11. Major Investment Opportunities

Montenegro offers a wide range of investment opportunities. Some of them are very much unique (like the 13 km long sand beach in Ulcinj or Flower Island), some are challenging from a construction point of view (like highways or the railroad system) and some are quite complex (like investments in the energy sector). However, we are ready to hear your suggestions and ideas about the ways to transform society, transfer the newest technology and improve the business environment. The main purpose of this publication is not to present all the investment opportunities, but just to tickle your mind a bit and awaken your interest in one of the most beautiful countries in the world. Also, we would like to refer to our publication titled “111 Frequently Asked Questions” where you can find lots of additional information about establishing and doing business in Montenegro.

Here is a snap-shot of possible investment projects.

11.1 Tourism

MAMULA Island - Mamula presents a very popular one–day trip destination accessible by boat. The island has a circular shape (200m in diameter) and coastline which consists of a rocky surface with a small beach section. The fortress located on Mamula has no accommodations, food, beverage or boutique services. The developmental concept includes a luxury hotel with exclusive leisure, food service and wellness facilities, and berths for small and medium size yachts. The Government of Montenegro prefers a Public-Private Partnership and announced a Call for Expression of Interest.

JAZ - Situated in the central part of the Montenegrin coast, Jaz belongs to the cities of Budva and Tivat. Plans for the gradual development consists of an urban development concept, including a village complex offering accommodations, pensions, a water sport center, wellness facilities, food & beverage services, etc. The fields and hillside of Jaz must be surveyed in order to get a picture of the exact available area. The Rolling Stones, Madonna and Lenny Kravitz performed concerts on the beach of Jaz in 2007 and 2008.

BULJARICA - is located between the cities of Bar and Budva. It has the greatest development potential on the Montenegrin coast. The land is mostly private. The majority of owners are members of a local landowners association, which is interested in creating a joint venture with the potential strategic partners participating as share holder partners.  The developmental concept includes high quality residential accommodations, 4 -5 star hotels and a tourist village (all of it totaling up to 6500 beds). A marina is also planned, as are a business center and 18-hole golf course.

BIGOVO - The Bigovo cove is situated between the cities Budva and Tivat and adjacent to the historic fisherman’s village. There is easy air access to the property via Tivat’s international airport (20 kilometers from the site). In addition, the international airports at Podgorica (90 minutes) and Dubrovnik (90 minutes) provide two additional accesses.  The site is located on a peninsula, and extends from the seacoast inland, almost fully across the peninsula to the bay side. The site encompasses 38,940 square meters of land area, with leisure facilities currently on 2,873 square meters. Plans and issues for the gradual development include a leisure asset of the highest quality utilizing – and maintaining – the beautiful natural surroundings.

KUMBOR - Kumbor is located at the shores of Boka Kotorska Bay, 6 km from Herceg Novi. Kumbor is known as a tourism resort belonging to Herceg Novi Riviera. There are many small beaches and nice restaurants on the seafront. Plans and issues for the gradual development include the construction of a world class, unique multifunctional upscale tourism resort, 4-5 star nautical and commercial amenities with leisure facilities.

VALDANOS - Valdanos is located close to Ulcinj, southeast of Bar. It is one of the most beautiful locations along the Montenegrin coastline. This former military vacation camp, surrounded by olive trees, offers an unobstructed ocean-front view with exclusive privacy, a Mediterranean climate and an average of over 240 sunny days. Airports are 68 km (Podgorica) and 86 km (Tivat) away. Valdanos bay covers 4km2, which includes a pebble beach of approximately 100 meters in length and various low rise camp and general public service facilities, i.e. tennis courts and parking areas. The conceptual framework includes a five star resort, protection of the coastal area allowing up to 100 m2 of green surface per bed, luxury tourism accommodations of a maximum of 4 floors, and the protection of its ecological structure. Montenegro is primarily interested in Public-Private Partnership properties.

MEDITERAN - This asset is located within a national park in Žabljak at 1,456 meters above sea level. While it has direct access by paved road, the location evokes a feeling of almost wondrous isolation and connection with nature. It is adjacent to and walking distance from the famous Black Lake, and is completely surrounded by towering pines. Views from the site are of nature’s wonders – soaring pines and towering mountains – unencumbered by man-made intrusions. The intention is to create a world-class resort that is intimate in feel, as well as conceptually, aesthetically, functionally and ecologically in harmony with the incredible natural beauty and striking physical position of this property.

