New tourism law adopted amid debates over sector's future

Tirana Times
By Tirana Times July 31, 2015 10:03

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  • Strategic investors in Albania's tourism sector will be offered state-owned property for a symbolic 1 Euro under 99-year concession contracts to develop tourist resorts for investments of Euro 5 million to 50 million

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KakomeTIRANA, July 30 - The ruling left Socialist-Party-led coalition approved this week in a special parliamentary session ahead of the summer vacations a law on tourism amid debates by tourism associations and the opposition Democrats.

Economy and Tourism Minister Arben Ahmetaj said the new tourism law guaranteed integrated and sustainable development.

"What this law targets is structuring tourist movement and tourism investment both in coastal and other areas... to promote sustainable tourism and give an end to massive constructions as happened in Durres," said Ahmetaj.

Strategic investors in Albania's tourism sector will be offered state-owned property for a symbolic 1 Euro under 99-year concession contracts to develop tourist resorts, according to the new law which also shifts power on investments from local government to the central government.

A new law on strategic investments passed earlier this year, says investors in the tourism sector will be offered the status of strategic investor and assisted procedures for investments of more than 5 million euros creating 80 jobs. For investments of more than 50 million euros in the tourism sector, investors are granted the 'special procedure' assistance status.

The incentive is part of a law granting foreign investors to Albania simplified and accelerated procedures in the next three years for strategic investments in energy, mining, transport, telecommunication, infrastructure, urban waste, tourism, agriculture and fishing and special economic zones.

Immovable property owned by central or local government situated in priority tourism development areas will be made available to investors for the construction of accommodation or other tourist infrastructure by the ministry responsible for tourism.

"The goal of this law is to promote Albania as a top Mediterranean destination and attract foreign and domestic visitors based on sustainable tourism. It regulates the activity of domestic and foreign tourism operators, making sure that the available tourism services meet tourists' expectations in a healthy and safe environment," says the report of the law.

The Albanian government is expected to make the tourism industry more competitive through tax incentives, public-private partnerships and the opening of new airports in southern Albania, minister Ahmetaj has earlier said.

"The law will not work wonders but is a good start for tourism. It will offer more opportunities to enterprises in the exploitation of beach territories. We target reducing informality and increasing the quality of services. The law also sets the foundations for the standardization of hotels and their star rating," said Ahmetaj.

The minister, also responsible for economy and trade, said he will introduce a package which also envisages reducing VAT on tourism from a current 20 percent to 10 percent.

Reducing VAT on tourism has been a perennial request by the Tourism Association to make one of the key industries in Albania more competitive compared to other regional countries where VAT on the tourism sector ranges from 5 to 8 percent.

The Albanian government also says it is in its final stage of negotiations with the TIA concessionaire over lifting its exclusive rights on international flights to pave the way to the operation of the new United Arab Emirates-funded Kukes airport in north-eastern Albania and the construction of a new airport in southern Albania serving the tourism industry.

The law clarifies competences among tourism institutions, targets making operational the Tourism Development Fund, certifying and licensing tourism operators, classifying accommodation units and tour guides based on international standards in a bid to make tourism in Albania sustainable, environment-friendly and year-round.

Bank of Albania data shows the foreign investment stock in hotels and restaurants dropped to 64 million euros in 2013, down from 94 million euros in 2008 just before the onset of the global financial crisis.

Tourism association, opposition concerned

The Albanian Association of Tourism described the approval of the new tourism law as hurried and not taking into consideration proposals by tourism association to reduce widespread informality.

"Failure to include in the law accommodation units such as villas and apartments which account for 65 percent to 70 percent of the market is a real issue of concern because they don't meet standards or pay taxes," says Zak Topuzi, the head of the Hotel Association.

The Association is also concerned over the reduction of the 20 percent VAT, a perennial request which the government has promised to give a solution through a package of incentives on the tourism sector.

Opposition Democratic Party MP Edmond Spaho said the new law did not make the tourism sector a priority.

"The law tries doing everything but does not provide a solution to any of the issues. It does not provide guarantees to foreign investors," said Spaho. "Laws have not managed to guarantee the development of tourism and despite some 4 million tourists a year, deducting immigrants and Kosovars, there are few foreign tourists remaining. We only need to apply successful models," he added.

A last-minute amendment to the law approved by 79 votes shifted the power on the criteria and tariffs for the classification of the tourist establishments from the minister responsible for tourism to the Council of Ministers.

Government officials consider the new law a good opportunity to attract strategic foreign investors considering the chaotic development of tourism and urban massacres in the past two decades in the key tourist destinations and that a considerable part of the Albania's coastline remains virgin.

Back in 2009, France's Club Med withdrew from a major holiday resort project in Albania's southern Ionian coast under a similar deal after continuous land disputes with local inhabitants despite a court ruling in favour of the investor's 99-year concession deal with the Albania government, unveiling the long-standing issue of clear property titles which is often one of the key barriers to foreign investors in Albania.

Tourism revenue registered a record high of 1.2 billion euros in 2014 when more than 3.6 million foreign tourists visited Albania, according to data published by the central bank and INSTAT.

Ethnic Albanians from Kosovo, Macedonia, Montenegro account for three-fifths of foreign tourists visiting Albania, with local experts often referring to this market as 'patriotic tourism.'

Albania's tourism competitiveness lost considerable ground in the past couple of years on deteriorating travel and tourism policy and enabling conditions, a biennial report published by the World Economic Forum has shown.

The travel and tourism industry, which employs around 41,000 people in Albania, is estimated to have contributed by $639 million or around 4.8 percent of the GDP in 2014

Tirana Times
By Tirana Times July 31, 2015 10:03