Transport operators handle less freight, more passengers

Transport operators handle less freight, more passengers

TIRANA, Jan. 29 – Maritime, air and rail operators in Albania faced mixed results in 2018 when freight transport declined and the handling of passengers only significantly increased for the country’s sole international airport. Data published by INSTAT, the state-run

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Protests force authorities to back off from HPP, oil search plans at protected areas

Protests force authorities to back off from HPP, oil search plans at protected areas

TIRANA, Jan. 28 – Protests by local residents and environmentalists over the construction of a small hydropower plant next to a protected Canyon and oil search plans at a national park have led to the suspension of works and a

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Albania remains ‘moderately free’ as it climbs 13 steps in economic freedom

Albania remains ‘moderately free’ as it climbs 13 steps in economic freedom

TIRANA, Jan. 28 – Albania climbed 13 steps to rank one of the Western Balkans’ best performing countries in economic freedom, but remained ‘moderately free,’ according to the 2019 index of economic freedom published by the Heritage Foundation, one of

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Newly-imposed ban drastically cuts gambling in Albania

Newly-imposed ban drastically cuts gambling in Albania

By Ervin Lisaku TIRANA, Jan. 28 – Legal changes have turned Albania from a gambling paradise to one of the countries applying one of Europe’s harshest legislation on games of chance, but facts on the ground show gambling continues although

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Shell drops oil search plans at Albania protected area after protests

Shell drops oil search plans at Albania protected area after protests

TIRANA, Jan. 24 – The Albanian government and Shell oil giant have withdrawn from oil search plans at a protected area in the southern Albanian region of Gjirokastra following protests by local residents and opposition by cultural heritage and tourism

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Albania wins over Kosovo-Serbia trade war

Albania wins over Kosovo-Serbia trade war

TIRANA, Jan. 24 – Albania is winning over the Kosovo-Serbia trade war, having sharply increased exports to neighboring Kosovo, a natural ethnic Albanian-dominated trading partner, where gains in market share could be even bigger if Albania produced more and current tariff

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Albania to tighten anti-money laundering legislation after critical Moneyval report

Albania to tighten anti-money laundering legislation after critical Moneyval report

TIRANA, Jan. 24 – Albanian authorities have drafted legal changes to tighten measures and penalties in countering money laundering and terrorism financing following a critical report by a Council of Europe monitoring body. The main proposed legal changes concern the

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UN: Italy slowdown, Brexit-fuelled cut in EU funding to affect Albania’s growth

UN: Italy slowdown, Brexit-fuelled cut in EU funding to affect Albania’s growth

TIRANA, Jan. 23 – A slowdown in the economic performance of Italy and Greece, Albania’s main trading partners, and lower EU accession funding following an eventual departure of the UK from the European Union next March will negatively affect Albania’s

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Albania NPL decline slows down in key barrier to credit growth

Albania NPL decline slows down in key barrier to credit growth

TIRANA, Jan. 23 – Non-performing loans in Albania’s banking system almost stood at a standstill in 2018 following a sharp decline since mid-2014 when they hit a record high of around 25 percent fuelled by credit boom in the pre-crisis

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Albanian unionists unhappy with trade unions’ performance, study shows

Albanian unionists unhappy with trade unions’ performance, study shows

By Ervin Lisaku TIRANA, Jan. 22 – Almost half of unionists in Albania think trade unions’ activity in defending workers’ interests is hampered by political influence and that union leaders are unable to affect government policies on employment, a study

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                    [post_content] => TIRANA, Jan. 29 - Maritime, air and rail operators in Albania faced mixed results in 2018 when freight transport declined and the handling of passengers only significantly increased for the country’s sole international airport.

Data published by INSTAT, the state-run statistical institute, shows the volume of maritime transport in the country dropped by 3.3 percent to around 3.9 million metric tons in all four ports. The decline is mainly related to the mid-2017 completion of steel pipes imports from Germany to build the Albanian section of the major Trans Adriatic Pipeline scheduled to bring Caspian gas to Europe by 2020.

The Durres Port handled around 13,000 pipes, bends and various equipment and machinery weighing more than 200,000 metric tons for 15 months until mid-2017, according to Switzerland-based TAP consortium.

The country’s largest, Durres Port handles the overwhelming 90 percent of maritime freight transport with the three other Shengjin, Vlora and Saranda ports sharing a 10 percent share.

Around 60 percent of Albania’s exports, whose main destination is Italy, were handled through ports in 2018.

Meanwhile, road handling of exports also rose by 16 percent in 2018, mainly reflecting higher exports to neighbouring Kosovo, the second most important destination of Albanian exports.  Albania’s exports to Kosovo have received a major boost since last November when Kosovo introduced tariffs on imports from Serbia, its main trading partner which it declared independence from a decade ago in retaliation for Serbia and Bosnia and Herzegovina’s efforts in blocking the recognition of Kosovo’s independence and its membership in key international organizations.

Albania’s exports rose by 14 percent in 2018 fuelled by a hike in energy-related products such as electricity and oil, minerals and steel following favorable weather conditions and a hike in commodity prices that defied the negative effects of Europe’s single currency losing around 7 percent against the Albanian lek. Yet, Albania’s exports covered only around half of the country’s imports which rose by an annual 2.4 percent.

The number of passengers from the Durres, Vlora and Saranda ports almost stood at a standstill in 2018 as it only rose by 1 percent to 1.5 million. The Durres and Vlora ports handle passengers to Italian ports of Bari, Ancona and Trieste, while the small southern Saranda port mostly handles passengers to the Greek island of Corfu, which also serves as a hub for international tourists to southern Albania, where the country lacks an airport.

