US giants Marriott, Hyatt to operate Albania hotels as high-end investments get tax cuts

US giants Marriott, Hyatt to operate Albania hotels as high-end investments get tax cuts

TIRANA, Nov. 28 – US-based hotel giant Marriott International is set to launch Albania operations and become the country’s major high-end brand through a hotel downtown Tirana as the government’s support has switched to high-end investment which it says will

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Germany provides €168 mln in Albania development projects

Germany provides €168 mln in Albania development projects

TIRANA, Nov. 28 – The German government has committed to support Albania through another €168 million in development projects in key sectors such as energy, sustainable development, water supply and waste management, continuing its contribution to Albania’s Euro-Atlantic integration as

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Albania placed under tighter money laundering monitoring by CoE body

Albania placed under tighter money laundering monitoring by CoE body

TIRANA, Nov. 27 – A Council of Europe monitoring body has placed Albania into enhanced follow-up following poor progress in tackling money laundering and terrorism financing, in a rating that has renewed accusations by the main opposition Democratic Party against

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Albania, Kosovo vow stronger economic cooperation amid Serbia dispute

Albania, Kosovo vow stronger economic cooperation amid Serbia dispute

By Ervin Lisaku TIRANA, Nov. 27 – Albania and Kosovo have vowed to step up economic cooperation by scrapping tariff and non-tariff barriers and conclude a customs union project that would facilitate trade exchanges between the two neighboring ethnic Albanian

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Albania agrifood monopoly operator fined €400,000 for abusive rents

Albania agrifood monopoly operator fined €400,000 for abusive rents

TIRANA, Nov. 26 – Albania’s Competition Authority has fined an Albanian-owned company for abusing its monopoly position by overcharging traders at Tirana’s wholesale agrifood market just outside the Albanian capital city where it has been offering warehousing and trade facilities

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Norway supports Albania’s maritime development

Norway supports Albania’s maritime development

TIRANA, Nov. 22 – Maritime industries can be a new growth sector for Albania and Norway is ready to assist and share its strong tradition and vast experience, says Per Strand Sjaastad, the Kosovo-based Norway’s Ambassador to Albania. His comments

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Albania’s central bank decision-making paralyzed

Albania’s central bank decision-making paralyzed

TIRANA, Nov. 22 – Failure to elect in time new members of the central bank’s supervisory council has temporarily paralyzed decision-making at the Bank of Albania, a key institution for the country’s economic and financial stability. The seven-year mandates of

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IMF urges more determined efforts to reduce migration appeal for Albanians

IMF urges more determined efforts to reduce migration appeal for Albanians

TIRANA, Nov. 21 – The International Monetary Fund says Albania needs stronger and more determined efforts to make current slowly recovering growth more inclusive by improving business climate and strengthening rule of law in order to reduce the appeal of

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Justice delayed for thousands as slowly progressing reform increases Albania court backlog

Justice delayed for thousands as slowly progressing reform increases Albania court backlog

TIRANA, Nov. 20 – Slow progress in the implementation of the long-awaited justice reform has led to a sharp increase in the backlog of cases awaiting trial, thousands of which involving business appeals with the administrative courts over controversial decisions

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Unfair competition is top concern for 70% of Albania’s tourism businesses, survey shows

Unfair competition is top concern for 70% of Albania’s tourism businesses, survey shows

TIRANA, Nov. 20 – Unfair competition from informal businesses, mainly apartment and villa owners is a top concern for the overwhelming majority of businesses in the accommodation sector of Albania’s emerging tourism industry. A recent survey conducted by the Albania

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                    [post_content] => TIRANA, Nov. 28 – US-based hotel giant Marriott International is set to launch Albania operations and become the country’s major high-end brand through a hotel downtown Tirana as the government’s support has switched to high-end investment which it says will have a stronger impact on the country’s emerging tourism industry.

The deal was announced this week by Albania’s Prime Minister Edi Rama who hailed Marriott’s Albania arrival as a milestone for the development of Albania’s 5-star hospitality industry which the government is supporting with a series of tax incentives.

Marriott International will cooperate through a franchise deal with Albanian-owned Albstar company which is building the “National Arena” stadium, the new home of the national football side, which will be ready by next year as a stadium, a commercial center and hotel.

The new stadium is a €50 million public private partnership project with a capacity of 22,000 seats under which the Albanian-owned company was offered public land to build commercial facilities at a 24-storey tower in return for building a new modern stadium.

The arrival of Marriott International is however not new in Albania. The American hospitality giant was indirectly present in Albania throughout 2017 through Sheraton hotel in Tirana, a global Starwood brand which it acquired in late 2016.

Sheraton left Albania in early 2018 following 15 years of operation in the country under a deal with Mak Albania, a subsidiary of Kuwait-based Kharafi Group Investments, after the hotel was purchased by an Albanian-owned major oil company for €30 million.

Commenting on Marriott's Albania arrival and tax incentives that the Albanian government is offering to the construction and operation of luxury hotels, Prime Minister Edi Rama said that promoting quality investment will have a stronger impact on the country's tourism industry.

"Five-star hotels bring higher contribution and impact to the tourism industry and the country's economy regarding the image which is key for the tourism industry, the high level of spending, contribution to employment, the quality of jobs, wages and above all the fundamental hospitality culture when compared to lower category hotels,” said Prime Minister Rama, speaking at a Tirana tourism investment forum.

He announced that Hyatt, another US-based giant is about to conclude an Albanian deal, which local media have unveiled could be former Sheraton, currently operating under the Mak brand of Kuwait-based Kharafi Group Investments.

 

Luxury competition getting tougher

Luxury hotel competition in Tirana has now become much tougher in Tirana in the past couple of years following the late 2016 opening of the Albanian-owned Plaza Hotel, a 24-storey tower in Tirana city center and the recent launch of Hilton Garden Inn.

Last September, Hilton Garden Inn, a mid-priced brand owned by Hilton Worldwide, launched its first hotel in Tirana, an Albanian investment of €19 million in partnership with the prestigious US-based hospitality chain through a franchise deal.

Competition is expected to get much tougher with the opening of the new Marriott Hotel next to the National Arena stadium next year and a new giant hotel next to the landmark 15-storey building of the Tirana International Hotel in the city center.

Austrian-owned Rogner Hotel has also been operating in Tirana since the early 1990s as the first Western hotel following the collapse of the country’s hardline communist regime.

Prime Minister Edi Rama says the government will put an end to the era of tourist villages which he says have turned into residence areas for apartment and villa owners with little value added for the country's tourism industry and promote more sophisticated investment like four and 5-star tourist resorts.

