Albania commercial banks reduced to 14 following mergers and acquisitions

Albania commercial banks reduced to 14 following mergers and acquisitions

TIRANA, Oct. 4 – Two commercial banks in Albania have been rebranded following mergers and acquisitions that have now officially reduced the number of banks operating in the country to 14 following a decade of 16. Starting October 2018, the

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Chinese investors upgrade Albania investment plan as oil prices pick up

Chinese investors upgrade Albania investment plan as oil prices pick up

TIRANA, Oct. 3 – As oil prices gradually pick up from the mid-2014 slump, Albania’s largest oil producer is planning to speed up its investment and drill dozens of new oil wells in foreign direct investment that could trigger more

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Businesses demand 5-year freeze to annual tax change practice

Businesses demand 5-year freeze to annual tax change practice

TIRANA, Oct. 2 – Business representatives have called on the Albanian government to consider a fiscal package that would remain unchanged for at least a mid-term period so that they can plan their investments more accurately. The current tax policy,

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State-run Serbian operator considers Telekom Albania purchase

State-run Serbian operator considers Telekom Albania purchase

TIRANA, Oct. 1 – Greece’s OTE Group, where Deutsche Telekom holds a 40 percent stake, is planning to sell its Telekom Albania unit, the country’s second largest mobile operator with a state-run Serbian mobile operator reported as a frontrunner to

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Albanian households consuming less when adjusted for inflation, INSTAT survey shows

Albanian households consuming less when adjusted for inflation, INSTAT survey shows

TIRANA, Oct. 1 – Albanian households practically consumed less in 2017 as spending stagnated and inflation hit a 5-year high, unveiling that the almost decade-high GDP growth that the Albanian economy registered last year did not have any major impact

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Durres dumpsite still pending final solution as emergency situation remains on paper

Durres dumpsite still pending final solution as emergency situation remains on paper

TIRANA, Oct. 1 – The announcement of an environmental emergency at a waste dumpsite just outside Durres, Albania’s second largest city and the traditional top tourist destination, has not changed anything for the better at the Porto Romano hotspot. Video footage

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“The Balkans begin at the Rennweg”

“The Balkans begin at the Rennweg”

By Johann Sattler “The Balkans begin at the Rennweg (street in the center of Vienna)” – there is hardly any Austrian that doesn’t know this phrase, which is attributed to former Austrian Chancellor Metternich in the 19th century. Since then,

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Editorial: Reversing demographic decline takes more than baby rewards

Editorial: Reversing demographic decline takes more than baby rewards

TIRANA TIMES EDITORIAL After commenting for a long time that massive migration is normal and natural and even circular, the Albanian government seems to have caught up with the demographic decline and its potential destructive impact, proposing this week baby

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Albania offers baby bonus hikes to fight sharp decline in birth rates

Albania offers baby bonus hikes to fight sharp decline in birth rates

TIRANA, Sept. 27 – With birth rates having hit a historic low and the population rapidly growing older due to drastic changes in lifestyle and massive migration following the collapse of the hardline communist regime in the early 1990s, the

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Poorly diversified energy investment dominates Albania’s FDI in year’s first half

Poorly diversified energy investment dominates Albania’s FDI in year’s first half

TIRANA, Sept. 25 – More than two-thirds of foreign direct investment that flowed into Albania in the first half of this year went to the energy sector and was mainly attributed to two major energy-related projects already in their final

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                    [post_content] => TIRANA, Oct. 4 – Two commercial banks in Albania have been rebranded following mergers and acquisitions that have now officially reduced the number of banks operating in the country to 14 following a decade of 16.

Starting October 2018, the Albania unit of Italy’s Intesa Sanpaolo and its newly acquired loss-making Veneto Banka Albania will be operating as a rebranded Intesa Sanpaolo Bank Albania. The merger only slightly increases Intesa Sanpaolo’s market share in Albania to 12.3 percent of total banking assets in the country due to Veneto Banka’s market share having dropped to a mere 1.38 percent and representing the 13th largest bank in the country at the end of the first half of this year, according to the Albanian Association of Banks.

The merger process comes more than one year after Intesa Sanpaolo, Italy’s largest retail bank, acquired the bankrupt Veneto Banca in Italy and its subsidiaries in several European countries including Albania.

Veneto Banka had nine outlets and 109 employees at the end of the first half of this year, down from 15 outlets and a staff of 132 during the same period last year, according to the banks' association.

Intesa Sanpaolo has been operating in Albania since 2007 when it acquired the American Bank of Albania, the first private bank in Albania established in 1998 by the Albanian-American Enterprise Fund.

Meanwhile, Veneto Banka has been operating in Albania since 2009 after purchasing and rebranding Banca Italiana di Svillupo (BIS Bank), and mainly serves small and medium-sized businesses, especially Italian-run companies who dominate the number of foreign-owned companies in the country.

 

NBG outlets rebranded ABI

Outlets of the former Albanian unit of the National Bank of Greece, the country’s tenth largest bank, have also been rebranded ABI, the American Bank of Investments, as of October 1, 2018 following an acquisition earlier this year.

The early 2018 acquisition by the American Bank of Investments, an Albanian-American bank that has been operating in Albania since 2016, came after NBG Albania had been losing significant market share in the past decade amid financial trouble from its Greece-based parent bank in the aftermath of the 2008 crisis and the worst-ever recession in neighboring Greece.

NBG Albania’s assets at the end of the first half of 2018 dropped to 2.54 percent of total assets in an ongoing downward trend since 2008 when it held a 6.7 percent market share in terms of assets that include loans, investments in securities and placement with banks.

The merger now almost doubles the market share of ABI Bank to 5.43 percent making it the seventh largest commercial bank operating in the country.

The American Bank of Investments, ABI, launched its Albania operations in December 2016 as a rebranded bank after U.S. based NCH Capital Inc, private equity and venture firm took over France’s Credit Agricole’s Albania unit.

 

Series of takeovers

Albania's banking system has been facing a series of takeovers in the past year, with several internal takeovers and mergers and new entrants increasing the share of Albanian capital in the banking system.

Albanian capital in the banking system, estimated at 10 percent at the end of 2017, has significantly increased during this year following the acquisition of two Greek bank units by Albanian-owned banks and companies. Tirana Bank and NBG Bank, both of which units of Greek banks in Albania, held a market share of about 8 percent in terms of assets at the end of the first half of this year.

Last August, Tirana Bank, a unit of Piraeus Bank, Greece’s largest lender, says it has agreed to sell its Albania unit, to Albanian-owned Balfin Group and Macedonia’s Komercijalna Banka for €57.3 million.

Balfin Group is Albania’s largest company which is now diversifying its investment portfolio also in the banking sector after successful operations in the mining, construction, retail trade sectors.

Alpha Bank is now the sole remaining Greek unit operating in Albania following the sale of three Greek-owned units, two of which this year. Its assets of 5.3 percent of total, make it the sixth largest bank in the country. Greek-owned banks held about a quarter of banking assets in 2008 just before the onset of the global financial sector hitting the Greek economy and its banking system.

Last August, the Albania subsidiary of France’s Societe Generale also changed hands as part of a deal the France-based lender has concluded to sell its Bulgarian unit to Hungary’s OTP Bank.

Societe Generale Albania is the fifth largest bank in terms of assets in Albania and the fourth largest in terms of lending.

Several other small banks operating in the country are also reportedly on sale as credit struggles to recover amid sluggish demand and a declining but still high level of non-performing loans of about 13 percent.

Experts say bank consolidation, the process by which one banking company takes over or merges with another, is expected to continue and further reduce the number of banks in the country, but at the same time not affect competition in a market where the four largest banks already hold more than two-thirds of total assets, at 68 percent at the end of 2017.

Experts believe the consolidation process will lead to tougher competition and improved access to banking services at a time when credit still remains sluggish, negatively affected by both tight lending standards applied by banks and poor demand by businesses and households.

However, the restructuring and growing online banking is expected to have a negative impact on bank employees.

The 16 commercial banks operating in the country cut dozens of branches and jobs nationwide last year as lending remained sluggish and e-banking gradually expanded despite banks registering record high profits.

The country’s banking system is considered well-capitalized, liquid and profitable.

Yet, in its latest statement, the International Monetary Fund recommends that “ensuring that new market entrants have solid banking experience and meet fit and proper criteria to operate in the Albanian banking market will be critical.”