Last year was positive also for the country’s air transport industry which handled 2.95 million passengers through the Tirana International Airport, the country’s sole international airport.

TIA, which since mid-2016 has been handled by a Chinese consortium switching hands from previous German and Canadian concessionaires, saw a 12 percent hike in the number of passengers, mainly heading to and from Italy, Albania’s main trading partner and the host of some 500,000 Albanians.

The hike in air passengers also reflects positive tourist season which authorities say brought 5.9 million tourists and generated more than €1.5 billion in travel income, around 10 percent of the country’s GDP.

Meanwhile, railway passenger and freight transport continue registered historic lows, reflecting the critical situation in the country’s state-run rail sector that has not seen major investment in the past three decades.

Only around 76,000 passengers travelled by train 2018, up 15 percent compared to 2017, but down from 198,000 in 2015 and about 4 million in the early 1990s soon after the collapse of the communist regime which banned private ownership of cars and public trains and buses were the key mode of transport.

Rail freight transport, mainly carried out through Montenegro, slightly recovered to 199,000 metric tons in 2018, about half compared to a decade ago and eight times less compared to the early 1990s.

Albania has secured €90 million in financing to rehabilitate its key Tirana-Durres railway segment and link it to the country’s sole international airport in a project that will revitalize the country’s degrading railway system that has almost seen no investment at all during the past quarter of a century following the collapse of the communist regime.

The European Commission describes Albania's transport sector as insufficiently developed, saying that "better connections to neighbouring countries and the EU transport network still need to be established to reduce transportation costs and facilitate trade."
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                    [post_content] => TIRANA, Jan. 28 – Protests by local residents and environmentalists over the construction of a small hydropower plant next to a protected Canyon and oil search plans at a national park have led to the suspension of works and a change of plans over environmental concerns in two southern Albanian areas where tourism is considered a major future opportunity for thinly populated villages that have faced mass migration over the past three decades.

While oil search plans by Shell oil giant and the Albanian government are on track to be dropped at the Zagoria protected area off the southern Albanian UNESCO World Heritage city of Gjirokastra, damage has already been caused to Holta Canyon outside the town of Librazhd, where an Albanian company has concreted the entry to the canyon as part of a permit it received last year to build a new hydropower plant.

Facing pressure by local residents, environmentalists and adventure travel activists, the government has ordered the suspension of works until the hydropower permit is revised, but huge uncertainties remain over its cancellation as the company that is building the small HPP, a €3.6 million investment next to a protected area and monument such as the Canyon, claims it has received all required permits to launch construction works. An apparent legal battle could force the Albanian government to face penalties over a potential unilateral cancellation of a permit it issued in April 2018.

“Many HPP permits have been awarded in the Gramsh region, but the Holta HPP is a scandal where nature and tourism are being destroyed for the benefit of short-sighted people," the Gramishi Online activists say in a Facebook post.

 

HPP screening

New Energy Minister Belinda Balluku says she has ordered the suspension of HPP construction permits due to more than a hundred concession contracts having remained on paper and environmental concerns over the areas the HPPs are planned.

The minister says Albania currently has 96 operational small and medium-sized HPPs which the government supports by purchasing electricity at regulated prices, compared to contracts for 440 such HPPs.

The suspension of works for all HPPs that have obtained licenses or are carrying construction works until a screening process is carried out has worried hydropower plant investors who say the surprise decision triggers uncertainties over current and future investment plans in a sector that is estimated to have attracted more than €1 billion in local and foreign investment over the past decade.

Protests by local residents in the past couple of years and legal battles could not stop the Vjosa and Valbona rivers, two of Europe's last wild rivers located south and north of Albania, from being dammed with the first hydropower plants after previous government decisions sealing their fate and the authorities refusing to back off over penalties they could face in case of unilateral cancellations.

A recent report by Bankwatch, a Czech Republic-based environmental and human rights group, has shown the boom in hydropower plant construction in the past decade has put significant pressure on the environment in Albania and international financial institutions are also to blame for this for financing the controversial projects

“Small-scale hydropower projects often do not pass through a comprehensive Environmental Impact Assessments (EIAs) at all, which in a fragile governance context leads to outright destruction of the environment,” says Bankwatch which examined two projects financed by London-based European Bank for Reconstruction and Development in Albania including one in the Shebenik-Jabllanicë National Park, east of Albania close to the Macedonia border.

In 2017, a new law on protected areas finally forbid the construction of hydropower plants in Albania national parks, but this move comes too late for those plants such as Rapuni located at in the protected area of Shebenik-Jabllanice.

Albania produces all of its domestic electricity from hydropower, three-quarters of which from three major state-run HPPs in a situation that often places the country in difficulty in case of prolonged droughts when the country is forced to make costly power imports.

Authorities are now mulling reactivating a thermal power plant on cheaper natural gas and setting up the first solar power plants through incentives that would reduce the country’s hydro-electricity dependence.

 

Holta Canyon

The Librazhd Municipality is a local government unit of some 32,000 residents located some 70 km south of Tirana in a one-and-a half hour drive. The region boasts a national park and several natural wonders, among which the Holta Canyon, is one of the key tourist attractions.

"The Holta Canyon, has remained fairly unexplored from local and foreign tourists alike. The Canyon was created by the erosion of the river Holta. It extends 3 kilometers from the village of Bardhaj to Kabash, with surrounding valley slopes of 100-150 meters and with crystalline waters of depths of around 3 meters,” says the IntoAlbania travel portal.

“Karst caves created by limestone rocks, stalactites and stalagmites of rare beauty can be found there. Silence and echoes, lush greenery hanging from the slopes above you and beautiful blue waters caressing your feet and creating small waterfalls along the way. A bit further, thermal waters where you can relax for a moment of your journey," it adds.

