National currency strengthening against EUR/USD brings mixed effects

National currency strengthening against EUR/USD brings mixed effects

TIRANA, Nov. 29 – Albania’s national currency has gained ground both against Europe’s single currency and the U.S. dollar over the past year, with mixed effects on the Albanian economy which suffers high euroisation rates. After hitting an 8-year low

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First Albanian private-run stock exchange getting ready to offer new investment, financing alternatives

First Albanian private-run stock exchange getting ready to offer new investment, financing alternatives

TIRANA, Nov. 29 – The Albanian Securities Exchange is on track to launch its operations in the next few weeks as the country’s first privately-owned stock exchange serving as a new investment and financing alternative to both local companies and

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Regional economies need up to six decades to catch up with average EU income, report shows

Regional economies need up to six decades to catch up with average EU income, report shows

TIRANA, Nov. 29 – Catching up with the average EU income could take Albania and other EU aspirant Western Balkan economies about six decades unless current sluggish GDP growth doubles to 5 or 6 percent, the World Bank has warned

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Drought triggered electricity imports cost Albania €200 mln for 2017

Drought triggered electricity imports cost Albania €200 mln for 2017

TIRANA, Nov. 28 – State-run OSHEE electricity operator contracted electricity worth about €33.4 million for December 2017 in costly imports for the seventh month in a row as the country continues to face one of its worst electricity crises triggered

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Albania-Kosovo step up customs union project as trade gains momentum

Albania-Kosovo step up customs union project as trade gains momentum

TIRANA, Nov. 28 – Albania and Kosovo are on track to finalizing their customs union through the establishment of a Kosovo customs operations office at Durres Port, the Albanian and Kosovo Prime Ministers announced during the fourth joint government meeting

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Albania mobile market reduced to three operators after Plus sale

Albania mobile market reduced to three operators after Plus sale

TIRANA, Nov. 27 – Ongoing financial straits and failure to meet investment requirements and keep up with its competitors led Plus Communication, the sole Albanian-owned mobile operator, to sell its operations to the country’s two largest mobile operators, the competition

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Tirana International Fair: Albania eyes new Chinese, Serbian investment

Tirana International Fair: Albania eyes new Chinese, Serbian investment

TIRANA, Nov. 27 – Chinese and Serbian companies dominated this year’s 24th edition of the Tirana International Fair, Albania’s largest business fair, reconfirming interest in Albania as a hub to the Western Balkans region with a strategic geographical position, but

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Marko Cadez: ‘Closer economic cooperation will lead to normalization of Serbia-Albania political relations’

Marko Cadez: ‘Closer economic cooperation will lead to normalization of Serbia-Albania political relations’

By Ervin Lisaku Serbia, Albania economic and trade relations are rapidly overcoming their historical barriers and gaining momentum and the Tirana International Fair, Albania’s traditional year-end business gathering where Serbian companies are being represented with their largest ever delegation of

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EBRD unveils new growth agenda Albania should pursue

EBRD unveils new growth agenda Albania should pursue

TIRANA, Nov. 23 – Improving the productivity of individual firms, infrastructure investment and an emphasis on green growth can help Albania and other Western Balkan regional countries get out of the middle-income trap and establish a new sustainable growth model,

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Fier, the breadbasket of Albania’s agriculture

Fier, the breadbasket of Albania’s agriculture

TIRANA, Nov. 23 – The southwestern Albanian region of Fier, known as the breadbasket of Albania’s agriculture, produces about a third of total vegetables and a quarter of the country’s field crops, making agriculture in this region a key sector

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                    [post_content] => TIRANA, Nov. 29 - Albania's national currency has gained ground both against Europe's single currency and the U.S. dollar over the past year, with mixed effects on the Albanian economy which suffers high euroisation rates.

After hitting an 8-year low of about 132 lek last June, the euro has slightly appreciated against the Albanian national currency trading at 133.69 lek in late November, but yet down 3.3 percent compared to the average rate a year ago and considerably below the average exchange rate of 140 lek for about five years until mid-2015.

The situation has considerably affected Albania's poorly diversified exports, two-thirds of which are destined to Eurozone countries making them vulnerable to Euro fluctuations in addition to already suffering because of slowly recovering oil and mineral prices following the mid-2014 slump in commodity prices.

Albania's Euro-denominated deposits of about 2 billion euros, accounting for 40 percent of total savings, have also lost about 5 percent of their value since late 2015 when the euro was trading at about 140 lek.

On the positive side, the depreciation of the Euro against the national currency is good news for borrowers in Euro who have their income in lek, the government’s external debt payments as well as imports whose cost has slightly dropped.

At Euro 1.9 billion, Euro-denominated loans in Albania’s banking system dropped to 47 percent of the total credit at the end of 2016, down 2.3 percentage points year-on-year, according to the European Central Bank.

Albania’s central bank attributes the strengthening of the national currency against the Euro to higher GDP growth fuelled by an increase in FDI and tourism revenue, but some experts say the euro inflows from rising cannabis cultivation and trafficking in the past couple of years has also had an impact.

However, when compared to the outbreak of the global financial crisis almost decade ago, the Albanian lek has lost ground against Europe's single currency which traded at an average of 123.3 in November 2008.

The U.S. dollar, whose weight on the Albanian economy is considerably lower, has also lost considerable ground against the Albanian national currency in the past seven months, reflecting the EUR/USD pair performance.

The U.S. dollar, which major commodities are traded at, fell to 112.76 lek in late November, down 8.3 percent compared to the average rate of 124 lek in October 2016, according to the central bank’s fixed exchange rate.

U.S. dollar-denominated loans in Albania account for around 10 percent of the total loans to businesses and a negligible 1.2 in loans to households.

The U.S. dollar hit a 12-year high of about 130 lek in early 2015, reflecting a slump in oil prices and making several key imports in Albania much more expensive.
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                    [post_content] => TIRANA, Nov. 29 - The Albanian Securities Exchange is on track to launch its operations in the next few weeks as the country's first privately-owned stock exchange serving as a new investment and financing alternative to both local companies and individual investors, but also central and local government units.

The expected launch comes six months after the Albanian Securities Exchange, ALSE, was licensed by the country's Financial Supervisory Authority in a bid to reactivate the capital market through private operators following the closure of the state-run Tirana Stock Exchange in late 2014 after 12 years of inactivity.

The stock exchange’s success will depend on the number of businesses that will be listed on it considering the tight capital, profitability and transparency criteria companies have to undergo, which in the former Tirana Stock Exchange attracted only a handful of companies, leading to its failure.

However, Artan Gjergji, a banking and capital markets expert, who heads the Albanian Securities Exchange, is optimistic that Albanian businesses, especially corporations have matured following about a quarter of century to a market economy and informality is getting lower.

“Albanian businesses have reached a maturity stage and overcome the transparency issue. The main reason keeping Albanian businesses away from banks, capital markets is lack of desire for financial transparency and its tendency to engage in tax evasion. But two decades on, businesses, especially corporations have matured and are getting more and more transparent,” Gjergji has told a local TV.