The Albanian banking system is overwhelmingly foreign owned but the market share of EU-owned banks has dropped by 15 percent to about 52 percent in the past four years as domestic owned banks expand and EU-owned banks continue deleveraging.

Turkish-owned BKT, Austria’s Raiffeisen and Albanian-owned Credins bank were the top three banks in terms of assets that include loans, investment in securities and interbank placement at the end of 2017.

 

‘A regional phenomenon’

Central bank governor Gent Sejko says EU-based banks leaving is a phenomenon that is affecting not only Albania but the whole region due to tighter measures adopted by the European Central Bank by forcing them to either increase capital or shut down some units.

"Failing to inject or find capital to increase their capital adequacy ratio, those banks were forced to withdraw from the region," Sejko told reporters this week.

"As a regulator of the financial system, we have targeted that this process is accompanied by the consolidation of the banking system and somehow this has had a positive effect because we now have two mergers that have reduced the number of banks to 14 from 16 and this is a positive indicator for the Albanian banking and financial system,” he added.

"Capital adequacy ratio has reached 18 percent and banks have excess liquidity which we target translating into healthy credit for the economy as the Eurobond emission has already provided the government with excess liquidity for its needs. The banking system's liquidity should be oriented toward healthy lending either for households or businesses,” says Sejko.

 
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                    [post_content] => TIRANA, Oct. 3 – As oil prices gradually pick up from the mid-2014 slump, Albania’s largest oil producer is planning to speed up its investment and drill dozens of new oil wells in foreign direct investment that could trigger more than a hundred million dollars and partly compensate for major-energy related projects already in their final investment stage.

Bankers Petroleum, which has been run by China’s Geo Jade since mid-2016 when it was taken over from Canadian investors, says it has raised its 2019 investment plan to about $150 million as international crude oil prices have currently hit a four-year high of about $80 a barrel, gradually recovering from a 12-year low of $30 a barrel in early 2016 after dropping from as high as $115 in mid-2014.

Bankers Petroleum operates the Patos-Marinza, one of Europe’s largest onshore heavy oilfields under a 25-year concession deal with the Albanian government which expires in 2029, and accounts for 90 percent of domestic oil production, the majority of which is exported in crude oil and a smaller portion goes to supply a local refiner.

"For the next year, we have planned more than US$ 150 million in investment which means more production, more income for us, the local and the central government," Xingyun Sun, the executive director of Bankers Petroleum is quoted as saying by local media.

Bankers Petroleum says it is drilling 40 new oil wells and investing $90 million for this year following a freeze in its drilling operations in 2016 and 2017 due to unfavorable oil prices.

"We have ambitious plans for the future. At the end of this year, we expect to carry out $89 million in capital expenditure and reach a general production of 780,000 metric tons from the Patos-Marinza oil field. With stable liquidity and Brent oil prices of $70 to $75 a barrel, we expect to drill more than 80 new oil wells for 2019," Xingyun Sun has told local Monitor magazine.

The renewed investment could also compensate for the expected decline in foreign direct investment as TAP and the Devoll Hydropower, the two major energy-related investment that drove FDI and economic growth in the past four years, are set to complete their investment stage by early 2019.

Current production from the Patos-Marinza oil field is estimated to have recovered to 15,000 barrels of oil a day and prices are favourable at a 4-year high. However, due to the poor quality of domestically produced oil that needs heavy refining, Bankers Petroleum usually sells crude oil at about a third below Brent prices.

The 2004 concession deal with Bankers Petroleum gave a boost to Albania’s oil industry which was collapsing under state management following the early 1990s transition to a market economy.

The post-1990s domestic oil production peaked in 2014 just before the mid-year slump in international prices when the Bankers Petroleum-led domestic production hit a 35-year high of 1.36 million metric tons.

However, Albania’s highest oil production dates back to 1974 when the then-communist country produced 2.25 million metric tons equal to about 38,408 barrels of oil per day in an industry that involved 34 state-run enterprises and employed about 25,000 people.

 

Bankers turns profitable

Brent oil prices picking up to an average of $50 a barrel allowed Bankers Petroleum to turn profitable again following two years of significant losses amid a sharp drop in oil prices.

The Chinese-run company posted profits of about 586 million lek (€4.6 million) in 2017, following losses that peaked to 5.7 billion lek (€45.3 million) in 2016 and record high profits of about 11 billion lek (€86.5 million) in 2014, according to financial reports filed with Albania’s National Business Center.

Bankers Petroleum’s finances are also expected to recover following an arbitration court ordering the Albanian government to pay back the oil producer over a tax dispute.

Bankers Petroleum says it is still negotiating with the Albanian government over a solution for being paid back or refunded over the tax dispute after an international arbitration court ruled in favor of Bankers.

The negotiations come as Paris-based International Chamber of Commerce ruled last February the Albanian government will have to pay back Bankers Petroleum $57 million (€46.5 mln) over a tax dispute dating back to 2011.

 

 Headquarters move to Albania

Bankers Petroleum says it has transferred its headquarters from Canada's Calgary to Albania’s Fier region, where its oil production and drilling operations are based, in order to speed up its decision-making and strengthen cooperation with the central and local government as well as local community.

The decision follows the late 2016 purchase by Chinese investors and the company's delisting from the Toronto Stock Exchange and the AIM market of the London Stock Exchange.

Bankers Petroleum's operations in the past decade have also caused environmental concerns, with local residents complaining of oil pollution and drilling operations damaging their homes, with early 2017 protests forcing the government to compensate them for their damage.

China’s Geo Jade, whose main oil operations before the Albania acquisition were focused in Kazakhstan, acquired Bankers Petroleum for C$575 million (€390 mln) from Canadian investors.

The Bankers Petroleum acquisition followed that of the TIA, Albania’s sole international airport, turning China, the world’s second largest economy, into a key investor in Albania, a country which was China’s top ally in the Balkans in the 1960s and 1970s.

 

Oil production picking up

 

Recovering oil prices are also expected to give a boost to local oil industry, exports and government revenue after production hit a 6-year low in 2016 as prices slowly recovered from the mid-2014 slump.

Albania produced 956,000 metric tons of crude oil in 2017, down about 10 percent compared to 2016 and about 30 percent less compared to the peak 2014 production of 1.36 million metric tons just before oil prices embarked on a downward trend, according to data published by state-run Albpetrol oil company.

Canada-based Bankers Petroleum, the country’s largest oil producer which in mid-2016 was fully acquired by a Chinese consortium, accounted for the overwhelming majority of 90 percent of total domestic production.

The oil giant is also one of the country's top exporters and a key employer in the region of Fier, Albania’s second largest region, where oil and agriculture are the two main industries.

Meanwhile, state-run Albpetrol oil company which currently runs only 5 percent of oil wells, almost doubled its production to 93,000 metric tons in 2017, up from 51,000 metric tons in 2016. The increased production came as three oil fields were taken back under state control following failed deals with private concessionaires.

Albania’s oil industry could receive a major boost if prices pick up and oil giant Shell, currently involved in some key promising exploration projects, decides to engage in production.

Albania oil exports, which make up about a fifth country’s poorly diversified exports, are low-value added as oil is mostly exported as crude and only a small amount is domestically refined.

The oil industry produces Albania’s second largest exports and employs more than 3,000 people, but what the Albanian government gets from exports is only a 10 percent royalty tax as no company currently pays the controversial 50 percent tax rate, which under current contracts, concessionaires start paying once they meet investment costs.

In its new contract with British-Dutch multinational Shell the government says Albania will be able to earn a portion from the first oil production in addition to the mining royalty when the oil giant engages in production.

The oil and mining industry was the fourth largest FDI recipient at the end of 2017, with the investment stock at about €875 million, accounting for 13 percent of the total FDI stock of €6.5 billion, according to Albania’s central bank.
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                    [post_content] => TIRANA, Oct. 2 - Business representatives have called on the Albanian government to consider a fiscal package that would remain unchanged for at least a mid-term period so that they can plan their investments more accurately.

The current tax policy, changing almost on an annual basis, is rated as one of the top concerns for Albania’s foreign and local businesses, in addition to a high tax burden compared to regional competitors, widespread tax evasion, corruption and an inefficient judiciary.

Albanian business representatives say the government needs to draft a tax package that would keep main taxes unchanged for at least the next five years.

The appeal comes as the finance ministry is expected to unveil its 2019 fiscal package with changes in some key taxes after Albania abandoned its 10 percent flat tax regime on personal and corporate income in 2014 to switch to progressive taxation.

