Could you give our readers an overview of the current macro-economic situation here in Montenegro and your projections for the next year?
The economy of Montenegro is not in a very good shape. After almost a decade under the sanctions, being closed and not having real exports and imports, we have not accepted new programs for companies. The problem was also in the market itself since all our companies were from the former Republic of Yugoslavia and now those big entities obviously cannot survive. They did not focus on trying to find new markets and in creating new programs that would produce competitive goods.
We have some companies which were very good in the last three or four years in finding new markets, selling their goods abroad and produce competitive products either in Montenegro or in former Yugoslavia or abroad. Beside those companies, we have quite a big number of companies which have not managed to expand. Therefore, we are trying to visit all those companies, to solve the problems they have and try to promote programs that will make their products more competitive. For this, we need new know-how and foreign investments.
We have numerous companies and projects which are very profitable, and right now we are in the process of applying new institutional system. We have adopted the Law on Foreign Investments, Privatization Law, and Central Bank Law. This is something that will provide more confidence to foreign investors. We think that the role of the state will be to provide the rules of the game. As you know, we have accepted the DM as an official tender in Montenegro, so there is no more uncertainty about inflation and profit returns of foreign companies.
Another aspect is the importance of diversifying the economy. You have important dependence on aluminum, with 50 % of GDP and 70 % of exports from the aluminum industry. What is your plan to diversify the economy and to prop up other industries?
The future for this lies in SMEs. One of our first tasks will be to develop and motivate people to get loans and establish SMEs. Those companies can follow the example of big entities such as KAP and generate a number of products for the final use of big companies.
There is also the possibility for some of the companies that are not very efficient to try to establish a healthy nucleus and start producing export oriented products. They should continue with this process and spread it to other departments of the company and other factories.
It is of highest importance to turn ourselves towards an efficient manner of working. Therefore I am now trying to see what goods we import and what type of business advice we can offer to people who are either unemployed or have taken salaries and left the company. We are trying to find out what they can offer to us and what we can offer to them to start SMEs.
We will also insist on organizing this through the Agency of SMEs by establishing partnerships. For example, 5 or 10 persons who are leaving the company and receive the redundancy payment can be trained and be given programs for development.
What are the sectors that you privilege for diversification?
The strategic orientation of Montenegro is the development of agriculture, tourism and all service industries. The Ministry of Economy is covering telecommunications, energy, mining and heavy industry.
One of the industries which have good chances for development is the food processing industry. We have plenty of companies in Montenegro which can work and export the final products at competitive prices.
We also have a high potential in the metal processing industry: beside KAP, we have steel works and within both of these we have a lot to offer to foreign investors.
The third industry with good chance for development is the textile industry. Unfortunately, some of the factories in Montenegro are doing just loan jobs.
We will go ahead with the procedure of privatization for all these companies through the privatization plan and of course through tenders. We are eager to attract as many foreign investors as possible. For most of these companies we are aware that we have a surplus of employees but with the help of the state we will apply the social program for redundant workers.
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When and how is KAP going to be privatized?
KAP is the biggest and one of the most important companies in Montenegro. Over the last period KAP was struggling quite a lot. Right now it is using 100% of its production capacities. Therefore, everything is going on very well at the moment and by the end of the year we will have the privatization strategy ready. We have already started the privatization of downstream activities and by the end of the year we will prepare tender documentation for the privatization of KAP.
What have been some of the most successful programs for the modernization and restructuring of KAP?
USAID was of great support not only to KAP but to the whole Montenegrin economy, especially for companies in the process of negotiations with foreign creditors. We have three foreign experts who are now part of KAP management. According to my information they are doing a very good job there. It is very important for us to have people who have experience in communication and negotiations with foreign companies. Since they have a lot of contacts they are very much aware of what the current trends in this business are.
Regarding the energy sector, we have heard about the possibilities of off-shore oil discoveries. How will this affect Jugopetrol's operations and its proposed privatization?
Jugopetrol will also be privatized very soon. The process was initiated two years ago, just before NATO air-strikes in 1999. The privatization process was stopped at that time and the interest of foreign investors for the company decreased. However, we are now ready to go ahead with the privatization of Jugopetrol. With regards to the possible findings of oil or gas, they are the property of Montenegro and even though Jugopetrol is conducting the research, the exploration concessions will not be its property, since it is the Ministry who will be issuing these concessions.
What is your role, as a Minister of Economy, in attracting foreign investors?
As a Minister of Economy, I will try to be involved, very often, in the companies but not as a manager or someone who will do the job of the manager. I see my role as someone who will work on an institutional level on legislation such as the Company Law and the Labor Law, in order to gain the trust of foreign investors and at the same time stimulate the confidence of domestic entrepreneurs, people who have money and want to establish new companies. This is the priority in the process of attracting foreign investors.
Secondly, our mission is to try to bring back some companies on solid foundations, to restructure them and modernize them, as they are companies which have a future. Some of the companies need, for example, just DM 100,000 or DM 200,000 of foreign investments to buy new tools for cost effective production. Few of them already have contracts with partners abroad.
I see the state as a mediator between companies and banks and as a negotiator for talks with foreign partners.
Until recently you were Chief of the Prime Minister's Cabinet and now you are handling this important portfolio, the Ministry of Economy. What has been one of the biggest challenges that you have faced?
There have been several big challenges, but for now one of the biggest would be to provide stable source of electric energy in Montenegro by the end of the year and I think that it is the most important task at this moment since we have a shortage of electric power.
The other challenge is to attract foreign investors not just for the development of companies but also to attract greater investments for the well being of the country as a whole. This will result in employment generation and growth of the economy either through privatization or through completely new foreign investments. I think that Montenegro has a lot to offer to foreign investors and they will recognize it.
What would be the final message that you would like to send to our readers who are investors looking for new opportunities?
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