The decision foresees that state run assets with an area of 500 m2 and more can be given for 1 Euro under tender procedures for investments of Euro 10 million in the manufacturing industry
TIRANA, March 12 – The return of ‘Albania 1 Euro’ initiative, offering state-owned assets for a symbolic price of 1 Euro in return for investments and job creation has drawn mixed reactions among the business community.
Hajredin Fratari, an experienced entrepreneur and the president of Albanian Confindustry Association, describes the initiative as old and already applied even by the former government but having a minor impact on the attraction of foreign direct investment.
“This initiative does not spark interest because investors, especially foreign ones, are more interested in the tax rate and security in the country,” Fratari tells local media, also bringing his own example of withdrawing from an investment under the previous initiative because of the dilapidated conditions of the state-owned facility offered for a symbolic 1 Euro.
“Currently, we have the highest tax levels in the region and this is expected to negatively influence on the attraction of foreign direct investment in the country,” adds Fratari.
According to him, government should draft concrete programmes and investment plans, attractive to foreign investors, especially Asian investors who have turned into huge financial potential in different markets.
The Business Albania Association and garment and footwear producers are more optimistic about the initiative at a time when Albania’s image and attractiveness to foreign investments has somehow been shaken by increasing the corporate income tax to 15 percent.
“The initiative to give interested companies different state facilities for investments at a symbolic rent of 1 Euro would bring new technology, employment and qualification to Albania,” says Luan Breagasi, the head of Business Albania Association.
The National Chamber of Garment Producers also hails the initiative, but wants a detailed list of state-owned facilities to be made available soon.
“We still don’t have a detailed list of facilities made available by government which would give us a clearer idea on the chances we will stand. What we need is that these facilities should be close to towns and the infrastructure be in place,” says Bardhi Sejdarasi, the head of the Garment Producers.
Last February, The Socialist Party-led government approved the Albania 1 Euro initiative, offering state-owned assets for a symbolic price of 1 Euro in return for investments and job creation. The “Albania 1 Euro” initiative had been launched by former Prime Minister Sali Berisha back since 2006 but proved unsuccessful in attracting foreign investors in these kinds of investments.
The decision foresees that state run assets with an area of 500 m2 and more can be given for 1 Euro under tender procedures for investments of Euro 10 million in manufacturing industry and in the garment and footwear industry locally known as “fa谮” for which government has not set any investment threshold.
The Economy Ministry can also propose government the signing of symbolic Euro 1 rent contracts for unsolicited offers for investments of more than 2 million Euros in sports, culture, tourism and cultural heritage. Winning companies, which will be supervised by a monitoring entity, will have to pay 10 percent in investment guarantees, before signing the contracts.
The government decision also foresees the rent of other state owned assets based on the level of investment, employment and monthly rent offered.
The government initiative is an effort to make Albania more attractive to foreign investors after the corporate income tax was raised to 15 percent this year, angering the business community which opposed the initiative as making Albania less competitive compared to other regional countries applying 10 percent flat tax regimes.
FDI, which in 2012 ranked Albania as the second largest recipient in South-East Europe, continued positively performing in the first three quarters of 2013 when it rose by 27 percent. FDI in the first nine months of 2013 rose to 712 million euros, up from 562 million euros during the same period in 2012, registering a record high for the first three quarters of a year, according to Bank of Albania data. The FDI was boosted by privatization and investments in hydropower plants.
A UN report shows Albania attracted USD 957 million in foreign direct investment in 2012, down 7.6 percent compared to 2011, but remained the second largest FDI recipient among six transition economies of the South-East Europe after Croatia.