"There are serious companies in Albania to which making public all their financial indicators is no problem. They are audited companies with international partners requiring detailed annual financial reports and meeting all criteria and they can join the stock exchange. What remains to be seen is whether they need extra capital on investments and whether they choose the stock exchange to increase the capital," says Gjergji, adding that the first companies have already confirmed their participation.

According to him, the stock exchange will bring a new alternative window with more investment and financing options than the market currently offers and help develop the Albanian economy at a faster pace

The launch of the stock exchange operations by the end of 2017 will offer investors higher return rates compared to traditional instruments such as deposits and investment funds and give a boost to the local economy by channeling funds internally.

“When Albanian companies start increasing their capital through the Albanian stock exchange by getting listed on it, investors will have several alternatives such as deposits and government securities, but also well-diversified investment funds, and can also directly invest by choosing on their own the company shares they want to invest in,” Gjergji has told local Scan TV.

The stock exchange is expected to offer higher interest rates and help channel savings internally, instead of abroad as the emerging investment funds do with a portion of their assets to diversify their investments other than government securities.

Businesses, which have to meet several quantitative and qualitative criteria especially regarding the transparency of their balance sheets, can also benefit lower loan rates at a time when credit is struggling to return to positive growth rates amid tight lending standards and declining but still high non-performing loans of about 15 percent.

“If to date businesses had only reinvesting their accumulated profits and addressing banks as the only way of financing, they will now have another alternative such as issuing bonds in the Albanian stock exchange and inviting the public to become shareholders or borrowers and lenders in relations with an Albanian business,” Gjergji says.

The Tirana Stock Exchange is already training its staff and settling some technical problems with e-payment system and the central bank’s government security system before it launches and undertake an awareness campaign on the stock exchange benefits.

"The stock exchange will use the same electronic system used by the bourses in Ljubljana, Skopje, Sarajevo, Banja Luka and Podgorica, meaning that in the future it could potentially be incorporated into the regional SEE link," says London-based European Bank for Reconstruction and Development in its latest transition report announcing the launch of Albania first private stock exchange by the end of 2017.

The newly established Albanian Stock Exchange, ALSE, is a joint stock company, with three founding shareholders, including the majority Albanian-owned Credins Banks, the country’s third largest commercial bank, which holds a 42.5 percent stake.

U.S.-owned American Bank of Investments also holds a 42.5 percent of the initial 50 million lek (€373,000) authorized capital. The American Bank of Investments, ABI, the 10th largest commercial bank in the country, entered the Albanian market in late 2015 as a rebranded bank after U.S. based NCH Capital Inc, private equity and venture firm took over Credit Agricole’s Albania unit.

AK Invest, an Albanian-owned non-bank financial institution which has been operating for 15 years, mainly engaged in money transfer and micro-credit, holds 15 percent of the shares.

The Financial Supervisory Authority says it has licensed the Albanian Stock Exchange to trade government securities and other financial instruments, establish a multilateral trading platform facilitating the exchange of financial instruments between multiple parties and educating, promoting and providing information to interest groups regarding the capital market and issuers’ activity.

“From the macroeconomic point of view, the establishment of a securities market in Albania represents concrete and clear indicators of the level of maturity the Albanian financial market has achieved. It also makes it possible for companies and the government to find long-term financing on projects which banks could be unable to finance, allows profitable companies to grow by selling their shares to a big number of shareholders and diversifying them and enables investors to invest with greater confidence, transparency in a well-regulated market,” says the Financial Supervisory Authority

The establishment of the stock exchange will give small investors the opportunity to engage in the securities market more transparently and minimize trading in online trading platforms, in some cases unprofessionally and through unlicensed operator and bearing a high investment risk for the public.

Albanian financial officials say the stock exchange will also be a good opportunity to withdraw in the coming years companies from other Albanian-speaking countries and regions such as the Kosovo market, serving as a unity platform for all Albanian investors.
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                    [post_content] => TIRANA, Nov. 29 - Catching up with the average EU income could take Albania and other EU aspirant Western Balkan economies about six decades unless current sluggish GDP growth doubles to 5 or 6 percent, the World Bank has warned in a recent report.

Growth in the six EU aspirant Western Balkan economies has currently picked up to about 3 percent at a time when the GDP in the EU member states has also recovered to 2 percent.

GDP per capita in purchasing power parity among Western Balkan economies ranges from 10,000 international dollars in Kosovo to about $12,000 in Albania and Bosnia and Herzegovina, about $15,000 in Serbia and Macedonia and $16,800 in Montenegro, according to 2016 World Bank data.

Meanwhile, the GDP converted in international dollars using the purchasing power parity rates is currently three-times higher in the European Union at an average of about $40,000, but ranges from about $19,000 in Bulgaria to about $106,000 in Luxembourg.

“It is important to note that at current growth rates, it would take about six decades for average per capita Western Balkan income to converge to the average for EU residents. With faster growth of 5 to 6 percent, convergence could be achieved in just two decades. That will require a bold and sustained implementation of structural reforms and steady progress in EU accession processes,” says the World Bank.

In its latest Western Balkans report, the World Bank expects the region as a whole to grow between 2.6 to 3.6 percent over the 2017-2019 period with Albania registering one of the region’s highest growth rates.

Meanwhile, the European Commission expects the 27 EU economies to grow between 2 to 2.4 percent by 2019.

“Growth in the EU is trending up, creating an opportunity for Western Balkan countries to reap the growth and stability benefits of deeper trade integration. The higher a country’s trade share with the EU, the higher impact EU growth has on its exports,” says the World Bank.

However, exports of goods and services as a share of GDP average a low 30 percent in the Western Balkans, far below the 80 percent averaged by similar-sized transition economies now in the EU.

In its latest forecast, the World Bank expects Albania's GDP to slow down from an expected 3.8 percent in 2017 to 3.5 percent in 2019 when two major energy-related projects such as TAP and a big hydropower plant complete.

"To foster confidence and accelerate growth, it will be critical for Albania to speed up reforms to consolidate public finances, improve the efficiency of spending, reduce risks from the energy and financial sectors, and build up the legal system," says the World Bank.

The Western Balkan region is Europe’s most underdeveloped suffering huge gaps in terms of economic development, rule of law and unemployment compared to Western Europe. Ethnic tensions are frequent especially in Bosnia and Herzegovina, Macedonia and Kosovo.

Only Serbia and Montenegro have currently launched accession talks. Enlargement prospects remain pessimistic in the short and medium-run considering internal developments in the bloc with the Brexit, the migrant and financial crises as well as rising populism high on the agenda.
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                    [post_content] => TIRANA, Nov. 28 - State-run OSHEE electricity operator contracted electricity worth about €33.4 million for December 2017 in costly imports for the seventh month in a row as the country continues to face one of its worst electricity crises triggered by a prolonged drought almost paralyzing the country’s hydro-dependent domestic electricity generation.

With demand for electricity at a peak due to almost freezing temperatures, regional power prices soared to about €75/MWh, up from an average of about €70/MWh in the previous months.

The December purchases take the total bill Albanian state-run electricity operators have footed on costly electricity imports to about €200 million since mid-2017.

