Government of MontenegroMinistry of Economy

May 2015

area: 13.812 km2 (360 km2 of sea) capital: Podgorica old royal capital: Cetinje population: 620.029 political system: parliamentary democracy official language: Montenegrin official currency: Euro € airports: Podgorica, Tivat sea ports: Bar, Tivat, Kotor, Zelenika

2012 2013 2nd quarter - 2014

GDP at current prices (€ million) 3,149.0 3,335.9 1,436.1Real GDP growth (in %)

- 2.50 3.5 1.7Inflation (in %) 4.2 1.8 -0.8Employment growth (%) 2.1 2.1 0.1Unemployment rate (%) 13.43 15.02 14.28

economically and politically stable country EU and NATO candidate WTO member investors from around 90 countries highest SDI per capita in the region lowest tax rates in the region VAT refund signed free trade agreements with EU, CEFTA, EFTA, Russia, Turkey, Ukraine state and local tax and administrative incentives within business zones financial incentives for direct investments (min 500.000 €; min 20 new jobs) exemption from custom duties

HIGHWAY BAR – BOLJARE

constructor: CRBC, China (priority part) 809,6 mil €

works on construction of highway Bar – Boljare officially started on the 11th of May 2015 construction of the priority part Smokovac – Uvac – Matesevo will last four years

the project of highway is a priority of the Government of Montenegro and is one of the elements of our strategy of integration with the European Union, which will enable greater and more secure mobility of people, goods and services

TARA GROUP

investor: BTI, Switzerland

the Government of Montenegro has signed the Agreement on the sale of shares in the company `November 4` - Metal Parts Factory Mojkovac and `November 4 `- Products Factory Mojkovac the company is divided into two companies - one company for military and one for civilian program, with almost identical ownership structure

WINDFARMS

Krnovo, Nikšić – construction started; installed capacity 72MW; 112 mil€ investor: Ivicom Consulting, Austria & Akuo Energy, France Možura, Ulcinj – installed capacity 46MW; 64 mil€ investor: Fersa, Spain

II BLOCK OF TPP PLJEVLJA – in the pipeline

constructor: Škoda Praha, Czech Republic

installed capacity 254 MW with the 39,5% of electric efficency by the price of 338,5 mil € expected annual production 1.600GWh

JSC DAIDO METAL KOTORinvestor: Daido Metal Co, Ltd. Nagoya, Japan over 150 million €

production of sliding sleeves for internal combustion engines

TREBJESA BREWERY NIKŠIĆinvestor: Molson Coors Brewing, Canada previous owner was a company In Bev; the past 12 years were followed by a modernization of production, investment, market expansion, strengthening of social programs.

STEEL WORKS NIKSIC - TOSÇELIKinvestor: Tosyali Group, Turkey 15 million €

Tosçelik increased its capacity and current product variety as a property of Tosyali Group.

PORTO MONTENEGROinvestor: Adriatic Marines, Canada/Montenegro over 150 million € Regent Hotel and Resort over 58.8 million € 248 berths for boats and is expected to build 250 new

AMAN RESORTinvestor:Adriatic Properties,Greece/Montenegro over 50 millions € Spa Center Queen`s Beach over 7 million € project evaluation of exclusive hotel Sveti Stefan, Miločer and Queen's Beach

BIANCA & AVALA RESORT AND SPAinvestor: Beppler and Jacobson, UK 25 million€

two luxury hotels on the north and on the south of the Montenegro

LUŠTICA DEVELOPMENT investor: Orascom development, Switzerland minimum investment obligations under the contract amounts to 150 million €, expected 1.1 billion €

PORTONOVI/ONE & ONLYinvestor: SOCAR, Azerbaijan planned construction of tourist facilities with additional facilities and marina, with a total value of 480 million €

PLAVI HORIZONTIinvestor: Qatari Diar, Qatar tourism facilities on the site of Plavi Horizonti total investments are estimated to amount to 250 million €

Electric Power Company

investor: a2a, Italy

a2a, Italian company, is owner of the 43.7% shares in Electric Power Company ‘Elektroprivreda Crne Gore’

SUBMARINE CABLE

investor: Terna, Italy 777 milion €

capacity: 2x500MW HVDC cables; length: 415km (390km undersea) from Italian side, 140km is already constructed

FDI in 2014 :: January – November 446,588.3 mil € over the last decade, Montenegro was recognized as one of the top-rated countries with highest income of FDI per capita in SEE region investors from around 90 countries

FDI (mil €)

corporate profit tax: 9% personal income tax: 13% and 9%

in economically underdeveloped municipalities in Montenegro, whose development index is below 75, a newly established legal entity does not pay corporate income tax and personal income tax if their total amount does not exceed the amount of €200,000 for the first eight years of operation.

VAT: 19% and 7%

real estate transfer tax: it is propotional and amounts to 3% of the tax base

property tax: ranging between 0.1 % - 1% of the immovable property’s market value

national treatment-foreign investor can, at the territory of the Montenegro, establish a company and invest in a company, under procedures and conditions under which local nationals can establish companies, or invest assets in companies

no limit in terms of invested capital - foreign investors are allowed to invest in any branch of industry and freely transfer of financial and other resources, including profits and dividends

financial incentives for direct investments

by new Decree this funds shall be allocated on the basis of a public invitation for investment projects whose minimum investment value is 500,000 euro and which ensure opening of at least 20 new jobs within three years from the date of conclusion of the agreement, and foreign investor can be the beneficiary of funds if it establishes a business entity in Montenegro. The amount of funds to promote investment that can be allocated from 3.000 to 10.000 per new jobDecree in Italian language you can find on enclosed web-site: http://www.srp.gov.me/biblioteka/uredbe

criteria for awarding funds for direct investments are:

reference of the investor the effect of the investment project on the productivity of suppliers and other business entities from Montenegro which operate within the same industry sector viability of investment project effects of investment project in connection with research and development effects of investment project on human resources environmental impact assesment international trade volume effects of investment project on the development of less developed local government units letter of intent of the local government where the investor intends to invest.

business zones represent the partly or fully equipped space in one local municipality where investor could establish production facilities under special conditions using tax and administrative incentives on state and local level

8 established business zones in Montenegro: Berane, Bijelo Polje, Mojkovac, Kolasin, Niksic, Cetinje, Podgorica, Ulcinj

business zones incentives:

state incentives: employers shall not pay contributions for compulsory social insurance on wage earnings; local incentives: payment of utility or other charges; bargain price of lease/purchase of premises within business zones; reduction or exemption from surtax on individual income; lowering tax rates on real estate; the possibility to define a favourable model of public-private partnership; equipping with infrastructure areas which do not have a developed infrastructure