2
P R O T O C O L
of the first meeting of the Joint Commission on Economic Cooperation
between the Government of the Republic of Slovenia and the Government of Montenegro
Ljubljana, 24 and 25 April 2012
The first meeting of the Joint Commission on Economic Cooperation between the Government Republic of Slovenia and Government of Montenegro (hereinafter referred to as the Commission) took place in Ljubljana on 24 and 25 April 2012, in accordance with Article 4 of the Agreement on Economic Cooperation between the Government of the Republic of Slovenia and the Government of Montenegro signed in Budva-Pržno on 5 September 2011. In accordance with Article 8 of the Agreement, the Agreement will enter into force on 28 April 2012. The Contracting Parties agreed on provisional application of the Agreement from 29 March 2012.
The Slovenian delegation was headed by Dr Stanislav Raščan, Ambassador, acting Director-General, Directorate for Economic Diplomacy, Ministry of Foreign Affairs of the Republic of Slovenia.
The Montenegrin part of the Commission was headed by Mr Goran Šćepanovič, Deputy Minister for Multilateral and Regional Trade Cooperation and Economic Foreign Relations, Ministry of Economy.
At the meeting, the following agenda was adopted by the Heads of the Commission:
1. Overview of the economic situation in both countries, with particular emphasis on the exchange of information on current economic indicators.
2. Economic cooperation between the Republic of Slovenia and Montenegro:
a) Exchange of information on bilateral economic cooperation;
b) Presentation of activities of the Slovenian e-Government;
c) Presentation of the work and activities of the Center of
Excellence in Finance (CEF).
3. Activities undertaken in working groups:
I. Energy;
II. Agriculture;
III. Tourism, Environment protection and Transport;
IV. Health
4. Miscellaneous
Ad 1)
Both sides reported on the current economic situation and the major macroeconomic indicators in their country.
Dr Stanislav Raščan, Ambassador, acting Director-General, Head of the Slovenian part of the Commission, provided information on the 2011 macroeconomic trends in Slovenia.
At the end of 2011, economic activity in Slovenia saw a further decrease. In 2011, Slovenian GDP fell by 0.2%. In the previous year, economic activity was boosted by international trade, which gradually calmed down. The domestic final consumption fell considerably, i.e. the consumption of households and the state was negative.
According to the March 2012 prognosis of the Office for Macroeconomic Analysis and Development (IMAD), the downward GDP trend recorded last year will continue. The fall of the Slovenian GDP in 2012 will amount to 0.9%. GDP is expected to reach EUR 35,641 million or EUR 17,428 per capita.
IMAD expects gradual growth of economic activity in 2013 and 2014, with the situation on the labour market worsening less intensively.
According to provisional data, Slovenia exported goods worth EUR 20.477 billion in 2011, 12.2% up on 2010, and imported goods in the value of EUR 22.158 billion, an 11.5% increase. The import-to-export ratio was 92.4%. Exports to the EU Member States accounted for 69.2% of total exports, whereas the imports from EU Member States accounted for 78.1% of total imports.
In 2011, the Slovenian current account balance of the balance of payments was negative, amounting to EUR 168.1 million.
At the end of 2011, annual inflation and the average annual inflation stopped at 2.0% and 1.8% respectively. According to a questionnaire on labour force, unemployment rate was 8.1%, whereas the rate of registered unemployment amounted to 11.8%.
The national consolidated gross debt at the end of the third quarter of 2011 amounted to EUR 15.884 billion or 44.4% GDP.
At the end of 2010, foreign direct investments (FDI) in Slovenia and direct investments of Slovenia abroad amounted to EUR 10.771 billion and EUR 5.518 billion respectively. In 2011, Slovenia recorded a net FDI inflow of EUR 794.2 million.
In 2011, tourist arrivals in Slovenia increased by 4%, exceeding 3.17 million. Foreign tourist arrivals increased by 7%.
The Republic of Slovenia officially became the 32nd member of the Organization for Economic Co-operation and Development (OECD) on 21 July 2010.
The Slovenian Development Strategy for the period 2013–2020 is being drafted.
Mr Goran Šćepanovič, Deputy Minister for Multilateral and Regional Trade Cooperation and Economic Foreign Relations at the Ministry of Economy presented data on major macroeconomic indicators in Montenegro.
