The business environment in Montenegro has improved in recent years, but the economy still faces significant challenges, said Slobodan Mikavica, president of the Union of Employers of Montenegro (UPCG).
In the first episode of the podcast Talk UP, Mikavica emphasized the importance of providing clear, transparent, and predictable business conditions to establish stable foundations for sustainable development and Montenegro’s eventual entry into the European Union (EU).
The topic of the first podcast episode was Improving the Business Environment and the Role of Business Associations. The podcast is produced by UPCG in collaboration with the PR Center, with support from the International Labour Organization.
Mikavica highlighted that reforms like fiscalization have significantly improved the business environment. He also pointed out the importance of subsidy programs for employment, production, and agriculture, which, along with the liberalization of building permits, have contributed to reducing unemployment and boosting the construction sector.
“All these measures have contributed to economic growth, but the processes are not fast enough. Entrepreneurs are not asking for privileges. We seek clear, transparent, and predictable business conditions. In such conditions, results come naturally,” Mikavica said.
Regarding key challenges, Mikavica noted that UPCG had identified ten major business barriers through the Business Agenda 2025 document. Among these, the most important are inefficient public administration, poor regulatory framework, lack of skilled workforce, unfavorable conditions for business financing, and the shadow economy.
He stressed the need for reforming public administration, pointing out that optimizing it is crucial.
“Research shows that about 23.7% of all employees in Montenegro work in public administration. When informal employment is taken into account, every third worker comes from the public sector. According to all international standards, this is too high,” Mikavica said.
He explained that such a large bureaucracy burdens the budget and slows down development. He sees the solution in comprehensive digitalization of public administration.
“All data must be consolidated on a single e-portal. We must stop wasting time carrying papers from one institution to another. Digitalization means faster procedures, greater transparency, and less room for corruption,” Mikavica explained.
He also emphasized the need to strengthen legal protection for whistleblowers and improve the public procurement system.
“Although progress has been made with the introduction of the electronic portal, competitiveness is still weak, and legacy barriers from previous systems continue to stifle the market,” Mikavica added.
When asked about Montenegro’s readiness for EU membership by 2028, Mikavica responded that entrepreneurs are actively learning from European partners, but there are still many serious weaknesses.
“Entrepreneurs are mostly ready. However, the state must ensure a stable and predictable regulatory framework. It is essential to clearly understand what legal obligations we will face, without retroactively changing the rules. The attempt to introduce retroactive taxation of excess profits was a completely wrong signal to investors,” Mikavica stressed.
He also warned about the influence of politics on the business environment.
“To have a professional and efficient public administration, we must depoliticize it. The criteria for work, knowledge, and results must be the sole measures for selecting and evaluating civil servants. Only then can we talk about creating a real market and attracting serious foreign investments,” Mikavica said.
He emphasized that economic development is the only guarantee of a better life for Montenegro’s citizens and that all societal efforts should be directed toward creating a healthy, modern, and competitive business environment.
Mikavica also called for a clear and comprehensive development strategy for Montenegro, particularly in key sectors like tourism, to ensure that the country’s natural resources are used in a sustainable and planned way.
“We need to know what we want to build on specific parts of the territory—where to place apartments, where to build condo hotels, and where to preserve natural wealth as a national asset,” Mikavica said, stressing the need for political, economic, and expert consensus on these matters.
According to him, having clear strategic plans will increase transparency in attracting investors, reduce opportunities for privileged decisions, and open space for local companies to participate in the country’s development.
Mikavica highlighted the need for Montenegro to retain land ownership by its citizens and direct foreign investments into sectors like IT and agriculture, rather than just real estate sales.
Speaking about social dialogue, Mikavica noted that UPCG has been recognized as a representative employer organization by the International Labour Organization and regularly participates in decision-making processes through the Social Council.
He praised the cooperation with international partners, particularly the International Labour Organization, which provides valuable support in guiding the development of Montenegrin society.
Despite the efforts of social partners, Mikavica pointed out the problem of political neglect of agreed-upon solutions.
“One example is the failure to adopt the initiative to equalize the retirement age between the public and private sectors at 67 years, despite the fact that this proposal was accepted by the Social Council,” Mikavica said.
He also reminded of UPCG’s initiative to amend the Trade Law to allow Sunday work during the tourist season, with appropriate compensation for employees.
“Despite an agreement with the unions, the proposal has not yet been put to a vote in the Assembly, which we see as the result of political calculations,” Mikavica noted.
Responding to a question about the impact of migration on the economy, Mikavica said that economic reasons are only the third most important factor motivating citizens to leave Montenegro.
“Business environment, safety in society, and professional development opportunities are the key factors for people staying,” Mikavica emphasized, warning that the state must act actively to stop internal migration and encourage the return of emigrants.
He pointed to significant changes brought about by the influx of foreign residents, particularly from Russia, Ukraine, and Turkey, noting the need for strategic planning of demographic flows and protection of national interests.
“We cannot treat these changes as temporary tourist stays. We must seriously analyze the benefits and potential challenges posed by the mass arrival of foreigners,” Mikavica said.
Commenting on the current issue of foreign investments, Mikavica stated that while foreign investments have significantly transformed Montenegro’s economy since the restoration of independence, there has been a noticeable decline in investments in the real sector in recent years, with a sharp increase in real estate investments.
“While this is beneficial in the short term, sustainable long-term growth requires a focus on production and innovation sectors,” Mikavica said.
According to him, companies from the EU will not invest in a country unless they have a clear vision of their obligations, what they can plan, and the results of their business in Montenegro.
“On the other hand, it is clear that many others have certain barriers in this area. I won’t say ‘extortion,’ that’s a strong word without proof, but certain concessions might have been requested from them, and they might have been willing to overlook them. The fact that we still don’t have quality investors from the EU does not help us,” Mikavica warned.
He believes that privileged investors are not necessary.
“I think that under the same conditions we offer foreign companies, domestic capital could be found, whether it is currently invested abroad or the savings of citizens, which amounts to around 3 billion EUR and is held in banks,” Mikavica concluded.
According to him, this is a huge capital that, through quality projects, could become attractive to the local population.