While the Albanian government supports the idea of the need for luxury investment, some local experts say demand for accommodation in Tirana, which has seen a significant rise in the past few years, is mostly for medium-priced 3 or 4-star hotels and see the new luxury investments with skepticism.

 

Tax incentives 

In a bid to promote elite tourism investment, Albania has been recently offering tax incentives for a 10-year period  on luxury accommodation units for investments ranging from €8 million to €15 million for four and five-star units that will have to be carried out by internationally renowned chained-brand hotels or local companies under management or franchise contracts with them.

Last year, the Albanian government cut VAT on hotel accommodation to 6 percent, from a previous 20 percent and has now introduced package incentives to extend the 6 percent VAT on all services offered by new chained-brand luxury hotels and resorts which will also be stripped of the corporate income tax for a 10-year period.

The government says the incentives are similar to regional countries with a longer tradition in tourism and aimed at making the country’s tourism industry more competitive by offering quality accommodation units and services in a bid to attract a new segment of high-income tourists.

Majority MPs say the new ‘elite’ tourism investments will contribute to new jobs, increase the number of high-income tourists and boost the country’s image, but the opposition is worried new tax-free investments could serve as money-laundering schemes for drug and other crime proceeds.

Data shows construction permits for new hotels have registered a sharp hike with more than 100 permits issued in the past couple of years after almost stagnating in the 2014-2016 period when only a total of 19 new permits were handed for hotel accommodations.

Current investment in the tourism industry in the country are being mainly carried out by Albanian investors at a time when the long-standing unclear property titles remains the main concern for foreign investors, especially at coastal areas, with several major investors having quit their Albania projects during the past decade over land disputes following prolonged legal battles and protests by local residents.

Due to property disputes, several local Albanian investors have opted to build coastal resorts on development contracts rather than purchasing the land without clear ownership titles.

The tourism industry which in the past couple of years has attracted more than four million tourists and generated €1.5 billion in income, about 14 percent of the country’s GDP, has emerged as one of the country’s key drivers of growth.

Prospects are optimistic but experts say the challenge is to put in place a year-round industry making use of mountain tourism and other cultural heritage destinations to reduce reliance on the peak coastal season and new quality investment could help with that.

Unfair competition from informal businesses, mainly apartment and villa owners is a top concern for the overwhelming majority of 70 percent of businesses in the accommodation sector of Albania’s emerging tourism industry, according to a recent survey by the Albania Investment Council, a government advisory body.

Albania has more than 1,200 licensed accommodation units with a capacity of more than 41,000 beds but the number of informal units, mainly apartments and villas offered for rent informally is estimated to be much bigger, unfairly competing with licensed operators by offering much cheaper prices due to often paying no taxes at all.
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                    [post_content] => TIRANA, Nov. 28 - The German government has committed to support Albania through another €168 million in development projects in key sectors such as energy, sustainable development, water supply and waste management, continuing its contribution to Albania’s Euro-Atlantic integration as the largest bilateral donor in Albania for the past three decades.

The recent deal involves projects that will be implemented by the German Development Bank, KfW, and the German Agency for International Cooperation, GIZ, during 2019-20 through soft loans and grants in traditional priority areas of German development cooperation in Albania.

Germany started providing development support to Albania in the late 1980s when Albania’s communist regime was about to collapse and just before Germany reunified following the collapse of the Berlin Wall, in support that has reached about €1 billion in the past three decades.

The new higher financial commitments by Europe’s leading economy come at a time when the two countries mark the 30th anniversary of development cooperation and at a time when Albania is hoping to launch long-awaited EU accession talks next year.

It also comes at a time when ungrounded asylum-seeking by Albanians in Germany has sharply declined following a wave in 2015-2017 and Albanians looking to settle in Germany are now considering legal migration.

Germany's ambassador to Albania Susanne Schütz said the higher financial support that Germany is providing is proof of the importance and attention that the German government shows toward Albania EU's integration as the Balkan country awaits a decision on its accession talks next year.

"The record figures of support are proof of the great importance that the federal government shows toward Albania and its road to European integration. During the past 30 years we have permanently stood by Albania and will continue to remain a reliable partner," Ambassador Schütz is quoted as saying in a statement by Albania's finance ministry.

"Germany not only makes available financial assistance and professional expertise but is also a critical consultant. We encourage Albania to show consistency in its road of ongoing reforms, especially in the judiciary and fight against organized crime and corruption," the Ambassador said, adding that Albania has no time to lose as it awaits next year's EU decision on the fate of its accession talks.

In addition to the development support, Germany’s Development Bank, KfW, is also providing a €100 million loan to help with much-needed investment in Albania's electricity and water supply infrastructure, much of which in critical condition.

German development support projects for the next two years will also focus on agriculture, vocational education training, rural and urban development, tourism, SMEs. Financial assistance will also cover regional Western Balkans projects such as European integration, fight against serious crimes, maritime pollution and protection against flooding.
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                    [post_content] => TIRANA, Nov. 27 - A Council of Europe monitoring body has placed Albania into enhanced follow-up following poor progress in tackling money laundering and terrorism financing, in a rating that has renewed accusations by the main opposition Democratic Party against the ruling Socialists.

Moneyval, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, a monitoring body of the Council of Europe, says it has placed Albania into enhanced follow-up, a rating assigned to countries with serious incompliance with standards and which have taken no satisfactory action to exit regular follow-up within five years from the adoption of the last report.

The rating comes following an evaluation report which has not been disclosed yet, but whose preliminary findings were discussed by the Moneyval Committee of Experts last summer, with Albania receiving low and moderate ratings in its efforts to fight money laundering and terrorism financing due to a low number of investigations and convictions.

Enhanced follow-up means Albania will have to report back more frequently with Moneyval and that compliance enhancing procedures ensuring that countries take steps to meet the international standards and follow Moneyval recommendations within an appropriate time frame can be applied.

“Throughout the application of these steps, the country concerned is required to report to the Moneyval plenary according to the set calendar, detailing the steps taken to achieve compliance, which, in certain cases, may include action plans endorsed at government level. If the plenary is satisfied with progress, the application of compliance enhancing procedures steps can be terminated,” according to Moneyval rules.

Back in 2015, Moneyval decided to remove Albania from the regular follow-up process following adequate progress since 2010.

The new enhanced follow-up rating comes following rising concerns of drug and other criminal proceeds being laundered into the country, considered a major cannabis producer and a key transit route for cocaine and heroin for European markets.

