Montenegro

Workshop on the Montenegro Doing Business Indicators

Podgorica, 26-30 October 2009

The Ministry of Finance and Capacity Development Programme (CDP*) organized a workshop with an aim to inform the representatives of state institutions and public and private sectors of the methodology of 2010 Doing Business report indicators as well as of IFC (International Finance Corporation) recommendations on further reform steps in creating better regulation and favorable business environment in Montenegro.

Special value of this workshop is that the presentation of Doing Business Report in Montenegro was for the first time done in the way to gather all the interested parties in one place to talk about the results, methodology, and to hear the recommendations for improvements from the people who made the report.

Beside presentation of 2010 Doing Business Report and analyses of indicators and methodologies, the IFC’s recommendations for further reform in domains covered by the Report, nine indicators were also presented: starting a business, construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, contract enforcement, and closing a business.

The workshop on the Doing Business Indicators is a part of the “International Competitiveness Indicators” component of the Project “Strengthening capacities of Ministry of Finance to efficiently plan, analyze and manage the public finances in support to country’s aspirations for sustainable development and EU integration” , implemented by the Ministry of Finance of Montenegro and Capacity Development Programme (CDP) and financed by the Government of Netherlands.

At the workshop opening H. E. Mr. Igor Lukšić, Vice-President of the Government of Montenegro for international economic cooperation, structural reform and enhancing the business environment and Minister of Finance said: “We want to send a strong message that this is just one of many activities that we will implement in the upcoming period in order to control the implementation of all the activities concerning removing of barriers, because it has become one of the top priorities of the Government in the coming period. Recognizing the efforts invested and recording the reforms carried out in certain areas, the World Bank positioned Montenegro higher on the list of countries which are ranked in the Doing Business Report for 2010. According to analysis of the World Bank Montenegro has improved the business environment and improved its position six ranks compared to last year's report. On the basis of reviewed reforms they registered Montenegro's progress in 4 out of 10 regulatory areas.”

“Montenegro has made significant progress in terms of indicators for protecting investors, trading across borders and getting credit, but also there is a lot that can yet be done regarding the indicators such as obtaining building permits, tax payment, registering property and enforcement of contracts,” said Mr. Alexander Avanessov, UN Resident Coordinator and UNDP Resident Representative to Montenegro. “The Government wishes to actively participate in the reform of this sector which is a quality plus,” Avanessov said, and he added that Montenegro needed to adjust to the global circumstances dictated by the economic crisis. “We can clearly say that the next few years both the world economy and national economies will be in a completely different situation compared to the state before the economic crisis. More and more attention will be devoted to issues such as climate change, and creation of so-called environmentally friendly jobs,” Mr. Avanessov underlined. He pointed out that there has been word about serious partnership between the Ministry of Finance, World Bank, UNDP and the International Finance Corporation and institutions that are responsible for achieving good results. “Through capacity strengthening programmes with the Ministry of Finance, and with financial support from the Government of the Netherlands, UNDP will provide continued support for achieving further success in this area,” Mr. Avanessov concluded.

Mr. Milorad Katnić, Deputy Minister of Finance and Secretary of the Council of the Eliminating Business Barriers estimated that improving of indicators would create stimulus for investors and new jobs. “The workshop on the Doing Business Indicators has been organized with the aim of acquiring new knowledge and capacity building in creating a better and more efficient business environment in Montenegro. I am pleased that in five days 50 people from the State administration passed this training, that they got new skills and that they will use the new skills to improve not only the World Bank’s Doing Business Indicators, but also the environment, which will, we believe, create new incentives for investors, provide jobs and ultimately create opportunities for a better life for the majority of Montenegrin citizens.”

Deputy Minister Katnić added that that was the first time in the region that such a workweek had been organized, that Montenegro became one of the best reformers in a short period of time, and that next year, along the existing and the new base of knowledge, the country is expected to be placed among top reformers not only in the region but also worldwide.

*        *        *

More about the Workshop on the Doing Business Indicators:

The workshop on the Doing Business Indicators is a part of the “International Competitiveness Indicators” component of the Project “Strengthening capacities of the Ministry of Finance to efficiently plan, analyze and manage the public finances in support of the country’s aspirations for sustainable development and EU integration”.  The overall objective of the “International Competitiveness Indicators” component is to provide support for institutional strengthening and capacity building of the "Department for improving the business environment".