The situation has plunged state-run OSHEE distribution operator and KESH power utility in severe financial straits, with the central government revising the budget to financially assist with the imports and a World Bank emergency loan on power imports already used.

The costly imports, compared to cheap domestic hydropower production by KESH utility, has also severely affected investment plans to upgrade the country’s distribution grid where about a fifth of electricity is still wasted due to poor-condition grid and thefts.

The OSHEE state-run electricity distribution operator emerged as Albania’s largest enterprise in 2016 in terms of turnover and profits, leaving behind major oil producing and trading companies.

OSHEE turned profitable in 2015 thanks to an aggressive nationwide campaign to curb electricity thefts and collect hundreds of millions of euros in accumulated unpaid bills following a short-term failed privatization by Czech Republic's CEZ that ended in early 2013.

Rainfall in the past few weeks have only slightly improved the situation in the country’s big state-run hydropower plants in the northern Drin Cascade due to water levels having dropped to historic lows following one of worst droughts in decades, exposing the vulnerability of Albania’s hydro-dependent electricity sector and the need for its diversification.

Albania’s three state-run HPPs on the Drin Cascade currently produce only about a third of the country’s electricity needs and the situation is not expected to considerably improve unless heavy rainfall fill up reservoirs nearly at stoppage point.

The situation remains critical also for more than a hundred small and medium-sized private and concession HPPs, producing about a quarter of the country’s domestic electricity.

In its 2018 budget, the Albanian government singles out the rainfall-dependent domestic electricity generation which this year suffered a major setback after one of the worst droughts in decades as the major threat for next year, with potential costly imports affecting scheduled investments in key sectors.

“The vulnerability of the electricity sector to the meteorological situation in the country is the main risk factor. In case of considerable negative situation, the effective vulnerability has a domino effect on all sector operators, with a considerable impact on the financial condition of each of the companies, calling into question the progress of measures taken as part of the energy recovery reform,” says the Albanian government in its explanatory report on the 2018 budget.
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                    [post_content] => TIRANA, Nov. 28 - Albania and Kosovo are on track to finalizing their customs union through the establishment of a Kosovo customs operations office at Durres Port, the Albanian and Kosovo Prime Ministers announced during the fourth joint government meeting held this week in Korça, southeastern Albania.

The two neighboring countries have signed several deals aimed at boosting trade exchanges and investment in the past four years, but progress has been quite modest due to ongoing barriers and trade disputes. However, 2017 is set to register a historic high of about €200 million in Albania-Kosovo trade exchanges following a strong double-digit hike in the first ten months of this year.

"We will continue working on the opening of the Kosovo Customs Operations Office at the Durres Port and that means that this office must become operational as soon as possible," Prime Minister Rama said, adding that the office will also ease Kosovo exchanges with other countries through Durres Port, Albania's largest, where Kosovo transit exports and imports account for about 10 percent of the volume of goods it handles.

"Goods destined for Kosovo will complete all the customs procedures at Durres Port, making it unnecessary to stop at Albania-Kosovo customs offices. That will be a drastic cut in time needed to carry out procedures and will considerably reduce the products' cost and increase trade benefits," added Rama.

The customs union, a project dating back to January 2014, when the two countries signed a strategic cooperation and partnership deal in their first joint government meeting, is currently being held back by some technical aspects on the Kosovo side.

The meeting at Korça, one of Albania’s key historical sites, where the first Albanian school opened 140 years ago when the country was still under Ottoman rule, came one day before Albania marked its 105th independence anniversary and a time when majority ethnic Albanian Kosovo will be celebrating in few months ten years of independence from Serbia.

Kosovo Prime Minister Ramush Haradinaj said cooperation with Albania was key to strengthening Kosovo both domestically and regionally considering the challenges facing the country in membership to international organizations, increasing the number of recognitions and its Euro-Atlantic integration prospects.

"The strengthening of Kosovo and our strengthening in the Balkans is achieved or accelerated through cooperation between Kosovo and Albania," said Haradinaj.

"We are working on economy. We are especially focused on small and medium-sized producers and providing easier fiscal policies to them and a legal package to reduce the doing business bureaucracy. What remains to be done is logistics, which means the investment locations and the necessary infrastructure," added the Kosovo Prime Minister.

However, behind the political rhetoric, Kosovo businesses complain non-tariffs barriers remain a key concern for Kosovo exporters to Albania.

"The practice of joint meetings between the Kosovo and Albanian governments has been welcomed by the business community and the Kosovo Chamber of Commerce, believing that it will have a positive impact on the establishment of a favorable trade and investment climate between he two countries through the elimination of ongoing barriers, especially during the export of Kosovo products to Albania," Safet Gerxhaliu, the head of the Kosovo Chamber of Commerce said ahead of the meeting.

"Considering that this practice has up to now produced only a background for media consumption, the Kosovo Chamber thinks that the format and content of these meetings should change toward establishing mechanisms that guarantee the implementation of measures and action that ultimately lead to increasing economic cooperation between the two countries," he adds, pointing out non-tariff barriers by Albanian authorities and dumping by Albanian exporters as some of the issues facing Kosovo businesses.

Albanian companies have also complained high customs duties and non-tariff barriers only favor big companies, mainly construction and steel companies in exports with Kosovo.

The recognition of mutual phytosanitary certificates has emerged as a key barrier for businesses in both countries as the two countries seek to diversify trade exchanges mainly relying on “fuel, electricity, construction material and metals.”

 

Trade, investment ties

Albania-Kosovo trade exchanges dominated by Albanian exports, rose by a third to about 24.5 billion lek (€181 million) in the first ten months of this year and are on track to register a record high after fluctuating at about the same level in the past five years, according to INSTAT, Albania’s state-run statistical institute.

Albania's trade exchanges with Kosovo account for only about 3 percent of the total and Kosovo is the country's second most important destination for exports.

The two ethnic Albanian countries have overcome a number of trade barriers over certain products in the past few years and made some procedures easier, but lack of an early tradition in economic cooperation seems to be the main issue preventing the creation of a single market of about 5 million resident consumers, experts say.

Data shows that behind political rhetoric of excellent economic cooperation with Kosovo, trade exchanges between the two countries are almost the same compared to Albania’s trade volume with Serbia and only half of what Kosovo imports from Serbia.

When it comes to mutual investment, the level of investment is largely dominated by Albanian companies.

Albanian investors have been among the top five foreign investors in Kosovo in the past few years with the 2016 FDI estimated at about €29 million, down from a peak level of €40 million in 2015. The Albanian FDI stock in Kosovo, mainly concentrated in the real estate, financial and trade sector, is estimated at €193 million and is represented by some 900 Albanian companies.

Kosovo companies in Albania have been less active in the past few years with their stock of FDI only slightly increasing to a total €29 million.

Some 600 Kosovo companies operate in Albania, mainly in the construction and trade sectors.

The Highway of Nation linking Albania to Kosovo has played a key part in the Kosovo Albania trade and human exchanges in the past decade despite its huge cost of about €2 billion euros on both sides of the border not yet justifying trade exchanges of about €200 million annually, more than double before the highway’s 2009 opening.

