Montenegro is set to introduce its inaugural systematic screening process for foreign investments, signaling a notable shift in how capital from non-EU countries will be managed as the nation aligns more closely with European Union regulations. This decision follows government approval on 31 July 2026 to develop a foreign investment screening framework, which will be integrated into a forthcoming Law on Foreign Investment Screening.
The new mechanism aims to evaluate whether specific transactions could pose risks to national security, public order, critical infrastructure, strategic resources, or sensitive technologies. Notably, it is designed to maintain Montenegro’s commitment to openness towards international capital.
This framework is not intended as an outright ban on investments from non-EU nations. Instead, it will mandate a review for transactions where a non-EU investor acquires at least 10% of ownership or voting rights, or otherwise secures significant influence over a company. This requirement will also apply to companies incorporated in Montenegro or other EU member states if their ultimate controlling investor is based outside the EU.
Under the proposed rules, transactions must undergo the screening process before finalization. Investments deemed low-risk can proceed without delay, while those identified as potentially problematic will enter further scrutiny. Ultimately, the government will retain the authority to approve or block investments based on assessments conducted through this institutional screening process.
Foreign investment plays a crucial role in Montenegro’s economy, particularly within sectors such as real estate, tourism, energy, infrastructure, and corporate financing. In 2025, Montenegro attracted approximately €1.02 billion in gross foreign direct investment (FDI), reflecting a year-on-year increase of around 14%. Net FDI also rose by about 8%, totaling €531 million. Notably, real estate alone accounted for roughly €497 million, nearly half of total gross inflows.
The geographical distribution of these investments underscores the significance of the proposed screening system. In 2025, Serbia was the largest source of FDI for Montenegro at approximately €142 million, followed closely by Turkey with around €136 million. Russian investors contributed roughly €112 million, highlighting that these three non-EU countries collectively provided over €390 million in investment during that year.
The proposed screening mechanism arrives at a time when third-country capital is integral to various sectors in Montenegro’s economy. For instance, despite ongoing sanctions and logistical challenges, Russian nationals invested about €112 million in 2025, with over €60 million directed towards real estate along the Adriatic coast.
The emerging system will not automatically prohibit foreign purchases of real estate based solely on the buyer’s nationality. The critical factor will be whether transactions fall within strategic-sector definitions established by the new legislation. This distinction is vital given that property transactions represent a significant portion of total foreign investment in Montenegro.
The implications of this screening regime extend beyond mere regulatory adjustments; they touch upon property development and infrastructure projects that are essential for economic growth. Such projects often involve substantial investments in hotels, residential units, marinas, utilities, and energy connections.
Critics like economist Davor Dokić argue that this initiative could impose unnecessary administrative burdens on investors already facing slow bureaucratic processes. He suggests that existing mechanisms—such as tax systems and anti-money-laundering laws—are sufficient for assessing potentially problematic capital without introducing additional layers of approval that may deter investment.
The success of this initiative hinges on balancing national security concerns with maintaining an attractive investment climate. Investors typically assess not just potential returns but also factors such as permitting periods and transaction timelines when deciding where to allocate capital.
This new regulatory environment coincides with broader EU efforts to enhance foreign investment screening mechanisms across member states. The EU’s recent adoption of Regulation 2026/1386, effective from 17 June 2026, aims to standardize national screening systems and requires member states to evaluate foreign investments based on security and public order considerations.
As Montenegro prepares to implement its screening framework, it recognizes the necessity of aligning its policies with EU standards while ensuring that it does not hinder foreign capital inflows critical for its economic development. The government aims for this system to be compatible with EU regulations post-accession while supporting continued investments from diverse sources including Russia and Turkey.
This initiative comes at a time when Montenegro’s net FDI inflow has already shown signs of decline in early 2026 compared to previous years. According to Central Bank data, net FDI decreased by 7.14%, while gross inflows fell by 26.84%. As implementation begins amid these trends, it becomes increasingly important for Montenegro to manage its foreign investment landscape effectively.
The overarching challenge remains: how can Montenegro establish a transparent and efficient screening system that safeguards national interests without deterring vital foreign investment? The answer lies in creating clear criteria and maintaining procedural transparency while balancing regulatory oversight with the need for timely investment approvals.
