL 226,4 mln €

13. Stock Exchange Indexes

14. Growing sectors -Telecommunication- Total revenue was increased for 90% in period 2001 - 2004 Total revenue in 2004 reached 11% of GDP (record in the region) 1.1 mobile phone per capita (8/2005) 60.43 SMS per capita (8/2005)

15. Growing sectors -Tourism- For the first eight months on 2005 Montenegro has been visited by 666.018 tourists which is 16.83% higher than in same period 2004 Total tourism revenues in the first eight months of 2005 were 21.8% higher than in same period 2004 According to the WTO latest research Montenegro is world’s fastest growing travel and tourism economy in the world

16. Do you need a good reason to invest in Montenegro? 1.We treat foreigners and nationals equally 2.We are champions in business registration procedures: you can register a Limited Liability Company for 1 euro, within 4 working days and by submitting three documents. 3.The Euro is our national currency. 4.There are no restrictions on ability to remit profit, dividend or interest. 5.We do have the lowest corporate tax rate in Europe – 9%. 6.Value added tax is one of the lowest in Europe – 17%.at rate. 7.Personal income tax is progressive with rates between 15.5 and 22.5%. 8.Montenegro has access to the Adriatic Sea. 9.Montenegro has over 180 sunny days per year. 10.Visas are not required for Montenegro.

17. Welcome to Montenegro and have a good business! Ministry of Finance of the Republic of Montenegro 81000 Podgorica, 2 Stanka Dragojevića Street tel: +381 81 242 835; fax: +381 81 224 450; e-mail: mf@mn.yu www.ministarstvo-finansija.vlada.cg.yumf@mn.yu