AmCham President: "Albania-US trade balance, below its potential"

Tirana Times
By Tirana Times February 14, 2020 11:58

AmCham President:

*By Enio Jaco

Firstly, I want to talk about two main topics. For some of AmCham's key indicators, what happened in 2019, the problems we've had, as well as this year's achievements. Then I would like to dwell on the investment climate and report on the conclusions that the American Chamber of Commerce has reached in 2019 regarding the investment climate in Albania.

I want to start with the extraordinary AmCham community. We are represented by 222 companies, we had a 17 percent increase in membership in 2019. AmCham member companies represent a combined revenue of $ 2.8 billion, or slightly more than 22 percent of the Albanian economy. We are aware of the weight of AmCham but also of the role and responsibility we have for the business climate in Albania and the responsibility for improving this climate.

In 2019, we have been very active. We have had 58 advocacy processes or activities based on the professional growth of AmCham members, committee and staff. These have shown the highest frequency perhaps in AmCham's history, with one activity every 4 days, and we have implemented an activity or process based on lobbying or improving legislation.

We had two different experiences. On the one hand we have been effective and we have succeeded. But on the other hand we have encountered different difficulties. One of these difficulties has to do with the public consultation process; more concretely, the Law on Public Consultation is not respected by the administration. This is a law that obliges the public administration to notify 20 days in advance of any new legislation that has to come into force, as well as 40 days in the case of complex legislation. Based on our analysis, this has not happened. Looking at the Fiscal Package alone, we note that in the last five to six years, this law has been given to us two to eighteen days in advance, so it has never met the minimum level of the notification period, which has not allowed us to properly build our opinions. These are complex packages that require a great deal of work from our lawyers, and here we have had a hard time.

We find this practice wrong, with negative effects on mutual trust between the business community and the public administration. We do not think this is intentional but it is an organizational issue that needs to be addressed. We have specific suggestions. In particular, we think that the Ministry of Entrepreneurship Protection, which plays a constructive role in relation to the business community, can take a more proactive role in monitoring and enforcing public consultation law.

On the other hand, we have had good experiences, and in particular I would like to highlight the Law on Income Tax and its Article 27/1, which we are pleased to see that it has been approved by Parliament. This legislation concerns international obligations on double taxation and greatly affects the investment climate. We are pleased that this law was approved by parliament with our proposals. I have the opportunity to thank the AmCham executive team and the committees that have done an outstanding job.

Secondly, I want to stop at the investment climate. During 2019 we have done a relatively large amount of work in relation to the investment climate in Albania. I think we all understand the importance of investing, not just in Albania, but everywhere. They are direct injections into GDP, into the economy, help the economy directly, create employment and business opportunities, improve standards, increase competition. We all understand the value of foreign investment, yet Albania is at a point when investment is more important than ever before. That's because we have two major infrastructure investments, TAP and Devoll, which are just ending. 

These two projects have made a significant contribution to the economy, and therefore their completion must be replaced by something else, in order for us to maintain at least some level of GDP where it has been.

But there is another reason. We hear from our members on the ground about the consequences of the earthquake. We have already received low-income reports during the last quarter of 2019, but also during the first quarter of 2020 we expect an impact on consumer spending. So we have these negative pressures in the economy that need to be balanced with other positive pressures. Investments can be the good balancing forces in this case.

We look at two things in terms of investment. We first analyze US investments in Albania and the region, as well as their trend. On the other hand we want to look at investments from an investor's perspective and see what the investor sees.

In terms of US investment, Albania has a US $ 100 million trade balance with the US, which is very low, below its potential. If we compare it with the North Macedonian ferry balance that is 230 million, that is 2.3 times higher than ours, even though Macedonia is a smaller country with a smaller economy than Albania. Not to mention the composition of this balance that is positive in the case of North Macedonia, so exports are higher than imports. The opposite is true for Albania. So the potential of trade relations with America is higher than it is at the moment.

But we also analyze things from the perspective of investors. First of all we have to be realistic that Albania is a small market. But this should not worry us, as all Western Balkan countries are small. Taken together, all of these countries do not have large markets, but the entire Western Balkans region is interesting as a whole. It is a region that will become part of the EU. The Western Balkans market is being liberalized, becoming more transparent, and one of the decisions investors make is which country in the Western Balkans will be chosen to make the major investments. So the question is how Albania performs compared to other countries in the region. This is interesting and often comes up to investors' minds, as we often communicate with them.

Here's a look at something like the World Bank report and the Doing Business Report that both investors and various experts consult. Albania ranks 82nd. Montenegro's 50th. Kosovo 57th. Serbia 44th. Macedonia 17th. 

So we have a huge gap between the position we are in and the position of northern Macedonia. No wonder, then, that most of the foreign investment in the region comes from Serbia and Northern Macedonia. For all these reasons we think we need a deep reform of the investment climate in order to be more competitive than we are today. The strongest reason for doing so is not global rankings, but the fulfillment of Albania's potential to be a leader in the region in terms of foreign investment.

Albania's opportunities are many. We are one of the most favorable geopolitical countries. We are a NATO member. We have excellent relations with the USA that lie in the political, military, security realm, and there is no reason not to trade them. We have a favorable position in the Mediterranean, access to various ports and important channels of global trade. We have a young, vibrant, western population capable of absorbing new technology. We have a competitive workforce in the region. We have an amazing AmChm network that can be made available to all new investors, so we have unique conditions that can make us a leader in the region. For this AmCham has placed the investment climate at the center of its strategy. And we are ready and open to start working and collaborating with our partners in government, and internationally with various business associations, international ones with which we have had an advanced relationship but also the American Chamber of Commerce. region.

*Enio Jaco is the President of the American Chamber of Commerce. These remarks were made during AmCham's first annual press conference

Tirana Times
By Tirana Times February 14, 2020 11:58