Bilateral Screening: Chapter 20 PRESENTATION OF MONTENEGRO MONTENEGRO Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 20 – Enterprise and Industrial policy Bilateral Screening: Chapter 20 PRESENTATION OF MONTENEGRO Brussels, 28 November 2012

Working Group for Chapter 20: - Enterprise and Industrial Policy - M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 20: - Enterprise and Industrial Policy - Bilateral Screening: Chapter 20 Presentation of Montenegro Brussels, 28 November 2012 Chapter 20: Enterprise and Industrial Policy Poglavlje 25 Nauka i istraživanje

TOURISM IN MONTENEGRO Olivera Brajović Deputy Minister Chapter 20: Enterprise and Industrial Policy TOURISM IN MONTENEGRO Olivera Brajović Deputy Minister Ministry of Sustainable Development and Tourism olivera.brajovic@mrt.gov.me M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial Policy

Chapter 20: Enterprise and Industrial Policy TABLE OF CONTENT: Institutional Framework Legal Framework and Compliance with EU Regulations Strategic Documents Macroeconomic Indicators Promotion of Tourism Products Investment Projects Participation in Projects Co-Financed by International Organizations M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

I. Institutional Framework Chapter 20: Enterprise and Industrial Policy I. Institutional Framework Ministry of Sustainable Development and Tourism National, Regional and Local Tourism Organizations Partners involved in creating a complex, diversified and high- quality tourism product: local governments, the tourism industry (Montenegro Tourism Association, Montenegro Chamber of Skilled Crafts and Entrepreneurship, Chamber of Commerce, Montenegrin Employers Federation), NGOs M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Chapter 20: Enterprise and Industrial Policy II. Legal Framework (1/2) Law on Tourism (“OG MNE” 61/10 of 22 Oct 2010) Law on Tourism Organizations (“OG MNE” 73/10 of 10 Dec 2010) Law on Rafting (“OG MNE” 53/11 of 11 Nov 2011) Law on Ski Resorts (“OG MNE” 13/07 of 18 Dec 2007) Law on Mountain Trails (“OG MNE” 51/08 of 22 Aug 2008) Law on Sojourn Tax (“OG MNE” 13/04 of 20 Feb 2004) Secondary Legislation : 2 Decrees, 4 Decisions and 40 Rulebooks in the field of tourism M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

II. Legal Framework – Compliance with EU Directives (2/2) Chapter 20: Enterprise and Industrial Policy II. Legal Framework – Compliance with EU Directives (2/2) Law on Tourism is aligned with Directive 2006/123/EEZ of 12 December 2006 In the third quarter of 2013 amendments to the Law on Tourism will be drafted and the provisions of Directives 90/314/EEZ of 13 June 1990 and 2008/122/EEZ of 14 January 2009, in the service sector, transposed. Drafting of new, and amendments to the existing laws and secondary legislation in the field of tourism are in process M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