 

Oil plans also dropped

Last week, the Albanian government and Shell oil giant also announced the drop of plans at the protected Zagoria area, an emerging adventure travel destination, where initial plans were to conduct a seismic study that did not exclude the use of explosives or specialized trucks in the search for possible petroleum, natural gas and mineral deposits.

Facing protests by local residents and environmentalist, both Shell and the Albanian government declared they would drop plans.

The main opposition Democratic Party claimed the oil search plans had been adopted under a government decision as part of 2018 deal awarding Shell oil exploration rights in Block 4, a southern Albanian area that involves seven municipalities among which Libohova, a local government unit in the region of Gjirokastra that also include the protected Zagoria area.

The whole Libohova municipality has a resident population of fewer than 4,000 with some 500 estimated to live in Zagoria, an areas relying on farming, livestock and the emerging tourism.

"The Zagoria area is one of the richest Albania areas boasting Byzantine legacy such as churches, bridges and archeological sites that make up huge potential for the sustainable local development of the area. Oil search operations or any other industrial activity in the area would pose a danger to the protected values," renowned activists of the Forum for the Protection of Cultural Heritage have said.

Having made some major discoveries but not engaged in oil production yet, Albania is one of the few countries where oil giant Shell did not suspend its oil exploration operations following the mid-2014 slump in oil prices.
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                    [post_content] => TIRANA, Jan. 28 – Albania climbed 13 steps to rank one of the Western Balkans’ best performing countries in economic freedom, but remained ‘moderately free,’ according to the 2019 index of economic freedom published by the Heritage Foundation, one of the top US-based think tanks.

This year’s report ranked Albania 52nd out of 180 global economies, a sharp improvement compared to last year’s 65th, in progress which the Heritage Foundation attributes to "dramatic improvement for the second consecutive year in fiscal health and higher scores for judicial effectiveness, labor freedom, and government spending.”

The report ranks Albania only one step below neighboring Kosovo, Europe’s youngest country that will be celebrating its 11th independence anniversary next February, and much better compared to Serbia, the region’s largest economy that ranked 69th this year. Ethnically-divided Bosnia and Herzegovina and tiny Montenegro ranked 83rd and 92nd respectively.

Macedonia, which recently overcame its decades-long name dispute with Greece, by being renamed the Republic of North Macedonia, was the region’s best performer ranking 33rd as the sole Western Balkan economy that is rated 'mostly free.'

Despite progress during the past quarter of a century of transition to democracy and a market economy, the report describes Albania as one of Europe’s poorest countries, “with sluggish economic growth hindered by a large informal economy and weak energy and transportation infrastructure and where high unemployment and a lack of opportunity spur substantial emigration.”

The long-standing issue of property rights, a weak judiciary that is undergoing reform, one of the region's weakest tax collection rates at only around 25 percent of the GDP despite having the highest tax burden among Western Balkan countries are some of Albania’s drawbacks identified by the Heritage Foundation report. In addition, a number of non-tariff barriers and bureaucracy is estimated to hamper both trade and investment opportunities.

Due to poor connectivity and the small size of regional economies as well as tariff and non-tariff barriers in place defying a regional free trade agreement, Albania conducts only a tenth of its trade with regional CEFTA countries. Similarly, Albania also manages to attract only a tenth of the FDI flowing into Western Balkans. FDI in Albania, which during the past decade has been at an average of €1 billion annually, mainly focuses on low value-added energy-related projects such as hydropower, oil and mining and most recently natural gas through the major Trans Adriatic Pipeline set to bring Caspian gas to Europe by 2020.

The state-run sector produces only a fifth of the GDP and employs one out of five in Albania, but experts say a weak rule of law has led to unfair competition and operations under monopoly position including the state-run electricity distribution and services operated by private sector operators under monopoly concessions or public private partnerships.

The latest World Bank Doing Business report showed Albania climbed only two steps to rank 63rd out of 190 global economies for the ease of doing business, continuing to lag behind most of its regional competitors ranking in the top 50.

Paying taxes ranks Albania the world's 122nd worst performer with medium-sized companies spending an average of 252 hours a year and having to pay about 37.3 percent of their profit in taxes and contributions, in the region's worst rating.
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                    [post_content] => By Ervin Lisaku

TIRANA, Jan. 28 - Legal changes have turned Albania from a gambling paradise to one of the countries applying one of Europe’s harshest legislation on games of chance, but facts on the ground show gambling continues although at a drastic decline compared to until late December 2018 before a gambling ban entered into force.

Albanian authorities have launched a nationwide crackdown on illegal gambling operations during the past month, initiating legal action against more than a dozen people, including three gamblers, for organizing illegal gambling activities, in legal sanctions that could see them fined or face prison sentences of up to six months.

In addition, authorities have ordered the country’s internet service providers to deny access to more than 1,600 local and international online betting sites, on a ‘ban list’ that has been regularly updated by the gambling supervisory unit and police officials with 10 lists until Jan. 24.

The partial nationwide gambling ban that the Albanian ruling Socialist Party majority approved in late October 2018, banned electronic casinos from residential areas and temporarily froze for an undetermined period what had become a booming sports betting industry, including online betting, until new legislation that could turn it into a state monopoly or set new rules to discipline their operation.

Yet, the country’s sole real casino offering live table games and located downtown Tirana was not affected by recent legal changes and anecdotal evidence shows gamblers are queuing to go there. Legal changes also do not apply to TV bingos, including the National Lottery, also offering scratch tickets.