"It is high time we had a national fiscal pact which means a deal on the economy. We should have a package that is established under broad consensus with all stakeholders and remain in force for several years so that we can also be clear on the business plans we draft," Arben Shkodra, the head of the producers' association has told a local TV.

"There can be no legal changes every six months, both from the central and local government. Legal security and the frequent changes in legislation are the two main issues identified in the Doing Business report," he adds.

Ines Muçostepa, the Head of the Union of Chambers of Commerce and Industry, also says a multi-annual package is essential.

"Lowering taxes is a good thing, but in the course of one year we still have the same law undergoing changes. That means there is fragmentation and not thorough analysis based on strategic sectors of the economy. That's why we think the drafting of a multi-annual package is essential," says Muçostepa.

Business associations also demand a revise downward in the dividend tax, currently at 15 percent, at the the same rate to the withholding tax on rents and capital gains.

"We continue to insist that the dividend tax should be cut. We have been demanding that for a long time. That is a tax that is a burden on businesses and even holds back new investment," says Muçostepa.

Hikes in local government taxes are also often a problem for the business community, especially in Tirana.

"A manufacturing business should not pay the infrastructure tax if building a new unit serving its operations because of serving as a barrier and increasing costs. In my opinion, a manufacturing business should be treated the same to other businesses because they need to be supported and stimulated," says Arben Shkodra of the producers association.

In 2017, the tax on the impact on infrastructure for the municipality of Tirana, the country’s largest local government unit with a resident population of more than half a million, was raised to 8 percent of the sale price for housing facilities, up from a previous 4 percent of the construction costs, in what developers described as a four-fold hike and blamed for triggering a hike in apartment and business facility prices. The infrastructure tax was revised down to 4 percent for business facilities earlier this year as multi-storey towers projects get under way.

 

Little likely to happen

The business community initiative for a mid-term freeze in changes to tax policy, not the first of this kind, is little likely to succeed given the political polarization in Albania and the current situation in Parliament which the opposition has been boycotting over alleged rising corruption and corruptive public private partnerships being awarded to oligarchs.

In addition, the opposition has its own economic platform relying on a flat tax and has vowed to cancel corruptive PPPs and any consensual move is little likely ahead of next year’s local government elections, a key test for the united opposition ahead of the 2021 general elections.

The approval of a consensual fiscal package for a 5-year period is also hampered by uncertainties surrounding Albania’s public finances, with the high level of public debt, the high level of non-performing loans and slowly recovering credit as key obstacles to the economy which in 2017 hit a 9-year high of 3.8 percent.

 

2018 fiscal package

While the 2018 fiscal package has not been officially unveiled yet, preliminary versions leaked to the local media have unveiled the government is considering a cut to the dividend tax and revising down the personal income tax on high earners as the two key changes frequently demanded by businesses.

The value added and personal income tax thresholds are one of the main causes leading to tax evasion in Albania, according to a survey by the Albania Investment Council, a government advisory body.

Albania currently excludes businesses with an annual turnover of less than 2 million lek (€15,744) from the VAT system and applies progressive taxation of up to 23 percent on personal income for monthly wages of more than 130,000 lek (€1,000) under a complicated system that excludes the first 30,000 lek (€236) from taxation and applies a 13 percent rate on income from 30,000 to 130,000 lek.

In a U-turn, last June the Albanian government approved lower corporate income tax and incentives on agribusinesses as part of a mid-year fiscal package in changes that are not expected to become effective before next January ahead of the upcoming mid-2019 local elections.

Some 10,000 businesses currently paying a 15 percent profit rate are expected to pay a reduced 5 percent corporate income tax as the turnover threshold for the new 5 percent profit rate increases to an annual 14 million lek (€110,000), up from a previous 8 million lek (€ 63,000).

The emerging agritourism sector is also set to 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.

Since 2014 after Albania abandoned its 10 percent flat tax, the corporate income tax and the withholding tax on dividends, rents and capital gains have increased by 5 percent to 15 percent, making the tax burden in country one of the region’s highest and a key concern for the business community in the country.
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                    [post_date] => 2018-10-01 17:29:34
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                    [post_content] => TIRANA, Oct. 1 – Greece’s OTE Group, where Deutsche Telekom holds a 40 percent stake, is planning to sell its Telekom Albania unit, the country’s second largest mobile operator with a state-run Serbian mobile operator reported as a frontrunner to acquire the key asset, according to international media reports.

“Serbia’s state-run Telekom Srbija has made an offer to acquire Telekom Albania as it looks to expand in the Balkans. Czech PPF Group and Bulgaria’s Vivacom are also vying to acquire it,” Reuters reports, citing Serbian media.

Turkish and Greek companies are also reportedly interested in acquiring the German-Greek operator, according to government sources quoted by local Albanian media.

The entry to Albania of Telekom Srbija, which also operates in Bosnia and Herzegovina and Montenegro, would mark the first major Serbian investment in Albania, where Serbian investment is quite modest, amid tense political relations over Kosovo, the ethnic-Albanian country which declared its independence from Serbia a decade ago.

Albania and Serbia have been closely working in the past few years to overcome historical barriers that have held back closer economic cooperation and investment, but trade and investment ties have slowly progressed.

Foreign direct investment from Serbia, the region’s largest economy, have in the past three years climbed to a modest stock of €20 million while Albanian investment in Serbia is almost non-existent.

Meanwhile, trade exchanges between the two countries hit a record high of about 30 billion lek (€236 million) in 2017, fuelled by an almost 40 percent increase in Albania’s imports from Serbia, leading to a wider trade gap with Serbia.

 

Second largest operator

Former AMC Albania was initially launched as a state-run operator in late 1995 as the country’s first mobile operator before it was acquired in 2000 by Greece’s OTE Group and rebranded Telekom Albania in mid-2015.

Telekom Albania is currently the second largest mobile operator in the country with a 36 percent market share, but posted significant losses in 2017 along with leading mobile operator Vodafone Albania.

Telekom Albania and Vodafone Albania each purchased a 50 percent share in Plus Communication operation at the end of 2017 when the sole Albanian-owned mobile operator ceased its operations after seven years of activity, leaving the market with three foreign-owned operators, including Turkish-owned Albtelcom.

Albania’s mobile phone operators suffered a double-digit decline in revenue in 2017 in an ongoing downward trend since almost a decade, triggered by tougher competition and smartphone apps replacing traditional phone calls and text messages, according to the electronic communications watchdog.

 

Experts worried

Economy experts describe the departure of German giant Deutsche Telekom as a bad signal for the Albanian economy and the country's telecommunications, a key sector also for the country’s national security.

"That is not good news as an international brand which you can take pride in is departing and considering the ones rumored to replace it, that will only be a transaction with no development for the market as the reality will remain unchanged," financial expert Elvin Meka has told a local TV.

The financial expert says the government should reconsider acquiring a minority stake in the telecommunication market also on national security grounds.

"That is an alarm bell that should also serve the Albanian government to reconsider the opportunity of reacquiring even a minority stake in such asset," Meka has told local Top Channel TV.

The Albanian government sold its minority 12.6 percent stake in former AMC for about €48 million in 2009 and currently has a 24 percent stake in Albtelecom landline, mobile and internet provider.

Economy expert Zef Preçi is even more skeptical of Telekom Albania’s possible acquisition by non-EU investors.

"The increase in the Chinese and Turkish capital and extra pressure on capital of Russian origin or similar countries is in essence testimony to the fatigue that serious EU companies have with the business climate in Albania either with its slow improvement or its deterioration," says Preçi.

"The company owners are compensated for the company's present market value. But the arrival of a new company means tougher business and lower infrastructure investment which punishes consumers," says Preçi.

The Albanian government says it has not been officially informally of sale negotiations which will also have to receive its okay and regulators such as the electronic communications and competition watchdogs.

Several major EU and North American investors have left Albania in the past few years with key assets in the air transport, oil, banking and health sector changing hands.

 
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                    [post_content] => TIRANA, Oct. 1 - Albanian households practically consumed less in 2017 as spending stagnated and inflation hit a 5-year high, unveiling that the almost decade-high GDP growth that the Albanian economy registered last year did not have any major impact on the overwhelming majority of Albanians.

The Albanian economy hit a 9-year high of 3.8 percent in 2017, but much of the growth was attributed to TAP and the Devoll Hydropower, the two major energy-related investments that are due to complete by early 2019, as well as a recovery in the long-ailing construction sector, triggering concern by experts over non-inclusive growth benefiting only a small part of the population.

