Decree on fostering direct investment

The Decree outlines the financial incentives for new investment in Montenegro and aims to improve the business environment and enhance the competitiveness of the economy. The Decree aims to attract new investors, increase employment, in particular in the less developed areas, and balance out regional disparities. Availability of adequate incentives will directly influence the investment-related decisions of the potential investors considering positioning themselves on the Montenegrin market.

The investors implementing investment projects in Montenegro are eligible for the financial incentives approved by the Government of Montenegro.

The funds to incentivize investments are allocated following a public announcement. Eligible investment projects include those of minimum worth of €500,000 which generate at least 20 new jobs over the course of three years, from the date of signing the agreement on the use of funds (in the Capital City and the southern region), or those worth at least €250,000 which generate at least 10 new jobs (in the northern and central region, excluding the Capital City). The incentives range from €3,000 to €10,000 per new job. In addition, any capital investment in excess of €10 million and generating at least 50 new jobs is eligible for incentives of up to 17% of its worth. The Decree also envisages the possibility to reimburse the costs of construction of the infrastructure required to implement the investment project.

According to the Decree, foreign investors become eligible to access the funds if they set up a company in Montenegro.

The stages of the procedure for allocation of the funds to foster foreign investment:

The amount is set at up to 50% of the eligible costs of implementation of the investment project in case of large companies, up to 60% for medium-sized companies and up to 70% for small companies.[1]

Funds amounting to up to 17% of the total value of the investment project may be allocated for capital investments without prior scoring procedure, in line with the Decree.

More information on the Decree on fostering direct investments is available at: http://www.srp.gov.me/naslovna/uredba_investicije/156942/Nova-Uredba-o-podsticanju-direktnih-investicija.html.

 

  • Cluster Development Programme in Montenegro

A comprehensive legislative, strategic and institutional approach to development of SMEs is a prerequisite for strengthening the competitiveness of Montenegrin enterprises and ensuring a more equitable regional development. Cluster formation is of particular importance for greater competitiveness of entrepreneurs, micro-, small and medium-sized enterprises (MSMEs).

Enhanced entrepreneurship and competitiveness resulting from cluster formation contribute to greater employment, import substitution, increased domestic production and export, better business environment, more equitable regional development and more effective harnessing of natural resources and production capacities.

The Programme aims to provide financial support to the entrepreneurs and 100% privately owned MSMEs within clusters through investment in tangible or intangible assets or operational costs, in order to strengthen the capacities of clusters and their positioning in the local and international market. This financial support scheme is based on reimbursement of a certain share of costs.

The M inistry of Economy will cover up to 65% of the eligible costs of the purchase value of equipment, excluding VAT, for the clusters operating in the less developed local governments, or up to 50% of the eligible costs for the clusters from other regions; the maximum amount per applicant is €10,000. The remaining 35% or 50% of the costs of purchase of equipment are covered by the applicants themselves. In line with the reimbursement scheme, the enterprise covers 100% of all the costs of purchase of equipment in question and gets reimbursed upon submitting relevant documents.

 

The strategic priority activities eligible for co-financing include the following:

Agricultural production and processing,

Wood processing,

Other manufacturing activities (except those not included in the Programme).

The Investment and Development Fund of Montenegro implements the Programme through direct loans (http://www.irfcg.me/me/2015-01-13-12-25-17/program-podrske-klasterima), using the European Investment Bank funds for this purpose. Loans are available at the interest rate lower by 0.50 % than the rate presented below.

Loan terms:

Maximum amount of up to €500,000 (exceptionally, the IDF Board of Directors may approve a larger amount, in line with the specific criteria);

Minimum amount of €10,000;

00% annual interest calculated pro rata;

Repayment term of 8 years (incl. grace period);

Grace period of up to 2 years.

Specific terms:

The projects implemented in the northern region of the country are approved the 3.50% interest annual interest calculated pro rata.

 

  • Programme for Enhancing Regional and Local Competitiveness through Harmonization with International Standards of Business for the period 2014-2016

The Programme aims to support entrepreneurs and SMEs, in particular the ones from the less developed municipalities and the northern region, to enhance their competitiveness through harmonization with the international standards related to products, management systems, staff, testing, control and certification and support for conformity assessment accreditation.

Within Component I, the 2014-2016 Programme reimburses up to 70% of the eligible costs of accreditation of the companies accredited for conformity assessment, for the standard series MEST EN ISO/IEC 17000 (17025, 17020, 17021, 17065, 17024) – accreditation of metrology and test laboratories, certification bodies, control bodies etc. The costs of accreditation for the conformity assessment bodies will be reimbursed only if the company is accredited by the Accreditation Body of Montenegro.

Component II of the 2014-2016 Programme reimburses up to 70% of the eligible costs for voluntary implementation/introduction of the following standards (with certification and re-certification): a)  MEST EN ISO 9001 series b) MEST ISO 14001 standard  c) MEST OHSAS 18000 series d) HALAL instructions e) MEST EN 22000 standard. Component II reimburses the costs of introduction or implementation of standards, including: hiring of consultants; assessment of situation – relations between processes and/or risk analysis with critical points, for HACCP and MEST ISO 22000; development of documents.

The organizational-operational segment of the Programme is managed by the Ministry of Economy.

All the incentives presented above are available to companies provided that all the set requirements have been met.