Meanwhile, electronic casinos are expected to be relocated to 5-star hotels or tourist areas with national importance that are yet to be determined by the government.

 

Battling illegal gambling

A number of former sports betting shops that have now turned into coffee bars are reported to offer illegal online gambling services, but only for gamblers betting medium to large sums, putting an end to bets below $10 dollars that a majority of Albanians used to place, starting as low as 100 lek (€0.8; $0.9) for predicting football matches.

While access to several websites on the Albanian ‘ban list’ of 1,627 portals is still available, experts say banning online gambling is quite a mission impossible due to a variety of opportunities that technology enables, including through proxy services or virtual private networks hiding the real location of gamblers.

In addition, having a credit card and opening an account with one of the online betting portals, can enable gamblers to bet online and use popular e-wallets to deposit and withdraw funds at lower costs compared to commercial banks.

 

Rental market effect

Hundreds of electronic casinos and thousands of betting shops nationwide have closed down this year, increasing supply in the rental market, where demand is satisfactory only in capital city Tirana, yet at much lower rental rates compared to the lucrative contracts landlords had with gambling business.

Outside Tirana, hundreds of former casino and betting shops have closed down and demand to rent them is poor due to the difficulties that small businesses are facing amid a hike in taxes, poor consumption and ever rising competition with shopping centers and supermarket chains that are gaining constant market shares.

Real estate agents say the massive closure of casinos and betting shops will sharply increase rental vacancy rates and lead to rental prices dropping by around a third due to current often Euro-denominated rates being unaffordable for most non-gambling businesses.

While some of the former betting shops have changed business operations, more are expected to close down due to being unable to survive as mere coffee shops without the lucrative sport betting business that allowed them to pay up to €3,000 in monthly rents for downtown Tirana facilities, more than double another non-gambling business could afford paying.

 

A booming industry

Gambling was a completely privately-run industry in Albania where until last year it officially generated more than €130 million in annual income, paid about €50 million in taxes and employed some 7,000 people, but much more if the informal sector was taken into account.

Experts had blamed the booming gambling industry for a series of negative economic and social effects, often associated with higher domestic violence and divorce rates.

The booming gambling businesses was often linked to gangs laundering crime and drug proceeds. There have also been cases when even senior officials and judges have justified some of their income through winnings in betting shops or casinos in their wealth declarations.

The ban on the booming sports betting industry comes following a two-year extension to a law disciplining gambling in downtown areas that was initially scheduled to become effective in January 2017, but became effective this year under new tougher amendments limiting gambling to 5-star hotels and non-residential areas that will be determined by the government.

Prime Minister Rama recently has said the gambling ban is saving Albanians €1 million a day, but hinted of new legal changes that could discipline sports betting following a freeze period.

Albania had an estimated more than 3,900 betting shops at a rate of 1 per 730 local residents until last year, setting a European record.

Gambling was a booming business in Albania during the past decade, defying global crisis effects and the economic slowdown that Albania faced. Gambling operations in the country varied from lotteries, electronic casinos and more numerous sports betting shops.

A gambling law, which has been in force for several years, banned people under 21 from entering betting shops, but regardless, teenagers are often seen there.
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                    [post_date] => 2019-01-24 18:48:18
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                    [post_content] => TIRANA, Jan. 24 - The Albanian government and Shell oil giant have withdrawn from oil search plans at a protected area in the southern Albanian region of Gjirokastra following protests by local residents and opposition by cultural heritage and tourism experts.

Representatives of the Albania unit of Shell oil giant, already engaged in some major oil exploration projects in the country, say the company will not carry out any search or drilling activity in Zagoria, a protected area in the region of Gjirokastra with a unique ecosystem and rare animals that has been recently emerging as an adventure travel destination.

The withdrawal came after a hearing with local residents this week was met with protests and strong opposition over oil exploration plans in an area where the Albanian government and Shell initially planned to conduct a seismic study that did not exclude the use of explosives or specialized trucks in the search for possible petroleum, natural gas and mineral deposits.

Reacting to concerns, Prime Minister Edi Rama also assured no oil drilling will be carried out at the Zagoria protected area.

The Zagoria national park, part of the Libohova municipality, was one of the seven Gjirokastra municipalities that Shell oil giant had identified to search for oil and gas this year as part of its newly acquired onshore Block 4, southern Albania.

Located about 35 km east of the UNESCO World Heritage site of Gjirokastra, the Zagoria park has been a protected area since 2015 and in May 2018, the whole area was declared a nature park by the government for its unique ecosystem and rare animals such as the brown bear and the wild goat and pig that breed there.

A hilly area with only few hundreds of residents, Zagoria has been recently emerging as an adventure travel destination, with tour operators offering ‘travel back in time’ horse riding tours.

Albania expects good news from Shell’s oil exploration operations in the country and is hopeful the British-Dutch multinational oil giant will soon engage in oil production that could give a boost to the country’s oil industry and much-needed foreign direct investment at a time when two major energy-related projects are set to complete their investment stage by the end of this year, leaving a huge gap in Albania’s FDI.

Albania is one of the few countries where Shell did not suspend its oil exploration operations following the mid-2014 slump in oil prices.
                    [post_title] => Shell drops oil search plans at Albania protected area after protests 
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                    [post_date] => 2019-01-24 17:15:05
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                    [post_content] => TIRANA, Jan. 24 - Albania is winning over the Kosovo-Serbia trade war, having sharply increased exports to neighboring Kosovo, a natural ethnic Albanian-dominated trading partner, where gains in market share could be even bigger if Albania produced more and current tariff and non-tariff trade barriers were lifted.

