Diplomacy &Commerce brings an interview with a lady whose name is another word for prestige in business community and who has been widely labelled as an unparalleled professional. The fact that she has been re-elected as the President of the AmCham Board of Governors, with the votes of representatives of 49 international companies in her favor, speaks volumes of Svetlana Vuksanovic. She believes that AmCham will continue to be a stronghold and loud promoter of a dialogue, economic strengthening of the country, enhanced competitiveness of Montenegro, catalyst of sustainable and green investment projects, promoter of the country to the renowned foreign investors and the main hub for exchange of the best business practices and experiences.
This year the American Chamber of Commerce in Montenegro marks its 15th anniversary. What do you see as the most significant achievement in the previous decade and a half and what would be the priorities to focus on in future?
The greatest achievement of the AmCham is reflected in the institutional improvement for dialogue between private and public sector and the unique contribution to the increased efficiency of economic and business processes in the country within the framework of platforms such as the Partnership for Better Business Environment and the Rule of Dialogue. In addition to this, we have managed to earn a position of a credible and trustworthy partner. To our delight, this has been recognized by all community partners.Moreover, we have been acknowledged for our support in identifying necessary reforms and capacity building for their effective implementation through the activities of our now more than 90 renowned members. It is worth recalling that AmChamundertakes to releasea biannual Business Climate Report, which allows us to follow key reform trends, commendthose reforms that have been successfully implemented, but also point out the areas of stagnation. Our findings are instrumental to identification of the most important processes needed for further improvement of the business environment, while at all times accounting for the welfare of society accommodating the business activity and the best interest of all the parties concerned. Therefore, AmCham remains committed to further promotion of the culture of dialogue, the rule of law, equal application of law, the overall economic development and making Montenegro an attractive investment destination.
So far, the AmCham members have invested in Montenegro close to 2 billion EUR. This year’s report of the AmCham, which as mentioned includes 49 members and employs almost six thousand people offers a number of recommendations to the executive branch of Montenegro. What do the indicators in the first half of 2023 suggest and which areas have been observed as a currently impossible puzzle in terms of business climate? Is there an ace in a hole and a strong bait at hand? What would be our comparative advantage over the countries with similar potential?
In the latest Report, the AmCham members pointed to the prospects of the long-term negative impact of the unpredictable political situation on the business climate, primarily seen through reduction of foreign investments, in particular those coming from credible investors who seek stable and predictable business environment. In this light, we expect decision-makers and all relevant stakeholders to attribute due importance to this cause, thus enabling conducive business climate for both local and foreign investors. As you have already observed, certain areas are still struggling with the chronical challenges.
Unfortunately, the rule of law, seen as a foundation of any developed society and economy that we strive to become, remains a major obstacle to the creation of a competitive and fair market, while frequent amendments to important systemic laws bring legal uncertainty. Other reasons for concern are the lack of an adequate workforce, the growth of informal market and insufficient incentives that would make Montenegro a more competitive investment destination compared to the region. Additionally, we maintain our suggestion that it is necessary for the state apparatus to prioritize its systemic response to the informal economy in order to stabilize public finances. Then again, as duly noted in your question, we still have some ace cards not shared to other countries, such as favorable geographical position, natural beauty, climate, culture and low cost of living. These features are always identified by the AmCham members as the most attractive elements of doing business in Montenegro. Other advantages of investing in Montenegro include the prioritization of European integration and the Euro as a currency, a favorable framework for foreign investments, especially in the field of innovation, a still stimulating tax policy, the size of the market – which offers great opportunities for digitalization and networking with decision-makers and simply launches Montenegro as a test market for numerous products and services that could be then placed globally.
In your public appearances you often draw attention to the gap in the labor market supply and demand. In doing so, you also offer a solution, especially with a view to the modernization of education program, as it seems that our educational system does not keep pace with the spirit of the time. Do you think the state has an ear for the AmCham Business Climate Report which showed that as much as 70% of the surveyed members believe that attracting candidates with appropriate skills would be one of the biggest challenges?
Correct. In the last Report we indicated that attracting of adequate candidates would pose a big challenge. As I have already emphasized, although a dialogue with the institutions of the system is in place, it requires commitment to its permanent improvement and strengthening and the awareness that this is an unending process. All programs and initiatives of the AmCham are based on the principle of mutual understanding and common aspiration to overcome certain social challenges such as, among other, the mismatch between the labor market supply and demand that you mentioned.
One of the key findings in our Report is that education of children and young people is not focused on skills needed in the labor market. This calls for implementation of comprehensive reform of the education system through the modernization of curricula and learning methods in educational institutions.