The Albanian part of the highway, which is set to become the country’s first toll road in 2018, plays a key role in Albania’s patriotic-dominated tourism bringing about 2 million Kosovo tourists each year.
                    [post_title] => Albania-Kosovo step up customs union project as trade gains momentum
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                    [post_content] => TIRANA, Nov. 27 – Ongoing financial straits and failure to meet investment requirements and keep up with its competitors led Plus Communication, the sole Albanian-owned mobile operator, to sell its operations to the country’s two largest mobile operators, the competition authority has unveiled after approving the transaction.

Albanian-owned Plus, the smallest and sole Albanian-owned mobile operator, has agreed to sell half of its frequency spectrum to Vodafone Albania and the remaining half to Telekom Albania for an undisclosed amount, in a move which makes the country’s mobile telephony market fully foreign-owned and practically reduces market competition with three remaining operators.

However, the country’s competition watchdog says the transaction brings no competition distortions and has tasked the electronic communications authority, AKEP, to make available frequency bands for the possible entry of new market operators.

"Because of financial difficulties, the enterprise can no longer continue with investment to provide quality and competitive services to consumers and considering AKEP's requirements toward other mobile operators to ensure the continuation of the service provision, Plus requests to transfer the frequencies in its use to the other operators under the deal with these operators,” Plus Communication has informed the competition watchdog.

"During all the time it has been operating since 2010, the company has incurred considerable losses... Losses accumulated in years are estimated at considerable amounts of 6.1 million lek (€45,000) and that is the reason the company's shareholders undertook capital restructuring twice to cover losses," the company adds.

In its 2016 financial report available on the National Business Center, Plus Communication reported accumulated losses of about 589 million lek (€4.3 million) and a negative shareholder equity of 320 million lek (€2.35 million), calling into question the company's ability to continue its operations, says auditor that examined the company's 2016 financial reports.

Plus has also signed an out-of-court deal on the settlement of contested accumulated debts that Plus claimed from the three main mobile operators regarding termination rates, the fees mobile companies charge other carriers to terminate calls on their networks.

The competition watchdog says the mobile communications market will continue remaining competitive even after Plus’s market exist when subscribers can choose among three remaining operators.

Meanwhile, AKEP says the three competitors can develop a wide range of services, offering high-quality services, competitive prices, a variety of choices and innovation for the general market competition.

"The spectrum that the three operators currently possess, the way of making use of it, the services provided, the technology employed and the number of subscribers makes the spectrum transfer by Plus Communication with no impact on market competition. We think the extra spectrum will be used by the two operators to increase their transmission capacity because of demand for higher data traffic,” says AKEP.

Plus currently has about 208,000 active subscribers, of whom 5,800 post-paid subscribers.

The competition authority says Plus subscribers don't necessarily have to choose between the two companies it was taken over as the number portability service which Albania has been applying since 2011 allows subscribers to port their numbers to any of the three remaining mobile companies operating in Albania within three days and free of charge.

Albania's telecommunication market, whose overwhelmingly 90 percent share is held by mobile operators, accounts for about 3 percent of the country's GDP with an annual turnover of about 40 billion lek (€294 million).

The sale operation comes amid a sharp decline in income Plus registered in 2016 and failure to increase its 5 percent market share despite obtaining its long-awaited 3G licence last year at a time when its three competitors were already offering 4G services.

Plus Communication, owned by some of the country’s richest businessmen, saw its annual income drop by 30 percent to about €16 million in 2016 and net profit drop by ten times to a mere 87.7 million lek (€ 644,000), according to annual reports filed with the country’s National Business Center.

The company’s difficult financial continued this year with the closure of several shops in Tirana in the past few months.

Plus Communication launched operations in late 2010 after it was awarded the fourth GSM licence in an international tender for €7.2 million.

Latest 2016 data shows leading Vodafone Albania operator, part of UK-based giant Vodafone Group, continues dominating the mobile market with 48.6 percent market share in terms of revenue, followed by Telekom Albania (former AMC), part of German Deutsche Telekom with 30.7 percent, Turkish-owned Albtelecom with about 12 percent, and Albanian-owned Plus Communication with 5 percent share.

Albania has some 3.4 million active mobile subscribers, the overwhelming 90 percent of whom are pre-paid ones.
                    [post_title] => Albania mobile market reduced to three operators after Plus sale
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                    [post_content] => [caption id="attachment_134744" align="alignright" width="300"]Serbian stand at the Tirana International Fair Serbian stand at the Tirana International Fair. Photos: Klik Ekspo Group [/caption]

TIRANA, Nov. 27 – Chinese and Serbian companies dominated this year’s 24th edition of the Tirana International Fair, Albania’s largest business fair, reconfirming interest in Albania as a hub to the Western Balkans region with a strategic geographical position, but also plenty of untapped resources and cheap labour costs.

The world’s second largest economy acquired some key assets in Albania last year, including the country’s sole airport and the biggest oil company as part of its regional expansion, giving a new impetus to relations with its once key tiny Balkan ally in the 1960s and 1970s.

Meanwhile, ties with Serbia, the largest economy among EU aspirant countries, have gained new momentum in the past three years as the two key regional players have been normalizing relations held back by historical barriers.

Speaking at the launch of the four-day Tirana International Fair last week, Prime Minister Edi Rama described the event’s 24th edition as evidence of interest in Albania and its growing economy.

"Albanian businesses are now a new reality in the country's history. They are a consolidated reality and the 'Made in Albania' products are developing and growing," Prime Minister Rama said, noting the tangible progress Albania has made since the fair's inaugural edition in the early 1990s when Albania was making its first steps toward a market economy and democracy after about five decades under a hardline communist regime and a centrally planned economy.

"Nowadays, foreign companies coming to our country not only find new investment opportunities, but can also find reliable, knowledgeable and courageous partners whom they can join and target fulfilling their ambitions to invest and make a profit through entrepreneurship in this country," he said.

Albania has managed to attract about €1 billion annually in foreign direct investment in the past few years, being the region’s second largest recipient and is set to become a regional energy hub as one of the countries where the major Trans Adriatic Pipeline passes through and its abundant oil and hydropower potentials.

Prime Minister Rama said China’s sizeable presence in the fair was an indicator for Albania’s investment opportunities.

"China is too big and Albania is too small and if Albania wasn't an attractive country for investment, it would have undoubtedly been a waste of time for the China Council for the Promotion of International Trade to arrange its participation in the fair of this country, which is a neighborhood of an average China city," said Rama.

"There is an indicator which I believe joins these interests and that is the consideration for our country and our capital city as a starting point regarding the regional market and opportunities to invest and take advantage of the still quite cheap labor and production costs compared to more developed countries," Rama added.

However, China's ambassador to Albania Jiang Yu says there are still some barriers to resolve in order to boost Chinese investment to Albania.

"There are some barriers in our cooperation path. I wish the parties resolve these barriers and difficulties through friendly negotiations and in compliance with the respective laws and rules. I also hope the Albanian government supports foreign investment and provides incentives to foreign investors, including Chinese companies, to establish a stable, transparent and predictable environment," the Chinese Ambassador told China Radio International in the local Albanian service.