Kosovo is partly replacing regional imports from Serbia and Bosnia and Herzegovina with products from Albania and Macedonia following a 100 percent tax it introduced against Serbian and Bosnian imports in late November 2018 in retaliation for their efforts in blocking the recognition of Kosovo’s independence and its membership in key international organizations.

Imports from Turkey, Bulgaria and Croatia also registered a significant boost in the last two months of 2018 as significant imports that Kosovo used to made from Serbia and Bosnia and Herzegovina, its top trading partners for imports, were paralyzed following the 100 percent trade tariff that Kosovo introduced on Serbian and Bosnian imports on Nov. 21, according to Kosovo’s statistical agency.

Kosovo's imports from Albania rose by 50 percent over November-December 2018 after Kosovo initially introduced a 10 percent tax on imports from Serbia, its main trading partner it declared independence from a decade ago, before hiking it to 100 percent on Nov. 21 and even extending it to all international branded goods produced in Serbia and Bosnia and Herzegovina on Dec. 28, defying criticism by EU and US authorities.

The hike makes Albania the top exporter to Kosovo among regional EU aspirant and CEFTA countries, overtaking traditional top exporter Serbia whose exports to Kosovo drastically dropped by almost 90 percent to a mere €5 million last December.

However, keeping the leading position on exports to Kosovo among regional Western Balkan countries will not be as easy for Albania as long as the tax against Serbia and Bosnia and Herzegovina remains in force.

Data by Kosovo's statistical agency shows Albania and Macedonia each exported around €17.4 million of goods to Kosovo last December, with Macedonia holding a slight advantage after Albania led regional exports to Kosovo with €20 million last November, €5 million more compared to Macedonia.

Kosovo also significantly increased imports from Turkey over November-December 2018, ranking Turkey which is experiencing an economic slowdown following a slump of its lira against the US dollar, the second most important partner for exports to Kosovo after Germany.

Detailed data by Albania's statistical agency shows the boost in Albanian exports is mainly a result of a significant hike in oil and minerals and construction material and metals, rather than food and non-alcoholic beverages and furniture whose exports also registered moderate hikes.

Albania's exports to Kosovo rose by around 30 percent to 27 billion lek (€216 mln) in 2018, but imports from Kosovo registered only a modest 5 percent increase to account for only a third of what Kosovo imports from Albania, according to Albania’s INSTAT.

While Kosovo’s unilateral tax has received international criticism because of running against the regional free trade agreement, Kosovo authorities say it’s the only way to stop Serbian agenda against Kosovo’s independence and Euro-Atlantic integration a decade after its independence from Serbia.

Local Kosovo media say the blockade on Serbian imports is having an initial positive effect on local Kosovo producers, some of whom have increased production capacity and employment. However, import of raw material that was traditionally imported from Serbia and Bosnia remains a problem until new competitive suppliers are found.

While Albania will find it almost impossible to replace Serbian grains and flour as well as raw material for Kosovo producers, local experts say Albania can be quite competitive in replacing former Serbian steel and oil products which Albania heavily produces through Turkish and Chinese investors.

However, tariff and non-tariff barriers still in place and poor production capacities by the Albanian economy compared to other regional competitors will likely find the Albanian economy with moderate benefits from Kosovo’s tariff hitting more than €500 million of Serbian and Bosnian products.

Albania’s exports preserved their double-digit growth for the second year in a row in 2018, but last December’s performance hints the country’s poorly diversified exports will find it difficult to preserve their growth rates for 2019 due to energy-related exports having received a blow from a prolonged drought hitting hydro-dependent electricity generation and a new decline in oil prices.

In addition, Europe’s single currency continuing to trade at a 10-year low against the Albanian lek, having lost around 7 percent last year, is expected to increase pressure on the country’s exporters whose profits have been significantly affected by Euro’s free fall.
                    [post_title] => Albania wins over Kosovo-Serbia trade war 
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                    [post_date] => 2019-01-24 15:36:05
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                    [post_content] => TIRANA, Jan. 24 – Albanian authorities have drafted legal changes to tighten measures and penalties in countering money laundering and terrorism financing following a critical report by a Council of Europe monitoring body.

The main proposed legal changes concern the obligation for the declaration of assets by senior government, public administration and judiciary officials who will be considered 'politically exposed people’ for up to ten years after leaving state office and even more if deemed necessary.

Under current legislation, senior officials have to declare their assets with the High Inspectorate on Declaration and Audit of Assets and Conflicts of Interest for two to four years after leaving office depending on the duty they held.

While judges and prosecutors are already undergoing a tight vetting process on their financial assets as part of a judiciary reform that has already ousted half of examined senior judges and prosecutors for failing to justify their wealth, an opposition-proposed similar vetting on politicians has not found backing among the ruling majority. Last December, a draft opinion by the Venice Commission, a Council of Europe advisory body, showed main opposition Democratic Party-proposed constitutional amendments fail to provide sufficient guidance and safeguards and may lead to abuse of power and severe implications for the rights of those subject to it, but acknowledged the legitimate aim to remove offenders and their influence from governance and political life.

Proposed legal changes also include digital currency transactions and providers of such services on the watch list.

Bank and non-bank operators, currency exchange shops and money transfer agencies will also be required to preserve documentation on transactions for a 10-year period, compared to a current 5-year obligation.

As a rule, banks and other financial institutions have to report on transactions of more than 1 million lek (€8,000) while the Property Registration Office reports on contracts worth more than 6 million lek (€48,000).

New provisions also slightly increase the obligation to declare with customs authorities assets worth starting €10,000 or its equivalent in other currencies. The current provision is for carrying cash or non-cash assets worth more than 1 million lek (around €8,000).