In 2011, economic trends in Montenegro can be assessed as favourable. GDP achieved growth of 3% compared to 2010. Inflation rate totalled 3%, slightly higher than projected and it is at the level of inflation in the EU. Montenegro has managed to achieve growth in many sectors: 1) tourism, 2) construction, 3) telecommunications, and 4) forestry. A slight increase of 1% was recorded in average earnings compared to 2010. In 2011, unemployment rate was 11.55%, which is a decrease of 5% compared to 2010.
Projections were done for 2012 for the most important economic indicators, including two scenarios of growth: basic and low-rank scenario. According to this scenario, the predicted rate of GDP growth will be between 0.5% (low-rank scenario) and 2% (basic scenario), the inflation rate will be between 2% (basic scenario) and 3.5% (low-rank scenario) and unemployment rates will decrease to 11.3%.
According to provisional data from the Statistical Office of Montenegro, exported goods worth EUR 454.4 million in 2011, 37.5% up on 2010, and imported goods in the value of EUR 1.823 million, a 10% increase. The import-to-export ratio was 24.9% and it was an increase compared to the previous year, when it attained 19.9%.
2011 saw a trade deficit amounting to EUR 1.368 million, which is more than the previous year.
Exports to the EU Member States accounted for 50.1% of total exports, whereas the imports from EU Member States accounted for 35.7% of total imports.
The national consolidated gross debt at the end of the third quarter of 2011 amounted to EUR 1.457 million or 44.5 % GDP.
According to the data from the Central Bank of Montenegro, total direct investments in Montenegro amounted to EUR 643 million at the end of 2010.
In 2011, total amount of foreign direct investment in Montenegro totalled EUR 534 million, showing a 22.83% drop, compared with the same period in 2010.
In 2011, Montenegro was visited by 1.37 million tourists or 8.74% more than in 2010, while foreign tourist arrivals increased by 10.04% and domestic tourist arrivals dropped by 1.6%.
Ad 2)
a) The delegations discussed bilateral economic relations.
The Head of the Slovenian delegation, Dr Stanislav Raščan, Ambassador, acting Director-General, presented economic cooperation between the Republic of Slovenia and Montenegro.
In 2011, Montenegro ranked 35th in terms of trade volume, which amounted to EUR 97.8 million, accounting for a 2.2% decrease compared to 2010. Exports accounted for EUR 84.4 million (2% up on 2010), and imports stood at EUR 19.3 million (17.2% down on 2010).
In 2011, Slovenia exported the following products to Montenegro: medicines (7.5%), petroleum-based oil (5.9%), cars and other motorised vehicles (4.7%), other food products (3.6%), new pneumatic tyres (2.9%), refrigerators, freezers (2.8%), ethyl alcohol (2.6%), newsprint paper (2.6%), other furniture and parts (2.4%), household paper products (2.1%), hair products (2%), electro-thermic appliances and household appliances (1.9%), washing/drying machines (1.5%), and other.
The most important Slovenian products imported from Montenegro in 2011 included: crude aluminium (54.6%), waste copper and scrap copper (17.4%), waste aluminium and scrap aluminium (9%), primary cells and primary cell waste, batteries and electric accumulators (3.7%), paper or cardboard waste and scraps (1.7%), essential oils (1.1%), scrap metal and steel and waste metal and steel (1.1%), iron and steel constructions and parts of constructions (1.1%), and other.
According to the data of the Bank of Slovenia, total exchange of service in 2010 amounted to EUR 29.7 million, accounting for an 8.4% fall compared to 2009. Exports of Slovenian services were worth EUR 18.5 million (11.1% up on 2009), and imports EUR 11.2 million (as in 2009). The decrease in imports was mainly the result of reduced transport services.
According to the data of the Bank of Slovenia, Slovenian direct investments in Montenegro amounted to EUR 169.8 million at the end of 2010, which represented 3.1% of Slovenia’s total direct investment abroad. At the end of 2010, there were no foreign direct investments from Montenegro in Slovenia.
The growth of FDI in the Republic of Slovenia between 1994 and 2010 was positive, except in 2001 and 2009. The fall in the value of FDI in 2009 was due to reduced net financing by foreign investors. The majority of FDI at the end of 2010 was channeled to:
- Financial services except for insurance companies and pension funds;
- Wholesale trade without motorised vehicles;
- Production of pharmaceutical raw materials and preparations with the concentration of investment value on a single investment;
- Retail sale;
- Real estate trade.
The Head of the Montenegrin delegation, Mr Goran Šćepanovič, presented economic cooperation between the Republic of Slovenia and Montenegro.
