Montenegro can turn global turmoil into economic opportunity, say analysts

Montenegro has a strong opportunity to take advantage of the global crisis and attract tourists, investments, and capital, according to economic analysts.

Tourism and the digital industry are seen as key comparative advantages, CE Report quotes FENA.

Projects in the field of green energy are also considered attractive. The country should promote its tax policies and introduce certain types of digital nomad visas, suggest Oleg Filipović, Vladimir Đukanović, and Predrag Zečević.

Montenegro is a small system whose advantage lies in its ability to quickly adapt, says economic analyst Oleg Filipović. The current global situation can primarily be leveraged in tourism. The season should be extended from 90 to at least 180 days, and off-season revenues should also be increased.

“We need to promote so-called luxury zones, as luxury destinations are currently under pressure. In our case, this includes Portonovi, Luštica Bay, and similar developments. There are significant migration flows, mainly due to war conditions, and we should make it easier for people with financial means to enter Montenegro. Another way is to attract so-called IT nomads again. We must come up with some form of tax incentives to facilitate their arrival,” Filipović told RTCG.

Due to Montenegro’s obligations in the context of EU accession negotiations to align its visa regime, citizens of Türkiye and Russia should be offered some form of nomad visas, Filipović proposes. Regarding the financial market, capital allocation is currently underway.

“One approach is to reduce taxes and increase direct investments, primarily in real estate. Another is to use a model similar to what Cyprus once applied—and still does to some extent—by becoming a kind of offshore center to attract capital,” Filipović said.

Tourism and the digital industry are also Montenegro’s comparative advantages, says economic analyst and former Wall Street broker Vladimir Đukanović. Compared to Spain and Portugal, Montenegro and Croatia lack sufficient four- and five-star hotels, which are crucial for development. Tax policies should also be promoted.

“Montenegro should follow Croatia’s example regarding capital gains tax and significantly shorten the period after which capital gains are no longer taxed. Croatia reduced this to two years, which allows it to attract a large number of investors. This is one of the key factors in today’s global financial world. Montenegro must also carefully consider its partnerships and secure energy supplies,” Đukanović said.

Montenegro has strong potential in the energy sector, Filipović adds.

“We have both wind and solar resources. If we secure investments through available funds and sell that energy primarily to the European Union, especially given ongoing government-to-government negotiations with the United States focused on energy, this could be highly beneficial. However, we must wait and see how these agreements develop,” he said.

The global economic crisis presents a major opportunity for Montenegro, according to analyst Predrag Zečević. The country has already begun attracting foreign investment through G2G agreements with the United Arab Emirates and is in final negotiations with France and the United States. These agreements should be given strong support while respecting European Commission recommendations, Zečević says.

“Over the past 15 years, G2G agreements have proven to be the most effective way to attract capital from targeted countries. As we’ve seen, they do not always proceed smoothly in parliament or constitutional courts. I believe they should be carried through, as they are an excellent tool for attracting desirable investments, particularly from Western countries. Major projects such as the Peru World Games complex and the Northern pipeline, carried out by Norway, the UK, and Baltic states, were completed without corruption. Montenegro did not invent G2G agreements—this concept originates from the European Commission,” he said.

Intergovernmental agreements should be carefully reviewed to assess their benefits, Filipović adds, while also raising concerns about the future of domestic companies.

“It is easy to sell what already generates capital. We should focus on developing sectors that currently do not generate sufficient revenue. How will we address employment issues, especially with ongoing labor migration? I would prioritize identifying and attracting companies that are essential across different sectors for Montenegro,” Filipović said.

Interest rates are already rising due to the global political situation, which may persist, and Montenegro should refinance its obligations as soon as possible, he added.

“In that direction, we should aim to attract companies and funds that operate seriously and make substantial investments, such as certain funds from the United States. I would prioritize them over European funds—not only investment funds but also hedge funds,” Filipović said.

The analysts have differing views on resistance to large investments at the local level. In some cases, local communities are justified, while in others they are not.

“Some believe that having over 100,000 beds is sufficient and are reluctant to accept new investors, even though projects like Alabar’s investment could significantly transform Ulcinj. In some cases, such as small hydropower plants or solar projects, local communities received virtually no benefits, while profits went to the wealthiest segments of society and their associates,” Zečević said.

“Anyone who comes to Montenegro, lives there, spends money, and even contributes just one euro in taxes should be welcomed enthusiastically,” Đukanović emphasized.

“Citizens, especially those with direct interests, are very aware, as this primarily concerns their property. It is necessary to ensure a reliable legal system for investors and work on reducing existing bureaucracy,” Filipović concluded.