In addition to initiating legal action for failure to declare or false declarations, proposed legal changes also envisage customs authorities can impose fines starting from 10 percent to 50 percent for undeclared or unjustified amounts of more than €10,000 when crossing the Albanian border.

Drafted by the financial intelligence unit, the legal changes have been submitted to the government for approval and are expected to turn into law in the next few months.

The legal changes come few months after a report by 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, 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.

Criminal proceeds deriving from trafficking of narcotics, crimes in the customs and tax areas such as smuggling and tax evasion as well as corruption are the main threats of money laundering in Albania, according to the Moneyval report.

Being placed under 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.

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 during the past year to alleged illegal euro inflows resulting from the peak 2016 cannabis cultivation and ongoing drug trafficking in the country.

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_date] => 2019-01-23 14:50:25
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                    [post_content] => TIRANA, Jan. 23 - A slowdown in the economic performance of Italy and Greece, Albania's main trading partners, and lower EU accession funding following an eventual departure of the UK from the European Union next March will negatively affect Albania’s GDP growth prospects for the next couple of years, the United Nations warns.

In its 2019 World Economic Situation Prospects, the UN expects Albania’s GDP growth to slow down from an expected decade-high of 4.2 percent in 2018 to 4 percent in 2019 and 3.8 percent in 2020, in forecasts that are significantly higher compared to international financial institutions such as the World Bank and the IMF, but slightly lower compared to the Albanian government’s more optimistic scenario of growth picking up to 4.4 percent by 2020.

The UN report cites a slowdown in Italy, the Eurozone’s third largest economy and a top partner that accounts for 40 percent of Albania’s trade exchanges, as one of the main reasons for lower GDP growth in Albania through apparent spillover effects in trade, investment, and migrant remittance ties.

“Italy, which already has an elevated level of public debt, has openly stated its intention for increased fiscal spending. This creates the potential for an open clash between the limits and guidelines on fiscal policy set by the EU and national fiscal policy stances,” says the UN which expects growth in Italy to slow down to 1 percent by 2020, down from an average of 1.2 percent annually over 2018-19.

Meanwhile, neighboring Greece, Albania’s traditional second most important trading partner, is expected to experience new economic slowdown after growth is estimated to have recovered to a decade-high of 1.9 percent last year following an 8-year recession ending in 2016 that saw its economy shrink by about a quarter.

The UN expects Greece, the top foreign investor in the country, but whose trade links with Albania, have been reduced to 7 percent, down from 14 percent just before the onset of the global financial crisis, to slow down to 1.5 percent in 2020.

“Given the importance of trade, investment and remittance links with the EU, any deterioration in the economic performance of the EU will have negative consequences for the [Western Balkan] region. Some countries are strongly exposed to Greece and Italy and would suffer spillovers from possible deterioration in those countries,” says the UN report.

Recessions in Italy and Greece, Albania’s main trading partners, top investors and the hosts of 1 million Albanian migrants, had a series of negative effects on Albania through lower trade, investment and remittance flows in the aftermath of the 2008-2009 global financial crisis.

One of the world's fastest growing emerging economies until 2017, Turkey's growth is estimated to have halved to 3.5 percent in 2018 and the UN forecasts growth will further drop to 1.7 percent in 2019 amid a sharp depreciation of the Turkish lira against the US dollar triggering a double-digit hike in inflation.

Examining the channels for the transmission of Turkish market volatility to the Western Balkans, a late 2018 World Bank report shows Albania is little exposed in terms of exports, but to a higher degree if imports, foreign direct investment and the banking sector assets are concerned.

The UN report says stronger growth among regional EU aspirant countries is constrained by structural unemployment and inadequate infrastructure.

"Stronger growth is needed to address the region’s diverse problems, including the need for reindustrialization and a low labour force participation rate. However, the longer-term capacity expansion is constrained by structural unemployment, improving but still inadequate infrastructure, dependence on foreign financing, and a still challenging business environment," says the UN report.

Average growth among the five EU aspirant Western Balkan countries covered in the report is expected to slow down to 3.7 percent over 2019-20 with Serbia, the region's largest economy, forecast to register the strongest growth of 4 percent.

 

Brexit to cut EU pre-accession funding

The UN report says a possible Brexit by the end of March 2019 with or without a UK deal with EU leaders could see EU accession funding available for Albania and other EU aspirant countries cut by 10 to 15 percent.

“The pre-accession assistance provided by the EU has a tangible developmental impact. However, Brexit may lead to about a 10–15 per cent decline in funding available to EU accession countries,” says the UN.

While trade and investment links between Albania and Europe’s second largest economy are quite modest, London-based European Bank for Reconstruction and Development has earlier warned a disruption of cross-border supply and value chains between the UK and advanced economies that are key trading partners for Albania and other countries in the south-east Europe region could lead to spillover effects.

“Unless other member states increase their contributions, Brexit will lead to a 10 to 15 per cent decline in structural and accession funds available to countries in central and south-eastern Europe, amounting to a reduction of up to 0.4 percentage points of GDP in EU-supported investment. Brexit may also weaken the (perceived) prospects of EU accession for candidate and potential candidate countries. A slower reform momentum in these countries will then weigh on growth,” the EBRD warned in its latest regional economic prospects report.

The European Union has committed a total of €650 million in financial assistance under the Instrument for Pre-Accession Assistance II from 2014 to 2020, but Albania’s absorption capacities remain poor with the country managing to absorb only more than a third of funds allocated for the 2007-2013 period due to problems with the quality of tendering, property rights and time-consuming procedures.

