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Slobodan Backovic: "We are laying the Foundation for many years"

01.09.2009
Author: Sergey Rymov, Irina FILATOVA
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Mr. Ambassador, in recent years, interest in Montenegro has grown greatly among Russians – not only as a holiday destination, but also as a country attractive for investment, including in the real estate market. How are things in Montenegro's economy today, and how has its investment climate changed in connection with the global financial crisis?
Indeed, foreign investments largely support Montenegro's budget. Now the government is making efforts to ensure that the volume of investments does not fall too sharply. Several large tenders are in the process at once. In April–May, when the global crisis reaches its peak, it will be seen how the country's economy will develop in the future. Due to the global economic crisis, the Government adopted a resolution on assistance to banks and budget expenditures. I would like to note that Montenegro now has the lowest percentage of unemployed in the region, and so far this figure has not increased.
At the moment, new laws regulating foreign investments have been adopted. In particular, we are talking about the fact that foreigners are allowed to buy apartments and houses with plots. At the same time, they cannot buy state–owned land, but they will be able to receive concessions for a certain number of years - from 30 to 90.

In which sectors of the Montenegrin economy are foreign investments most important?
Investments in construction (new hotels, roads and highways, electric power, environmental protection, etc.) have the largest volume, and this year the implementation of several large projects in this area begins. Tourism is also very important for Montenegro – it is the most significant source of income for the country. We strive to ensure that the number of tourists does not decrease. The production of natural, healthy food products, as well as the production of aluminum and wood processing are very important for Montenegro.

Tell us about the largest investment projects in the real estate sector.
Now the Moscow-based Metropol company is implementing a project on St. Mark's Island near Tivat, where it is going to build a hotel complex. Prior to that, the island had been leased by the French tourist society for 30 years. In addition, a large yacht port with various infrastructure facilities, as well as a Four Seasons hotel will be built in Tivat on the site of a former ship repair plant. The construction of a water supply system for supplying drinking water to cities on the coast is coming to an end.
In Herceg Novi, work is also underway on the construction of a hotel complex, which is funded by Arab capital. A small tourist town is also planned to be built on the Lustica peninsula this year.
But the largest investment project in Montenegro will be the construction of a resort complex on a large beach in Ulcinj. The project volume will be about $12 billion, and the implementation will last 5-10 years. Most likely, it will be financed not by one investor, but by several. Also this year, the construction of a highway from the city of Bar towards the north of Montenegro will begin. The complex of hotels in Milocera and St. Stephen after reconstruction will open this tourist season.
Anyway, we hope that the planned volume of investments will not decrease for all major projects, and this is very important for Montenegro.

How fast is Montenegro moving towards the European Union? What benefits can Montenegro's future membership in the European Union bring?
Indeed, we would like to become an EU member as soon as possible and try to fulfill all European requirements. We have submitted an application and are now waiting for a response, after which the country will be able to receive candidate status. Then the European Union will determine exactly what Montenegro should adjust in legislative and other areas in order to bring them in line with international standards. However, the preparation has been going on for several years and has affected a wide variety of industries.
Why is it important for us to be a member of European Society? Montenegro is a small country, and if it continues to be an "island" in a united Europe, it could be dangerous for its economy. You know that we use the euro as our national currency, which replaced the German mark in 2002. It was the use of European currencies that supported Montenegro during the internal economic crisis in the late 90s, and we hope that there will be no repeat of it.
First of all, we plan to get economic benefits from joining the EU: the practical absence of tax duties on trade, the free movement of people as labor, etc. We have something to attract European investors: income taxes are very low in the country, it is profitable to open a small production here. In addition, for the first time we will receive financial assistance from the EU for the development of infrastructure and public institutions.
We are a young state that is now laying the foundation for many years to come. And in this construction of institutions, laws and procedures, the example that we will follow is very important. It is very important that we restore order exactly according to the pattern that exists in Europe.

When, according to real estimates, can Montenegro join the EU?
It's hard to say, as it depends on many factors. We are ready to meet European requirements very quickly, but political factors also play an important role. How can we talk about 2012 as the closest date?
We are considering our possibilities in the context of all the Balkan countries. Croatia is currently the closest to joining the EU. After its accession, Montenegro, Albania, Macedonia and Serbia will remain outside the European Union in the Balkans. And much will depend on how the EU decides to accept these countries – individually or all at once.

Montenegro is one of the few countries where Russians can travel without a visa. Will this change if Montenegro joins the EU?
When Montenegro enters the Schengen area, it will have to apply the general rules of the Schengen Agreement. They are the same for all members of the Schengen community, and all citizens of countries outside the Schengen area will need to have a visa. However, we hope that the issue of visa-free travel for Russian citizens will be resolved by an agreement between Russia and the EU.

Now there is a lot of talk about changing the rules of construction and about stricter state control in this area.
Yes, we are trying to streamline the construction industry and introduce new, clear rules. The construction of new facilities should be carried out according to approved building plans. The owner must coordinate his actions with the urban planning commission and obtain a permit. A serious problem that was associated with the lack of development plans in many localities has now been eliminated: now almost all cities have adopted their general and detailed plans, which are consistent with the General Plan of the republic. However, the bureaucratic procedures for obtaining the necessary papers can and should be reduced, and we will try to do this.
Many Russians have already purchased real estate in Montenegro. What positive things do you see in this for Montenegro? Maybe there are some negative consequences?
The positive factors of the increased interest of Russians in Montenegro are obvious. People come to the country, money comes with them, which is very important for the economy. There is a demand for goods and services – and this is positive.
Perhaps the only drawback is the situation in which some Russian citizens who have a business or real estate in Montenegro do not pay tax on income earned in the country. Usually these are people who are engaged in the tourism business: when buying real estate, they rent it out for the season. We are not at all against such activities, but everyone should understand the need to pay taxes.

What place do Russians occupy now, both among investors and tourists?
When the Montenegrin market was opened to foreigners, the main investors were Austrians, Hungarians and the British, while Russia was only in fourth or fifth place. However, last year Russia brought in more than 300 million euros of direct investment and took the first place. We'll see what happens this year. As for tourism, apart from neighboring Serbia and Bosnia, it is from Russia that the largest number of tourists come – 115,000 people last year.

Are there any advantages for property owners in terms of time spent in the country?
This issue is regulated by the law on foreign citizens: a foreigner can obtain a temporary residence permit and stay in the country as long as he wants. In fact, this is a temporary residence permit.
Montenegro has everything to feel good about itself. The climate is comfortable here, the cost of living is cheaper than in Moscow, it is calm and safe here. I hope that Russian citizens will agree with my opinion. That's why many people choose Montenegro when they retire. Russian Russian newspaper is already being printed, and schools with instruction in Russian will soon be opened.

If then a person wants to take the citizenship of Montenegro, what needs to be done for this?
This requires at least 10 years of permanent residence in the country. But so far there have been no such cases – it's just that not enough time has passed since the formation of the state.

What would you like to wish to the readers of our magazine who are thinking about their future in Montenegro?
First of all, I wish both Russians and Montenegrins that in this crisis for the global economyDuring this period, our countries maintained a high standard of living and realized most of their desires. Come, Montenegro welcomes everyone kindly, in this country you can find your second home and feel like you are at home. I am sure that our country has excellent prospects.

Slobodan Batskovich

Homesoverseas.ru editorial office
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