The main opposition Democratic Party and some economy experts have linked Euro’s free fall against the national currency this year to alleged illegal euro inflows resulting from the peak 2016 cannabis cultivation and ongoing drug trafficking in the country,

Last July, soon after EU leaders delayed a decision on the possible launch of accession talks with Albania for mid-2019, European Commission representatives urged Albanian authorities step up efforts in the fight against corruption, and organized crime, in particular regarding anti-money laundering and asset confiscation, as well as addressing the issue of terrorism financing.

“The Albanian authorities should swiftly implement the recommendations of the Moneyval report on anti-money laundering and countering terrorism financing,” EU officials said.

 

Opposition concerned 

The main opposition Democratic Party said the Moneyval report reconfirms its concerns of Albania having turned into a money laundering site.

"As the deputy chair of the parliamentary economy and finance committee, I have often raised the concern that the selective tax cuts in the hotel and tourism industry, construction in Tirana and especially gambling are the sectors where money is being laundered and that the government is closing eyes to it,” says Jorida Tabaku, an opposition Democratic Party MP.

“The inexplicable free fall of the euro during the past year, the increase in the number of betting shops, the decline of credit and the increase in Tirana construction should have sounded alarm bells for the government, but none of warnings were taken into consideration and we now face a situation under which Albania is placed under strict monitoring until taking action in 2019,” she adds.

 

Money laundering risk 

Earlier this year, a report assessing the exposure of commercial banks and non-bank financial institutions showed financial institutions supervised by Albania’s central bank display medium to high risk on money laundering and terrorism financing.

Half of the 60 surveyed operators were described as posing medium-level risk and the remaining half at high risk because of failing to report to the Bank of Albania.

Among the 31 medium-level risk operators, there were 12 out of 16 commercial banks operating in Albania, 13 out of 31 non-bank financial institutions and 6 out of 13 savings and loan associations.

Albania only slightly improved its ranking at the 2018 Basel anti-money laundering index, an annual ranking assessing the risk of money laundering and terrorist financing around the world, as it continued remaining a medium risk country, lagging behind two regional competitors.

The 2018 report ranked Albania as the 55th country most at risk of money laundering out of 129 countries worldwide, better than Serbia and Bosnia and Herzegovina, but significantly worse compared to Montenegro and Macedonia, the region’s top performers.

An earlier 2018 report by the US Department of State said Albania remains at significant risk for money laundering due to rampant corruption and weak legal and government institutions.

“Real estate (particularly in the coastal areas), business development projects, and gaming are among the most popular methods of hiding illicit proceeds,” said a money laundering report by the US Bureau of International Narcotics and Law Enforcement Affairs.

Albanian law enforcement authorities seized about €9 million in suspected money laundering transfers and bank accounts in 2017 with the majority of identified cases originating from drug trafficking and cultivation, according to an annual report by the country’s Financial Intelligence Unit.

Authorities identified family members of politically exposed individuals, people with criminal records and young men in their twenties involved in money laundering schemes in some 1,384 suspicious activity reports they received from financial institutions, mostly commercial banks, notaries public and money transfer agencies.
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                    [post_content] => By Ervin Lisaku

TIRANA, Nov. 27 – Albania and Kosovo have vowed to step up economic cooperation by scrapping tariff and non-tariff barriers and conclude a customs union project that would facilitate trade exchanges between the two neighboring ethnic Albanian countries following moderate progress in the past five years when the two governments have held regular annual joint meetings.

The stronger commitment came this week in the city of Peja, Kosovo, where the two governments held their fifth joint meeting that concluded with nine new deals including joint customs controls at the Albania-Kosovo border, mutual recognition of certificates that hold back trade exchanges, scrapping roaming tariffs and establishing a joint Kosovo-Albania chamber of commerce.

The deals come at a time when relations between Kosovo and Serbia, the country it declared independence from a decade ago have entered a new stalemate, with Kosovo imposing 100 percent tariff on imports from Serbia in protest of Serbian efforts blocking Kosovo’s recognitions and its membership in key international organizations. Tariffs, which EU representatives say run against regional cooperation, don't apply to international brands produced in Serbia and Bosnia and Herzegovina, two countries which don’t recognize Kosovo’s independence and which Kosovo accuses of lobbying against its efforts.

With Kosovo importing an annual €400 million from Serbia and another €80 million from Bosnia and Herzegovina, but only €167 million from Albania, the recent trade dispute with Serbia could serve to further boost Albania-Kosovo trade and investment ties, which a decade after Kosovo’s independence and the construction of a Highway of Nation cutting the distance between the two countries, have been slowly progressing and are still hampered by tariff and non-tariff barriers despite annual commitments by Albanian and Kosovo politicians to scrap them.

Speaking in Peja during the joint government meeting, Albania's Prime Minister Edi Rama described the 100 percent tariff Kosovo has introduced on Serbian imports as “political reaction against continuous excesses of Serbia's supremacist behavior toward Kosovo” and as reaction to a blocking approach toward the region's connectivity that is also affecting Albania due to Serbia holding back a newly built Albania-Kosovo electricity interconnection line.

Inaugurated in mid-2016, the German-funded 400 kV interconnection line between Albania and Kosovo was supposed to help the two neighboring countries increase energy security by diversifying electricity resources and set up a joint energy market, but two years on, Serbia which still de jure owns the Kosovo distribution grid, continues halting it despite warnings by Vienna-based Energy Community Secretariat, an international organization dealing with energy policy.

The Albanian Prime Minister also accused the EU of being biased against Albanians at a time when Kosovo has not had its visas scrapped yet and Albania keeps fighting to launch EU accession talks and front-runners Serbia and Montenegro are already progressing with negotiation chapters.

Prime Minister Rama says that in addition to being a reference point in its state-building, Albania is to Kosovo “the country with most natural flair to cooperate and interested in its success after its birth as an expression of justice denied” a decade ago.

"There will be zero tariffs and zero non-tariff barriers between Albania and Kosovo within the first half of next year. We have gathered five time and it’s high time we imposed 100 percent tariffs north of Kosovo [Serbia] and have zero tariffs south of Kosovo [Albania],” said Prime Minister Edi Rama.

"We also have to move toward customs union. There will be transit at Durres Port for Kosovo on January 1 and other steps within the next six months toward the customs union," said Rama.

The Prime Minister says there will also be a complete recognition of mutual documentation in the next six months so that whatever is issued in Albania is also recognized in Kosovo and the other way round.

Non-recognition of certificates for plant and animal products has emerged as a key non-tariff barrier for Albania and Kosovo producers after overcoming ‘trade wars’ on specific products such as potato, flour, beer, medicines, meat and vegetables in the past decade.

Albania and Kosovo are also planning joint inspections at the Morine-Vermice border crossing point and customs office with Kosovo.