An EU-candidate since mid-2014, Albania is hoping to launch accession talks next June, but EU leaders have said an eventual green light will depend on further progress with reforms strengthening rule of law and the judiciary as well as fighting organized crime and corruption.

“The prospect of EU accession, confirmed by the European Commission strategy paper, and the decision by the Council of the EU to open accession negotiations with Albania and the former Yugoslav Republic of Macedonia in 2019 (if they meet certain conditions) remain important macroeconomic policy anchors,” says the UN report.
                    [post_title] => UN: Italy slowdown, Brexit-fuelled cut in EU funding to affect Albania’s growth
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                    [post_content] => TIRANA, Jan. 23 – Non-performing loans in Albania’s banking system almost stood at a standstill in 2018 following a sharp decline since mid-2014 when they hit a record high of around 25 percent fuelled by credit boom in the pre-crisis period and economic slowdown after a decade of GDP growth of 6 percent annually until the 2008-09 global financial crisis.

Bank of Albania data shows non-performing loans (NPLs) dropped to around 12.7 percent in November 2018, down only 0.65 percent compared to the end of 2017, to register one of the lowest declines for the past five years.

The main barrier to easier lending standards and credit recovery, NPLs dropped by 5 percent to 18.3 percent in 2017, following a standstill in 2016 and a total of 6 percent during 2014-15.

The NPL decline is mainly a result of mandatory write-off of bad debt that has spent three years in the ‘loss’ category since 2015 and loan restructuring with big borrowers, but yet NPLs in Albania remain the highest in the Western Balkan region, posing a key barrier to easier lending standards and credit recovery.

Commercial banks in the country wrote off 3.1 billion lek (€24.8 mln) in bad debt during the first half of 2018, taking the stock of bad debt that has been removed from banks' balance sheets to 51 billion lek (€408 mln) since 2015, according to a Bank of Albania financial stability report.

The significant level of NPL write-off and a strong appreciation of the national currency against Europe’s single currency, accounting for around half of total credit in Albania, has also affected credit growth which statistically remains at negative growth, but at moderate growth rates of around 4 percent when adjusted for the NPL write-off and the Euro’s free fall effects.

Yet, commercial banks in the country remain highly liquid and have posted record high profits in the past couple of years, although several small banks continue registering losses leading to a number of mergers and acquisitions and new entrants that have cut the number of commercial banks operating in the country to 13, from a decade of 16 until last year.

Few weeks ago, Albania’s central bank governor Gent Sejko called on commercial banks operating in the country to ease lending standards so that the current sluggish credit growth receives a boost, in a move that would also help the country’s economy grow at faster and more sustainable rates.

Credit to the private sector has been sluggish in the past five years amid a high level of non-performing loans and poor demand by both businesses and households despite loan rates on a downward trend due to key rates by both Albania’s central bank and the European Central Bank at record lows.

The Albanian economy is estimated to have recovered to a decade-high of 4.2 percent in 2018, but growth prospects for this year are mixed with the Albanian government expecting growth to pick up to 4.3 percent, and international financial institutions forecasting growth will slow down between 3.5 to 3.7 percent amid lower FDI as two major energy-related projects are in their final stage and possible spillover effects from main trading partners in the Eurozone, a slowdown in Turkey and global trade tensions.
                    [post_title] => Albania NPL decline slows down in key barrier to credit growth  
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                    [post_date] => 2019-01-22 16:42:07
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                    [post_content] => By Ervin Lisaku

TIRANA, Jan. 22 – Almost half of unionists in Albania think trade unions’ activity in defending workers' interests is hampered by political influence and that union leaders are unable to affect government policies on employment, a study has shown.

Perceptions over the efficiency of the emerging trade unions in the country are significantly worse among non-members with more than two-thirds of Albanians believing trade unions operate under political influence and are unable to lobby lucrative contracts for workers.

The study is based on the findings of some 1,800 respondents, including 800 trade union members in a bid to measure the first public and unionist perceptions on trade unions, which in Albania have been independently operating only after the early 1990s following the collapse of the communist regime and its centrally planned economy.

Albania has more than eighty trade unions, most of which operating under the umbrella of two major confederations, the Confederation of Trade Unions of Albania and the Union of Independent Trade Unions of Albania. Rifts among trade unions and poor representation among the private sector, representing 80 percent of total workers and the GDP, is often blamed for the poor efficiency in defending workers' rights and interests in addition to perceived high levels of influence by incumbent governments due to the majority of union members working in the public sector.

Around half of unionists paying membership fees say they are unaware of the financial transparency among trade unions.

However, a majority of three-quarters to four-fifths, think trade unions protect workers' interest regarding working conditions and offer protection from possible violations of work contracts, in findings which researchers say could be highly more positive than what they really are due to the respondents being trade union members.

Some unionists claim employers are often more powerful than trade unions during negotiations and often manage to prevent trade unions and their members from having unique stances on collective contracts.

"There are disagreements even among various unions representing institutions regarding collective contracts. This often leads to failure to sign them. Employers also have an impact on the rift among trade unions," a trade union member is quoted as saying on condition of anonymity.

An earlier study conducted by Nikoll Doçi, a social sciences professor with the public University of Tirana, has shown that although Albania trade unions have increased their activity in the protection of employees and in collective bargaining, “they have not managed to overcome the rift between them and membership in the private sector remains small.”

Some unionists claim politicians have a huge impact on trade unions' performance.

"Politics has a huge impact on trade union's performance. Political convictions also affect membership to a certain trade union. It also happens that trade union structures are reshuffled when a new government takes over. That means trade union leaders are elected based on political affiliation," another member is quoted as saying.

