Tourism policy is reflected in the following sustainable development goals of the UN 2030 Agenda:
SDG 8: Decent work and economic growth
8.9. By 2030, devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products.
SDG 11: Sustainable cities and communities
11.4. Strengthen efforts to protect and safeguard the world’s cultural and natural heritage.
SDG 12: Sustainable production and consumption
12.b Develop and implement tools to monitor sustainable development impacts for sustainable tourism that creates jobs and promotes local culture and products.
SDG 14: Life below water
14.7. By 2030, increase the economic benefits to Small Island developing States and least developed countries from the sustainable use of marine resources, including through sustainable management of fisheries, aquaculture and tourism.
In terms of the National Sustainable Development Strategy by 2030 and the accompanying Action Plan, Montenegro committed to the following:
– Improve local entrepreneurial infrastructure and business environment for SME development and entrepreneurship (SDG 8.9.1) towards operationalising national and local tourism business zones through financial support for infrastructure development, better promotion, tax and administrative facilities at the central and local levels, as well as growth in investments in tourism fostered by fiscalisation measures. The aim is to provide additional facilities for investors in the northern and central regions of Montenegro through the model of tourism development zones (green investments in tourism), define the model for establishing, managing and operation of the zones of national interest, and introduce incentives for prospective investors by amending legislation and adopting specific regulations governing tourism zones (SDG 8 – 8.3). Strengthen incentives and tax facilities in tourism to foster the development of high-category hotels and building new forms of tourism products aligned with sustainable development principles and strategic planning documents (reducing the return on investment time in high-end hotels down from 20 to 12 years, increase the net positive impact on public finance and employment).
– Increase the significance of culture as a fundamental value of spiritual, social and economic development greatly conducive to better quality of life, promote culture tourism as one of the most important niches and achieve sustainable tourism with the emphasis on culture and eco tourism, given that through the development of culture tourism and other forms of sustainable tourism, agriculture, crafts and creative industries (SDG 11 (11.4) and SDG 8 (8.9)) there is a need to put cultural heritage to sustainable use.
– Resource-efficiency needs to be improved in tourism: foster greening of tourism and greater resource-efficiency through the support to green investments in hotel and hospitality establishments, as well as in water and waste management facilities during their construction; reduce waste generation from tourism activities and improve waste management; protect sensitive ecosystems impacting tourism development; foster the introduction of green technologies in tourism, and maintain the destination appeal in the long run, including the non-technological innovation through eco-management, marketing, new business forms or organisational setups; improve market regulation where pricing signals are ineffective (create better pricing signals and market instruments with the ability to reduce costs caused due to adverse environment externalities); introduce green procurement to foster green innovation (links with NSDS goal 4.5), SDG 6 (6.3), 7 (7.3), 11 (11.6), 12 (12.b), 15 (15.5).
The following EU Acquis chapters are relevant for the tourism policy:
Chapter 3 – Freedom to provide services, concerning tourism services, given that pertinent Acquis enables the functioning of the European internal market and includes the right of establishment in any of the European Union Member States. Right of establishment entails the right to start and operate a business in any member state by incorporating a company or as a self-employed person. The right of establishment will allow Montenegrin business entities to launch, start and perform business activity on a sustained and continued basis in one or more EU Member States.
Chapter 11 – The Common Agricultural Policy of the European Union (CAP) is one of the most complex and significant policies of the European Union (EU), both in terms of the volume of the acquis and the resources from the overall Union budget intended for this area. CAP objectives can be achieved through two pillars. The first pillar is related to direct payments and common market organization, and the second pillar is related to rural development policy.
Chapter 20 – Enterprise and industrial policy aims at creating an enabling environment for producers and entrepreneurs by supporting their competitiveness and fair participation in business activities in Europe and globally. Topics covered include industrial policy, financial support instruments for SMEs, tourism industry, aviation and maritime industry, wood industry, steel and metal industry.