11.2 Infrastructure

HIGHWAYS - The Ministry of Transport, Maritime Affairs and Telecommunications of Montenegro announced a prequalification tender for prospective bidders for the execution

and implementation of a Public-Private Partnership (PPP) contract involving the design, financing, construction, operation and maintenance of a new motorway running from Bar to Boljare. The PPP contract will be awarded through a transparent and competitive tender process, in application of the best international practice and in accordance with the Decree dated May 29 2008, passed by the Government of Montenegro approving the project.  Prospective bidders who meet the criteria set forth in the Prequalification Document shall be invited to participate in an international competitive tender process for the Project. In addition, the Government of Montenegro is planning to develop the necessary documentation for the Adriatic-Ionic highway (so called west-east corridor) around 105 km long, that should connect the Croatian and Albanian side of the same highway.

RAILWAY – The Government of Montenegro adopted a restructuring plan which according to the company will be split into two separate: (i) that will be in charge of developing and maintaining the railroad infrastructure and traffic regulation and (ii) the second one in charge of operations (freight and passenger transport and maintenance of rolling stocks). Infrastructure management and traffic regulation will remain state owned, while joint investments with a strategic partner will be sought for Infrastructure maintenance on the basis of a long-term contract with the state. Privatization is planned for operations.

11.3 Transportation and Logistics

Montenegro Airlines - was founded fourteen years ago. It is registered for domestic and international passenger and charter traffic, as well as for the carriage of cargo and mail. Over the last 10 years, Montenegro Airlines linked Montenegro with the largest European cities: Frankfurt, Zurich, Paris, Rome, Vienna, Ljubljana, Moscow, London, Milan and Belgrade. Three million passengers have been transported so far. At the Shareholders meeting held in July this year, it was decided to move from a LLC to Joint Stock Company and to proceed with the new issue of shares, representing 30% of the current company value. Out of these 30%, five percent will be offered on the stock market, while the remaining 25% will be offered to a strategic partner. The consulting firm SH&E was selected as the advisor for privatization. Companies from Russia, Great Britain and Israel had shown interest in the privatization of Montenegro Airlines. The representatives of Montenegro Airlines have said that the European Bank for Restructuring and Development is also interested in privatization of this company.

LUKA BAR - The Port of Bar spreads over 200 hectares. The total length of the operational

coast is 3.5 kilometers, aquatorium maximum depth of 14 meters, and 120 thousand square meters are closed warehouses. In the port, there are five specialized terminals: for Ro-Ro and passenger traffic, general cargo, containers, solid and liquid bulk. Maximum capacity is about 5 million tons. The State posses 54.05% of total shares, while the remaining proportion is divided between: privatization funds (15.54%), workers (11.03%), citizens (18.33%) and other legal entities (1.05%). The port employs 1,371 workers. The average age of workers is 45. In accordance with a decision of the Government of Montenegro on the privatization plan, the sale of the state package of shares in the port shall be done on the basis of restructuring.

ADRIATIC SHIPYARD BIJELA - The shipyard is the largest ship-repairing yard in the Southern Adriatic. It was established in 1927 and nowadays it has a large experience and extraordinary human expertise and technical capacities. The shipyard offers its services at the international maritime market, and therefore the services it provides have almost exclusively the character of export. The main activity of the company includes ship repair and reconstruction. A Public Invitation is currently opened for submission of bids for the participation in the Tender for sale of 61, 5749% of the total equity.

11.4 Energy

Greenfield in hydropower plants on the River Moraca - The Government of Montenegro intends to develop the country’s untapped hydropower potential through Public-Private Partnerships. As a priority, the Government wants to develop the Moraca River potential through a series of four hydroelectric-power plants for a total installed of 238 megawatts (MW) and an annual production of 693 gigawatt hours (GWh). Extensive geotechnical and hydrological investigations have already been performed for the preparation of the technical documents. Legal Due Diligence, Detailed Spatial Plan and Strategic Environmental Assessments are expected to be completed by the end of February 2009. Interested parties may be requested to comment on the data from the existing technical documents, and to produce improved design proposals for the development of the Project.

ELECTRICAL POWER COMPANY - is a state-owned company carrying out activities in the area of electricity generation, transmission, distribution and supply. Pursuant to its statute, the Electrical Power Company is organized as a company whose core activity is electricity generation, transmission, distribution and supply. The Privatization Council has decided to start the procedure of recapitalization of the Electrical Power Company of Montenegro. It is estimated that by conducting this process, around 22% of the company will be privatized. Having in mind the current involvement of the private owners, that would lead to 45% of the total capital in private hands, while the state will keep the remaining 55%. The Council has formed a Tender Commission which will supervise and fulfill the process with the operative team.

11.5 Industry

DUVANSKI KOMBINAT PODGORICA - owns a network of retail stores and warehouses.  It employs 406 employees. The subject of sale is 100% of the company shares.