"The next step we will launch is a joint border crossing point in Morine [northeast Albania] and the ease of human and freight circulation," says Rama.

The tighter cooperation commitments come at a time when trade exchanges between Albania and Kosovo are slowly progressing amid concerns over a hike in transportation costs after Albania introduced last September tolls at an average of €5 on its section of the Highway of Nation linking the two countries.

The new stronger commitments, whose field implementation remains to be seen, also mark a U-turn compared to the previous four joint government meetings when business representatives, especially Kosovo ones, accused politicians of staging a political show with little substance to give a real impetus to trade exchanges.

"It's a pity that there are still a lot of non-tariff barriers between Albania and Kosovo. The joint government meeting [this week] managed to discuss some of them but a lot remains to be done. It's not that there is no political will but we are not gaining momentum in settling those barriers," says Berat Rukiqi, the head of the Kosovo Chamber of Commerce and the Kosovo representative at the newly established Albania-Kosovo joint chamber of commerce.

 

Slow trade, investment progress 

Trade and investment ties between Albania and Kosovo have slowly progressed during the past five years despite the two governments holding annual joint meetings to settle barriers preventing a boost in trade exchanges and promote mutual investment.

Albania-Kosovo trade exchanges, dominated by Albanian exports to Kosovo, grew by around a quarter, in the first three quarters of this years, and are on track to register strong double-digit growth rates for the second year in a row considering the recent trade dispute between Kosovo and its traditional top trading partner Serbia.

Albania-Kosovo trade exchanges dominated by Albanian exports rose by 31 percent to hit a historic high of 29.4 billion lek (€234 million) in 2017 after fluctuating at about the same level of about €160 million in the past five years, but more than double compared to 2009 when Albania opened its part of the highway, according to Albania’s INSTAT statistical institute.

At about €200 million, 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.

Investment ties between the two countries have also slowly progressed in the past five years with the Kosovo foreign direct investment to Albania increasing to €56 million in mid-2018 compared to a mere €14 million in early 2014 when the two governments held their joint government meeting.

Meanwhile, Albania FDI stock in Kosovo was at €133 million in mid-2018, up from around €100 million at the end of 2014, ranking Albania the seventh most important investor there, according to Kosovo's central bank.

 

 

Concerns over ‘media show, little substance’

Behind political rhetoric of the Albanian government stepping up its customs union project with neighboring Kosovo, the reality on the ground is quite different with a series of barriers preventing economic cooperation and a common market of about 5 million consumers, Albania state auditors say.

A late 2017 audit by Albania’s Supreme State Audit showed that the consecutive deals the two governments signed during the joint government meetings in the past four years were characterized by the expression of goodwill, but did not translate into real government policies that would responsibly and successfully conclude the customs union project with Kosovo.

Safet Gerxhaliu of the Kosovo chamber of commerce has earlier described the four joint government meetings as “producing too much media show and little substance.”

Experts have earlier noted that while traditional factors due to the isolation and lack of communication between the two Albanian-speaking countries for almost five decades until the early 1990s and the late 1990s Kosovo war that led to its independence from Serbia in 2008 partly explain the situation, the huge almost 2 billion euro investment in the so-called Highway of Nation on both sides of border sharply cutting travel time does not yet justify a slowly growing annual trade volume of €200 million between the two countries.

Kosovars yet top tourist arrivals to Albania along with ethnic Albanians in Macedonia in a segment known as ‘patriotic tourism’ and the Highway of Nation cutting distance between the two countries has had a key impact.
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                    [post_date] => 2018-11-26 12:59:38
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                    [post_content] => TIRANA, Nov. 26 – Albania’s Competition Authority has fined an Albanian-owned company for abusing its monopoly position by overcharging traders at Tirana’s wholesale agrifood market just outside the Albanian capital city where it has been offering warehousing and trade facilities since 2015, with the higher costs incurred by traders estimated to have also hit consumer prices.

The competition watchdog says it has fined Albanian-owned ‘Ekma Albania’ 10 percent of its 2017 turnover, equal to about 50 million lek (€400,000), for abusing its dominant position as the sole provider of warehousing facilities for fruit and vegetable products in Tirana, a region of around 1 million residents, more than a third of the country’s total population.

Competition authorities say the company has been applying excessively high rental prices, estimated at about twice higher compared to nearby rental facilities along the Tirana-Durres highway, at profit rates of 65 percent and meeting the investment cost in record time of about three years since launching its operations in 2015 under a deal with municipality of Tirana.

The Competition Authority says Ekma Albania has imposed unfair prices and trading conditions on tenants by also forcing them to pay extra electricity and water fees compared to prices charged by state-run operators in an abuse of its dominant position.

Albania also has four agricultural food markets including one located in Elbasan, central Albania, two others in Divjaka and Lushnja, some 44 km south of Tirana in a region known as Albania’s breadbasket, and another one in Shkodra, the country’s largest northern region. However, due to their distance from Tirana are not considered decent alternatives to replace the Tirana agri-market.

Monthly rental prices at the Tirana agrifood market facilities range from 1,000 lek (€7.8) to 1,500 lek (€11.8) /m2 and 50,000 lek (€393) to 70,000 lek (€550) for vans and trucks, in prices considered too high by hundreds of local traders who have also earlier staged protests over abusive charges.

Authorities say traders have to negotiate lease contracts each month instead of annually, and prepay for two months in guarantees without being offered anything in return by the lessor, in a situation that places tenants at financial instability and unfavorable competition grounds.

According to reports filed with the National Business Center, Ekma Albania reported net profit of 323 million lek (€2.5 million) for 2017, up 5 percent compared to 2016, at a profit rate of about 65 percent of annual turnover.

The consolidated position of Ekma Albania, a joint venture owned by three Albanian companies with a 33.3 percent stake each, and huge investment needed for the construction of these kind of markets are considered barriers for the entry of new operators, says the competition watchdog.

 

Legal battle

Competition authorities say Ekma Albania could face further sanctions in case of not applying cost-oriented rental prices at a similar level compared to the average at the geographical area where it operates and has ordered it to stop overcharging traders on electricity and water services, leaving the company a 30-day deadline to undertake changes.

However, with the company having already appealed the preliminary conclusions of the competition authority's findings last September, a new legal battle that could take several years to settle is about to initiate.

Big fines imposed by the Competition Authority are in general appealed by companies in legal battles that in some cases have been dragging in the country’s three-tier justice system for more than a decade. Meanwhile, the collection of penalties faces serious problems even after final court decisions in favor of competition authorities.

