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Thursday, May 23, 2024
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Montenegro, 10 realistic arguments for the continuation of the Economic Citizenship Program

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A billion euros

By the end of this year, 1,000 applications will be submitted as part of the Economic Citizenship Program, which has been implemented in Montenegro since 2019. Families from all over the world who have recognized Montenegro for its natural beauty, hospitality, security, business opportunities, healthy concept of life, and the expected soon entry into the EU apply for the Montenegrin Program. The expected financial effects, when all applications are processed by the competent authorities, amount to 445 million euros, of which 200 million euros belong to the state through the mandatory payment of administrative fees (35 million euros), the payment of donations (115 million euros) and paid VAT (50 million euros). Hotel builders participating in the program, in which applicants who pass rigorous controls invest, will receive 245 million euros, funds that they are obliged to use. as part of their complete investment in the construction of new hotels. For this, the state was guaranteed with appropriate bank guarantees, and the dynamics of building construction are monitored by auditors. If the Program continues up to the anticipated 2,000 successful applications (a certain percentage is rejected in the process), it will mean that 1.055 billion euros will be generated through the Economic Citizenship Program. Of this, 520 million euros will be paid to the state and municipalities, and 535 million euros to the builders, who submitted projects to the state. The percentage that would be intended for the state and municipalities is higher through the continuation of the Program, because the donation to the state has been increased from 100 to 200 thousand euros from 2022. These financial resources cannot be directly replaced from other sources, and it is significant that they are realized in several economically very complicated years.

New hotels

The construction of numerous new hotels that are realized within the framework of the program, most of which are in the north, would not be possible, at least not with this dynamic, without the implementation of the Economic Citizenship Program, as a significant source of capital and contribution in terms of bringing qualified applicants to Montenegro. We testify that the works on the construction of the hotel are taking place intensively and at a fast pace thanks to the Program. The new hotels will be managed by respected hotel operators, including InterContinental, Swissotel, SIRO by Kerzner and Splendid. According to the current projections of the listed projects, as well as new candidate projects in the last period, the realization of 1200 hotel rooms in new hotels in the north and 800 hotel rooms in the south is planned. According to the reports of the renowned consulting company Horwath HTL, one room in a hotel of level 4*+ and 5* contributes to the GDP of the country over 50 thousand euros per year, and employs an average of 1.3 workers. So, in the next few years, these new 2,000 accommodation units in hotels will contribute to the employment of at least 2,600 hotel workers, and will contribute more than 100 million euros per year to the country’s GDP. According to MONSTAT, the GDP of Montenegro in 2021 was 4.95 billion euros.

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Development of the North

Fifteen years ago, I had the opportunity to meet the experts of the Canadian company Ecosignwhose representatives then worked on the development of the spatial plan of the Bjelasica and Komovi regions. It is a company that participated in designing and designing numerous ski resorts in Canada, and then actively worked on designing ski tracks for the Winter Olympic Games in Sochi in 2014. During that period, I was professionally engaged in the international development organization CHF International, an implementer of USAID- and, it seems to me, an institution that was remembered for the good things it did for the development of our north. It was hard to imagine at the time that something that the Canadian experts were “drawing” would certainly develop. And today we see it with our own eyes. We see the development of large infrastructure projects, such as the highway and ski resorts, whose goal is the development of the north of Montenegro. Such projects would not have been realized without the existence of the Economic Citizenship Program, certainly not with this kind of dynamics. If the Program continues, new opportunities for further development will open up, and Montenegro will additionally position itself on the map of tourist centers.