In a key arbitration case, the Albanian government is seeking to settle a $57 million tax dispute with the now China-owned Bankers Petroleum, the country’s largest oil producer, dating back to 2011 when the company was run by the Canadians.

The decision came after a third party auditor ordered in mid-2016 the Albanian government to pay back Bankers Petroleum $37 million which the then-Canadian owned company had paid in installments to the Albanian tax administration over the dispute.

Albanian and Chinese state-backed companies failed to conclude contract negotiations on the Arbri Road linking Albania to Macedonia in 2015 while a Chinese consortium that was supposed to make a billion dollar investment in the Spitalla industrial park, outside Durres, also failed to materialize.

Last year, Chinese companies acquired the Tirana International Airport and the Banker Petroleum oil company, increasing Chinese investment to Albania 10-fold to more than $700 million, and turning China, the country’s third largest trading partner, into one of top investors in a single year.

The acquisition reconfirmed China’s investment and trade interest in traditional ally Albania, and could herald other important investment as part of Beijing’s ambitious “One Belt One Road” initiative, a plan to wrap its own infrastructure and influence westward by land and sea and the “16+1″ framework expanding cooperation with 11 EU member states and five Balkan countries in Central and Eastern Europe.

The Albania Chinese relations date back to the late 1940s when Albania was one of the first countries to establish diplomatic ties with the People’s Republic of China and tiny Balkan country helped the Asian superpower regain its seat at the UN as the PRC in the early 1970s.

Chinese experts helped rebuild much of the country’s main industries in the 1960-70s, giving rise to an unequal alliance.

Four decades on, the present context is quite different as China has turned into the world’s second largest economy, and Albania is now a NATO country and an EU candidate country with its small economy being one of the Western Balkans’ most vibrant and holding one of the greatest potential due to the geographical advantage and natural resources.

 

Albania-Serbia normalization

 Serbia, Albania economic and trade relations are rapidly overcoming their historical barriers and gaining momentum and the Tirana International Fair, Albania’s traditional year-end business gathering where Serbian companies are being represented with their largest ever delegation of some 100 companies in their national stand, is the best indicator for this.

Speaking about Albania-Serbia economic relations, Prime Minister Rama said the establishment of a joint Tirana-based chamber of commerce in late 2016 has already paved the way for the establishment of a number of Albanian-Serbian joint ventures targeting to expand not only in Albania and Serbia, but the whole region.

"This is a concrete example of the untapped potentials to invest, to promote economic growth and offer real employment and have a direct impact on increasing welfare," Rama said.

Marko Cadez, the President of the Serbian Chamber of Commerce and Industry, says his trips to Albania have been monthly during the past year, bringing Serbian companies to negotiate and sign deals with Albanian partners.

In an interview with Tirana Times ahead of the kick-off of the four-day fair on Nov. 23 , Cadez, said he sees great opportunities in trade and investment cooperation between the two key Western Balkan countries considering the current quite untapped potentials.

“What matters the most is the growing awareness of the fact that our economies are small, that the capacities of our companies, with the exception of few, are insufficient to independently compete at the international market, and that only together our offer can beat the competition … It is also important that we have recognised in each other desirable partners and that there is growing confidence between our businessmen,” he says.

Cadez says big Serbian companies are already examining opportunities to invest in Albania’s tourism following the tax incentives the Albanian government has announced.

Albania-Serbia trade exchanges are currently stuck at an annual modest level of about €170 million annually and dominated by what experts have previously called medieval era agricultural imports and exports.

Serbian foreign direct investment have in the past three years climbed to a modest stock of 20 million euros while Albanian investment in Serbia is almost non-existent.

Prospects seem optimistic as the two leading EU aspirant Western Balkans countries have already improved access with the launch of the direct Belgrade-Tirana flights by Air Serbia carrier and are on track to be linked through a shorter distance through the extension of the Albania-Kosovo highway to Nis, south-eastern Serbia.

Albania and Serbia had a three-year honeymoon soon after World War II when the communists came to power in both countries but later parted ways on ideological grounds. Relations between the two countries in the past 25 years of transition have remained tense especially after the late 1990s Kosovo war leading to its independence from Serbia in 2008. Ties are now on track to improve as Serbia and the majority ethnic Albanian-inhabited Kosovo are also holding continuous EU-mediated talks to normalize their relations and Albania has offered an ‘agree to disagree’ approach on Kosovo.

Relations between the two countries temporarily entered a Cold War era status quo in October 2014 following a drone incident with Albanian nationalistic and patriotic symbols flying over the Partizan stadium in Belgrade in the midst of a Serbia-Albania Euro 2016.

 

An opportunity to fill FDI gap

Potential new China and Serbia investment could fill the gap Albania's FDI is expected to undergo in 2019 when two major energy-related investment such as the Trans Adriatic Pipeline and Devoll Hydropower project by Norway's Statkraft complete their investment stages, affecting Albania's annual FDI flows by at least €200 million if no other projects compensate them.

Albania is hoping to fill the gap through investment in the rapidly growing tourism industry by offering tax incentives for a 10 year-period in return for investments of 8 to 15 million euros.

The Balkan country has also been targeting to attract investors in its first special economic zone of Spitalla close to the country’s biggest port of Durres and has recently cut the corporate income tax on IT companies to 5 percent, down from a standard 15 percent.

A modest recovery in commodity prices is also expected to give a boost to oil and mining investment, Albania’s second largest exports which have been severely affected following the mid-2014 slump in international prices.

The Albanian economy is on track to grow by about 4 percent in 2017 and 2018, fuelled by major energy-related investment and a rapidly growing tourism industry.

 

 

 
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                    [post_content] => [caption id="attachment_134676" align="alignright" width="200"]Marko Cadez, the President of the Serbian Chamber of Commerce and Industry Marko Cadez, the President of the Serbian Chamber of Commerce and Industry[/caption]

By Ervin Lisaku

Serbia, Albania economic and trade relations are rapidly overcoming their historical barriers and gaining momentum and the Tirana International Fair, Albania's traditional year-end business gathering where Serbian companies are being represented with their largest ever delegation of some 100 companies in their national stand, is the best indicator for this.

Marko Cadez, the President of the Serbian Chamber of Commerce and Industry, says his trips to Albania have been monthly during the past year, bringing Serbian companies to negotiate and sign deals with Albanian partners.

In an interview with Tirana Times ahead of the kick-off of the four-day fair on Nov. 23 , Cadez, who is also the President of the Managing Board of the Western Balkans 6 Chamber Investment Forum, says he sees great opportunities in trade and investment cooperation between the two key Western Balkan countries considering the current quite untapped potentials.

"What matters the most is the growing awareness of the fact that our economies are small, that the capacities of our companies, with the exception of few, are insufficient to independently compete at the international market, and that only together our offer can beat the competition ... It is also important that we have recognised in each other desirable partners and that there is growing confidence between our businessmen," he says.

Cadez says big Serbian companies are already examining opportunities to invest in Albania's tourism following the tax incentives the Albanian government has announced.