Chapter 27 – Environment includes a wide-ranging body of acquis which is quite demanding even for the current Member States: horizontal legislation, air and water quality, waste management, nature conservation, industrial pollution prevention and risk management, chemicals and genetically modified organisms (GMO), noise and forestry, whose consistent implementation will create an environment conducive to further development and promotion of Montenegrin tourism and Montenegro’s constitutional designation as an ecological state.
Some obligations in tourism policy stem indirectly from chapters 12, 14, 19 i 28.
Starting from the strategic commitment to the European perspective of the Western Balkans, expressed at the Thessaloniki Summit in 2003, and then confirmed in the Enlargement Strategy in February 2018, the European Union proposed, two years later, the new accession methodology for the Western Balkans (Enhancing the accession process – A credible EU perspective for the Western Balkans), aimed at more dynamic and credible pre-accession negotiations. One of the key novelties introduced by the new methodology introduction of the so-called thematic clusters, grouping several negotiating chapters, introduced in order to shift the political focus of the candidate countries to the key sectors, but also introduce sanctions in case of lack of implementation of the necessary reforms and fulfillment of pre-accession obligations. Negotiations on each of the six clusters will be opened as a whole, once the benchmarks have been met.
Cluster 3 – Competitiveness and Inclusive Growth, according to the new EU methodology for the Western Balkans, includes negotiating chapters: 10, 16, 17, 19, 20, 25, 26 and 29. Negotiating chapter 28 – Consumer and Health Protection make part of the Cluster 2 – Internal Market.
The latest European Commission Montenegro 2021 Report notes that „Montenegro has made some progress and is moderately prepared in developing a functioning market economy. In spite of some delays due to the pandemic, the government continued implementing some of the envisaged reforms of the business environment. An orderly government transition in the middle of the crisis preserved the effectiveness of the COVID-19 policy response. The new government managed to mitigate fiscal risks by accumulating sizeable fiscal buffers to cover 2021 financing needs, including for additional COVID-19 support programmes.” The economy still suffered from the restrictions to contain the epidemiological situation in the first quarter of 2021, with real GDP contracting by 6.4% y-o-y. Strong base effects, the easing of containment measures and some pick-up in tourism activity turned annual growth positive in the second quarter, as retail sales surged by 19.6% y-o-y, exports rose by 53.4% y-o-y, while the rise in domestic demand also fuelled a sharp (28.6% y-o-y) increase in imports. The dramatic fall in services exports, in particular tourism, affected Montenegro’s traditional surplus on the services account, which shrank to 4% of GDP in 2020, down from 20% of GDP a year earlier. Travel restrictions and the slowdown of tourism have reduced the demand for seasonal workers. Some 34,755 temporary residence permits were issued in 2020, an 18% drop from 2019.
The aim of EU tourism policy is to maintain the position of a leading destination while maximising the contribution of tourism industry to growth and employment, and promoting collaboration among EU member states, particularly through sharing of good practices. In June 2010, the European Commission adopted the document entitled Europe, the world’s No 1 tourist destination – a new political framework for tourism in Europe, setting the new EU tourism strategy and the action plan. It hinges on four priorities:
The Commission package on tourism and transport in 2020 and beyond, adopted in May 2020 in response to the COVID-19, is composed of three guidelines and a recommendation to help EU countries gradually lift travel restrictions while respecting necessary health precautions. The package includes: a chapeau communication on tourism and transport; a common approach to lifting restrictions of free movement at EU internal borders in a gradual and coordinated way, mirroring the progressive lifting of domestic restrictions; a common framework to support the gradual re-establishment of transport whilst ensuring the safety of passengers and personnel; a recommendation to make travel vouchers an attractive alternative to cash reimbursement; and common criteria and principles for gradually and safely restoring tourism activities, in particular for health protocols for hospitality (hotels, etc.).
In 2015, one in ten enterprises in the European non-financial business economy belonged to the tourism industries. These 2.4 million enterprises employed an estimated 12.7 million persons. Enterprises in industries with tourism related activities accounted for 9.2 % of the persons employed in the whole non-financial business economy and 21.5 % of persons employed in the services sector. The tourism industries’ shares in total turnover and value added at factor cost were relatively lower, with the tourism industries accounting for 3.8 % of the turnover and 5.7 % of the value added of the non-financial business economy.