The strictest checks

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The basic criteria for applying are extremely strict. First of all, it is necessary to obtain, and legalize in the prescribed manner, a whole set of documents, including certificates of impunity, serious and exhaustive financial statements, and evidence of investments within the Program. After the licensed agent submits the application, the main part of the process begins, ie. as part of the state’s internal procedure, an official procedure for checking the international suitability of candidates (comprehensive due diligence) is carried out, which is carried out on behalf of the state by world-renowned companies, specialized in this field: Exiger from Canada and S-RM from Great Britain, which received a license in Montenegro Gori for these jobs. This in-depththe analysis takes at least one month and if the findings are negative, the application is automatically rejected, without the right to appeal. If the finding is in order, only then the application qualifies to be reviewed by the competent state authorities, headed by the Ministry of Internal Affairs of Montenegro. International eligibility checks carried out by specialized companies include a thorough and comprehensive analysis of the applicant as a natural person, thus checking the authenticity and validity of all personal documents, and an additional and particularly detailed examination of his financial statements. This includes an analysis of personal financial statements and an examination of all companies related to the applicant, as well as their financial statements. This analysis represents the largest part of the security procedure, and even before it was implemented, i.e. before the submission of the application itself,Henley & Partners , then international and local banks where they open escrowaccounts. Only after checking the international suitability, and only if the finding is not for rejection, are the multi-month checks carried out again by the Ministry of Internal Affairs, in cooperation with the National Security Agency. In addition, of course, the state reserves the discretion to revoke the passport of the applicant, in case it is proven that he submitted an incorrect document during the process, or does not behave in accordance with the law after obtaining citizenship. Therefore, this comprehensive and detailed verification process dictates that only applicants who have earned it will be entitled to a Montenegrin passport. Such unique procedures and analyzes realized for the first time in Montenegro, which cover personal data and finances of individuals, i.e. applicants, their families and persons related to them.

Quality of applicants

In several of the largest industries applying to Henley & Partnersare business owners and entrepreneurs, then financial experts, also ICT experts and specialists, such as doctors of medicine. There are serious names from the world of the ICT industry, cosmetic and fashion industry chains, bankers, doctors who work at the most prestigious world-renowned clinics, who have already or will soon, through this program, become Montenegrin citizens. They decided on Montenegro as a destination for alternative citizenship after, in some cases, several years of analysis. Montenegro can be extremely proud of its Citizenship by Investment Program. In the world of investment migration, it has established itself as a successful platform for state financing and economic innovation, able to raise millions of euros of debt-free capital every year for its citizens and attract some of the world’s best talents and investors with valuable international networks and knowledge that will enrich our nation. The direct injection of debt-free liquidity into our country, instead of increasing debt that would burden future generations, allows Montenegro to be more autonomous in its monetary and fiscal policy than would otherwise be the case. The quality of the applicants is the best illustration of the success of the Program. Every country in the world would like such applicants for its citizens and fellow citizens, and that is the essence of such programs, that it is not a single transaction, although of course it is also very significant, but that the effects of this program multiply. It is a pleasure to meet such people in general.

Comparative experiences

Today, investment migration is widely recognized as a long-term form of state generation of investment demand and a catalyst for economic growth and diversification. They make up billions of euros of world capital. There are now over 100 investment migration programs in the world, and it is a legitimate migration path accepted by the United States of America, Australia, Austria, Spain, Italy, Portugal and many other sovereign states. Investment migration has become a standard and recognized policy lever to encourage foreign direct investment, and EU member states such as Austria, Malta, Spain, Greece, Italy, Portugal and many others that offer these programs have created a vital advantage for themselves and their citizens in the global competition for capital and knowledge. There is no doubt that well-managed and regulated investment migration programs create significant social value. As noted by the IMF, such programs help stimulate job creation, economic growth and national prosperity. Just as large economies in North America and Europe use investment migration to attract expertise and foreign direct investment, smaller economies such as Montenegro can similarly use the potential and benefits of these programs to develop their economies and programs helped them compete on the world stage. Investment migration programs bring billions of euros of much-needed capital to sovereign states that would otherwise have to be raised through taxation or increases in national debt and budget deficits. There are numerous objective sources that indicate not only the value of the liquidity injection itself, but also the wider benefits in terms of directing foreign direct investment (FDI) to EU countries such as Malta, Greece, Latvia, Spain or Portugal. These programs bring real social benefit not only through increased government revenues, job creation and increased spending on infrastructure, but through the creation of new opportunities at all levels of society. The investment migration programs of the EU member states brought about 25 billion euros of foreign direct investments to the EU during the past decade. These programs generate enormous economic and social value in Europe, especially for smaller economies. After the global financial crisis, these programs enabled economic recovery and growth for many European countries.