 

 Full interview with Marko Cadez below:

  As the 24th edition of the now traditional Tirana International Fair is approaching, Serbia has reconfirmed its participation as one of the key regional players and the biggest economy among EU aspirant Western Balkans countries. What can you tell us about this year’s participant Serbian companies and the novelties of products and services they bring to the Tirana fair?

There have never been more Serbian businessmen in Albania than these days. More than two hundred business people - representatives of about one hundred companies from Serbia have come to Tirana at the International Economic Fair and for the Assembly of the Mixed Serbian and Albanian Chamber of Commerce and Industry. In the organisation of the Chamber of Commerce and Industry of Serbia and the Development Agency of Serbia, some 41 companies will participate - twice as many as last year with a significantly diversified, richer and better quality offer at the Fair of Economy, within the national stand of 310 square meters, almost three times bigger than last year.  The majority of companies are from the building construction industry, that is, from the production of building materials, food processing and textile industries. Among the exhibitors at the national stand of Serbia there are manufacturers of machinery and equipment, agricultural mechanisation and producers of animal feed, electric materials, packaging materials, pharmaceutical, cosmetic and chemical products, as well as companies that provide engineering and marketing services. This time, Serbia will be presented by big companies, important global and regional exporters but also by less fast-growing companies that have prepared a vital and high quality offer.

In the Serbian offer to the Albanian market, there are products of the ironworks HBIS Group Serbia Iron & Steel (made of steel and white sheets),  confectionery products of the regionally renowned factory  Pionir, furnaces and cookers for households by Alfaplam, tiles and blocks by IGM Mladost, hydro and wind turbines by Sever, Galenika’s medications and medical supplies, Maxima’s paints, Unipromet's roadway protective fences, FAM's oils and lubricants, Rubin's beverages, Agranela’s  dry plums .... The company Basket of Healthy Food Made by Hand will present for the first time in Tirana an interesting production programme - products made of integral flour, while the company Conto Bene Jeans has brought to the fair denim clothes that has already become dominant in the  region, and the company GMP Jarmenovci  has brought jams and canned fruit .... Carefully chosen offer is the result of our analyses – by comparing data about the demand at the Albanian market and trends in the Albanian imports and the production and export potentials of Serbia.

 

  How much are Serbian business representatives familiar with the Albanian market and business climate considering that there is now an operational Tirana-based joint Albania-Serbia Chamber of Commerce and what do they expect from this fair?

 The Serbian economy has recognised unused potentials and the chance for the sale of its products at the Albanian market as a new export destination and Albanian companies as partners not only for trade, but also for the establishment of joint companies, joint ventures and other business arrangements. This is even more important because Albania is faced with huge works related to the modernisation of its infrastructure and investments in industry and tourism. The beginning of the implementation of announced large infrastructure and development projects in the region of the Western Balkans will open opportunities for new partnerships. The Business Fair in Tirana is an excellent opportunity for Serbian manufacturers to present their production programmes and export offers to the business community of Albania and to other countries participating in this international business event, to establish contacts with local businessmen and to start negotiations about projects that can be implemented together.

Business associations of two countries and the Mixed Albanian and Serbian Chamber of Commerce and Industry, founded during the last year's fair in Tirana, have greatly contributed by their activities to the newly aroused interest for cooperation. Both the Chamber of Commerce and Industry of Serbia and the Albanian and Serbian Chamber of Commerce and Industry have been extensively engaged lately to bring closer and to connect our economies by providing information on the conditions and possibilities of doing business at the Albanian and Serbian markets and by establishing direct contacts and organising business discussions with individual companies about concrete business arrangements. Since the date of its foundation until present time, the Mixed  Chamber has responded to almost 50 inquiries by Serbian and Albanian companies in the field of agribusiness, wood, machine, metal and electrical industries, building construction, transport and freight forwarding.

We have jointly organised visits of Serbian companies to Albania, as well as of Albanian companies to Serbia. The Chamber of Commerce and Industry of Serbia provides full support and services to its members that are interested in the Albanian market and our  door is always open to all Albanian companies that want to do business in Serbia. It seems that in the past year there is not even one month that I did not travel to Albania with some Serbian companies, such as “Lilly Drogerie” or Diary “Šabac”, which had some concrete discussions and made some agreements with their Albanian counterparts. With our assistance and mediation, companies from Serbia have met with Albanian companies such as Agna Group, Ferra & Co, PM Office and BALFIN Group. For example, the Serbian company “Milanović Engineering” has already signed the contract with the Albanian “Delia Group” which regulates partnership and joint participation in the projects related to the construction of water supply systems, drinking water treatment plants and wastewater treatment plants in Albania.

 

Albania and Serbia have made tangible progress in normalizing relations during the past three years as meeting between politicians, civil society and tourist exchanges have become quite common, but when it comes to business things seem to be moving at a slower pace with trade exchanges at almost the same level and Serbian investment to Albania slightly increasing in the past few years. Is the historical past and lack of traditional cooperation and the climate of mistrust an ongoing barrier that hampers trade and investment ties between the two main Western Balkan economies?

It is true that our trade relations are modest, that potentials for improving economic relations are large and not sufficiently used, that those who are interested in investing still weigh their decisions and that we would like that everything is going on at a much faster pace. But, I would not agree that there is no progress. On the contrary, Serbia and Albania are two economies in the region that in the past year have made the biggest advancement in connecting their business communities by means of mechanisms for strengthening regional and bilateral cooperation. The result is that the mutual trade this year, in only nine months, has been increased by more than one third compared to the same period of the previous year for both sides and that at the end of September, we already achieved the annual performance from 2016. Total trade has been increased by 36.4 percent, the export of Serbian products to Albania by 36.2 percent, and the export of Albanian products to Serbia by 37.2 percent.

There is a growing interest not only in the import-export businesses, but also in the higher forms of cooperation - individual and joint ventures and the establishment of mixed companies for the purpose of production and joint appearance not only at the Albanian and Serbian markets, but also at the third markets and in regional and international tenders.

What matters the most is the growing awareness of the fact that our economies are small, that the capacities of our companies, with the exception of few, are insufficient to independently compete at the international market, and that only together our offer can beat the competition ... It is also important that we have recognised in each other desirable partners and that there is growing confidence between our businessmen.

The breakpoint was the last year's October Business Forum in Niš and the wind in the back that we received then was the support given by the highest political leaders of our countries - personally by Prime Ministers Rama and Vučić (now the President of Serbia). We still have their support. At the same time, I am deeply convinced that our political relations will be become even better as a result of our strengthened and high quality economic relations, increased number of mutual investments and joint projects, recognised economic interests by our communities and benefits arising from regional cooperation.

 

What can the two governments do to further promote trade and investment ties and remove barriers before an apparent distant EU membership? Is the EU's regional economic area project that the Western Balkans leaders signed at the Trieste Summit this year a good tool to make the region more competitive to foreign investors as a single market of 20 million consumers instead of small markets operating individually?