A nationwide survey conducted by INSTAT, the state-run statistical institute, shows average spending for an Albanian household rose by a mere 0.4 percent in 2017 at a time when consumer prices hit a 5-year high of 2 percent, in a situation that unveils real expenditure growth was down by 1.6 percent when adjusted for inflation rate.

An average Albanian household of 3.7 persons spend a total of 73,400 lek (€580) a month in 2017, with the per capita spending at 19,660 lek (€155) and almost half of the monthly budget still going on food items.

Back in 2016, average spending for an Albanian household grew by 4.2 percent at a time when consumer prices hit a 16-year low of 1.3 percent and the economy grew by 3.4 percent, indicating moderate growth of 2.9 percent in household spending when adjusted for inflation, according to INSTAT.

The survey shows Albanians increased their spending on transport, health, hotels and restaurants by 12 to 15 percent in 2017 fuelled by a hike in oil prices, more patients addressing the private health sector and spending more on medicines and a rise in foreign tourist numbers triggering a spike in local prices.

Meanwhile, spending on garment and footwear as well as education dropped by around 11 percent amid tougher competition and lower demand reducing prices.

 

Sizeable food spending

A sizeable 44 percent of monthly spending for an Albanian household still goes to fund "food and non-alcoholic beverages," the key item in the consumer basket consisting of basic products such as milk, eggs, bread, meat, vegetables and fruit.

Spending on basic products has only slightly dropped from 45 percent in 2016 and 48.7 percent in 2015 in the past couple of years, but yet remains the highest among EU aspirant households.

The situation reflects rather expensive consumer prices for the average Albanian income, triggered by heavy reliance on imports and the application of standard 20 percent VAT even on basic products.

Albania’s food and non-alcoholic beverage prices were estimated at 75 percent of the EU 28 average in 2017, higher compared to EU member Bulgaria and lower only compared to Montenegro among regional EU aspirants despite Albania's GDP per capita remaining among Europe's lowest, at only about third of the EU average, according to Eurostat, the EU’s statistical office.

 

Inequality gap slightly narrows

The INSTAT survey shows Albania’s inequality gap slightly narrowed in 2017 as the richest 10 percent of households spent 2.4 times more than the overwhelming 90 percent of Albanians, a modest 0.1 percent drop compared to the 2016 findings.

A person belonging to the richest 10 percent spent an average of 62,330 lek (€492) a month in 2017, slightly less compared to a year before, but 3.4 times more compared to the 90 percent of households in the bottom income decile spending an average of 18,311 lek (€144) a month.

The survey shows spending for households in the top 10 percent income decile, accounting for a fifth of total consumption, dropped by 4.3 percent and increased by 1.7 percent for the bottom income group, reducing inequality gap by 0.1 percent to 2.4.

A household in the richest 10 percent is composed of an average of 2.6 persons compared to an average of 3.9 persons for the remaining 90 percent and an average of 3.7 nationwide.

Some 7,500 households nationwide were interviewed for the 2017 survey conducted by INSTAT.

The central Albanian regions of Tirana and Durres, the key drivers of the Albanian economy producing more than half of the country's GDP, have the highest household spending at an average of 20 percent above the country's nationwide average.

The northeastern region of Diber, where mining and agriculture are the two main industries, has the lowest spending at about a third below the country's average.

 

Non-inclusive growth

The Albanian economy hit a 9-year high of about 3.8 percent in 2017, but economists say the country’s GDP needs to grow by at least twice higher in order to produce tangible welfare for the overwhelming majority of Albanians.

“Despite some positive changes during the past decade, Albania is still part of those countries with exclusive growth, meaning that the number of economic stakeholders who contribute to GDP growth is still low compared to the total economic stakeholders and as a result even the ‘lion’s share’ of economic growth goes almost entirely in favor of these stakeholders, triggering huge gaps in income and economic and financial benefits,” economist Adrian Civici has said earlier this year.

Civici, who earlier served as a member of the central bank’s supervisory board, says about 80 to 85 percent of economic growth in Albania originates from less than 20 percent of economic stakeholders and as a result 80 to 85 percent of its benefits go in favor of this small group.

“In countries with all-inclusive growth there are much fairer ratios in the contribution of economic stakeholders to the growth structure and benefits from it. This is one of the major challenges facing Albania’s future economic and development policies,” says Civici.

Growth in annual household consumption ranged from 0.13 percent in 2012 to 2.86 percent in 2017 at a time when the country’s GDP growth recovered from 1.4 to 3.8 percent during the same period, considerably below the average 6 percent GDP growth estimated to bring tangible welfare to Albanian households, according to GDP growth data published by INSTAT.

 
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                    [post_content] => TIRANA, Oct. 1 - The announcement of an environmental emergency at a waste dumpsite just outside Durres, Albania’s second largest city and the traditional top tourist destination, has not changed anything for the better at the Porto Romano hotspot.

Video footage shows that almost three months after Durres Municipality declared an emergency situation at the hotspot situated only few kilometers outside Durres at a populated area and just next to a public university, waste continues to burn in broad daylight with a series of negative effects on humans, the environment and local fauna and flora.

The announcement of the emergency situation came following a June 2018 visit to the site by Prime Minister Edi Rama who promised to close down and rehabilitate the hotspot, and turn it into a giant park by autumn 2019.

"What we target is transforming that area from an environmental hotspot into a park for the Durres and Albania that we want… and by autumn 2019 we will either have completed it or we will be under way. We hope this will be a fast intervention which can benefit the whole community but also numerous tourists," Rama said during his visit to the site last June, offering a new waste-to-energy plant that is being built outside Tirana as a solution to the Durres waste disposal and treatment issue.

The current Porto Romano dumpsite, the sole waste disposal area for the whole Durres, a region of some 200,000 residents, has been often dubbed an environmental time bomb for Durres, a city that has traditionally relied on tourism, but whose reputation in the past few years has waned also due to ongoing pollution and failure to find a permanent solution to the rehabilitation of the Porto Romano hotspot.

Dozens of trucks throw unseparated waste at the Porto Romano dumpsite every day, a considerable part of which is burned, triggering clouds of smoke.

The hotspot is also an employment opportunity for scrap and plastic collectors, including minors, who defy contamination threat to help their families make ends meet.

Cows, sheep, pigs also often feed there, increasing the risk of contamination through milk or meat products.

 

An environmental time bomb

Local residents have often staged protests about closing down the dump site, but no action has been taken due to Durres having no other alternative to dispose of its waste and no budget to build a new landfill on its own modest income.

Durres residents, especially those living in Porto Romano and ish-Keneta (former swamp area), describe the situation as alarming.

“One can easily spot how smoke spreads into the whole city. Such a situation is really critical and is silently killing all Durres residents, but especially those living in the Spitalle and ish-Keneta (suburban areas) which are very close to the waste disposal site,” Nikolle Prenga, a representative of the local community has earlier said.

The situation is also critical for dozens of thousands of students of the public University of Durres who will be attending the new academic year in mid-October 2018.

Hundreds of metric tons of waste is disposed of each day at an improvised landfill just few kilometers out of the city of Durres and only hundreds of meters away from the local “Aleksander Moisiu” public university, with constant waste burning being an imminent threat to some 18,000 university students.

The unstoppable fumes emitted from waste burning are also a constant threat to local flora and fauna in a nearby wetland, not to mention tourism, the key driver of the economy in the country’s largest coastal city boasting more than two thousand years of civilization.

Damage to the tourism industry in Durres, featuring the country’s largest port, a coastline of 62 km of sandy beaches along the Adriatic and ancient sites and monuments dating back to ancient Roman times is even bigger unless immediate action is undertaken.

The hotspot currently spreads over an 80,000 m2 area, just 3 km outside Durres and close to a wetland and beach area.

The Porto Romano dump site is not the sole concern local residents and farmers face with pollution.

Local farmers often complain local plants, especially involved in battery recycling and not using protective filters, pose a damage both to human health and their field crops.

 

Expert worried

Environmental expert Magdalena Cara describes the situation in Durres alarming, saying emergency intervention is needed to prevent a possible catastrophe.

"Waste management in Durres is in a critical condition. There is waste burning all the time and the smoke cloud covers various parts of the city depending on the wind direction. There is mixed waste, including plastic, and burning emission is toxic and cancerous,” she has told a local environmental newspaper.

“There is no management at all, there is no surrounding of the dump site, restricted area or guards and everything has been neglected. There is huge pollution there and the smell is even more terrible,” she says.