 

Impact on consumers

The excessive high rates have also indirectly affected all of the country’s residents due to the Tirana agrifood market being the country’s largest and also serving as a distribution point for other markets in the country due to some of the biggest fruit and vegetable importers and traders being based there.

Albanian households, who have one of Europe’s lowest income but face one of the highest prices for their disposable incomes, spend about half of their monthly budgets, some 45 percent, on food and non-alcoholic beverages, the key item in the consumer basket, according to a survey by INSTAT, the state-run statistical institute. Vegetables and fruit, whose prices have soared in the past few years, account for a fifth of spending in this group, which is topped by milk, bread and meat.

Inflation rate in the country has been at 2 percent during this year, about 1 percent below the central bank’s 3 percent target estimated to have a positive effect on the country’s economy, despite imports having become much cheaper due to Europe’s single currency having lost 6 percent and trading at a 10-year low of about 125 lek against the national Albanian currency.

Albania’s inflation rate has been running below the 3 percent target for five consecutive years, hinting sluggish demand and a slowly recovering economy which last year grew by a 9-year high of 3.8 percent.

 

Transport concessionaires 

Concessionaires operating in the transportation sector have been the focus of the competition watchdog’s probes this year, receiving fines and warnings over alleged abuse of their monopoly positions.

Earlier, this month the Competition Authority imposed a €400,000 to the Albania subsidiary of Switzerland-based SGS for abusing its monopoly position by causing delays and placing car owners at unfavorable position when undergoing compulsory annual and semi-annual inspections in the first penalty with one year to go before its 10-year concession comes to an end.

The competition watchdog also issued a warning to a German concessionaire at Durres Port, Albania's largest, over ousting rival stevedoring companies after becoming the sole provider of stevedoring services for out-of-gauge cargo at the port’s eastern terminal in late 2015 under a 35-year concession deal with the Albanian government.

Last July, the authority also handed some recommendations to the company operating the country's sole international airport to apply cost-oriented fees to air carriers in a bid to reduce ticket prices from and to Tirana.

The decision led to the Albanian government selecting an audit firm to conduct what it calls an ‘independent economic review’ of the concession contract it has with the Tirana International Airport, the country’s sole airport with a de facto monopoly on international flights and whose high charges on carriers are often blamed for Albania having one of the region’s highest ticket prices.

Concession companies operating in the country, often providing services under monopoly conditions, have a guaranteed market and one of the highest return rates.

 
                    [post_title] => Albania agrifood monopoly operator fined €400,000 for abusive rents  
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                    [post_content] => TIRANA, Nov. 22 - Maritime industries can be a new growth sector for Albania and Norway is ready to assist and share its strong tradition and vast experience, says Per Strand Sjaastad, the Kosovo-based Norway's Ambassador to Albania.

His comments came at a recent conference in Tirana during the launch of Norwegian government-funded project to align the country's maritime standards with EU requirements with a focus on capacity building and study programs. The €1.4 million project is implemented by the UNDP in Albania.

“I believe that the maritime sector can be a significant engine behind growth and development in the Albanian economy in the future, as it has been in Norway for a very long time. It is about making use of the opportunities, and it is about diversifying the Albanian industry,” says Norway’s Ambassador.

“Norway is ready to support the development of the Albanian maritime sector. It is about developing maritime clusters and sharing experience. This support will be contributions and advice to plans, legislation, capacity building, environment, navigation and communication, mapping and technology,” he adds.

The Norwegian Ambassador has earlier noted that energy can also be a key driver of the Albanian economy, just like it has been for more than a century in Norway, Europe's largest hydropower and oil producer.

"The Albanian economy is growing, at around 4 percent every year. A growing economy needs more energy – otherwise further growth will suffer. There is a need for investment in the Albanian energy sector, especially in the construction of new generation sources and transmission lines, improvements in the distribution grid, or energy efficiency. There is also a need for stronger integration in the regional market," the ambassador noted in an energy conference earlier this year.

Norway’s state-run Statkraft has already made operational a hydropower plant in Albania and is about to complete a second larger one in the most important electricity generation investment in the past three decades. The two hydropower plants are part of the Devoll Hydropower project, a €535 million investment with a capacity of 256MW that is expected to increase Albania’s electricity generation by 20 percent.

Limya Eltayeb, the UNDP country director for Albania says improving governance of the maritime sector Albania will ensure more sustainable growth.

"The Adriatic and Ionian basins are a blessing and great resource, but they also face trade-offs concerning scarcity of space, risks in maritime security, scarcity of renewable resources, and degradation of the environment including effects on climate change," she says.

Albania's maritime industry is mainly focused on passenger and freight transport in the country's four ports and a small fish industry producing the country's top agricultural exports, but whose further growth is hampered by EU export quota.
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                    [post_date] => 2018-11-22 11:18:18
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                    [post_content] => TIRANA, Nov. 22 - Failure to elect in time new members of the central bank's supervisory council has temporarily paralyzed decision-making at the Bank of Albania, a key institution for the country’s economic and financial stability.

The seven-year mandates of six out of nine members of the Bank of Albania’s supervisory council expired this month, leaving the highest decision-making body at the central bank with only three members and unable to make decisions.

Procedures are already under way to elect the six new members, three of whom proposed by the government and three others by the Parliament, but the process could be delayed as the main opposition Democratic Party and their allies who are eligible to propose candidates have been boycotting Parliament since early September.

Albania's central bank postponed two meetings of the supervisory council this month where it was supposed to decide on the monetary policy and the bank's budget for next year.

Governor Gent Sejko, whose 7-year term expires in 2022, is among the three remaining members of the supervisory council, which makes the key decision-making at the central bank, primarily related to preserving price stability through an inflation target of 3 percent and preserving financial stability.

Albania’s central bank has been undertaking emergency currency exchange operations since last June after Europe’s single currency hit a 10-year low against the Albanian lek, in sharp depreciation of about 10 percent compared to last year. The central bank intervened in the country’s free floating exchange rate regime by purchasing excess euros from the local currency exchange market in a bid to stabilize the Albanian lek and curb a series of negative effects, primarily affecting Eurozone-destined exports and sizeable Euro-denominated deposits and remittances. The central bank also cut the key rate to a new historic low of 1 percent to handle disinflation pressure from cheaper imports and stimulate credit growth and consumption through lower interest rates.
                    [post_title] => Albania’s central bank decision-making paralyzed 
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                    [post_date] => 2018-11-21 14:46:40
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                    [post_content] => TIRANA, Nov. 21 - The International Monetary Fund says Albania needs stronger and more determined efforts to make current slowly recovering growth more inclusive by improving business climate and strengthening rule of law in order to reduce the appeal of emigration among the country’s residents.