 There are two key things for the future and sustainable development of our small economies, whereas we do not think only of Serbian and Albanian economies but also of economies in all countries in the Western Balkans. The first thing is - the continuation of already initiated structural reforms that will enable the acceleration of economic growth, reduce unemployment as common  and the greatest difficulty in the whole region, and lead to the increase of the standard of living of citizens. With the progress in reforms and with strengthening our economies, we will be closer to the European Union.

In parallel with internal reforms, equally important task is to strengthen regional cooperation and tighter regional integration advocated by the Western Balkans Chamber Investment Forum that gathers all chambers in the region with almost half a million member companies. As soon as we reach agreement on all issues and as soon as we eliminate obstacles for mutual cooperation our business environment will become more stimulating and we will cooperate more and more and connect our business communities and export more and attract more investors.

Therefore, it is important for our economies to mutually harmonise regulations and certificates, to synchronise inspections and monitoring and to have common regional economic area, the market without barriers so that trucks do not wait 15 hours at the borders ... this is something that we can actually  do and that cannot be harmful for anyone not even in political terms. This can be beneficial for all our economies. In this way, we can become not only a more attractive place for domestic companies but also for foreigners.  If we achieve this, global investors will not look at us as individual players but they will see the whole region with 20 million consumers. Without the region through which they can freely move, there will be no business.

By adopting the Multi-Annual Action Plan for the Regional Economic Area in Trieste in July, we have obtained a powerful instrument - an efficient tool that will help us to implement more than one hundred measures in order to open new opportunities for growth, development, better competitiveness and employment in the region. With the adoption of this document, regional economic integration has become a priority issue in agendas of both the business community and the decision-makers. On the proposal of the regional chamber, the prime ministers have personally delegated their coordinators for the purpose of more efficient implementation of the Plan.

The Western Balkans Chamber Investment Forum of six countries in the Western Balkans and our joint chamber of the region - Permanent Secretariat of the Western Balkans Chamber Investment Forum with the seat in Trieste will have an important role in the implementation of this Plan. We will measure our results by fewer unnecessary administrative procedures and by more harmonised certificates, by shorter stay of trucks at borders and by turning hours of waiting into minutes. The progress will also be measured by the increase of the number of small and medium-sized enterprises that have become the part of supply chains of large multinational companies and by the number of small enterprises that have grown into medium-sized and large ones because they have obtained the space for development at regional markets and because they have become capable enough to beat competitors at international markets. Our success will be greater if more cars cross borders, as well as more trucks or trains that transport goods and if there are more business people and more new business opportunities in the region.

 

The Serbian government has announced plans to complete the Nis-Merdare highway. Will the completion of the Durres-Prishtina-Nis highway and the normalization of relations with Kosovo help trade and investment ties and make the use of Durres Port a more suitable option for Serbian companies? 

 As confirmed by the Serbian line Ministry, the construction of the Niš –Merdare highway, 77 km long, or to be more precise, its first 40 km, from Niš to Pločnik, should start next year.

In its total length, from Niš through Merdare, Priština, Tirana to Durres, the highway will ensure the Serbian economy a better connection with the Kosovo and Albanian markets. Serbia, which is landlocked, will gain access to another port – the Port of Durres, and Albania will get the fastest and shortest connection with the European Corridor 10.  Better transportation connections are not the only benefit of the construction of this highway. The implementation of this regional infrastructure project will contribute to better networking of the business communities, lowering of costs and reducing time for transport of goods and passengers, greater attractiveness for investments and business operations of the regions through which the highway runs. And I strongly believe that closer economic cooperation will lead to the normalization of the political relations.

In addition, the announced beginning of the works will open up the opportunities for engagement of not only Serbian companies, but companies from the entire region, organized in consortia, for the purpose of joint participation in tenders for such projects, which will be invited across the region in the coming period. Because this is the first of the road and railway transport routes from the Connectivity Agenda, whose construction will be supported by the EU.  The economic strengthening of the Western Balkans, through the projects of infrastructure and business linking, among other things, is one of the foundations of the Berlin Process, and the involvement of the business communities in their implementation is one of the goals, around which the Chamber of Commerce and Industry of Serbia and Kosovo Chamber of Commerce have gathered all the chambers in the region in the Western Balkans Chamber Investment Forum more than two years ago.

 

Serbian people love Albania’s coastline and more and more have been visiting Albania in the past few years through direct Belgrade-Tirana flights. Are tourism investment on the Serbian investors’ agenda and are there any concrete projects considering the incentives the Albanian government is offering for big tourism investments?

 Tourism is certainly one of the most promising areas with the greatest potential for future cooperation additionally encouraged by new legal solutions, tax and other incentives of the Albanian state aimed at stimulating high quality services, development and investments in tourism. In addition to the increase in the number of tourists at the Albanian coast, there are more and more Serbian companies that are interested in investing in Albanian tourism. For the time being, I can tell you that the possibility of investing in Albania is seriously considered by one of the great Serbian companies which has been expanding its business operations in this field in the region in recent years. That is one of the reasons why I will again travel to Albania very soon with a representative of that company. I believe that I will be able to bring good news very soon.

 

 

 

 

 

 
                    [post_title] => Marko Cadez: ‘Closer economic cooperation will lead to normalization of Serbia-Albania political relations’
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                    [post_date] => 2017-11-23 14:22:33
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                    [post_content] => TIRANA, Nov. 23 - Improving the productivity of individual firms, infrastructure investment and an emphasis on green growth can help Albania and other Western Balkan regional countries get out of the middle-income trap and establish a new sustainable growth model, London-based EBRD says in a report measuring progress among transition economies.

“There is no silver bullet – no one size-fits-all solution. By strengthening their institutions, supporting firm dynamics and innovation, integrating their firms into the global economy and investing in sustainable infrastructure, the countries of the EBRD region should be able to complete their transition to sustainable market economies," said EBRD chief economist Sergei Guriev.

With the pre-crisis remittances, consumption and construction fuelled growth having significantly waned over the past decade, Albania’s new growth agenda has focused on new sectors such as tourism, energy, agriculture also making use of public-private partnerships.

However, GDP growth of about 1 to 3 percent in post-2008 period and expectations of about 4 percent in the next few years are still below the 6 percent growth rate the developing EU-aspirant Albanian economy needs to grow at in order to produce welfare to its citizens and bridge gaps with EU countries.

Albania’s GDP per capita of about €3,800 remained unchanged at 30 percent of the EU average for the third year in a row in 2016, according to a report by Eurostat, the statistical office of the European Union.

Albania ranked 65th among 190 economies in the latest Doing Business report, lagging behind some key regional competitors, mainly because of the high tax burden and bureaucratic procedures.

The country has also significantly improved road infrastructure over the past decade, but railway infrastructure is almost inefficient due to decades-long lack of investment and still has a sole international airport making ticket prices considerably more expensive to regional countries. The government is also recently promoting solar and wind energy investment to diversify the country’s wholly hydro-dependent domestic electricity generation.

The EBRD report shows that more than a quarter of a century after the collapse of the country's communist regime, similarly to regional Western Balkan competitors, the Albanian economy still has some indicators representing little or no change from a rigid centrally planned economy in the corporate, energy, infrastructure and financial sectors.