Fund for innovations

The Innovation Fund is the umbrella state institution in the implementation of measures and programs of innovation policy intended for micro, small and medium entrepreneurship, as well as the transfer of technologies from scientific and research institutions. The primary goal of the Innovation Fund is to stimulate the economic growth and competitiveness of Montenegro by increasing the innovativeness of the Montenegrin economy. Our estimates say that thanks to the Economic Citizenship Program, the Fund will be able to receive and distribute between 30 and 40 million euros next year. And that could be a serious continuation of up to 130 million euros, if the Program were to be implemented on the fully planned 2,000 successful applications. Contributions to this Fund will enable the Government to, among other things, implement various projects, such as financing start-up companies for Montenegrin entrepreneurs in various fields.

Process set up

The economic citizenship program functions through several state administrations, with the idea and the first competition published during the 40th Government of Montenegro, the current Decision on Economic Citizenship was adopted and started implementation during the 41st Government, and implementation continues during the 42nd and current 43rd Governments. The process continued even in the era of the COVID pandemic, which was not at all simple. It works, primarily, because the process was set up professionally, with corrections made on the fly, which was required by the age of the pandemic. Unfortunately, it happens that the steps in the process of approving applications slow down unnecessarily, and today, instead of a decision in six to nine months, the system often takes more than a year to make decisions. The consequence is, there is still a significant number of unresolved applications and serious funds in escrowaccounts. Nevertheless, the process is taking place, now more efficiently and quickly. During these processes, the public administration learned a lot, from how financial systems in the world’s banks function, to how documents are legalized around the world. Bearing in mind the current state of public finances, the Program, which should be further professionalized, with additional resources of the state administration, can be of invaluable importance for the implementation of timely consolidation and stabilization of public finances.

Multiplicative effects

Licensed brokerage agents, such as Henley & Partners,they succeeded with serious efforts to put Montenegro on the map of investment migration, which was not easy in the competition of Malta, Austria, Portugal, Greece, Thailand and numerous other country-brands. Also, it was not easy for the whole system to work in our country, and now we have it. The system, which includes the state administration, primarily the Ministry of Interior and the Investment Agency, is transferred to a large number of involved legal entities and includes licensed agents, data due diligence agents, companies that have applied for development projects, banks, notaries, legal advisors, translators, professional associations etc. This system managed to keep the Program active through the challenges of the pandemic, the Russian-Ukrainian crisis and cyber attacks that significantly slowed down, and sometimes even disabled, electronic communication. The family of each successful applicant.

Imvestor’s word

A few months ago, due to the nature of my work, I had the pleasure of hosting Mr. To Bradley Horowitz, who is VP Product at Google, but also a serious intellectual and gentleman. After we went through an intensive agenda that included a visit to the Prime Minister, a meeting with the ICT community, the management of the Innovation Fund, and, as time allowed, sightseeingfor Montenegro, I quote the statement he gave to our media at the time: “During my visit to Montenegro this summer, I had the opportunity to see for myself not only the natural beauty of your country, but also the investment potential. I had the opportunity to meet with the highest government officials, and also with decision-makers not only from the public sector, but also from the field of investments and the ICT industry. In direct and open conversations with all of them, I realized that Montenegro represents exceptional opportunities for investment. I am also familiar with the Montenegrin Economic Citizenship Program, which is certainly in line with all of the above. The economic citizenship program contributes not only to the economy and financial stability of the country, it also makes Montenegro position itself on the global map, making it visible to the world’s elite”, local media writes.

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