The appeal came by an IMF mission visiting the country this month as part of routine consultations with the Albanian government after the role of the Washington-based lender of last resort was revised to advisory in early 2017 following a three-year binding deal accompanied by a loan.

The IMF says it expects Albania's growth to drop to 3.7 percent next year down from a decade high of about 4 percent this year on lower contribution by the hydro-dependent domestic electricity sector, lower investment from two large energy-related projects already in their final stage and increasing risks to growth in Europe, especially Albania's main trading partner Italy.

"Much remains to be done to make growth more sustainable and inclusive, and to reduce the appeal of emigration. It is also important to build stronger buffers, especially now that risks to Europe’s economic outlook have increased," IMF representatives said this week after concluding a two-week visit led by Jan Kees Martijn, the new IMF mission chief for Albania.

The Albanian economy grew between 1 to 4 percent annually in the past nine years, compared to a pre-crisis decade of 6 percent annually, the growth rate estimated to bring tangible welfare to Albanian households, one of Europe’s poorest.

The IMF says the vigorous implementation of judicial sector reform, the enforcement of the rule of law and the anti-corruption strategy, clearer property rights facilitating credit growth and FDI attraction,  improving the quality of health care and education and closing infrastructure gaps with regional peers are key to promoting faster and more inclusive growth, stronger regional integration and blunt the appeal of emigration.

In particular, improving the quality of healthcare and education is described as critical for curtailing the deepening shortage of skilled labor in Albania, a country’s which already has one of world’s top per capita migration rates and where polls shows one out of two would consider leaving the country if they were given the opportunity.

"The need for upgrading education, health care, and infrastructure towards European standards requires raising both the quality and the level of spending. In particular, spending on education remains low while skills shortages are a serious constraint to productivity and growth," says the IMF mission.

Experts says Albanians mostly leave the country because of economic reasons, looking to escape poverty in their homes but also to integrate into leading European economies and take advantage of better education, health and social protection infrastructure for their families.

High migration rates and rapidly ageing population pose key threats to Albania’s labor productivity which already remains Europe’s poorest performing, the World Bank has warned in a recent report.

Albania has around 1.2 million migrants abroad, almost 40 percent of its 2.8 million resident population, making it one of the countries with the highest per capita migration around the world in the past quarter of century of the country’s transition to democracy and a market economy.

Massive migration, mainly to Italy and Greece, the hosts of around 1 million Albanian migrants, has also contributed to lower birth rates in the country with a series of negative economic and social effects for the country’s longer term prospects.

During the past five years, migration renewed with a new wave of economic migrants, mainly seeking ungrounded asylum in rich EU countries such as Germany and France. More than 100,000 Albanians have sought international protection in EU member states since 2014, placing Albanians on a top 10 list of asylum-seeking citizens dominated by war-torn Asian and African countries, according to Eurostat, the EU’s statistical office. However, only few thousands asylum-seekers managed to obtained protection status in EU countries due to Albania being considered a safe country that is a NATO member and an EU aspirant hopeful of launching accession talks next year.

While asylum-seeking has curbed, more and more have turned to learning German and legally move to Europe’s leading economy, in a phenomenon that has not spared skilled professionals such as doctors and nurses leaving the country.

 

Containing risks

IMF representatives also warn of a series of risks facing the Albanian economy that are mainly related to the rapid increase in public-private partnerships, budgetary arrears and tax cuts or preferential treatments that the government is offering, stressing the need for key reforms that would also help Albania in its pursuit of further integration with the European Union.

“Key reforms include strengthening the rule of law and economic institutions, removing obstacles to higher private savings and investment, and reducing public debt at a faster pace by enhancing the management of public investments and broadening the revenue base. In addition, safeguarding financial stability within the changing architecture of the banking sector increases the complexity of financial supervision,” says the IMF.

The IMF reiterates the need to promote a competitive bidding process by halting the acceptance of unsolicited proposals favoring private companies through bonuses as the government pursues with its ambitious PPP program to upgrade key road, health, education and waste management infrastructure.

Finance Minister Arben Ahmetaj has hinted the government will scrap the unsolicited proposal procedure that has proved decisive for most PPP contracts starting July 2019.

“While the projected PPP-related spending remains below the legal limit of 5 percent of tax revenues, this leaves little room for any additional government-funded PPP projects,” says the IMF, which has earlier warned PPP arrears could pose a threat to Albania’s debt reduction agenda.

The IMF also warns about immediately addressing the issue of rising central and local government arrears, estimated at 1.5 percent of Albania's GDP, around €180 million, with a considerable part involving accumulated VAT refunds to major energy-related investment which the finance ministry says it has agreed to refund in scheduled instalments in order not to affect revenue growth.

“Given the absence of fiscal space, we strongly urge the authorities to refrain from introducing ad-hoc tax cuts, exemptions, or preferential treatments and consider rolling back those already implemented,” says the IMF.

The Albanian government is offering a series of tax incentives and tighter rules against tax evasion for next year in a carrot and stick approach ahead of the upcoming mid-2019 local elections.

 
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                    [post_date] => 2018-11-20 17:58:08
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                    [post_content] => TIRANA, Nov. 20 – Slow progress in the implementation of the long-awaited justice reform has led to a sharp increase in the backlog of cases awaiting trial, thousands of which involving business appeals with the administrative courts over controversial decisions by Albanian authorities.

The Supreme Court, which currently has only four out of nine judges, has accumulated a backlog of 30,000 cases at a time when hearing continues for cases submitted as early as 2014. The functioning of the court, where an Administrative College also operates as the highest administrative court instance to settle household and business disputes with the public administration, has been hampered by a slowly progressing vetting process scanning judges and prosecutors over their wealth and failure to establish new justice bodies that would pave the way to new appointments.

Another 12,000 cases await trial at the Administrative Appeals Court, which has only 13 judges to examine appeals from all six administrative courts of first instance that have been operating in the country since late 2013 in a bid to offer faster procedural actions and trials.

A considerable number of cases belong to business disputes with Albanian tax, customs, inspection and public procurement authorities but years of examination in the country’s three-tier administrative court system means huge costs for the country’s business community which is now hoping the justice reform under way will provide faster and fairer access to settle their disputes and restore trust in a system highly perceived as corrupt.

Economy expert Besart Kadia says the slow progress in the implementation of the justice reform has led to a deadlock for the country's economy.

"Corruption, ill-functioning, lack of integrity, transparency and accountability in the system have been identified and are widely accepted as negative phenomena that are the focus of this crucial reform to change the situation of the justice reform in the country. Yet, the justice reform has also led to a big impasse for the country's economic life," Kadia an entrepreneurship secretary at the main opposition Democratic Party, has written in an op-ed published on local media.