Commenting on the health consequences, the environmental expert say the pollution first of all affects lungs and blood because of the toxic fumes but also causes allergies.

“The Durres Municipality says the situation at Porto Romano is beyond its powers because of the huge investment needed" she says, adding that Prime Minister Rama's visit to the site last summer has not changed anything yet.

 

No final solution yet

Durres local government sources say they are still waiting for a solution by the Integrated Waste Management Committee, a government inter-ministerial body chaired by the country's deputy environment minister, to find an alternative solution before putting an end to waste disposal at the Porto Romano area.

Few years ago, the Albanian government failed to conclude contract negotiations over the construction of a new landfill that would have solved the waste issue for the next three decades.

A 30-year concession awarded to an Albanian-Italian joint venture to build and operate a landfill in Manez, some 20 km outside Durres, failed to materialize into a contract in 2015 after the concessionaire was seeking what were described as unaffordable waste disposal fees of about €25 per metric ton.

The local municipality says it has no money to fund a new landfill, whose cost is estimated at about €20 million, and cannot even financially afford to intervene to rehabilitate the Porto Romano waste disposal site where about €3 million is needed.

Ironically, the central government has recently funded a luxury €6 million veil-like promenade in downtown Durres, which heritage experts say risks burying ancient ruins in concrete next to the landmark Durres castle and Venetian tower.

The new Tirana waste-to-energy plant that is being built under a 30-year public private partnership with the Albanian government, has been offered as a solution that will also serve Durres, although costs will significantly increase compared to current dumping and even the proposed landfill whose plans were dropped.

The Tirana waste plant winning concessionaire is expected to secure its income by collecting a €29 fee for every metric ton of waste it processes, €4 more than the rejected project outside Durres.

The environment ministry says the construction of the modern plant by 2019, when it is also expected to produce electricity from waste burning, will put an end to the waste management issue in Tirana, closing down and rehabilitating the current Sharra landfill. The new plant is expected to have a capacity of 550 to 800 metric tons of waste a day in its urban waste, wastewater, ash landfills as well as its incinerator.

Albania has already built its first waste-to-energy plant in Elbasan, central Albania and has signed concession contracts backed by the central government to build two new such plants in Fier and Tirana, despite environmental concerns by local residents and environmentalists worried over the new plants and their incinerators increasing dangerous pollution in the country.

The European Commission has warned the waste-to-energy plants pose concerns “in terms of compliance with EU principles since disposal and incineration are the least preferred waste management options.”

Waste management is one of the most pressing issues facing Albania and the emerging tourism industry after five wastewater treatment plants that Albania has made operational in recent years have considerably improved the quality of the country’s bathing waters.

Only about 70 percent of the country’s 2.8 million resident population has access to public waste treatment and disposal services, making waste management one of the key issues of concern for local communities and hundreds of thousands of tourists visiting Albania.

Three quarters of Albania’s municipal waste is landfilled, about 17 percent is recycled, about 2 percent is incinerated to produce electricity, and 3 percent is burned or dumped outside landfills, according to 2017 data by state statistical institute, INSTAT.

 
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                    [post_content] => By Johann Sattler

“The Balkans begin at the Rennweg (street in the center of Vienna)” - there is hardly any Austrian that doesn’t know this phrase, which is attributed to former Austrian Chancellor Metternich in the 19th century. Since then, this statement has been cited frequently to illustrate Austria's geographical, historical, economic and cultural ties with the Balkan region and to show the mediating role that Austria has played throughout history as a bridge between the Balkans and Central and Western Europe. Support for the establishment of the Albanian state is a good example of Austria-Hungary’s role in Southeastern part of Europe. Austria aims to also play this role during its EU Council Presidency, which comes at a time when Europe is facing major challenges and political changes. During the six months of our Presidency, we will do our best to be a bridge between EU countries and beyond, in order to reduce tensions within and to contribute to a more powerful Europe.

1. Presidency priorities

With the start of the Austrian EU Presidency (July 1st - December 31st), under the motto “a Europe That Defends", there is the opportunity and the challenge of playing the mediating role between the contrasts that characterize the European Union: economic issues and refugees, the need for internal restructuring and strengthening of the EU, the implementation of national agendas and the maintenance of unity, the negotiation of the Brexit, but also when it comes to EU enlargement. We aim to act and interact within a Europe with different dynamics and in this interaction of forces, the Presidency's focus lies on three key priorities:

