Montenegro’s Business Climate

Progress, challenges, and the road ahead

Montenegro’s business environment is showing signs of progress, but significant challenges remain. In the 2024 White Book, Arijana Nikolić Vučinić, Executive Director of the Montenegrin Foreign Investors Council (MFIC), highlights key areas where Montenegro has moved forward, such as improvements in the Ease of Doing Business Index. However, she stresses the need for decisive action in addressing infrastructure, digital transformation, and workforce readiness.

As Montenegro aspires to join the European Union by 2028, aligning with EU standards remains a top priority. In an interview, Nikolić Vučinić underscores MFIC’s role in supporting reforms, fostering dialogue between stakeholders, and encouraging sustainable practices through initiatives like the newly introduced Green Transition Index. At the same time, she advocates for aligning education with market needs and prioritising soft skill development from early childhood to prepare Montenegro’s workforce for the future.

Reflecting on the 2024 White Book, what do you consider the most significant improvement in Montenegro’s business climate over the past year, and which area requires the most urgent attention?

Over the past year, Montenegro’s business climate has seen modest, meaningful progress. After two years of recorded decline, the MFIC Ease of Doing Business Index has shown growth, marking a positive step forward. However, it is important to be realistic and honest, as we emphasised during the White Book promotion. This growth is symbolic and reflects the initial signs of improvement rather than a comprehensive transformation. Significant challenges remain, and addressing them will require decisive action from policymakers and the entire business community.

Some of the barriers identified in the 2024 White Book have persisted for many years, but clear priorities can still be singled out. Developing infrastructure remains a cornerstone for economic progress and this includes both improving road networks and increasing air connectivity. Equally important is the need to intensify and fully implement the process of digital transformation, which is vital for modernising Montenegro’s economy. Moreover, aligning the education system with the needs of the labour market is essential to address existing skill gaps and better prepare the workforce for future demands.

Montenegro’s progress, while encouraging, serves as a reminder that the path ahead is demanding. To sustain and accelerate improvements, a coordinated and decisive response from all stakeholders is essential.

The White Book 2024 presents identified business barriers, as well as responses from the relevant institutions. What is the status of solving the barriers identified so far?

The 2024 White Book introduced a detailed tabular overview of business challenges alongside identified responsibilities for institutions. This year, investors identified 23 new recommendations across various areas. Out of the 37 recommendations from previous editions, relevant institutions provided responses to all of them. However, no activities were initiated for 11 recommendations, while some progress was noted for the remaining 26. Unfortunately, none were fully resolved. In an effort to accelerate the resolution of identified business barriers, we have decided at this year’s General Assembly to change the publication timing of the White Book. Starting this year, the White Book will be released in November instead of in March or April as it had been in previous years. By shifting the publication date to November, the Government will have more time to incorporate the recommendations of foreign investors into its work program, allowing for a more efficient and timely response to the challenges outlined in the White Book.

MFIC shifted White Book publication date to November to allow the Government more time to act on recommendations

In light of Montenegro’s aspirations for EU integration, how does MFIC align its objectives with EU standards, and what role does the Council play in facilitating this alignment?

MFIC’s mission is to improve Montenegro’s economic environment, which closely aligns with the country’s EU integration objectives. At this point, I must mention Montenegro’s goal of becoming an EU member state by 2028. The latest European Commission report recognises the country’s strong ambition to achieve this goal, as well as its commitment to European values. However, it is important to highlight that the path to EU membership requires a steadfast commitment to implementing EU standards. In this process, the openness of the government and institutions to constructive feedback from the business community must remain one of the key priorities.

Through continuous dialogue with institutions and the diplomatic community, MFIC advocates for reforms that bring Montenegro closer to EU standards. It is important to mention that most of our member companies originate from EU countries, and their contributions to this process are significant. By fostering best practices and promoting regulatory alignment, these companies serve as key drivers of progress toward Montenegro’s EU aspirations.

With the global emphasis on sustainable development, how is MFIC encouraging the business community and decision-makers to adopt green practices in Montenegro?

Sustainability and green economy initiatives are crucial not only for Montenegro but also in the context of EU integration. Recognising the importance of these issues, we established The Green Economy Transition (ESG) Committee to drive progress toward a more sustainable economy. This committee was specifically designed to accelerate the adoption of green strategies and facilitate collaboration between businesses and institutions. Furthermore, starting next year, MFIC will introduce a Green Transition Index designed to measure and promote the integration of green practices within businesses operating in Montenegro.

Most of our member companies are foreign- owned, and many are part of global corporations, so their experience and expertise are invaluable in this context. The main challenge we face is that ESG practices are still relatively new for many local stakeholders. Therefore, we aim to leverage the expertise of our members to help drive awareness and capacity-building efforts, promote best practices and foster collaboration between businesses and institutions.

Drawing from your tenure at the Ministry of Labor and Social Welfare, how do labour market dynamics in Montenegro impact foreign investment, and what reforms would you advocate to align workforce skills with investor needs?

Montenegro’s education system must align more closely with labour market demands. Currently, young people often graduate without the skills and knowledge required by employers, as noted in the White Book. To address this, the state must invest in active labour market policies that focus on reskilling and upskilling both unemployed youth and adults registered with employment agencies.

MFIC aligns its objectives with Montenegro’s EU goals, advocating for reforms and regulatory alignment

A particular emphasis should be placed on addressing the NEET (Not in Education, Employment, or Training) youth demographic, as their inactivity represents a significant socio-economic cost for the country. Encouragingly, some employers have recognised the importance of investing in their employees by offering training programs to meet job requirements. This positive trend should be supported and scaled up.

In the 2024 White Book, the lack of soft skills was highlighted. As someone who has worked in the Ministry of Education and served as the General Director for Preschool, Primary, and Inclusive Education, how important do you think it is to start educating children on these skills from an early age?

Developing soft skills from an early age is critical for both personal and professional development. As someone deeply involved in education reform, I believe soft skills such as communication, teamwork, problem-solving, and adaptability are foundational for success in any field. Starting this education in early childhood lays a solid foundation for future learning and career readiness. Educational programs should integrate these skills into their curricula alongside traditional academic knowledge. Doing so not only prepares young people for the workforce but also fosters a culture of lifelong learning and adaptability.