Conducted by the Centre for Integrated Legal Services and Practices with the support of German Friedrich Ebert Foundation in Albania, the study measured perceptions in Albania's four main cities including capital city Tirana, northern Shkodra, southern Vlora and southeastern Korça.

The study recommends trade unions should boost transparency over the management of their members’ financial contribution and set up online networks where members can register, engage on issues they face and get informed on the budget spending.

Trade unions should also increase transparency regarding their relations with politics and their impact on drafting employment policies to enable both the public and their members a more realistic approach on the situation, researchers say.

 

Albania trade union history

Trade unions were almost fictitious and under full state control for more than four decades until the early 1990s when the communist regime collapsed and Albania switched to a multi-party system and a market economy that left the country's main industries in a state of bankruptcy.

A miners’ union was the first independent trade union set up in 1991 following a hunger strike over better working conditions, wage hikes and democratic changes at a coal mine just outside Tirana.

Almost thirty years after their establishment, trade unions’ role in the Albanian society remains small, undermined by insufficient funding they receive from membership fees and alleged political influence hampering their reliability.

 

Oil workers, miners protest

Around 1,000 oil workers in a former state-run oil refiner in Ballsh town, southern Albania, have remained jobless since late 2018 in a repeated scenario in the past decade following a failed privatization of the Armo oil refiner, where the Albanian government still holds a minority 15 percent stake.

Representatives of the company that has been managing the refinery for the past year say the situation is a result of inadequate crude oil supplies by Chinese-owned Bankers Petroleum, the country’s largest oil producer.  However, Bankers Petroleum officials blame the refiner’s failure to meet financial obligations for the cut in local oil supplies, but leave open an option to negotiate a new contract for 2019.

Meanwhile, miners have warned of fresh protests over the government's failure to meet their financial demands over miners' status and pensions.

Albania has thousands of miners mainly engaged in chromium extraction, a majority of which destined for exports.
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            [post_date] => 2019-01-29 15:50:52
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            [post_content] => TIRANA, Jan. 29 - Maritime, air and rail operators in Albania faced mixed results in 2018 when freight transport declined and the handling of passengers only significantly increased for the country’s sole international airport.

Data published by INSTAT, the state-run statistical institute, shows the volume of maritime transport in the country dropped by 3.3 percent to around 3.9 million metric tons in all four ports. The decline is mainly related to the mid-2017 completion of steel pipes imports from Germany to build the Albanian section of the major Trans Adriatic Pipeline scheduled to bring Caspian gas to Europe by 2020.

The Durres Port handled around 13,000 pipes, bends and various equipment and machinery weighing more than 200,000 metric tons for 15 months until mid-2017, according to Switzerland-based TAP consortium.

The country’s largest, Durres Port handles the overwhelming 90 percent of maritime freight transport with the three other Shengjin, Vlora and Saranda ports sharing a 10 percent share.

Around 60 percent of Albania’s exports, whose main destination is Italy, were handled through ports in 2018.

Meanwhile, road handling of exports also rose by 16 percent in 2018, mainly reflecting higher exports to neighbouring Kosovo, the second most important destination of Albanian exports.  Albania’s exports to Kosovo have received a major boost since last November when Kosovo introduced tariffs on imports from Serbia, its main trading partner which it declared independence from a decade ago in retaliation for Serbia and Bosnia and Herzegovina’s efforts in blocking the recognition of Kosovo’s independence and its membership in key international organizations.

Albania’s exports rose by 14 percent in 2018 fuelled by a hike in energy-related products such as electricity and oil, minerals and steel following favorable weather conditions and a hike in commodity prices that defied the negative effects of Europe’s single currency losing around 7 percent against the Albanian lek. Yet, Albania’s exports covered only around half of the country’s imports which rose by an annual 2.4 percent.

The number of passengers from the Durres, Vlora and Saranda ports almost stood at a standstill in 2018 as it only rose by 1 percent to 1.5 million. The Durres and Vlora ports handle passengers to Italian ports of Bari, Ancona and Trieste, while the small southern Saranda port mostly handles passengers to the Greek island of Corfu, which also serves as a hub for international tourists to southern Albania, where the country lacks an airport.

Last year was positive also for the country’s air transport industry which handled 2.95 million passengers through the Tirana International Airport, the country’s sole international airport.

TIA, which since mid-2016 has been handled by a Chinese consortium switching hands from previous German and Canadian concessionaires, saw a 12 percent hike in the number of passengers, mainly heading to and from Italy, Albania’s main trading partner and the host of some 500,000 Albanians.

The hike in air passengers also reflects positive tourist season which authorities say brought 5.9 million tourists and generated more than €1.5 billion in travel income, around 10 percent of the country’s GDP.

Meanwhile, railway passenger and freight transport continue registered historic lows, reflecting the critical situation in the country’s state-run rail sector that has not seen major investment in the past three decades.

Only around 76,000 passengers travelled by train 2018, up 15 percent compared to 2017, but down from 198,000 in 2015 and about 4 million in the early 1990s soon after the collapse of the communist regime which banned private ownership of cars and public trains and buses were the key mode of transport.

Rail freight transport, mainly carried out through Montenegro, slightly recovered to 199,000 metric tons in 2018, about half compared to a decade ago and eight times less compared to the early 1990s.

Albania has secured €90 million in financing to rehabilitate its key Tirana-Durres railway segment and link it to the country’s sole international airport in a project that will revitalize the country’s degrading railway system that has almost seen no investment at all during the past quarter of a century following the collapse of the communist regime.

The European Commission describes Albania's transport sector as insufficiently developed, saying that "better connections to neighbouring countries and the EU transport network still need to be established to reduce transportation costs and facilitate trade."
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