The Italians are coming

TIRANA, May 7 – For two decades the movement of people between Albania and Italy was clearly one sided — they left Albania for Italy to seek a better life. But walking in downtown Tirana these days, it is clear the number of Italians in the city is growing. They are students, workers, spouses of Albanians — and businesspeople. And Albania’s government wants more of the latter to come and stay in this country.
Seeking to create more jobs and grow its economy, Albania is looking to attract more investors and entrepreneurs from Italy, its largest trade partner, the country’s prime minister says.
Prime Minister Edi Rama told Italian investors this week Albania was fertile and welcoming country for their investments.
“Albania is where Italian entrepreneurs can immigrate. Here they can find America,” Rama said.
The offer was made Monday at the opening ceremony of the Italian Week in Albania.
Italian Senate head Pietro Grasso was also present, while on a two-day visit to Tirana, during which he met with all of the country’s leaders and spoke of the need of integrating the parts of the Balkans not yet in the EU as soon as possible in light of developments in Ukraine and the fear that Russia would start to exert more pressure in the region.

Trade has not translated into large investments

Italy is Albania’s largest trading partner. Nevertheless compared to other countries in the region, Albania ranks low in Italy’s total trade and investment volumes.
The Italian Week is aimed at trying to promote bilateral ties and “open a new page in the way of cooperation with Italy.”
Rama said that “even though we are the first to love Italy,” and being “geographically closer,” Tirana is still “more distant in trade and economic exchanges.”
There are more than 300 Italian entrepreneurs in Albania so far, but that number could be much higher, the Albanian government says, because the conditions are right.
“Here the profit will be larger, there will be less tax and less bureaucracy than in Italy. Our need for jobs is larger and labor costs are much lower,” Rama told potential Italian investors. “Many believe that if we manage to overcome the wall of prejudice and understand that an enterprise needs to move more rapidly from the idea to implementation, then we will have an increase in volume.”
Promoting foreign investment and creating new jobs has been a key offer his governing Socialist Party has made to the voters. And it sees Italy as a top potential source for new investments that can create a large number of jobs — even if they won’t be highly paying ones.
Italian investors have so far had success in industries that rely on cheap labor costs and benefit from the ability of many Albanians to speak fluent Italian — these include the garment and shoe manufacturers as well as call centers for services and telemarketing.
Italian Ambassador Massimo Gaiani said Italian businesses are increasingly aware of the opportunities Albania offers, but they see it as very important to have a good and safe business climate in the country when they invest, and, above all, that the same conditions are offered equally to all businesses.
The ambassador, speaking at one of the Italian Week events, said the low cost of labor in Albania is largely what attracts Italian businesses to the country.
He added the bilateral relationship has been cemented by huge investments and donations that the Italian state itself had done in Albania in the past two decades, adding that 650 million euros in donations and incentives had come to Albania from Italy.
Crisis redefined trading
relations

But Italy is not alone in having a gap between its spot as a trading partner and direct investments. Top trading partners Italy and Greece rank fourth and fifth largest investors.
Italy which is the top trade partner with more than one third of total trade exchanges saw its FDI stock climb to 434 million euros in 2012 up from 427 million euros in 2011 and 348 million euros in 2009.
On the other hand, Greece, which has been the traditional top foreign investor in Albania, and is expected to escape its six-year recession only this year, has seen its FDI continuously drop since 2008. The FDI stock from Greek investors dropped to 451 million euros in 2012, down from 521 million euros in 2007.
Renewable energy, mining and tourism are some of the sectors Italian investors travelling to Albania are offered as priority sectors during meetings with Albanian officials.
Government officials say Albania offers investment opportunities not only because of the flexibility of its labour market and one of the world’s lowest fiscal regimes, but also because of the tangible assistance to domestic and foreign investors.
Italy is Albania’s top trade partner with 50 percent of total exports and 30 percent of imports. More than 80 percent of footwear and garment products manufactured in Albania, which are the country’s main exports, go to Italy.
According to Italy’s Confindustria lobby group, some 300 Italian companies operate in Albania, mainly in the footwear and garment manufacturing.
Data show that exports to Italy, the destination of more than half of Albanian exports, have also been affected by the crisis there, with their growth rate slowing down. In 2012, Albania exported around 108 billion Lek of goods to Italy, up only 3.6 percent compared 2011, when exports grew by 28 percent year-on-year.
Italy accounted for around half of Albanian exports and one-third of total imports. Neighbouring Greece now ranks the sixth most important destination of Albanian exports after Spain, Kosovo, China and Germany and Turkey with only 3 percent of the total and the second most important destination only for imports with around 10 percent. Spain has emerged as the second most important destination of Albanian exports mainly due to oil exports by Canada-based Bankers Petroleum.

Positive trend seen in the next few years

But things could shift as Albania’s top two trade partners Italy and Greece are expected to register positive growth rates in 2014, escaping their recession period, according to forecasts by Eurostat, the statistical office of the European Union, which is a positive signal for a further recovery in Albania’s exports.
Italy is expected to register positive growth rate of 0.7 percent in 2014 after being in recession in 2012 and 2013.
Meanwhile, Greece which still remains Albania’s second top trade partner is also expected to register positive growth rate of 0.6 percent in 2014 overcoming six consecutive years of recession, which has also considerably affected trade exchanges with Albania.
The two neighbouring countries account for around 50 percent of Albania’s trade exchange, being the top investors in Albania and the overwhelming source of migrant remittances.