According to him, a backlog of dozens of thousands of cases awaiting trial for as many as four years at the country's appeals and supreme administrative courts has led to many businesses admitting the unfair penalties imposed by state authorities rather than waste time and money for so long in the country's justice system.

An inefficient judiciary and highly perceived corruption is one of the key concerns for current and potential foreign investors to Albania with major investors often putting costly clauses of international arbitration in settling potential disputes with the government in their Albania investment contracts.

Due to political stalemates preventing the establishment of new bodies to fill vacancies and the launch of a vetting process punishing several judges over failing to justify their wealth, Albania’s Constitutional Court, the Supreme Court, and the School of Magistrates training upcoming judges and prosecutors have been paralyzed this year, giving a severe blow to the justice system in the country and undermining public trust in the reform.

The High Judicial Council and High Prosecutorial Council, two key bodies replacing the current inefficient High Council of Justice, have yet to be established and pave the way for new appointments in key courts and prosecutor’s offices.

Artan Hajdari, a renowned lawyer who was also one of the experts involved in the drafting of the justice reform, says the mid-2016 constitutional changes were adopted to increase the recruitment standards for current judges and lawyers undergoing vetting and remove political interference in their appointment which had led to a highly perceived corrupt judiciary despite Albania already having Western standards legislation in place.

Eight judges and prosecutors out of the first sixteen to undergo vetting through a final say have so far failed to pass the vetting process over failing to justify their wealth in a process that began in early 2018 but is slowly progressing and could take years considering more than 750 judges and prosecutors in the country.

The implementation of the justice reform is also one of the key conditions that Albania has to meet as it hopes to launch EU accession talks next year in addition to strengthening rule of law.

An earlier 2016 report by the Albanian Investment Council, a government advisory body, found that administrative courts were failing to examine business appeals in time and about three-quarters of their decisions were in favor of the public administration.

“Administrative courts do not possess capacities to objectively review cases within legal deadlines, taking into account the high number of cases filed in such courts and the limited number of judges,” showed the Investment Council report.

 

A pensioner’s saga

The inefficient administrative court system and the odyssey in its three-tier system also negatively affects vulnerable people such as pensioners, stripping them of modest benefits to make ends meet.

A pensioner engaged in a legal dispute with authorities over not having 20 years in social security recognized under communism and in the early 1990s in a state-run enterprise that was later privatized has already spent five years in the three-tier administrative court waiting for years to have his case examined before the Supreme Administrative Court decided last summer following an almost four-year wait time that the case had to be re-examined by a new body of the Administrative Appeals Court.

The pensioner who initiated the legal battle in 2013 when administrative court had not yet been established got a decision in his favor by a first instance administrative court in early 2014 before the decision was appealed by the local social security authorities to embark on an odyssey of legal battle that could take another few years to settle.

The 71-year-old pensioner, who is now getting modest partial pension will have to wait for another couple of years in the best case scenario before a final court decision by the Administrative Appeals Court which is currently examining 2016 cases.

While awaiting for about five years to get a final say, the pensioner, who is recently suffering from a progressive incurable disease, has been receiving only 5,000 lek (€40) a month in partial pension, an amount about three times lower compared an estimated 16,000 lek (€115) subsistence level calculated by the Ombudsman’s office.
                    [post_title] => Justice delayed for thousands as slowly progressing reform increases Albania court backlog  
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                    [post_date] => 2018-11-20 14:34:49
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                    [post_content] => TIRANA, Nov. 20 - Unfair competition from informal businesses, mainly apartment and villa owners is a top concern for the overwhelming majority of businesses in the accommodation sector of Albania’s emerging tourism industry.

A recent survey conducted by the Albania Investment Council, a government advisory body, shows 71 percent of businesses operating in the tourism industry nationwide, admitted to facing unfair competition by unlicensed operators, in a situation that mostly affects licensed accommodation units along the country’s Adriatic and Ionian coasts, but also hits government revenue.

Albania has more than 1,200 licensed accommodation units with a capacity of more than 41,000 beds but the number of informal units, mainly apartments and villas offered for rent informally is estimated to be much bigger, unfairly competing with licensed operators by offering much cheaper prices due to often paying no taxes at all. Apartment owners are required to pay a 15 percent tax rate in case of offering them to tourists or local residents, but the tax is largely ignored outside Tirana.

Lack of qualified human resources, barriers in access to finance and inappropriate public infrastructure are also key concerns for the country's tourism operators to handle the rise in the number of number of tourists visiting the country, according to the survey conducted by the Albania Investment Council. The government advisory body serving as a linking bridge between the business community and the government was set up in 2015 with support by London-based European Bank for Reconstruction and Development.

Albania’s Finance Minister Arben Ahmetaj says the government will further tighten the fight against tax evasion in the tourism industry by cooperation with leading global online booking platforms such as booking.com, where more and more unlicensed Albanian operators have been advertising apartments and rooms at rates of 10 to 25 percent and paying nothing in local taxes for their income.

“Soon, the fight against informality will go to another level, as negotiations are being held with digital platforms such as Booking.com and Airbnb to obtain official information from these platforms on all the structures leased in Albania,” minister Ahmetaj said at a recent meeting with tourism operators.

Albania tax authorities undertook a nationwide campaign in the country’s coastal areas last summer during the peak of the tourist season to tackle high tax evasion, imposing fines on hundreds of operators and even handing 30-day operation bans to several big hotels and restaurants.

The Albanian government says a new billing system enabling the real time monitoring of business to consumer and business to business operations will considerably improve efforts to tackle tax evasion in the country, estimated at around 30 percent of the country's GDP.

Local tourism operators in the country are also worried over the high seasonality in the country's summer and coastal based tourism that peaks in July and August and the relatively small amounts that foreign tourists spend in the country, often because of their short stays.

Tourist accommodation units have been facing a reduced 6 percent valued added tax for the past year, down from a previous standards 20 percent VAT, but the lower rate only applies to accommodation fees and excludes food, drinks or entertainment.

In a bid to promote elite tourism, the Albanian government is now offering tax incentives for four and five-star hotels with an investment value between €8 million to €15 million. However, the long-standing unclear property titles remains a key barrier to attract foreign investors, some of whom have abandoned their investment following disputes with local residents.

Earlier this year, the Albanian government selected 100 villages nationwide to upgrade their infrastructure and public services and promote agritourism by offering incentives and grants to support local characteristic agriculture products.