Coastal and maritime tourism is the largest maritime activity in Europe and employs almost 3.2 million people, generating a total of € 183 billion in gross value added and representing over one third of the maritime economy. As much as 51% of bed capacity in hotels across Europe is concentrated in regions with a sea border. EUROSTAT reports that over 656,000 tourist accommodation establishments active within EU-28 in 2016 compose the industry offer. Altogether, they provided more than 31 million bed places. According to the same source, the number of nights spent in tourist accommodation in the EU continued to grow in 2017 (5.2 %), reaching more than 3.1 billion nights.
EU Strategic Framework
In line with the development vision set in the Development Directions for Montenegro 2018 – 2021, the aim is to implement activities focused on continued development – building quality infrastructure and harnessing natural resources to sustainable limits through development projects, particularly in sectors where Montenegro has the competitive advantage, such as tourism as an industry whose key challenge remains to upgrade and diversify its tourism product, given that key limitations of the previous tourism development concept include insufficient number of high-quality accommodation establishments, regional disparities and still highly pronounced seasonality. The prospects for health tourism development were recognized by the Smart Specialization Strategy 2019-2024, while specific potentials of this industry, are elaborated by the Rural Tourism Development Programme 2019-2021 and the Programme for Culture Tourism Development.
The World Economic Forum (WEF) ranks Montenegrin tourism competitiveness in its 2019 Report at 67th place in the world (out of 140 countries). The tourism competitiveness index is 3.9. Travel and tourism play a major role in the growth and transformation of Montenegro. Directly and indirectly, they make up over 25% of GDP. Direct employment in tourism accounts for 7.6% of employment in Montenegro, and total (direct, indirect and induced) accounts for over 19% of total employment in Montenegro.
Montenegro Economic Reform Programme 2021 – 2023 states that the strong impact of the COVID-19 virus pandemic on the economy of Montenegro, in an environment of high tourism dependency, with contemporary closing of state borders during the summer tourism season, have led to the real GDP drop of 15.2 percent, the public finances outturn at the level of 11.1 percent and growth of the already high public debt to the level of 104.2 percent in 2020. The most recent short-term indicators also show to further economic activity downturn. In 2020, Montenegro registered 79.2 percent less visitors in collective accommodation with 79.8 percent less overnight stays, if compared to 2019. The preliminary data of the Central Bank of Montenegro for 9 months of 2020 indicate an annual drop of 88 percent in revenues from tourism. Apart from tourism, other associated activities have also recorded decline in activity.
To assuage the adverse impacts of the COVID-19 on the economic activity in the country and the deteriorated financial status of the most vulnerable populations in Montenegro, on 19 March 2020 the Government of Montenegro adopted urgent measures in response to the negative economic effects of the Coronavirus Pandemic. At its session held on April 24, 2020, the Government of Montenegro adopted the Second Package of Measures to Support the Economy. As a part of the Second Package of Economic Support Measures, The Government of Montenegro has adopted the Assistance Program to support the economy and employees, in order to mitigate the negative effects of the Coronavirus Pandemic (COVID-19). In part of the subsidies approved for the tourism sector, subsidies were approved to economic entities (entrepreneurs and companies) in the field of tourism, whose activity hasn’t been stopped, but has suffered significantly as a result of measures undertaken by the Ministry of Health in order to combat the global pandemic. All other representatives of the tourism industry were covered by subsidies for affected activities by means of subsidies on gross wages of employees for April and May 2020 to entrepreneurs and SMEs for the activities which were not stopped, but were significantly reduced as a result of the health precaution orders issued by the Ministry of Health. Companies and entrepreneurs operating in the field of tourism were eligible for 100% of the subsidy, and companies operating in the field of catering and transport for 50% of the subsidy for June 2020.