III. Strategic Documents Chapter 20: Enterprise and Industrial Policy III. Strategic Documents National Strategy for Sustainable Development (January 2007) Human Resources Development Strategy for the Tourism Sector of Montenegro (May 2007) Montenegro Tourism Development Strategy by 2020 (December 2008) Regional Tourism Strategy of the Bjelasica and Komovi Region (May 2005) Master Plans for Sustainable Development: Kolasin and Zabljak Velika plaza (The Big Beach), Ulcinj – pilot project under the Master Plan (May 2003) Boka Kotorska - pilot project under the Master Plan (June 2003) M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Montenegro Tourism Development Strategy by 2020 Chapter 20: Enterprise and Industrial Policy Montenegro Tourism Development Strategy by 2020 “APPLYING THE PRINCIPLES AND OBJECTIVES of sustainable development, Montenegro will create a strong position of a high-quality global tourist destination; for the population of Montenegro, tourism will provide enough jobs and improve the standard of living, while stable and reliable revenues will be generated by the State” M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Chapter 20: Enterprise and Industrial Policy Operational Objectives • 1. Creating necessary tourism and supporting infrastructure towards achieving the strategic goal 2. Montenegro formed a special and unique selling proposition 3. Montenegro is recognized and accepted as a “year-round tourist destination” 4. Institutional and legal framework corresponds to the requirement of a successful and sustainable tourism development 5. Local people are increasingly involved in the tourism industry (“internal marketing”) M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Activities to Implement Operational Objectives (1/3) Chapter 20: Enterprise and Industrial Policy Activities to Implement Operational Objectives (1/3) Balanced development of tourism based on the principles of sustainable development;; Improving the quality and structure of tourism and its standardization; The development of diversified offerings, with special emphasis on tourism offer based on nature; Improving cross-sectoral cooperation (transport, trade, agriculture); Improving tourism and catering business in accordance with the Law on Tourism; Introduction of a single electronic software for keeping records of tourism turnover, in order to obtain relevant data on the effects of tourism; Keeping the most important and gaining new outbound tourist markets; Preservation and improvement of tourism infrastructure and offer as prerequisites for further development; Promotion of Montenegro as a unique and safe high-quality tourist destination; Creating favorable conditions for investment in tourism; Support of the State in finding models and creating the environment for projects in the tourism sector with the local population and economy; Providing infrastructural prerequisites for the implementation of development plans; Education and training in order to create high-quality tourism products - compliance with EU standards, progression of knowledge, skills and the labor market. Integration of the tourism product in terms of sales and marketing (destination management and integrated sales) Private-public partnership M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Activity status - Action Plan for Tourism (2/3) Chapter 20: Enterprise and Industrial Policy Activity status - Action Plan for Tourism (2/3) Investments in tourism and travel were estimated at €192.1 million, or 33.4% of total investment in 2011. (Source: Travel & Tourism: Economic Impact-Montenegro 2011-2021) Regional water supply system built on the Coast (Phase I - 2010: €85 million; Phase II - 2012: €7.5 million) Sewerage system in Montenegrin municipalities (Estimated value of the project approximately €169 million, funding provided by: the Government of Montenegro, PE “Regional Water Company for the Montenegrin Coast”, IPA fund, KfW bank, EIB, EBRD, WB, Erste Bank, Abu Dabi Fund, the Republic of Slovenia) Waste treatment facilities (Built: in Podgorica in 2006 and Bar in 2012. Planned to be built in Pljevlja in 2014; technical documentation prepared for the municipalities of Kotor, Herceg Novi, Niksic, Berane and Bijelo Polje. Estimated value of the project for Phase I – €50 million) A network of 4 NTO offices established abroad Regional Tourism Organization for Bjelasica and Komovi established (June 2006 - Bijelo Polje, Berane, Andrijevica, Kolasin and Mojkovac ; 2009 – joined by the Municipality of Plav) Identification of protected areas in accordance with international and EU regulations (EMERALD, Natura 2000) and inclusion in the national legislation M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Montenegro – a Destination Divided into Tourism Clusters (3/3) Chapter 20: Enterprise and Industrial Policy Montenegro – a Destination Divided into Tourism Clusters (3/3) Division of Montenegro into tourism clusters : Budva – Bar (beach tourism) Ulcinj (beach tourism and nature-based tourism) Boka Kotorska (beach tourism, cultural tourism, sport and health tourism) Skadar Lake-Cetinje (nature-based tourism, sport and rural tourism MICE) Bjelasica and Komovi, Prokletije-Plav, Rozaje (nature-based tourism, sport tourism, conferences, wellness) Durmitor-Sinjajevina, Zabljak-Pluzine-Savnik ((nature-based tourism, sport and family tourism) The coastal region and the mountains are connected by travel corridors: The coastal region – Durmitor The coastal region - Bjelasica and Komovi M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

