Montenegro is experiencing a growing trend in foreign direct investment, but there are challenges, with the rule of law being the major obstacle to attracting more renowned companies from developed economies. This includes the need for an efficient judiciary that ensures the protection of capital, the enforcement of contracts, and legal certainty, according to Mladen Grgić, the economic and economic diplomacy advisor to the president of the country, speaking to Forbes Montenegro.
Grgić notes that Montenegro has been a relatively attractive investment destination, evidenced by foreign direct investment inflows averaging over 20% of GDP from 2006 to the present. Despite experiencing the largest GDP decline in Europe during the COVID-19 pandemic, Montenegro has seen a rapid recovery. Over the last three years, it has recorded one of the highest GDP increases on the continent, even as some countries face the threat of recession.
The past year has been particularly successful for Montenegrin companies, achieving record profits when adjusted for inflation.
Grgić emphasizes the favorable business environment and tax policy as key factors contributing to Montenegro’s appeal as an investment destination. He highlights the growing trend in foreign direct investment inflows in 2021 and 2022, significantly surpassing the previous ten-year average in real terms and as a percentage of GDP.
According to World Bank data on the share of net foreign direct investment in gross domestic product in 2022, Montenegro ranked 9th globally.
Grgić points out that around 40% of the structure of investments comprises real estate, putting additional pressure on infrastructure and space. Overbuilding on the coast, mainly driven by purchases for later leasing, directs tourism toward its most damaging forms.
Investments in companies and banks make up about 20% of the total inflow. Grgić emphasizes the importance of focusing on this segment, as foreign companies can contribute to creating a better business culture, help strengthen human capital, and bring additional knowledge and experience to enhance business capacities.