 
  1. Security: The Austrian Presidency aims to strengthen the external borders of the European Union, by fighting illegal immigration, strengthening ‘Frontex’ and working on a Common European Asylum System.
  2. Prosperity: Ensuring prosperity and competition through digitization is another priority. To maintain the competitiveness and sustainability of the European economy in the future, Europe needs an intelligent digital transformation policy.
  3. Stability: Stability takes shape and structure when there are no major dangers and threats in the European geographic area. Therefore, a very important priority for Austria will be a credible EU perspective for the Western Balkans. The integration process, with its unique transformative power, will remain the driving force for fostering reforms in the region. It is in the economic and security interest of the EU and the region that the Western Balkans becomes part of the EU. This region has proven to be a reliable partner on migration and other important issues and it is an essential part of Europe also regarding our close historic and cultural ties.
  The Western Balkans in the focus of the Austrian Presidency 2018 began with the Bulgarian Presidency of the EU Council, leaving the floor during the second half of the year to the Austrian Presidency and to continue next year with the Romanian one. It is indeed a good opportunity for the Balkans having three consecutive EU Presidencies with a focus on the Western Balkans, thus ensuring that, despite the geopolitical challenges Europe is facing, the Western Balkans stay in the spotlight. In this context, Austria has been and remains one of the most committed countries in favor of integrating the Western Balkan states into the EU under the assumption that the EU is not complete without this region and that these countries do not merely deserve a European prospective but EU membership, once conditions are fulfilled. It should be noted that the Western Balkan countries have moved important steps forward. Macedonia and Albania have received a provisional green light for opening negotiations with the EU next year, although Austria along with other European countries wanted this to have happened this year. Albania's priorities in the new political season – ‘A little less conversation, a little more action’ It is important for Albania that it maximally utilizes this period of less than a year by devoting itself to the technical part of the screening process, but more importantly, to rigorously push forward the key reforms especially in the field of the rule of law, in the fight against corruption and organized crime  and on the electoral reform. To fulfill these tasks, Albanian citizens expect their country’s political leaders, the government and the opposition, and all elected representatives, to put their sleeves up and give their best. This will take a government that tries to close the gaps rather than deepens them and that is oriented towards inclusion and humility rather than exclusion. On the other hand, an opposition is needed whose action has as a basic principle the rigorous control of the work of the government and the presentation of realistic alternative policy proposals within the legal institutions, in order for it to compete in the upcoming elections. And both sides, when it comes to matters of national importance that need unity, should set aside party rhetoric and reach a compromise that will benefit the country. In my opinion, priorities for this new political season are issues such as the establishment of institutions like the HPC, the HCJ and the SPAC, the approval of the Magistrate's Law, and cooperation on the electoral reform, taking into account the OSCE/ODIHR recommendations. Starting from this, both political sides should use the electoral campaign that will begin for the local elections to introduce trustworthy concepts and candidates, including new faces, rather than accusing each other. Albania is one of the countries with the youngest population in Europe and the country would benefit from a political facelift, especially when it comes to those who are the closest to the daily concerns of the citizens, that is the mayors. What the country does not need is to adopt in a hurry and without proper scrutiny controversial laws, or to boycott or be mostly absent in parliament. On the contrary, Albania needs a focused political course in the citizens’ interest. So, in short, using Elvis Presley’s famous line, "a little less conversation, a little more action, please!" To achieve this democratic maturity is not easy, not only in Albania but also in other European countries including Austria. It is a daily endeavor, it takes time and patience and it requires the will for compromise. But is an essential process, especially in Albania, where the political polarization is particularly strong. The contribution of civil society, students and interest groups in this process is as indispensable as that of independent media. Austria's commitment to Albania's  integration process in EU  Despite changes in the historical, economic, or geopolitical context of the two countries, the core of Austrian-Albanian relations has remained the same: we are and remain a strong and trusted partner for Albania and one of the most committed supporters of Albania's EU path. On the other side, Albania has included Austria as one of the country's four strategic partners, which emphasizes convincingly the special bonds between our nations. Within the Berlin’s Process framework, Austria has been a very active participant since the beginning, initiating a number of regional projects, also infrastructure related ones such as the Peace Motorway (Nish - Prishtinë - Durrës). Furthermore, we have also been very active in trying to overcome bilateral disputes, culminating in signing of two border agreements and we have undertaken initiatives for civil society’s involvement in the Berlin Process projects. In this context, in the course of its engagement, Austria, within the Presidency of the EU Council, will undertake a number of initiatives focusing on the Western Balkans and its integration in the EU. Among them, let me mention the Gymnich meeting (Aug. 31, 2018) between the Foreign Ministers of EU countries and the candidate countries, where one of the most important points was the integration of the Western Balkan region. Also, Tirana will be in the focus of our Western Balkans policy through two ministerial conferences: the Conference of Ministers of European Integration, focusing on the mutual support in the accession process (4 October) and the Conference of Ministers of Interior and Justice, which will have in focus the cooperation on issues such as data exchange and migration (4/5 October). This does not only highlight the importance of the Balkans and Albania to Austria, but also shows that Austria has managed throughout its Presidency to place the Balkans at the center of EU policy. Furthermore, we expect a host of official visits: besides Foreign, Justice and Interior Ministers, the Federal Chancellor of the Republic of Austria Sebastian Kurz is expected to visit Tirana, as well as the Speaker of Parliament, Wolfgang Sobotka. The highlight of Albanian dignitaries in Vienna will be President Meta's visit to Austria at the end of October. 1. Europe’s role in the world Since its founding, the European Coal and Steel Community and then the European Union has provided continuous peace and prosperity for its citizens, but also exporting stability them to the surrounding countries. The European Union offers its citizens the best system of social protection and is by far the largest contributor of development aid in the world. However, as President of the European Council Donald Tusk said during his speech at the 60th anniversary of the Treaty of Rome: “to build a free world, it takes time, great efforts and sacrifices are needed, and Europe has made it. But nothing can be taken for granted. Europe as a political entity will either exist united or will not exist at all.” The EU needs ongoing work and commitment to support the most successful peace project ever experienced in Europe's history. Europe finds itself at a time of challenges and change, in a turbulent world, at a time when increasing insecurity is coming from the US, when China and Russia are emerging increasingly powerful and more confident but whose model is fundamentally different from that of the EU. Tensions within the European Union have increased. With the Brexit, the EU experienced for the first time the will of a nation wanting to leave the EU. But Europe should see Brexit as an opportunity, as a model agreement for a very close partnership with the EU beneath the threshold of membership. Pro-Europeans are challenged in providing clear and concrete responses to the implementation of their policies. So, it is time to defend with conviction what Europe has achieved so far; the time of lukewarm European supporters is over.  Deepening and widening  The internal reform of the EU has been boiling down frequently to one question: more subsidiarity (leaving more competences to member states) or deepening of integration (more competences for Brussels). The need for EU reform does not necessarily have to exclude one of those principles. Further integration among member countries does not necessarily go against the principle of subsidiarity; rather they can be implemented side by side through agreements between the EU and member countries. Austria, under the slogan "less, but more efficient" supports the internal reform of the EU simultaneously in these two directions. The extension of EU’s competences is as necessary in some areas, as its detachment from some other areas is. For this reason, the discourse within the EU should be oriented about which areas are needed to deepen the EU's competences and in which areas national/local decision-making would be more efficient. In our view it would make sense to increase the role of member countries in decision making when it comes to health, culture, tourism, education, sport, youth, inclusion etc. On the other hand, further integration among member countries would be needed in such aspects as the protection of external borders, internal and external security, representation of Europe in the world, as well as in the fields of research, innovation and digitization. EU reform in these two parallel directions would be an attempt to balance the interests of the EU and its member countries. On the one hand, this would lead to a more efficient and more focused Europe and, on the other hand, to the increase of subsidiarity. However, subsidiarity is difficult to be put in place and implemented in practice.  For this reason it is important to look at the approach of member countries' parliaments regarding this principle. The underestimation of this principle by the EU was used by Brexit supporters against the EU itself. But so far, what has been done by the EU in this respect were “ad-hoc” adaptations. Given this policy debate, there have been better times for EU enlargement. But it would be short-sighted from our side if we lost sight of the Balkans region. This would lead to increased insecurity in this vital part of Europe as countries would lose momentum in their modernization quest and would come under the growing influence of third parties. At the same time, the countries in the region should continue to forcefully make their case, and the most convincing arguments are real reforms, real results in fighting organized crime and corruption and real steps in consolidating democracy by reducing polarization and increasing accountability. So in a nutshell: it takes two to tango. The Balkans should not miss this opportunity, but also the EU should not lose sight of this region.    *The author of this article is the Austrian Ambassador to Albania [post_title] => “The Balkans begin at the Rennweg” [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-balkans-begin-at-the-rennweg [to_ping] => [pinged] => [post_modified] => 2018-09-28 09:57:30 [post_modified_gmt] => 2018-09-28 07:57:30 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=138649 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [7] => WP_Post Object ( [ID] => 138642 [post_author] => 281 [post_date] => 2018-09-28 09:30:33 [post_date_gmt] => 2018-09-28 07:30:33 [post_content] => TIRANA TIMES EDITORIAL After commenting for a long time that massive migration is normal and natural and even circular, the Albanian government seems to have caught up with the demographic decline and its potential destructive impact, proposing this week baby bonuses for couples that will have children in the future. Currently a meager amount of about 40 euro is given to couples who increase their families. The reward is set to go up at more than 300 euro for the first child and incrementally higher for the next children. The Finance Ministry is also aiming to modernize the system distributing maternity leave payments, making it finally digital. For the moment the archaic mechanism through which new mothers need to move to get their modest allowances is simply medieval. Albania has lost so much of its population and the trend is ongoing. The first and most important reason for this is not the decline in the birth numbers, although it also plays a part. However the elephant in the room is migration. According to the latest polls, in the present days as much as 70 percent of Albanians still want to leave their country. The majority of them are of course young and vital. Exactly the kind of people likely to have kids.  