Albania has improved in three areas of business regulatory reform, but it still has to enhance its competitiveness in the Balkan region as it currently ranks better only compared to Serbia, Kosovo and Bosnia and Herzegovina
TIRANA, Oct. 30 – Albania has achieved its best ever result in the Doing Business report, ranking 68th among 189 global economies, considerably improving its image among foreign investors who consider the flagship report as a reference point before deciding to invest. The 2015 Doing Business report released this week by the World Bank ranked Albania 68th, up from 108th a year ago on business regulatory reforms and a change in methodology which saw Albania’s ranking in 2014 deteriorate from 90th to 108th.
However, Albania still has to improve its competitiveness in the Balkan region as it currently ranks better only compared to Serbia, Kosovo and Bosnia and Herzegovina.
In the 2015 Doing Business, Albania improved in three areas of business regulatory reform including starting a business, dealing with construction permits, and registering property. “Starting a business has become easier in Albania by lowering registration fees. Albania also made dealing with construction permits easier by resuming the issuance of construction permits and by consolidating the land permit and construction permit into a single construction development permit. In addition, Albania made transferring property easier by establishing effective time limits and computerizing the records on immovable property,” says the report. However, Albania weakened its secured transactions system through an amendment to the Securing Charges Law that does not allow intangible assets to be secured with a nonpossessory pledge. And it made paying taxes more costly for companies by increasing the corporate income tax rate by 5 percent to 15 percent, adds the report.
Back in the 2014 report, Albania’s single reform included making paying taxes easier by allowing corporate income tax to be paid quarterly. In 2013, Albania made starting a business easier by making the notarization of incorporation documents optional and made paying taxes easier for companies by abolishing the vehicle tax and encouraging electronic filing for taxes.
Doing Business, a World Bank Group flagship report, covers 189 economies and 10 indicator sets including starting a business, dealing with construction permits, getting electricity, registering property, paying taxes, trading across borders, getting credit, protecting investors, enforcing contracts, resolving insolvency.
Albania ranked 90thin the 2014 Doing Business report (revised to 108th), 85th in the Doing Business 2013 (82th under revised ranking), 82nd in the 2010 and 2011 reports and 89th in the 2009 report, compared to 136th in 2008.
“This is good news for whoever wants the Albania of employment and entrepreneurship: We have climbed 40 places in the World Bank ranking on doing business,” wrote Prime Minister Edi Rama in social networks.
Reacting to the comment by the Prime Minister, the opposition Democratic Party said the World Bank had appreciated reforms made before Edi Rama came to power in Sept. 2013.
“The ranking by Doing Business is good news for the country and it is clear that it is a result of great reforms undertaken by the previous government and the Municipality of Tirana,” said Jorida Tabaku, an opposition Democratic Party MP.
Doing Business 2015: Going Beyond Efficiency shows that in the past year, economies in Europe and Central Asia further improved the regulatory environment for local entrepreneurs, adding to the gains recorded in the past decade.
“Economies in Europe and Central Asia have consistently led the world in the pace of regulatory reform,” said Rita Ramalho, Doing Business report lead author, World Bank Group. “Governments’ commitment to improving the regulatory environment for entrepreneurs has allowed them to close the gap with the top performers in some areas. For example, the average time to register property in the region has fallen by 14 days since 2010, making the process faster than in OECD high-income economies.”
Largest FDI recipient
Fuelled by privatization revenue, foreign direct investments reached a record high in 2013, ranking Albania the most attractive economy among five South-East Europe candidate and potential candidate countries, according to a 2014 World Investment report published by the United Nations Conference on Trade and Development (UNCTAD).
Data shows FDI inflows reached a historic high of $1.225 billion, ranking Albania on top of five transition SEE economies which also include EU candidates Serbia, Montenegro, Macedonia and potential candidate Bosnia and Herzegovina.
Serbia ranked the second largest FDI recipient in 2013 with $1.03 billion, followed by Montenegro with $447 million, Macedonia with $334 million and Bosnia and Herzegovina with $332 million.
“In Albania, FDI inflows reached $1.2 billion, owing mainly to the privatization of four hydropower plants and to the acquisition of a 70 percent share of the main oil-refining company ARMO by Heaney Assets Corporation (Azerbaijan),” says the report.
The UNCTAD report says that in Albania, the Trans-Adriatic pipeline will generate one of that country’s largest FDI projects, with important benefits for a number of industries, including manufacturing, utilities and transport. “The pipeline will enhance Europe’s energy security and diversity by providing a new source of gas,” says the report.
TAP is scheduled to start construction in 2015 and carry the first gas by 2019. The pipeline will transport natural gas from the giant Shah Deniz II development in Azerbaijan through Greece and Albania to Italy, from which it can be transported farther into Western and Central Europe.
Competitiveness lags behind
Albania lost another two places in the 2014-2015 Global Competitiveness report published by the World Economic Forum, ranking 97th among 144 economies on deteriorating basic requirements, efficiency enhancers and innovation and sophistication factors. In this year’s report, Albania was sandwiched between Zambia and Mongolia, lagging behind all regional countries. Albania ranked 95th in the 2013-2014 global competitiveness report, 89th in 2012-2013 and 78th in the 2011-2012 report.
The report shows corruption remains the most problematic factor for doing business in Albania for 21.2 percent of respondents, followed by access to financing for 20.2 percent, inefficient government bureaucracy at 13.8 percent, tax rates at 11.3 percent, poor work ethic in national labour force at 8.7 percent and inadequately educated workforce at 7.4 percent.
With a score of 3.8 in a 144 country list on a 1 to 7 scale, Albania ranked worst in innovation sophistication factors (114th), and slightly better on efficiency enhancers (95th), and basic requirements (97th).
The report describes Albania as a country with 2.8 million population, a GDP of $12.8 billion, accounting for 0.03 percent of the world total and a GDP per capita of $4,609