In 2011, the Republic of Slovenia ranked 4th in terms of trade volume, which amounted EUR 91.78 million, accounting for a 13.73% increase as compared to 2010. Exports accounted for EUR 30.293 million and imports stood at EUR 61.485 million.
In 2011, Montenegro exported the following products to the Republic of Slovenia: aluminium and aluminium products, mineral fuels, mineral oils and products of their distillation, copper and products of copper, electrical machinery, equipment and their parts.
The most important Slovenian products imported to Montenegro in 2011 included the following: mineral fuels, mineral oils and their products, nuclear reactors, boilers and machinery, paper, cardboard waste and scarp, pharmacy products, electrical machinery, equipment, and their parts.
According to data from the Central Bank of Montenegro, Slovenian direct investments to Montenegro amounted to EUR 34.366 million at the end of 2010.
In 2011, total amount of foreign direct investment from the Republic of Slovenia to Montenegro was EUR 19.619 million showing a 75% drop compared with the same period in 2010.
Most FDI at the end of 2011 were made in:
- Domestic companies and banks (33.8%),
- Real estate (36.4%),
- Inter-company debt (25.5%),
- Other (4.3%).
Both sides will strive to increase the value of mutual investments.
The Ministry of Economic Development and Technology, in cooperation with UNIDO, currently implements a project of the National Cleaner Production Centre in Montenegro – UE/MNE/09/001 – with a focus on "clean industry". At the request of project providers, the project was extended for a period of one year in December 2011 due to a delay in the implementation of the project of "clean industry" in a selected company. The Chamber of Economy of Montenegro and the University of Montenegro also participated in the implementation of the project led by a Slovenian company. The latter was tasked with the transfer of know-how.
As part of economic cooperation between the Republic of Slovenia and Montenegro, the issue of reciprocity in the return of value added tax needs to be settled.
Within the context of economic cooperation between the Republic of Slovenia and Montenegro in the financial field, the Slovenian and Montenegrin side exchanged information on the introduction of reciprocity with respect to return of VAT to persons liable to tax in Slovenia and Montenegro. Since both countries provide reciprocity to the same extent, they agree to establish reciprocity following the exchange of notifications through diplomatic channels.
Transport is an important element of cooperation between the two countries. Scheduled flights between Ljubljana and Podgorica by the Slovenian and Montenegrin air carriers Adria Airways and Montenegro Airlines play a significant role in the cooperation between the two countries both in tourism and the economy. Both heads of delegations proposed that both sides consider the possibility of reducing the prices of air tickets for scheduled flights between Ljubljana and Podgorica.
b) The Slovenian side informed the Montenegrin side of the advantages of e-Government and expressed the readiness to transfer the knowledge and experience in this field to the Montenegrin side.
c) The Slovenian side presented to the Montenegrin side the activities of the Centre of Excellence in Finance (CEF) established under the auspices of the Stability Pact for South Eastern Europe with a view to organising expert training in public finance management and central banking for CEF member countries (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, Moldova, Montenegro, Romania, Serbia, Slovenia, and Turkey) and other countries.
Ad 3)
I. Energy
Both sides noted with pleasure that companies and institutions of both countries have already established successful partnership in certain energy projects, thereby enhancing and contributing to positive institutional relations. At the Joint Commission, the two sides exchanged topical information on the major energy projects planned in Montenegro, emphasizing the importance of renewable energy and energy efficiency projects.
The Joint Commission welcomed the readiness and the intention of Slovenian companies to implement the best design, construction and operation practice for small hydroelectric power plants, which are the bearers of sustainable development of local community in energy production and water management. The Commission supports the signing of the Letters of Intent between the Turboinstitute and the Municipalities of Andrijevica and Šavnik on the Montenegrin side, expecting a positive impact on the sustainable development of local communities.
The Slovenian side would like to receive information from the Montenegrin side on the schedules for the construction of power lines in the Municipality of Šavnik, as well as notices for public tenders relating to watercourses in the municipalities of Andrijevica and Šavnik.
Both sides agreed to support continued partnership between Slovenian and Montenegrin companies and institutions in the investigation and exploitation of hydro potential in Montenegro. Both sides agreed to reconsider the activities under the signed concession agreement for the construction of hydroelectric power plants on Vrbnica River.
Improvement of energy efficiency in public facilities has been identified as the area of future cooperation between two countries. Project of refurbishment of five public buildings in Municipality Mojkovac and their connection to common central heating system on biomass is a pilot case of this kind of project in Montenegro.