IV. Macroeconomic Indicators Chapter 20: Enterprise and Industrial Policy IV. Macroeconomic Indicators Trends – Tourism Parameters for the Period 2007-2011 *Revenues are presented in millions of € tourists nights M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Chapter 20: Enterprise and Industrial Policy Statistical Parameters January – September 2012 1.4 million tourists (4.8% more than in Jan-Sep 2011) 8.9 million overnights (4,2% more than in Jan-Sep 2011) (Source: MONSTAT) Total revenues from tourism amounted to approximately 680 million EUR (4.3% more than in the comparative period of the previous year) (Source: MSDT) M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

The Structure of Overnight Stays Chapter 20: Enterprise and Industrial Policy The Structure of Overnight Stays Jan – Sep 2012 Domestic Serbia Other former Yugoslav countries (not including Slovenia) Other European and non-European countries Russia and the countries of the former USSR M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

WORLD TRAVEL AND TOURISM COUNCIL Chapter 20: Enterprise and Industrial Policy WORLD TRAVEL AND TOURISM COUNCIL - Key Indicators (2011 Report) – (1/2) GDP: Direct participation of tourism - 8.1% of the total GDP in 2011, growing at an average annual rate of 10.9%, with an estimated share of 14.8% in 2021 Employment: Direct participation of tourism - 6.9% of total employment in 2011, growing at an average annual rate of 8.0%, with an estimated share of 13.3% in 2021 Investment - 33.4% of total investments in 2011, growing at an average annual rate of 16.4%, with an estimated share of 50.8% in 2021. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

