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Southeast European Times: Montenegro sets its sights high

Published date: 28.11.2006 15:46 | Author: Kliping inostranih medija

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By Robert C. Austin for Southeast European Times 27/11/06

With its spectacular coastline and rugged mountainous interior, Montenegro has great tourist potential. Now that the republic has gained independence from the former state union with Serbia, some say it could become the next Monaco. Examples abound -- one need only think of Greece, Portugal and Spain -- of the economic benefits arising from international tourism. Newly sovereign Montenegro is well-poised to seize the opportunity.

Defying predictions that the May independence referendum would sow instability, Montenegro actually saw its tourism numbers grow this past summer. Currently, a mad rush is on to buy property, while the government has endeavoured to make investment there as painless as possible. Revenues can be expected to continue growing annually, and investment figures -- fueled by the massive property boom -- are impressive. Indeed, Montenegro is third in Europe in terms of per capita foreign direct investment.

So far, Russians have been the key players. With investments estimated at $2 billion, they dominate a sizeable chunk of the economy. Among other strategic assets, they own the crucial aluminum factory in Podgorica. Not everyone in Montenegro is entirely happy with so much Russian money flowing in, and the government has been keen to diversify. Those critical of the Russians express doubt that pledges will be kept, particularly environmental guarantees.

Russians also account for the largest growth rate among international tourists. While they are often perceived as dominating the industry, however, the actual situation is more complex. Slovenes, for instance, have developed a new coastal hotel in Sveti Stefan. An Irish interest has bought Hotel Fjord in Kotor and Britain's Beppler and Jacobson has made a large investment in a spa resort in Kolasin.

Nevertheless, the Montenegrin government has continued to seek something bigger from the West. The United States has sent the odd warship calling on Montenegro but has provided surprisingly little foreign investment. Montenegrins likely hope that NATO membership and a possible fast track to the EU will give them more leverage to attract western capital and reduce the dependency on Russia.

It now appears that big investment has finally arrived. A deal has been concluded with Peter Munk, one of Canada's leading industrialists and the chairman of the world's largest gold producer, Barrick Gold. Munk also owns a piece of TriGranit Development Corporation in Budapest. TriGranit has already established itself as the region's leading developer, with successful projects completed or on the go in Bulgaria, Hungary, Poland, Slovenia, Romania and Russia. TriGranit also has future development plans in Montenegro.

In late October, Munk concluded talks with the government on the purchase of a former shipbuilding and naval yard once controlled by the Yugoslav Army, at a superb location on Kotor Bay with easy access to a nearby airport. The deal paves the way for developing a major marina in the coastal town of Tivat.

Munk notes that the investment has huge transformative potential and that his plans are not typical. "It is not a factory changing hands. We are establishing a brand new industry which will enable Montenegro to be competitive with the most successful yacht harbors on the Mediterranean," he says.

The level of investment in international tourism will create enormous potential for people in the region, Munk adds. For Montenegro, sources inside and outside the government say, Munk's investment is more than just another tourist project. It is the first substantial investment from the West and one that should act as a catalyst for more of the same.

Munk plans to totally redevelop a 24-hectare site into the largest luxury yacht marina on the eastern Mediterranean with over 700 berths. It is expected to attract a high-end clientele and this is in line with some of the general trends in Montenegro's tourism strategy. The investment will bring massive infrastructure improvements. In essence, a whole new Tivat will emerge over the next three years. The first stage of the investment is $150m, with a total cost of $500m once the project is complete.

The first big step is to get Tivat's environmental house in order. Years of shipbuilding and military activity have left a deep imprint on Kotor Bay. In co-operation with the EBRD and the World Bank, an environmental cleanup will start.