Investment ambient and opportunities of Montenegro Towson, April 12 th H.E. Miodrag Vlahovic Ambassador of Montenegro to United States

Macroeconomic data GDP growth % 10,0913,511,0 Inflation % 2,06,74,0 Employment growth rate % 4,45,73,7 Unemployment rate % 14,712,210,8 Export growth % 36,914,612,1 Import growth % 54,7208,5 Trade balance % of GDP 31, 5935,8733,27 Deficit/surplus % of GDP 3,43,10,7 Public debt % 25,1521,1519,97 Productivity growth (GDP per capita) % 3,51,33,2 2009: GDP growth -4%, Deficit 2,6% of GDP-a (90 mil €), Inflation-app. 3%

Investment Incentives The Law on Foreign Investment – 2000 (Amendments 2007)  Corporate income tax rate – 9% - lowest in the region  Value added tax – 17% (7% for tourism and IT products; 0% for some basic products)  Personal income tax –12% in 2009 and 9% in 2010  42 agreements avoiding double taxation  Average customs duty – 6,6%  Business registration procedure – 4 days

Advantages Political stability Macroeconomic stability Level of achieved Euro-Atlantic integrations (EU and NATO) Achieved level in negotiations for WTO accession Efficient and transparent tax system Reformed banking sector Simple and fast business establishment Liberalized foreign trade system (in accordance with WTO) Educated and qualified labour Attractive space for living Preserved environment

Good basis for foreign investors “Foreign investor” > 25 % of total capital invested Foreign companies in Montenegro are guaranteed equal legal treatment as local ones No limit on the amount of capital invested in Montenegro CEFTA membership FTA – Free trade agreement with Turkey and Russia

FDI in Montenegro  FDI per capita €  First nine months of 2009 FDI 857,5 €; 15,3% more then in 2008  Companies and banks – 628,2 million €  Greenfield investments 3,338 billion € in 2008

FDI in Montenegro by countries –  Italy – ,94 €  Russian Federation – ,70 €  Austria – 43,172, €  Great Britain – 41,076, €  Cyprus – 36,198, €  Hungary – ,01 €  Netherlands – 29,767, €  Switzerland – 26,383, €

Montenegro – success story in 2009 Electric Power Holding Company of Montenegro – EPCG Closure of transaction on 30 th of September 2009 A2A registered as owner of 43,7% of the shares of EPCG To increase power of production capacities on 90 MW Provide profit of 300 million €

Structural and legislative reforms  Labor Law  Decrease of taxes  Concession Law  Property Law  Construction Law  Elimination of business barriers  Improvement of infrastructure (transport, water supply, electricity supply, treatment of waste and waste waters, IT)  …

Major results in privatization process Telecommunication – 100% private ownership Banking sector – 100% privatized Capital market – 100% private ownership Agriculture – 100% private ownership Services – 100% private ownership Oil import and distribution – 100% private ownership Tourism – mostly private ownership EBRD – small scale privatization 3.7 (evaluation scale 1-4+) – large scale privatization 3.3 (evaluation scale 1-4+)

Planned privatizations (1) Montenegro Airlines  National flying company  99,88% share owned by the Government of Montenegro  Five Fokker 100s and two Embraers 195  In September 2009 adopted model for capital increase of 30%

Planned privatizations (2) AD “Montecargo”  Company provides services of transportation of cargo  Announced a public tender for sale of the majority stake in AD “Montecargo” in October 2009  Acquisition of a majority stake – 87,6358% of total capital Tobacco Company Podgorica  Announcing a public tender for the sale of the majority stake in the Tobacco Company is planned for 2010  Acquisition of a majority stake  Basic activities – primary processing and preparation of tobacco, cigarette production, whole sale and retail sale  Installed production capacities enable monthly processing of 400 t cigarettes (4800 t/year)

Planned privatizations (3) Hydro Power Plants on Morača River Hydro Power Plants on Morača River  HPP Andrijevo  HPP Raslovići  HPP Milunovići  HPP Zlatica ■ Total installed capacity 238,4 MW Annual production 721 GWh Annual production 721 GWh Time frame for construction of all power plants 6 years Time frame for construction of all power plants 6 years Construction costs 540 million € Construction costs 540 million €

Planned privatizations (4) Adriatic Shipyard “Bijela”  Announcing a public tender for the sale of the majority stake in the Institute “Adriatic Shipyard “Bijela” is planned for 2010  Acquisition of a majority stake  Company is the largest ship repairing yard in the southern Adriatic  Reparation of navigable vessels of all types and for all purposes of up to deadweight capacity  Capacities for manufacturing of navigable vessels – barges for various purposes with and without own drive, pontoons, working platforms, and other steel constructions  Shipyard field in area of m2 LLC “Maritime Affairs” Bar  Company is in ownership of “Port Bar”  Announced a public tender for sale of 100% stake in LLC “Maritime Affairs” Bar in October 2009  Concession for the period of 30 years

Health Institute “Simo Milošević”  Multidisciplinary health centre  Total area of facilities: m2  Announcing a public tender for sale of the majority stake in the Institute is planned for March 2010  Acquisition of a majority stake – 56,4806% of total capital Hotel-touristic company “Ulcinj Riviera”  Service and tourist company  Hotel “Bellevue”. Capacity beds, consists of three pavilions: Avala, Borik i Cer. Accompanying facilities include: two restaurants, cocktail lounge, terrace, souvenir shop etc.  Hotel “Olympic”. Capacity beds; rooms: 24 single, 96 twin-bedded,12three-bedded. Accompanying facilities: swimming-pool, terrace, congress hall etc.  Car park “Neptun” around m²  Car park “Češki kamp” around m²  Announcing a public tender for the sale of the majority stake in the HTP “Ulcinjska rivijera” is planned in 2010  Acquisition of a majority stake (60,7311% of total capital) Planned privatizations (5)

Thank you for your attention! H.E. Miodrag Vlahovic, Ambassador of Montenegro to United States