Government of Montenegro Ministry of Economy May 2015

 area: km 2 (360 km 2 of sea)  capital: Podgorica  old royal capital: Cetinje  population:  political system: parliamentary democracy  official language: Montenegrin  official currency: Euro €  airports: Podgorica, Tivat  sea ports: Bar, Tivat, Kotor, Zelenika

nd quarter GDP at current prices (€ million) 3,149.03,335.91,436.1 Real GDP growth (in %) Inflation (in %) Employment growth (%) Unemployment rate (%)

 economically and politically stable country  EU and NATO candidate  WTO member  investors from around 90 countries  highest SDI per capita in the region  lowest tax rates in the region  VAT refund  signed free trade agreements with EU, CEFTA, EFTA, Russia, Turkey, Ukraine  state and local tax and administrative incentives within business zones  financial incentives for direct investments (min €; min 20 new jobs)  exemption from custom duties

HIGHWAY BAR – BOLJARE constructor: CRBC, China (priority part) 809,6 mil €  works on construction of highway Bar – Boljare officially started on the 11 th of May 2015  construction of the priority part Smokovac – Uvac – Matesevo will last four years  the project of highway is a priority of the Government of Montenegro and is one of the elements of our strategy of integration with the European Union, which will enable greater and more secure mobility of people, goods and services

TARA GROUP investor: BTI, Switzerland  the Government of Montenegro has signed the Agreement on the sale of shares in the company `November 4` - Metal Parts Factory Mojkovac and `November 4 `- Products Factory Mojkovac  the company is divided into two companies - one company for military and one for civilian program, with almost identical ownership structure WINDFARMS  Krnovo, Nikšić – construction started; installed capacity 72MW; 112 mil€ investor: Ivicom Consulting, Austria & Akuo Energy, France  Možura, Ulcinj – installed capacity 46MW; 64 mil€ investor: Fersa, Spain II BLOCK OF TPP PLJEVLJA – in the pipeline constructor: Škoda Praha, Czech Republic  installed capacity 254 MW with the 39,5% of electric efficency by the price of 338,5 mil €  expected annual production 1.600GWh

JSC DAIDO METAL KOTOR investor: Daido Metal Co, Ltd. Nagoya, Japan over 150 million €  production of sliding sleeves for internal combustion engines TREBJESA BREWERY NIKŠIĆ investor: Molson Coors Brewing, Canada  previous owner was a company In Bev; the past 12 years were followed by a modernization of production, investment, market expansion, strengthening of social programs. STEEL WORKS NIKSIC - TOSÇELIK investor: Tosyali Group, Turkey 15 million €  Tosçelik increased its capacity and current product variety as a property of Tosyali Group.

PORTO MONTENEGRO investor: Adriatic Marines, Canada/Montenegro over 150 million € Regent Hotel and Resort over 58.8 million €  248 berths for boats and is expected to build 250 new AMAN RESORT investor:Adriatic Properties, Greece/Montenegro over 50 millions € Spa Center Queen`s Beach over 7 million €  project evaluation of exclusive hotel Sveti Stefan, Miločer and Queen's Beach BIANCA & AVALA RESORT AND SPA investor: Beppler and Jacobson, UK 25 million€  two luxury hotels on the north and on the south of the Montenegro

LUŠTICA DEVELOPMENT investor: Orascom development, Switzerland  minimum investment obligations under the contract amounts to 150 million €, expected 1.1 billion € PORTONOVI/ONE & ONLY investor: SOCAR, Azerbaijan  planned construction of tourist facilities with additional facilities and marina, with a total value of 480 million € PLAVI HORIZONTI investor: Qatari Diar, Qatar  tourism facilities on the site of Plavi Horizonti  total investments are estimated to amount to 250 million €

Electric Power Company investor: a2a, Italy  a2a, Italian company, is owner of the 43.7% shares in Electric Power Company ‘Elektroprivreda Crne Gore’ SUBMARINE CABLE investor: Terna, Italy 777 milion €  capacity: 2x500MW HVDC cables; length: 415km (390km undersea)  from Italian side, 140km is already constructed

 FDI in 2014 :: January – November 446,588.3 mil €  over the last decade, Montenegro was recognized as one of the top-rated countries with highest income of FDI per capita in SEE region  investors from around 90 countries FDI (mil €)

 corporate profit tax: 9%  personal income tax: 13% and 9%  in economically underdeveloped municipalities in Montenegro, whose development index is below 75, a newly established legal entity does not pay corporate income tax and personal income tax if their total amount does not exceed the amount of €200,000 for the first eight years of operation.  VAT: 19% and 7%  real estate transfer tax: it is propotional and amounts to 3% of the tax base  property tax: ranging between 0.1 % - 1% of the immovable property’s market value  national treatment-foreign investor can, at the territory of the Montenegro, establish a company and invest in a company, under procedures and conditions under which local nationals can establish companies, or invest assets in companies  no limit in terms of invested capital - foreign investors are allowed to invest in any branch of industry and freely transfer of financial and other resources, including profits and dividends

 financial incentives for direct investments  by new Decree this funds shall be allocated on the basis of a public invitation for investment projects whose minimum investment value is 500,000 euro and which ensure opening of at least 20 new jobs within three years from the date of conclusion of the agreement, and foreign investor can be the beneficiary of funds if it establishes a business entity in Montenegro. The amount of funds to promote investment that can be allocated from to per new job  Decree in Italian language you can find on enclosed web-site:  criteria for awarding funds for direct investments are:  reference of the investor  the effect of the investment project on the productivity of suppliers and other business entities from Montenegro which operate within the same industry sector  viability of investment project  effects of investment project in connection with research and development  effects of investment project on human resources  environmental impact assesment  international trade volume  effects of investment project on the development of less developed local government units  letter of intent of the local government where the investor intends to invest.

 business zones represent the partly or fully equipped space in one local municipality where investor could establish production facilities under special conditions using tax and administrative incentives on state and local level  8 established business zones in Montenegro: Berane, Bijelo Polje, Mojkovac, Kolasin, Niksic, Cetinje, Podgorica, Ulcinj  business zones incentives:  state incentives: employers shall not pay contributions for compulsory social insurance on wage earnings;  local incentives: payment of utility or other charges; bargain price of lease/purchase of premises within business zones; reduction or exemption from surtax on individual income; lowering tax rates on real estate; the possibility to define a favourable model of public-private partnership; equipping with infrastructure areas which do not have a developed infrastructure