TIRANA, May 8 – German investors became more optimistic about the country’s business and investment climate this year, but detailed data shows Albania continues to remain the least attractive destination among 16 Central and South East European countries, according to the 2017 annual survey conducted by DIHA, the German Association of Industry and Trade in Albania.
On a 1 to 6 scale with 1 being very good and 6 very bad, German investors rated Albania 4.8, worst than 19 other destinations, including neighboring Kosovo.
Asked if they would invest again in the same country, about a quarter of German investors in the country, 24 percent, said they wouldn’t take the risk if they were given another opportunity. The score ranks Albania second from bottom among 16 CSEE countries, better only compared to Bosnia and Herzegovina.
Lack of transparency in public procurement and the poor fight against corruption and crime topped German investors’ concerns for the second year in a row.
One of the main doing business barriers for local and foreign investors in Albania, public procurement continues to face issues related to limited competition and discriminatory criteria although the country has been offering e-procurement procedures since eight years in a bid to reduce corruption and increase transparency. Reports by the Public Procurement Agency and the Procurement Commission appeals body show state-run institutions continue abusing public tender procedures awarding contracts with no race and placing discriminatory criteria apparently to select pre-determined winners.
Lack of legal security and the poor predictability of economic policies as well as the unfavorable R&D environment complete the top five concerns for German businesses in the country.
The tax burden, a key barrier for Albanian and several foreign business association, was out of the top-10 concerns for German investors.
The results reconfirm Albania, which has a geographical and climate advantage over many of its regional competitors, has to strengthen rule of law and innovate in order to attract more German investment.
Cheap labor costs, the employees’ good productivity, motivation and qualification, the adequacy of higher education and the quality and availability of local suppliers were rated as the top five advantages Albania offers to German investors.
Some 45 DIHA members in Albania, about half of the total members, took part in the survey carried out in the first quarter of this year as part of bigger survey with German Chambers of Commerce in Central and South East Europe.
German companies in Albania are engaged in important sectors such as construction, production, retail sales and logistics.
German investments in Albania at the end of 2016 were estimated at Euro 147 million, ranking among the top 10 foreign investors in the country, according to the central bank.
Meanwhile, trade exchanges between the two countries, dominated by Albanian imports of machinery and equipment, rose to a record high of 63.2 billion lek (€461 million) in 2016, accounting for about 8 percent of Albania’s trade volume, says INSTAT, the state statistical institute.
Since the late 1980s just before the collapse of Albania’s communist regime, Europe’s largest economy Germany has invested about €810 million in development projects in Albania, mainly energy, water supply and sewerage, becoming the country’s main donor.