At its session held on June 18, 2020, the Government of Montenegro adopted the Information on the implementation of the Program to provide support to the economy and employees, in order to mitigate the negative effects of the Coronavirus Pandemic (COVID-19). After € 280 mil. in the First and € 40 mil. in the Second Package, on July 23, 2020, the Government adopted the Third Package of Economic Support Measures to provide support support to the economy and employees, in order to mitigate the negative effects of the Coronavirus Pandemic (COVID-19) worth €1.22 bil, covering a period of four years. The purpose of the short-term measures from the Third Package was to support the tourism sector in the amount of €83,350,000 (VAT rate will be reduced from 21% to 7% on the preparation and serving of food and soft drinks in all catering activities for a period of one year) and supporting the economy through wage subsidies, including tourism, totaling at €16.2 mil. In order to create conditions for the efficient recovery of tourism business, which implies coordinated cooperation of a large number of participants in the tourism product development, long-term measures in the tourism sector were aiming at:
– objective perception of changes in the market (analysis and research) with constant flexibility in relation to the new circumstances (prompt response, adaptation to the situation);
– establishment of a more favorable legislative and financial environment in order to support investment activities;
– stimulus for investments in sustainable tourism projects;
– promotion of public-private partnerships;
– incentives for new technological solutions, digitalization and innovation;
– implementation of digital platforms, use of ICT technology, artificial intelligence, virtual reality and other new forms of communication in marketing.
The Government of Montenegro has adopted on October 15, 2020 the Information on the extension of the Wage Subsidy Program in order to mitigate the negative effects of the epidemic of the new Coronavirus Pandemic (updated on October 22, 2020). On January 28, 2021, the Government of Montenegro adopted the Measures to Support the Economy and the Citizens for the 1st Quarter of 2021. Additional support measures for tourism and catering offered by the Fourth Support Package included: 1. Increasing degree of liquidity of economic entities in tourism industry and catering by means of annual fees for the use of the marine property (€3,500,000 – 2021); 2. Creating conditions for attracting tourists from priority markets by means of subsidies to tour operators (€150,000 – 1st Quarter 2021); and 3. Tourist vouchers for education and health professionals and support to providers of private accommodation (€5,500,000 – June 30, 2021). As a result of the need to continue support in the 2nd Quarter od 2021, taking into account the fact that the Montenegrin economy still, to a significant extent, feels the consequences of the Coronavirus Pandemic, Measures to the Economy and the Citizens in the 2nd Quarter of 2021 were adopted by the Government of Montenegro on April 29, 2021. Measure 2.9 – Support to tourist guides – assumes implementation of financial support to tourist guides (individuals) who are registered, as unemployed, in the records of the Employment Agency on March 31, 2021. The procedure and the criteria for these one-time-off grants to tourist guides, in the amount of €300, are defined by a separate program.Measure 3.3 – Reduction of the annual fee for the use of marine property – continues from the 1st Quarter and assumes reduction of the agreed annual fee for the use of marine property during 2021 to users / tenants who operate seasonally or throughout the year, in restaurants bathing areas, temporary locations, ports, in the amount of 50% of the agreed annual/seasonal fee for the use of marine property. Measure 3.6 Tourist vouchers for educators and health workers and support to private accommodation providers, also continues and will be implemented in two phases: the first phase refers to the invitation to private accommodation providers to apply to this call, whereas the second phase refers to the procedure of issuance and usage of the vouchers. Revision of this measure refers to the time frame and its implementation is extended until December 31, 2021.
The proposed amendment to Measures to Support the Economy and the Citizens for the 2nd Quarter of 2021 expands the list of users of tourist vouchers and the implementation of measure 3.6 is extended until December 31, 2021.
At the proposal of the Ministry of Economic Development, the Government of Montenegro has adopted on September 23, 2021 Rural Tourism Incentive Program 2021-2022 in order to develop the diversified tourist offer of Montenegro, create local/regional rural tourist brands, as well as to provide better branding of Montenegrin destinations from the aspect of increasingly popular rural tourism.