WORLD TRAVEL AND TOURISM COUNCIL Chapter 20: Enterprise and Industrial Policy WORLD TRAVEL AND TOURISM COUNCIL - Key Indicators (2011 Report) – (2/2) Ranking of Montenegro (the impact of travel and tourism on the country’s GDP, out of 181 competing countries) The 133th position - according to the absolute size The 36th position - according to the amount of contribution to the national economy The 1st position – growth forecast in the tourism sector (“the fastest growing tourist destination”) (Source: Travel & Tourism: Economic Impact-Montenegro 2011-2021) M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Chapter 20: Enterprise and Industrial Policy V. Promotion of the Tourism Product (1/2) Marketing concept of tourism in Montenegro, with balanced regional development and compliance with the principle of sustainable development, under the slogan “Montenegro – Wild Beauty”. Promotion of an integrated tourism product individually or jointly with countries of the region. Joint promotion of the tourism offer of the countries of Central and Eastern Europe on the Chinese market (Memorandum between the National Tourism Administration of the People’s Republic of China and the authorities responsible for tourism in the countries of Central and East Europe on establishing a tourism promotion alliance between China and the countries of Central and East Europe). M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Chapter 20: Enterprise and Industrial Policy V. Promotion of the Tourism Product (2/2) 4 NTO offices abroad (Frankfurt, Belgrade, Sarajevo and Ljubljana) and the Montenegro Convention Bureau (for MICE market) Online unified tourism presentation of Montenegro, promotional videos, printed brochures, etc.                                        Organization of study visits for groups of journalists and tour operators from targeted source markets in Montenegro, etc. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Chapter 20: Enterprise and Industrial Policy VI. Investment Projects (1/2) Porto Montenegro – Investment worth € 600 million. The project of building a settlement around the marina and the home port for yachts designed to meet the sophisticated requirements of yachts, their owners, guests and crew, with additional infrastructure for largest yachts. Beyond Horizon (Plavi horizonti) - Investment worth approximately €250 million. Construction and development of a high-end tourist resort with supporting commercial facilities (a spa, beach bar, sports facilities, restaurants, etc.). Lustica Bay - Investment worth approximately €1 billion. Building a top-level tourist resort in the Bay of Traste, the peninsula of Lustica, located in the very heart of nature. Facilities: 8 hotels (2200 rooms), 1600 apartments, 750 villas, town center with all the necessary facilities (shops, schools, medical services), 2 marinas, conference center, golf course. Golf resort in Tivat– Contract with the Company “LPDG doo”. Podgorica (Investor from the Netherlands). Investment worth €181,597,140 over the first 9 years. The lease for 18 months amounts to €188,804.40, payable within 45 banking days from the date of signing of the Lease Agreement and the Escrow Agreement. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Chapter 20: Enterprise and Industrial Policy VI. Investment Projects (2/2) Military Barracks “Orijenski battalion”, Kumbor, Herceg Novi – A Long-Term Lease Agreement for 90 years with the Oil Company SOCAR, Azerbaijan. The investment is worth €259 million, and will be implemented in the first eight years of the lease term. Tourist Resort, the Island of Sveti Marko – Investment worth €300 million. Development of a unique deluxe class tourist resort on the Island of Sveti Marko. The Island will be the first integrated 6-star resort in Europe, managed by Banyan Tree, a renown hotel operator. Aman Sveti Stefan – Given under a long-term lease of 30 years to the Company Adriatic Properties. More than €45 million has been invested since the beginning of investment. Hotel Hilton Podgorica – The value of the investment is approximately €20 million, the construction of a 5-star hotel. The facilities consist of 5 units including: increasing accommodation capacities (197 rooms, 23 suites with a Launch bar, a presidential suite), in addition to 9 conference rooms, a restaurant , bar, wellness center, fitness and spa with an indoor swimming pool. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Chapter 20: Enterprise and Industrial Policy VII. Participation in Projects Co-Financed by International Organizations (1/3) GIZ, ADA, UNDP, USAID, SNV and EBRD Hiking and biking Peaks of the Balkans 5 in 5 Training for entrepreneurs of small and medium-sized businesses on the following topics : * Services oriented towards the needs of tourists * marketing and sales * creativity and innovation Support the development of rural tourism Management and support to sustainable tourism development in the National Parks of Montenegro Development of cultural tourism Support the development and promotion of Active & Adventure tourism Installation of tourist signs M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Chapter 20: Enterprise and Industrial Policy VII. Participation in Projects Co-Financed by International Organizations (2/3) Projects in the tourism sector, within the Cross-border Cooperation Program with Serbia, Albania, Croatia, BH. (15 projects) 1.“Construction of roads for tourism cooperation through the development of craftsman products”(budget: €149,191.81) 2.”Valorisation of the ethno-gastronomic heritage of Skadar Lake”(budget: €86,438.88) 3.“MARUBI-cooperative model for the promotion of tourism between Shkoder and Ulcinj” (budget:€194,075.00) 4.”Placement of common tourism products on the international market” (budget: €194,441.00) 5.”Farm Tour, rural tourism development in Northern Albana and Eastern Montenegro” (budget: €96,279.00) 6.”Development of tourist itineraries for cross-border areas between BH and Montenegro” (budget: €93,518.31) 7.“One-year tourism in mountain destinations of BH-MNE 365“ (budget: €439,340.40) 8. ”Eco and cultural tourism in the Southern Dinarides” (budget: €183,370.00) 9. “Sustainable cross-border development of the Municipalities of Foca and Pluzine” (budget: € 389,319.13) M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Chapter 20: Enterprise and Industrial Policy VII. Participation in Projects Co-Financed by International Organizations – IPA(3/3) 10. “Joint promotion and increasing the level of safety of nautical tourism in the Dubrovnik-Neretva County and Montenegrin Coast” (budget: €205,011.00) 11. ”Nature for the Future” (budget: €189,669.65) 12. “Business cooperation and improvement of skills in the development of recreational tourism“ (budget: €234,189.94) 13. ”Traditional olive production as part of cross-border tourism” (budget: €249,270.09) 14. “Sustainable tourism for equal opportunities/chances” (budget: €180,977.94) 15. “Through culture and tourism to a better partnership” (budget: €249,588.00) IPA Adriatic Cross-Border Cooperation: 1. ”Integrated activities for promotion of sustainable development - TUR.GRATE 2” (budget: €450,000.00) (Source: Ministry of Foreign Affairs and European Integration) M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

Thank you for your attention! QUESTIONS