Albanians make up 3 percent of all asylum seekers in the European Union this year only. A country of less than 3 million people and which has not been in war for half of a century, has at least 8000 asylum seekers knocking on EU’s door.  The numbers of asylum seekers cannot not even be compared with the hundreds of thousands applying for the US Lottery program or to the spiking numbers of the students and professionals who are learning German with the sole purpose of starting a new life there. The vocational development agencies updating the skills and teaching German to the future IT specialists and nurses of Germany are functioning as the de-facto Labor Ministry of Albania now that there is no institution under this name. Unfortunately they are the most successful labor recruitment offices. Words aside the number of returnees from these programs is extremely low. The repercussions of this massive flight on the already dire pension scheme in Albania on the wider labor market dynamics, on the frail healthcare system as well as on the social fabric of the country cannot be overstated. Increasing the baby bonuses is a step that was necessary and should be saluted. However it is going to take much more serious effort on the die of Albanian institutions. This should start with an honest and thorough examination of what should be done to counter the reasons of this flight. Some of the reasons, including lack of hope, are difficult to target since they can be seen as subjective. One thing which is objective is that as long as the model for successful professional and financial development is going to be based either on political cronyism or organized crime lordship, or worse both, there are going to be always more people leaving than returning. However lets return to other reasons which are painfully clear. The lack of access to the public services and the bad quality of the latter are a key reason that surpasses poverty in the decision of Albanian couples to have and raise children elsewhere. There is no bonus high enough to offset this. Continuing to see Albanian educational and healthcare sectors as stories of success is poking yourself in the eye, when it comes to this issue. Maybe the Albanian government is limited in its capacity to generate economic growth, stimulate investment and employment. However it is less limited in guaranteeing that all Albanian children receive a qualitative education and that even kids in rural and remote areas have access to it. It is much less limited to change the corruptive PP scheme that is placing hospitals in the hands of oligarchs and driving the middle class citizens to seek service in the private healthcare sector. The latter has also major problems with accountability for its failures. A baby bonus is just a tiny a baby step. A comprehensive social policy is necessary to address this looming reality. [post_title] => Editorial: Reversing demographic decline takes more than baby rewards [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => editorial-reversing-demographic-decline-takes-more-than-baby-rewards [to_ping] => [pinged] => [post_modified] => 2018-09-28 09:49:52 [post_modified_gmt] => 2018-09-28 07:49:52 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=138642 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [8] => WP_Post Object ( [ID] => 138616 [post_author] => 29 [post_date] => 2018-09-27 12:47:41 [post_date_gmt] => 2018-09-27 10:47:41 [post_content] => TIRANA, Sept. 27 – With birth rates having hit a historic low and the population rapidly growing older due to drastic changes in lifestyle and massive migration following the collapse of the hardline communist regime in the early 1990s, the Albanian government has unveiled a social reform encouraging Albanian parents to have more children through a sharp hike in baby bonuses. Prime Minister Edi Rama says parents will receive up to 120,000 lek (€945) in cash bonuses for their newborns starting next year in hikes of up to 24-fold as part of incentives promoting higher birth rates and increasing child support. Albanian parents currently receive only a modest 5,000 lek (€40) in one-off bonuses for their newborns, an amount that has remained unchanged since the early 2000s when it was introduced by Edi Rama, then serving in his first term as Tirana Mayor before it expanded nationwide in 2008 as a welcome cash gift. However, getting the modest cash gift often takes Albanian parents up two years due to late and complicated disbursement of funds. The newly proposed cash bonuses, which the government is planning to disburse in instalments until children become one year old, are set to increase 8-fold to 40,000 lek (€315) for the first child, double to 80,000 lek (€630) for the second child and treble to 120,000 lek (€945) for the third or more children. "That is a measure which in our calculations will promote higher birth rates, but the most important thing is that it is an incentive for everybody with no difference for all families having children in Albania," Prime Minister Edi Rama said. "That is a nationwide bonus that will be awarded in real time in the course of one year to families under a new mechanism that is going to be set up. The next challenge will be extending the reward in more than one year, but that is another topic," Rama added. The incentive comes as birth rates in the country have seen a drastic cut in the past 28 years and the country’s resident population has been declining and getting older, posing a threat to the country’s emerging economy and public finances. Albania’s natural population growth registered negative growth in the first quarter of this year as the number of deaths slightly exceeded births in a dramatic but warned situation that takes place for the first time in nine decades since Albania established a civil registry in the late 1920s, according to official figures. The number of newborns dropped to around 31,000 in 2017, down from 82,000 in 1990 just before the collapse of the communist regime when Albania had one of Europe's highest fertility rates, according to Albania's state statistical institute, INSTAT. Experts say the decline in Albania’s birth rate is a result of cultural changes in the typical Albanian household during the past quarter of a century of the country’s transition to democracy and a market economy, lower marriages and fertility rates and high migration rates which in the past few years transformed into asylum-seeking in wealthy EU member states. Once the country with the highest fertility rate under communism, Albania has seen its average number of children per woman drop to 1.78, down from 3 in 1990 just before the transition to a multi-party system and a record 6 in the early 1960s, which has contributed to the population shrink and ageing. Massive migration in the past quarter of century, mainly to Italy and Greece, the hosts of around 1 million Albanian migrants, has also contributed to lower birth rates in the country. 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. Experts says Albanians are mostly leaving 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. International financial institutions have also warned shrinking populations, such as in Albania’s case, pose a formidable fiscal challenge, placing public finances under pressure on increased spending on pensions and health, reduce economic growth and make it more difficult to reduce public debt as a share of GDP.   Wage hike Prime Minister Edi Rama also announced a wage hike for employees in the public education and health sector as well as in the military for next year following a freeze in this year's wage hike after a mid-year budget cut. In addition to revising downward central government spending and revenue targets, the mid-year changes to the 2018 budget also cut dozens of public administration jobs and canceled funds that were initially intended for public administration salary hikes. A 1 billion lek (€7.9 mln: $9.2 mln) fund initially intended for salary hikes was cancelled, but year-end rewards to pensioners provided under a 3 billion lek (€23.7 mln; $27.7 mln) solidarity package turned into law in early September. The wage hike initiative comes as the ruling Socialist Party comfortably governs alone in its second consecutive term of office and public finances have recovered following a series of rather tough reforms in the electricity, water supply and fighting tax evasion in the past five years, often criticized for targeting the poorest and leading to massive departures from the country, especially on ungrounded asylum-seeking. The initiatives also come as the country will be heading to local elections in mid-2019 and the ruling Socialists target to continue running the country’s largest municipalities.   [post_title] => Albania offers baby bonus hikes to fight sharp decline in birth rates [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => albania-offers-baby-bonus-hikes-to-fight-sharp-decline-in-birth-rates [to_ping] => [pinged] => [post_modified] => 2018-09-28 10:00:21 [post_modified_gmt] => 2018-09-28 08:00:21 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=138616 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [9] => WP_Post Object ( [ID] => 138594 [post_author] => 29 [post_date] => 2018-09-25 17:09:15 [post_date_gmt] => 2018-09-25 15:09:15 [post_content] => TIRANA, Sept. 25 – More than two-thirds of foreign direct investment that flowed into Albania in the first half of this year went to the energy sector and was mainly attributed to two major energy-related projects already in their final investment stage, unveiling tough challenges ahead with filling the huge FDI void that is expected once the key projects finish and attracting investment in higher value-added sectors. The Trans Adriatic Pipeline and the Devoll Hydropower, the key drivers of Albania’s FDI growth in the past four years, were the main contributors in the first half of this year when FDI grew by an annual 28 percent to €494 million, up €109 million compared to the same period last year, according to Albania’s central bank. FDI in the first half of this year mainly originated from Switzerland, the headquarters of the TAG AG consortium that is building the Albanian section of a major Trans Adriatic Pipeline bringing Caspian gas to Europe. TAP, whose Albania section kicked off in 2014, is already in its final construction stage in Albania with the investment stage expected to complete by early 2019 before bringing first Caspian gas to Europe by 2020. Swiss FDI to Albania during the first half of this year was at €194 million while total FDI stock from Switzerland, the overwhelming majority of which linked to TAP, was at €1.1 billion, ranking Switzerland the second largest foreign investor in the Albania. The Netherlands, home to the major Devoll Hydropower project that is being built by Norway’s Statkraft through its wholly-owned Netherlands-based Statkraft Markets B.V., was the second largest contributor to FDI growth in the first half of this year with €101 million. A wholly state-owned Norwegian company, Norway’s Statkraft has already made operational its first Banja hydropower plant as part of its Devoll Hydropower project, one of the country largest foreign investment projects and is set to complete its second and final Moglice HPP by early 2019. Dutch foreign investment in Albania has also been boosted by British-Dutch multinational Royal Dutch Shell which has made some key oil discoveries in the country and is planning to engage in a production stage that could bring billions of euros in investment in the oil industry. The potential investment by Shell oil giant is currently the sole major project in sight that could replace the huge FDI gap of €200 to €300 annually left by TAP and the Devoll Hydropower starting 2019 following their completion. FDI stock from Canada also rose by €30 million to €914 million in the first half of this year, fuelled by investment by Bankers Petroleum, the country's largest oil producer which in mid-2016 was taken over by China's Geo Jade. Higher FDI in the oil sector has also been fuelled by a pickup in commodity prices with oil prices having hit a three-and-a-half year high of $80 a barrel.    