1. 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

2. 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- Poglavlje 25 Nauka i istraživanje Bilateral screening: Chapter 20 Presentation of Montenegro Brussels, 28 November 2012 Chapter 20: Enterprise and Industrial policy

3. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Marko Vujović Deputy Minister Ministry of Economy marko.vujovic@mek.gov.me Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy Industrial policy in Montenegro

4. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union  Industrial policy is defined as conceived effort of the state to change production structure of nation and ensure structural adjustment in changeable conditions.  Industrial policy and its most important parts, like e.g. Strategy of development of manufacturing industry and Sector strategies, are parts of wider economic and development policy, streaming towards further development of industry and industrial manner of production as performance in economic and non – economic sectors. Institutional framework  Ministry of Economy I Institutional framework Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy

5. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy II Policy framework  In order to analyse relations between strategy documents and industrial policy of Montenegro, documentation basis, which includes 18 strategies and reports done in last 6 years, are shown: Montenegro in 21 st century – in era of competitiveness Economic policy of Montenegro for 2011 Recommendations for Government of Montenegro for economic policy for 2011 Economic fiscal program for period 2010 – 2013 Strategic priorities of economic policy of Montenegro for 2012 National strategy of sustainable development of Montenegro 2030 Strategy of regional development of Montenegro 2010 – 2014 Strategy of export support Strategy of support of FDI in Montenegro

6. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy II Policy framework Strategy of energy development of Montenegro until 2025 Policy and strategy of tourism development until 2020 Strategy of traffic development in Montenegro Strategy of construction development in Montenegro until 2020 National program of food production and rural areas development 2009 – 2013 Strategy for competitiveness support on micro level 2011 – 2015 Strategy of small and medium enterprises development 2011 – 2015 National program for integration of Montenegro in EU for period 2008 – 2012 Draft of Strategy of development of manufacturing industry in Montenegro 2012 - 2017

7. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje III Basic inputs for future Industry development Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy Components of industry development are: Increase of accumulation of physical capital and knowledge; Movement of work and capital towards sectors where their usage is more effective and which are followed with increased demand; Diversification of economic structure which influences on smaller level of exposure of trade changes and movement of demand; Diversification with emphasis on manner of comparative and competitive advantages.

8. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje IV Present trends in industry Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy Participation of industry production in GDP

9. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje IV Present trends in industry Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy  Participation of certain categories of industry production in GDP

10. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje IV Present trends in industry Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy  Comparison of manufacturing industry and all industrial production, regarding their participation in GDP, shows that some other sectors in last couple of years took significant participation in industrial production, comparing to traditional industrial sectors, e.g. metal – manufacturing sector, which is still very dominant, but slowly loses its influence because of the objective situation.

11. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje IV Present trends in industry Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy  Participation of industry production in total employment

12. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje IV Present trends in industry Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy  Participation of certain categories of industry production in total employment

13. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje  From shown relevant data, it is clear that in total industrial production, participation of employees in manufacturing industry make its highest number, which makes manufacturing industry even more important factor in future development of industry in Montenegro. Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy IV Present trends in industry

14. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje V Basic tasks of future development of industry in Montenegro Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy  Future development of industry in Montenegro should focus on two main tasks: 1.Improvement of process of restructuration of Montenegrin industry and enforcement of its market competitiveness, considering the process of joining the EU; 2.Improvement of industrial development which satisfies needs of current generations, on a way that it does not endanger capability of future generations to reach their own needs, that is industrial development.

15. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje VI Goals of future development of industry in Montenegro Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy  Based on previously mentioned tasks as well as experience from other candidates and EU member countries, goals of industrial development in Montenegro can be defined:  Goals that are referred to improvement of process of restructuration of industry of Montenegro and empowerment of its market competitiveness, concerning the period of transition and joining to EU  Goals referring to creation of conditions for sustainable industrial development

16. 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 Goals of future development of industry in Montenegro Chapter 20: Enterprise and Industrial policy 1. Regarding the process of transition and joining the EU: a) creating an environment for industrial enterprises; b) empowerment of capability of international corporation of competitiveness of Montenegrin industry; c) adaptation of industry in Montenegro to business environment in industrial structures of EU. 2. Creation of conditions for sustainable industrial development a) economically justified production that is focused on growth, in order to ensure positive opportunities for future generations; b) increase of employment considering other social aspects; c) decrease of pollution and other pressure on ecological system; d) efficient usage of natural resources; protection of economic capital and its productivity.

17. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje VII Industrial policy as engine of future development Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy  Important guidelines of industrial policy: 1.Industrial policy should arise from national long-term strategy of socio – economic development, manufacturing orientation and strategy of industry development; 2.Industrial policy should have importantly wider framework than public (state) intervention in industry; 3.Industrial policy has to sustain the widest national interest, which is reached with consensus of all directly interested parties; 4.Industrial policy has to flexibly formulated, with possibility of post correction from side of its actors, active participants (holders) of industrial policy.

18. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje VII OECD suggestions for industrial policy composition Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy As assistance to development of industrial policy, OECD suggested 10 basic goals of industrial policy: 1. Efficiency of industry; 2. Rationalization of total activities; 3. Adaptation of small and medium enterprises; 4. Structural adaptation of industry; 5. Solution of social problem, made throughout reconstruction of industry; 6. Adjustment of organizational structure of industry; 7. Creation of conditions for balanced industrial development; 8. Improvement of usage of industrial capacities: 9. Faster adaptation of industry on changeable society goals; 10. Protection of environment.

19. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje IX Main goals of the future development of industry Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy Definition of industrial policy in order to help strategic industries and ways of supporting their development Enhancing the competitiveness and export potential by accelerating privatization, attracting FDI, boosting scientific research, establishing an appropriate framework for entrepreneurship through improved management firms and improving market transparency.

20. 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 X Reaching goals Chapter 20: Enterprise and Industrial policy Regarding the recommendations of European Union, in order to create Industrial policy, Montenegro has reached further results on these fields: 1.Improvement access to finance the business - through activities of bank sector, Investment Development Fund, leasing companies and micro credit organizations; Credit lines will be created for crediting of SMEs, in order to provide start up support. 2. Competition Policy – this will be developed and reached throughout implementation of Regulatory Impact Assessment RIA, Guillotine regulatory reform and reform of Doing Business (this reform established the concept of one-stop shop, providing the easy way of gaining permits, shortening administrative procedures)

21. 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 X Reaching goals Chapter 20: Enterprise and Industrial policy 3. Improving infrastructure – numerous project have been and it will be implemented, which have a main purpose to improve quality and efficiency of energy, transport and communication infrastructure services. Throughout project of Business zones, the infrastructure in certain municipalities will be improved and adopted for industrial usage. 4. Industrial innovation – promotion of industrial research, development of advanced manufacturing technologies, promotion and development of new business concept, such as Business zones and Clusters. a)Through development of Business Zones, Montenegro within clearly defined space, provides to investors numerous tax and administrative reliefs. b)Development of Clusters in Montenegro will contribute to balanced regional development and increase of competitiveness of SMEs.

22. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Poglavlje 25 Nauka i istraživanje X Reaching goals Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy 5. Attracting FDI – Montenegro has created competitive strategies for attracting foreign investors; business ambient has a lot of relieves that provides favorable conditions for investors. 6.Support for development of SMEs. 7.Competitive tax policy and business barriers – Montenegro has the most competitive tax system in region and there is ongoing work on removing business barriers.

23. Thank you for your attention! QUESTIONS