I have to emphasize that within the survey, our members also rated employees in Montenegro as communicative, work-dedicated, responsible, loyal and easy to train for new jobs and tasks, yet observed for lacking the initiative for improvement, as well as theawareness of the necessity of personal and professional development. Young people on the labor market lack enthusiasm, and have unrealistic expectations in terms of earnings. All the aforesaid suggests the decision-makers are required to give more serious consideration to the education system and professionalization of human resources and respond properly to the market needs. Likewise, the business community is required to contribute facilitating this process. As a joint task, it requires a responsible and comprehensive approach and a great deal of time.
From you point of view, has there been any change in the mindset of the citizens of Montenegro who prefer having a government job as, to their belief, a guarantee of a regular income and stability in general? What the private sector relying on foreign capital has to offer?
We can say that certain mindset changes have been observed, mostly thanks to the good practices of the socially responsible companies, the members of the AmCham. We are proud of their work and we endeavor to impose their values as a standard for the society in which we operate. Although we understand a government job is more attractive for the more because of the recent increase in salaries, on the long-run this is an unsustainable concept if not coupled with development of new competencies and increased productivity. We have pinpointed repeatedly that the state administration requires optimization and professionalization and in such context it is unreasonable to expect to have a stable public finance without generation of new values based on the entrepreneurship and innovations.
I believe the problem solution should start from education, meaning educational institutions that are required to instill entrepreneurship spirit in young people, including also the engagement of the members of society or business community that should offer their good practices as a benchmark for the society and the young people. I am confident that companies showing responsibility and ethics in their work, committed to the community and the environment, these companies indeed being the members of AmCham, will attract ever more interest. At the same time, all our efforts are focused on creating a conducive business environment that would attract to Montenegro as many socially responsible companies as possible.
It is a little-known fact that, according to the ICT Cortex analysis, the total revenue of the ICT sector in 2022 amounted to more than 600 million EUR, which means an increase by one-fourth compared to 2021. In this context, the IT sector has generated 21% of the total export of Montenegro, this being a historic high. Do you see potential in our human resources in this area, especially in terms of the rise of artificial intelligence and in relation to the often-heard promises that Montenegro will become a heaven on earth for digital nomads?
The results of the ICT Cortex are encouraging and actually confirm what we at the Chamber have pointed out repeatedly that Montenegro has an incredible potential for becoming competitive in the global market of the IT sector. Adequate support measures of the Government can facilitate development of the innovative economy, while at the same time strengthening traditional economic activities. It is worth noting that as an incentive for attracting digital nomads, the Government amended the Personal Income Tax Act which provides that digital nomads shall not pay the income tax where such income is higher than three average gross wages in Montenegro in previous year. Montenegro eventually becoming a globally recognized destination for digital nomads would have great promotional potential for us and help shaping the investment image of the state.
It goes without saying that Montenegro is a small system, yet the system that can be digitalized in a relatively short time provided that there is a sound and comprehensive strategy available and a political will to that end. Notwithstanding the infrastructure has been developed in compliance with the standards, there is a need for an advanced promotion of the e-services, a single unified database, access from a single platform and also the need for training and raising the awareness of citizens, employers and employees about the advantages of using digital services. The state should establish electronic payment systems, thus enabling the taxpayers topay public revenues at any place without a tariff. In this way, on top of the indisputable advantages of the timesaving and data collection, this would allow for safeguarding of public financethrough a minimized possibility of money ending up in grey flows.
However, we cannot neglect the fact that the acceleration of digital transformation during the COVID-19 pandemic indicated the lack of digital skills, both in the general population and among public officials. The AmCham members agree that the digital literacy of the population needs significant improvement and I expect this to become one of the priorities of the decision-makers in the forthcoming period. This effort will certainly be supported by the business community.
Where and how do you see Montenegro and AmCham within in one decade time – the year is 2033?
Even if assuming that the formal process of the accession to the European Union would be completed, it still would not mean that the social changes would not continue to follow their natural flow. I believe that as a society we should foster the culture of change, above all for our own sake. All members of the society should be required to engage and participate in the social life with an aim of preserving the principles of democracy, that is to say the rule of law, equal application of law and preserving living community. I am inclined to think that with every step closer to the standards of the other EU members, these values will gradually become our everyday life.
Already at this point I can say with full confidence that in the decade you referred to, the American Chamber of Commerce would still be a stronghold and loud promoter of a dialogue, economic strengthening of the country, enhanced competitiveness of Montenegro, catalyst of sustainable and green investment projects, promoter of the country to the renowned foreign investors and the main hub for exchange of the best business practices and experiences, something that can be offered only by this AmCham being a part of the European network of AmChams.