On a 1 to 10 scale with 10 denoting the frontier in terms of a sustainable market economy, the Albanian economy scored an average of 5, slightly lower compared to key regional competitors in the transition scores for six qualities of a sustainable market economy that involve being competitive, well-governed, green, inclusive, resilient and integrated.

The report shows that firms in Albania still face major constraints in relation to electricity with losses of about 3 percent of output owing to electricity outages, representing a significant burden.

The London-based financial institution suggests key priorities for Albania's 2018 agenda should focus on stepping up EU-oriented reforms, further advancing business environment and power sector reforms.

"It is critical for Albania’s long-term prosperity that the momentum in the EU approximation is preserved and accelerated and that everything is done in the areas of public administration reform and rule of law (among other areas) to meet EU requirements for the opening up of accession talks," says the EBRD.

"The campaign against informality has yielded important results but extra efforts are needed to tackle deep-rooted problems such as getting electricity, registering property and enforcing contracts," it adds.

The EBRD expects the Albanian economy to grow by 3.7 percent over 2017-2018 driven by some major energy-related investment, but warns significant downside risks associated with the embedded structural weaknesses in public administration and infrastructure, as well as vulnerability to external shocks in the Eurozone, where Italy and Greece are Albania’s main trading partners.

The EBRD forecast is significantly lower compared to the Albanian government’s optimistic scenario of growth recovering to 3.9 percent in 2017 and picking up to 4.2 percent next year when some major energy-related projects such as TAP and the Devoll HPP are completed.
                    [post_title] => EBRD unveils new growth agenda Albania should pursue 
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                    [post_content] => TIRANA, Nov. 23 - The southwestern Albanian region of Fier, known as the breadbasket of Albania's agriculture, produces about a third of total vegetables and a quarter of the country’s field crops, making agriculture in this region a key sector in addition to its oil industry which has slowed down in the past three years due to a slump in international oil prices.

Due to its fertile lowlands, Fier produced about 370,000 metric tons of vegetables in 2016, about a third of the country's total in an area of 9,310 hectares, according to data published by INSTAT, the state-run statistical office.

The southwestern region has a big advantage over the other 11 Albanian regions in fresh vegetable, melon and white bean production as well as grains such as wheat and maize but also olive.

When it comes to citrus production, it's the southern region of Vlora that produces about 60 percent of total production, mainly thanks to Xarre mandarin cooperatives in Saranda, southernmost Albania.

Albania’s fruit and vegetable production has registered a sharp increase in the past five years, meeting the majority of the country’s needs and increasing exports.

Vegetable exports increased 5-fold peaking at 5.4 billion lek (€39 million) in 2016, compared to only about 1 billion lek (€7.9 million) until 2012, according to state statistical institute, INSTAT.

The region of Fier, the country's second largest in terms of population, is home to some 302,000 residents, accounting for 11 percent of Albania's 2.9 million population. Its surface area is 1,890 km2 with a population density of some 164 residents/km2.

Because of its key oil and agriculture sectors, the region of Fier is one of the key contributors to the country's GDP along with Tirana and Durres, the hosts of about half of the country's population and businesses.

The region of Fier is home to the Patos-Marinza oilfield, Europe’s largest onshore oil field where oil production has slowed down following the mid-2014 slump in international oil prices.  Meanwhile, the district of Lushnja, part of the region of Fier, is known as the breadbasket of Albanian agriculture due its fertile lands and hard-working farmers. An oil refiner also operates in the Mallakastra district of the region of Fier.

Agriculture is a key sector in the Albanian economy, employing about half of the country’s GDP but producing only about 20 percent of the GDP, unveiling its low productivity which is hampered by fragmentation of farm land into small plots and poor financing and technology employed.

Irrigation capacities remains a key barrier nationwide ranging from 17 percent in Berat to 45 percent in Fier and Korça and 47 percent in the northeastern region of Dibra, despite Albania having one of Europe’s largest per capita water resources.

In addition, farmers also complain about high fuel prices and lack of refunds increasing production costs and making them uncompetitive to regional countries providing subsidies.

A government initiative to formalize the sector by providing tax IDs to farmers in return for paying compulsory insurance and benefiting refunds has attracted only few dozens of thousands of farmers so far and the government says it intends to revise the pension system for farmers.

The agriculture sector has grown by slightly above zero in the past couple of years, reflecting weather related factors such as floods, freezes and prolonged droughts.

With the remittances-fueled construction boom almost over, more and more Albanian enterprises are turning to agriculture to diversify their investments, engaging mostly in egg, fruit and vegetable production, a considerable part of which are destined for exports.

In addition to almost paralyzing the country’s hydro-dependent electricity sector, the prolonged drought Albania faced last summer had a negative impact on Albania’s agriculture, especially corn production.
                    [post_title] => Fier, the breadbasket of Albania’s agriculture 
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            [post_content] => TIRANA, Nov. 29 - Albania's national currency has gained ground both against Europe's single currency and the U.S. dollar over the past year, with mixed effects on the Albanian economy which suffers high euroisation rates.

After hitting an 8-year low of about 132 lek last June, the euro has slightly appreciated against the Albanian national currency trading at 133.69 lek in late November, but yet down 3.3 percent compared to the average rate a year ago and considerably below the average exchange rate of 140 lek for about five years until mid-2015.

The situation has considerably affected Albania's poorly diversified exports, two-thirds of which are destined to Eurozone countries making them vulnerable to Euro fluctuations in addition to already suffering because of slowly recovering oil and mineral prices following the mid-2014 slump in commodity prices.

Albania's Euro-denominated deposits of about 2 billion euros, accounting for 40 percent of total savings, have also lost about 5 percent of their value since late 2015 when the euro was trading at about 140 lek.

On the positive side, the depreciation of the Euro against the national currency is good news for borrowers in Euro who have their income in lek, the government’s external debt payments as well as imports whose cost has slightly dropped.

At Euro 1.9 billion, Euro-denominated loans in Albania’s banking system dropped to 47 percent of the total credit at the end of 2016, down 2.3 percentage points year-on-year, according to the European Central Bank.

Albania’s central bank attributes the strengthening of the national currency against the Euro to higher GDP growth fuelled by an increase in FDI and tourism revenue, but some experts say the euro inflows from rising cannabis cultivation and trafficking in the past couple of years has also had an impact.

However, when compared to the outbreak of the global financial crisis almost decade ago, the Albanian lek has lost ground against Europe's single currency which traded at an average of 123.3 in November 2008.

The U.S. dollar, whose weight on the Albanian economy is considerably lower, has also lost considerable ground against the Albanian national currency in the past seven months, reflecting the EUR/USD pair performance.

The U.S. dollar, which major commodities are traded at, fell to 112.76 lek in late November, down 8.3 percent compared to the average rate of 124 lek in October 2016, according to the central bank’s fixed exchange rate.

U.S. dollar-denominated loans in Albania account for around 10 percent of the total loans to businesses and a negligible 1.2 in loans to households.

The U.S. dollar hit a 12-year high of about 130 lek in early 2015, reflecting a slump in oil prices and making several key imports in Albania much more expensive.
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