With more and more restaurants adopting a farm-to-table approach, the emerging agritourism sector will benefit from several tax incentives, including a 5 percent corporate income tax, a reduced 6 percent VAT and exemption from the infrastructure tax on investment starting next year.

Making an appropriate 'star' rating of accommodation units in order not to confuse tourists is also considered essential by tourism industry operators in addition to upgrading local road and waste management infrastructure.

Albanian authorities report the country was visited by more than 5 million foreign tourists last year, generating a record high of €1.7 billion in income, about 14 percent of the country’s GDP, but some travel industry experts say about 80 percent of those numbers are ethnic Albanians from regional countries or Albanian migrants based in EU or North America in a segment often referred to ‘patriotic tourism.’
                    [post_title] => Unfair competition is top concern for 70% of Albania’s tourism businesses, survey shows 
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            [post_content] => TIRANA, Nov. 28 – US-based hotel giant Marriott International is set to launch Albania operations and become the country’s major high-end brand through a hotel downtown Tirana as the government’s support has switched to high-end investment which it says will have a stronger impact on the country’s emerging tourism industry.

The deal was announced this week by Albania’s Prime Minister Edi Rama who hailed Marriott’s Albania arrival as a milestone for the development of Albania’s 5-star hospitality industry which the government is supporting with a series of tax incentives.

Marriott International will cooperate through a franchise deal with Albanian-owned Albstar company which is building the “National Arena” stadium, the new home of the national football side, which will be ready by next year as a stadium, a commercial center and hotel.

The new stadium is a €50 million public private partnership project with a capacity of 22,000 seats under which the Albanian-owned company was offered public land to build commercial facilities at a 24-storey tower in return for building a new modern stadium.

The arrival of Marriott International is however not new in Albania. The American hospitality giant was indirectly present in Albania throughout 2017 through Sheraton hotel in Tirana, a global Starwood brand which it acquired in late 2016.

Sheraton left Albania in early 2018 following 15 years of operation in the country under a deal with Mak Albania, a subsidiary of Kuwait-based Kharafi Group Investments, after the hotel was purchased by an Albanian-owned major oil company for €30 million.

Commenting on Marriott's Albania arrival and tax incentives that the Albanian government is offering to the construction and operation of luxury hotels, Prime Minister Edi Rama said that promoting quality investment will have a stronger impact on the country's tourism industry.

"Five-star hotels bring higher contribution and impact to the tourism industry and the country's economy regarding the image which is key for the tourism industry, the high level of spending, contribution to employment, the quality of jobs, wages and above all the fundamental hospitality culture when compared to lower category hotels,” said Prime Minister Rama, speaking at a Tirana tourism investment forum.

He announced that Hyatt, another US-based giant is about to conclude an Albanian deal, which local media have unveiled could be former Sheraton, currently operating under the Mak brand of Kuwait-based Kharafi Group Investments.

 

Luxury competition getting tougher

Luxury hotel competition in Tirana has now become much tougher in Tirana in the past couple of years following the late 2016 opening of the Albanian-owned Plaza Hotel, a 24-storey tower in Tirana city center and the recent launch of Hilton Garden Inn.

Last September, Hilton Garden Inn, a mid-priced brand owned by Hilton Worldwide, launched its first hotel in Tirana, an Albanian investment of €19 million in partnership with the prestigious US-based hospitality chain through a franchise deal.

Competition is expected to get much tougher with the opening of the new Marriott Hotel next to the National Arena stadium next year and a new giant hotel next to the landmark 15-storey building of the Tirana International Hotel in the city center.

Austrian-owned Rogner Hotel has also been operating in Tirana since the early 1990s as the first Western hotel following the collapse of the country’s hardline communist regime.

Prime Minister Edi Rama says the government will put an end to the era of tourist villages which he says have turned into residence areas for apartment and villa owners with little value added for the country's tourism industry and promote more sophisticated investment like four and 5-star tourist resorts.

While the Albanian government supports the idea of the need for luxury investment, some local experts say demand for accommodation in Tirana, which has seen a significant rise in the past few years, is mostly for medium-priced 3 or 4-star hotels and see the new luxury investments with skepticism.

 

Tax incentives 

In a bid to promote elite tourism investment, Albania has been recently offering tax incentives for a 10-year period  on luxury accommodation units for investments ranging from €8 million to €15 million for four and five-star units that will have to be carried out by internationally renowned chained-brand hotels or local companies under management or franchise contracts with them.

Last year, the Albanian government cut VAT on hotel accommodation to 6 percent, from a previous 20 percent and has now introduced package incentives to extend the 6 percent VAT on all services offered by new chained-brand luxury hotels and resorts which will also be stripped of the corporate income tax for a 10-year period.

The government says the incentives are similar to regional countries with a longer tradition in tourism and aimed at making the country’s tourism industry more competitive by offering quality accommodation units and services in a bid to attract a new segment of high-income tourists.

Majority MPs say the new ‘elite’ tourism investments will contribute to new jobs, increase the number of high-income tourists and boost the country’s image, but the opposition is worried new tax-free investments could serve as money-laundering schemes for drug and other crime proceeds.

Data shows construction permits for new hotels have registered a sharp hike with more than 100 permits issued in the past couple of years after almost stagnating in the 2014-2016 period when only a total of 19 new permits were handed for hotel accommodations.

Current investment in the tourism industry in the country are being mainly carried out by Albanian investors at a time when the long-standing unclear property titles remains the main concern for foreign investors, especially at coastal areas, with several major investors having quit their Albania projects during the past decade over land disputes following prolonged legal battles and protests by local residents.

Due to property disputes, several local Albanian investors have opted to build coastal resorts on development contracts rather than purchasing the land without clear ownership titles.

The tourism industry which in the past couple of years has attracted more than four million tourists and generated €1.5 billion in income, about 14 percent of the country’s GDP, has emerged as one of the country’s key drivers of growth.

Prospects are optimistic but experts say the challenge is to put in place a year-round industry making use of mountain tourism and other cultural heritage destinations to reduce reliance on the peak coastal season and new quality investment could help with that.

Unfair competition from informal businesses, mainly apartment and villa owners is a top concern for the overwhelming majority of 70 percent of businesses in the accommodation sector of Albania’s emerging tourism industry, according to a recent survey by the Albania Investment Council, a government advisory body.

Albania has more than 1,200 licensed accommodation units with a capacity of more than 41,000 beds but the number of informal units, mainly apartments and villas offered for rent informally is estimated to be much bigger, unfairly competing with licensed operators by offering much cheaper prices due to often paying no taxes at all.
            [post_title] => US giants Marriott, Hyatt to operate Albania hotels as high-end investments get tax cuts
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