Lower FDI from Greece, Italy Albania saw lower FDI inflows during the first half of this year from Italy and Greece, the top trading partners and traditional investors in the country during the past quarter of a century of transition to democracy and a market economy. FDI inflows from Greece, the traditional top investor in Albania, was at only €13 million in the first half of this year, negatively affected by several key Greek investments in the banking, health and education sectors selling their Albania units which is expected to be officially reflected on an FDI decline later this year due to most transactions taking place in the third quarter of the year. Yet, neighboring Greece, home to half a million Albanian migrants and the traditional second largest trading partner, remained the top foreign investor in Albania in mid-2017 with an FDI stock of €1.27 billion. Unlike trade exchanges that were severely affected by Greece’s 8-year recession that contracted its economy by a quarter by 2016, Greek FDI in Albania has doubled in the past decade. FDI from Italy, Albania’s traditional top trading partner, also grew by a mere €16 million in the first half of this year, to rank the neighboring country across the Adriatic, also home to some 500,000 Albanian migrants, the sixth largest foreign investor in the country with an FDI stock of €646 million. FDI from Austria and Turkey was at €34 million respectively in the first half of this year, boosted by investment in the hydropower sector.   Energy reliant Albania’s FDI was largely reliant on the energy sector with investment in the oil, mining, natural gas and electricity sector accounting for about 70 percent of FDI inflows for the first half of the year. Meanwhile, FDI stock in sectors with great potential such as the key agriculture and tourism sectors remain quite modest, negatively affected by the long-standing issue of unclear property titles that have in several cases led major investors in the travel and tourism industry to quit their Albania projects. Albania's FDI stock climbed to €7.1 billion in the first half of this year, representing about 60 percent of the country’s GDP. A recent IMF study has shown Albania has managed to attract only about a tenth of the inward foreign direct investment stock in the Western Balkans in an FDI race that is led by Serbia, the region’s largest economy, with a 55 percent share alone. As in much of the region, corruption is a key concern for potential foreign investors to Albania, where an inefficient judiciary that is being reformed also remains a key barrier. Foreign investors have also voiced concern over Albania having a higher tax burden compared to regional Western Balkan competitors.   FDI incentives Albania has extended for another year incentives on strategic investment as it prepares to draft a new comprehensive law that will provide the same protection to both Albanian and foreign investors and specify the country’s strategic sectors. The one-year extension until December 2019 comes as a late 2015 law on strategic investment offering easier procedures to investors is set to expire by the end of this year and the ruling Socialist Party majority prepares to draft a new investment law by 2019 in a bid to improve the legal framework and attract much needed foreign direct investment and know-how. In a bid to promote elite tourism investment, Albania has been 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. [post_title] => Poorly diversified energy investment dominates Albania’s FDI in year’s first half [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => poorly-diversified-energy-investment-dominates-albanias-fdi-in-years-first-half [to_ping] => [pinged] => [post_modified] => 2018-09-25 17:10:53 [post_modified_gmt] => 2018-09-25 15:10:53 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=138594 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post] => WP_Post Object ( [ID] => 138701 [post_author] => 29 [post_date] => 2018-10-04 13:15:24 [post_date_gmt] => 2018-10-04 11:15:24 [post_content] => TIRANA, Oct. 4 – Two commercial banks in Albania have been rebranded following mergers and acquisitions that have now officially reduced the number of banks operating in the country to 14 following a decade of 16. Starting October 2018, the Albania unit of Italy’s Intesa Sanpaolo and its newly acquired loss-making Veneto Banka Albania will be operating as a rebranded Intesa Sanpaolo Bank Albania. The merger only slightly increases Intesa Sanpaolo’s market share in Albania to 12.3 percent of total banking assets in the country due to Veneto Banka’s market share having dropped to a mere 1.38 percent and representing the 13th largest bank in the country at the end of the first half of this year, according to the Albanian Association of Banks. The merger process comes more than one year after Intesa Sanpaolo, Italy’s largest retail bank, acquired the bankrupt Veneto Banca in Italy and its subsidiaries in several European countries including Albania. Veneto Banka had nine outlets and 109 employees at the end of the first half of this year, down from 15 outlets and a staff of 132 during the same period last year, according to the banks' association. Intesa Sanpaolo has been operating in Albania since 2007 when it acquired the American Bank of Albania, the first private bank in Albania established in 1998 by the Albanian-American Enterprise Fund. Meanwhile, Veneto Banka has been operating in Albania since 2009 after purchasing and rebranding Banca Italiana di Svillupo (BIS Bank), and mainly serves small and medium-sized businesses, especially Italian-run companies who dominate the number of foreign-owned companies in the country.   NBG outlets rebranded ABI Outlets of the former Albanian unit of the National Bank of Greece, the country’s tenth largest bank, have also been rebranded ABI, the American Bank of Investments, as of October 1, 2018 following an acquisition earlier this year. The early 2018 acquisition by the American Bank of Investments, an Albanian-American bank that has been operating in Albania since 2016, came after NBG Albania had been losing significant market share in the past decade amid financial trouble from its Greece-based parent bank in the aftermath of the 2008 crisis and the worst-ever recession in neighboring Greece. NBG Albania’s assets at the end of the first half of 2018 dropped to 2.54 percent of total assets in an ongoing downward trend since 2008 when it held a 6.7 percent market share in terms of assets that include loans, investments in securities and placement with banks. The merger now almost doubles the market share of ABI Bank to 5.43 percent making it the seventh largest commercial bank operating in the country. The American Bank of Investments, ABI, launched its Albania operations in December 2016 as a rebranded bank after U.S. based NCH Capital Inc, private equity and venture firm took over France’s Credit Agricole’s Albania unit.   Series of takeovers Albania's banking system has been facing a series of takeovers in the past year, with several internal takeovers and mergers and new entrants increasing the share of Albanian capital in the banking system. Albanian capital in the banking system, estimated at 10 percent at the end of 2017, has significantly increased during this year following the acquisition of two Greek bank units by Albanian-owned banks and companies. Tirana Bank and NBG Bank, both of which units of Greek banks in Albania, held a market share of about 8 percent in terms of assets at the end of the first half of this year. Last August, Tirana Bank, a unit of Piraeus Bank, Greece’s largest lender, says it has agreed to sell its Albania unit, to Albanian-owned Balfin Group and Macedonia’s Komercijalna Banka for €57.3 million. Balfin Group is Albania’s largest company which is now diversifying its investment portfolio also in the banking sector after successful operations in the mining, construction, retail trade sectors. Alpha Bank is now the sole remaining Greek unit operating in Albania following the sale of three Greek-owned units, two of which this year. Its assets of 5.3 percent of total, make it the sixth largest bank in the country. Greek-owned banks held about a quarter of banking assets in 2008 just before the onset of the global financial sector hitting the Greek economy and its banking system. Last August, the Albania subsidiary of France’s Societe Generale also changed hands as part of a deal the France-based lender has concluded to sell its Bulgarian unit to Hungary’s OTP Bank. Societe Generale Albania is the fifth largest bank in terms of assets in Albania and the fourth largest in terms of lending. Several other small banks operating in the country are also reportedly on sale as credit struggles to recover amid sluggish demand and a declining but still high level of non-performing loans of about 13 percent. Experts say bank consolidation, the process by which one banking company takes over or merges with another, is expected to continue and further reduce the number of banks in the country, but at the same time not affect competition in a market where the four largest banks already hold more than two-thirds of total assets, at 68 percent at the end of 2017. Experts believe the consolidation process will lead to tougher competition and improved access to banking services at a time when credit still remains sluggish, negatively affected by both tight lending standards applied by banks and poor demand by businesses and households. However, the restructuring and growing online banking is expected to have a negative impact on bank employees. The 16 commercial banks operating in the country cut dozens of branches and jobs nationwide last year as lending remained sluggish and e-banking gradually expanded despite banks registering record high profits. The country’s banking system is considered well-capitalized, liquid and profitable. Yet, in its latest statement, the International Monetary Fund recommends that “ensuring that new market entrants have solid banking experience and meet fit and proper criteria to operate in the Albanian banking market will be critical.” The Albanian banking system is overwhelmingly foreign owned but the market share of EU-owned banks has dropped by 15 percent to about 52 percent in the past four years as domestic owned banks expand and EU-owned banks continue deleveraging. Turkish-owned BKT, Austria’s Raiffeisen and Albanian-owned Credins bank were the top three banks in terms of assets that include loans, investment in securities and interbank placement at the end of 2017.   ‘A regional phenomenon’ Central bank governor Gent Sejko says EU-based banks leaving is a phenomenon that is affecting not only Albania but the whole region due to tighter measures adopted by the European Central Bank by forcing them to either increase capital or shut down some units. "Failing to inject or find capital to increase their capital adequacy ratio, those banks were forced to withdraw from the region," Sejko told reporters this week. "As a regulator of the financial system, we have targeted that this process is accompanied by the consolidation of the banking system and somehow this has had a positive effect because we now have two mergers that have reduced the number of banks to 14 from 16 and this is a positive indicator for the Albanian banking and financial system,” he added. "Capital adequacy ratio has reached 18 percent and banks have excess liquidity which we target translating into healthy credit for the economy as the Eurobond emission has already provided the government with excess liquidity for its needs. The banking system's liquidity should be oriented toward healthy lending either for households or businesses,” says Sejko.   [post_title] => Albania commercial banks reduced to 14 following mergers and acquisitions [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => albania-commercial-banks-reduced-to-14-following-mergers-and-acquisitions [to_ping] => [pinged] => [post_modified] => 2018-10-04 13:15:24 [post_modified_gmt] => 2018-10-04 11:15:24 [post_content_filtered] => [post_parent] => 0 [guid] => http://www.tiranatimes.com/?p=138701 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [queried_object] => stdClass Object ( [term_id] => 52 [name] => Premium [slug] => premium [term_group] => 0 [term_taxonomy_id] => 52 [taxonomy] => category [description] => Please subscribe to have access to articles in our premium section. 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