Montenegro flag Montenegro: Investing in Montenegro

Foreign direct investment (FDI) in Montenegro

FDI in Figures

Montenegro has the potential to become a magnet for investment because of its business-focused economic system and low corporate tax rate. According to the latest data available from the World Bank, Montenegro´s total FDI inflows reached EUR 877 million in 2022, up by 25.4% year-on-year and above the pre-COVID level. The stock of FDI was estimated at USD 5.68 billion in 2021 (around 93.1% of GDP – data UNCTAD - World Investment Report 2023), with a per capita investment ratio among the highest in Europe. The sectors attracting most FDIs are tourism, real estate, energy, telecommunications, banking, and construction. Data from the Montenegrin Investment Promotion Agency shows that the main investing countries are Russia (14.8% of inflows between 2010-20), Switzerland (6.8%), Serbia (6%), Austria (5.9%), Italy (5.9%), and the Netherlands (5.4%). According to preliminary data by the Central Bank, total FDI inflow declined by 26% to EUR 857 million in 2023. The decrease was due to reduced investments in the form of intercompany debt, lower investments in companies and banks, and an increase in the withdrawal of foreign investments. Investments in companies and banks saw a 57% decrease to EUR 95 million, while investments in real estate increased by 3.3% to EUR 463 million during the same period. FDI inflow in the form of intercompany debt also fell by 34% to EUR 265 million.

The country offers great economic freedom and monetary stability. Domestic and foreign companies enjoy equal treatment in Montenegro. Foreign companies can own 100% of a domestic company, and their profits and dividends can be repatriated without limitations or restrictions. Furthermore, Montenegro does not have foreign investment screening. Nevertheless, corruption, the politicization of justice, organized crime, an approximate and unreliable land registry, and sluggish bureaucracy are obstacles to FDIs. The Privatization and Capital Investment Council is the governmental institution that manages, controls, and implements the privatization process in the country, which already involved almost 90% of formerly state-owned enterprises. Some initiatives have been taken to improve the business environment such as the establishment of the Credit Guarantee Fund to foster credit lines for banks. The country has implemented dedicated legislation providing guarantees and safeguards for foreign investors. Additionally, the country has adopted over 20 other laws related to business, all aligned with EU standards. Montenegro ranks 75th among the 132 economies on the Global Innovation Index 2023 and 83rd out of 184 countries on the latest Index of Economic Freedom.

Foreign Direct Investment 202020212022
FDI Stock (million USD) 5,8195,3605,681
Number of Greenfield Investments* 539
Value of Greenfield Investments (million USD) 872104127

Source: UNCTAD, Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Country Comparison For the Protection of Investors Montenegro Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 5.0 7.5 7.0 5.0
Index of Manager’s Responsibility** 8.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 6.0 6.8 9.0 5.0

Source: Doing Business, Latest available data

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in Montenegro

Strong Points
Montenegro's key assets in terms of attracting FDI include:

- one of the most competitive tax systems in Europe (rate of 9%);
- qualified and low-cost workforce;
- touristic potential (sea, mountain, climate);
- hydroelectric potential;
- negotiations for accession to the European Union;
- good quality of education and health systems.
Weak Points
Montenegro's weak points impeding FDI include:

- small size of its domestic market;
- high dependence on tourism, construction and energy sectors;
- electricity generation largely based on subsidised coal;
- deficient road and electrical networks;
- structural unemployment (14%) and lack of qualified personnel;
- importance of ethnic voting and political blockage;
- poor business environment;
- substantial informal economy (39% of GDP) and low participation rate (54%).
Government Measures to Motivate or Restrict FDI
In Montenegro, private ownership is protected by the Constitution and includes equal treatment of foreigners.
Montenegro has a favorable tax regime with the lowest corporate tax rate in the region at nine percent.
Foreign investors can participate in local privatization processes and can own land in Montenegro generally on the same terms as locals. Expropriation of property can only occur for a "compelling public purpose” and compensation must be made at fair market value. There has been no known expropriation of foreign investments in Montenegro. International arbitration is allowed in commercial disputes involving foreign investors.

Registration procedures have been simplified to such an extent that it is possible to complete all registration processes online. In addition, bankruptcy laws have been streamlined to make it easier to liquidate a company; accounting standards have been brought up to international norms; and custom regulations have been simplified. There are no mandated performance requirements.

To learn more you can visit the MIA website, the government agency dedicated to investment promotion.  

Bilateral investment conventions signed by Montenegro
The bilateral investments treaties signed by the Montenegro may be found on the Policy investment hub website.

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Latest Update: May 2024