In more operational terms, the component is aimed at:

• Supporting the establishment of appropriate structures and processes within the Department that are required for its effective servicing of the Government and the Council for elimination of business barriers;

 

• Supporting the Department in establishing an appropriate system for measurement of international competitiveness indicators and in developing, in close cooperation with local partners, a White Book on the  international competitiveness of the Montenegro;   

• Providing an institutional framework for effective involvement of local experts on international competitiveness issues;

 

• Establishing a framework for effective communication on international competitiveness issues with various stakeholders within the country and abroad,  including organization of events on this subject. 

The desire of the government to actively engage in reforming these areas was the motivation to organize a workshop that would train government officials on the methodology of the Doing Business report, so that those that are directly involved in implementing the reforms would know exactly what is being measured and how these measurements take place.

Doing Business experts presented on nine indicators including starting a business, construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, contract enforcement, and closing a business.

The Doing Business team presented the most recent findings of the report, including the specifics on Montenegro and global best practices. The presenters explained and clarified the methodology of the indicators, as well as the impact of previous reforms undertaken by Montenegro last year, which included improvements in Starting a business and Dealing with construction permits. Many misunderstandings about the methodology and the rankings were clarified.

This included:
- whether levels of foreign direct investment impact the ease of doing business,
- why certain procedures are included, and
- the methodology behind time and cost estimates.

Some of the issues raised during the workshop will require further follow up by the Doing Business team. In this regard the workshop has been extremely helpful to put the right people on each side in touch with one another and thereby creating a platform for dialogue between the World Bank and the Montenegrin public and private sector.

An expert from the Doing Business reform unit was also present at the workshop and focused on specific recommendations on how Montenegro can continue to improve on each indicator. The workshop participants also included representatives from the Ministry of Finance, Ministry of Economy, Ministry of Justice, Ministry for Spatial Development and Environment Protection, Chamber of Economy, Montenegro Business Alliance, Union of Employers, Tax Administration, Real Estate Agency, Commercial Court, Central bank of Montenegro, Customs Administration, Municipality of Podgrica, Agency for Construction and Development of Podgorica.

The Doing Business team took note of numerous reforms which are in the pipelines by the relevant agencies such as the plan to unify social security filing and payments, the land administration project, short-term steps which should soon facilitate the registration of property such as the online posting of standardized contracts for the transfer of property and the introduction of notaries.

The action plan drawn up by the Doing Business reform unit on request of the government can now reflect these changes and will take into account future changes. Additional recommendations on how to improve on all nine Doing Business indicators were made by the Doing Business reform unit. Further discussions on this reform action plan will follow with the ministries present at the workshop next week.

The workshop provided a unique opportunity for all those present to learn about the experiences, challenges and future reforms that each institution is dealing with and set the scene for a fruitful collaboration between all parties. Collaboration between the Doing Business team, the Doing Business Reform unit and the government institutions of Montenegro who are working on reforms is extremely important in order for Montenegro to achieve better results in the next few years in an efficient and productive manner. UNDP stands ready to assist this process in the future.

*        *        *

More about the Project

The Project “Strengthening capacities of the Ministry of Finance to efficiently plan, analyze and manage the public finances in support of the country’s aspirations for sustainable development and EU integration” aims to assist the Government of Montenegro, in particular the Ministry of Finance, in strengthening its capacity to efficiently plan, analyze and manage the public finances of the country and consequently to support the country’s aspirations for sustainable development and EU integration. The Project is designed as a capacity building project whose main outcome should be an enhanced institutional and administrative capacity of the Ministry of Finance for financial analysis, management, and fiscal policy development. The Project supports continuous efforts of the Ministry of Finance for upgrading and strengthening the public finance function of the country, thus better serving development goals such as sustainable economic growth and poverty reduction.

There are five areas of the Ministry’s activities which have been selected to be in focus of the Project’s support: (i) Economic and Fiscal Program; (ii) Budget; (iii) Tax and Custom, (iv) International Competitiveness indicators, and (v) Insurance. Each of the five areas will be tackled through the three-pronged approach:

• Training of the key staff of the Ministry of Finance in areas, such as forecasting of macroeconomic indicators, mid-term budget planning, tax and custom regulations, financial reporting, and public policy initiatives.

 

• Upgrading the administrative capacity of the Ministry of Finance and supporting the process of legal harmonization of activities under the responsibility of the Ministry with those ones of the acquis communautaire.

• Strengthening of institutional mechanisms and procedures that are needed for more systematic information flows, regular monitoring and review of financial policies, and for better coordination with partner institutions.