The United Nations report shows FDI inflow has grown by four times during the past 6 years, rising from a mere 264 million dollars in 2005 to around 1.1 billion dollars in 2010
TIRANA, August 1 – Foreign Direct Investment (FDI) flows in 2010 rose to more than USD 1 billion for the first time ever, making Albania the second largest FDI recipient in South-East Europe after Serbia. The data were unveiled on Monday during the launch of the 2011 World Investment report by the United Nations Conference on Trade and Development (UNCTAD).
Speaking at the presentation of the report in a joint press conference with UN Resident Coordinator Zineb Touimi-Benjelloun, Albania’s deputy Economy Minister Enno Bozdo said 44.5 percent of FDI has been used in industrial exploration and construction while the remaining 55 percent in services, transport, telecommunications, financial services and trade.
“The Albanian government is aware that attracting foreign direct investment and increasing the competitiveness of domestic companies are crucial for sustainable economic development in Albania,” said Bozdo.
“The rising presence of foreign companies in Albania is a clear indicator of the favourable conditions for FDI which continue in several sectors of the economy such as mineral extraction, the energy sector, banking and telecommunications,” added the deputy minister.
The report shows FDI inflow has grown by four times during the past 6 years, rising from a mere 264 million dollars in 2005 to around 1.1 billion dollars in 2010. FDI inflows registered a slight drop only in the 2009 when the global crisis broke out registering 979 million dollars, from 988 million dollars in 2008. However, the quadruple of FDI has been unable to lower the unemployment. The official unemployment rate in 2005 was at 14.1 percent and dropped to 13.5 percent at the end of 2010.
FDI flows to South-East Europe as a whole fell by 47 per cent in 2010, partly as a result of the sluggishness of investment from EU countries (traditionally the dominant source of FDI in the subregion). In particular, Greece, which used to be a gateway or conduit for foreign investors into South-East Europe, ceased to be an entry point as its domestic economic crisis worsened. FDI flows to Croatia and Serbia declined sharply in 2010.
The World Investment Report 2011 shows that globally FDI flows rose modestly in 2010, but were still 15 percent below the pre-crisis average. The report forecasts that, barring any unexpected economic shocks, FDI flows will recover to pre-crisis levels over the next two years.
Investment promotion and facilitation have remained dominant elements in national investment policies. Nonetheless, the risk of investment protectionism has increased as restrictive investment measures and administrative procedures have accumulated over recent years.
Latest data published by the Albania’s central bank show foreign direct investment registered one of its lowest quarterly levels during the first three months of this year dropping to 57 million Euros, down from 166 million Euros during the same period a year ago. The drop of 65 percent during the first three months of this year represents the lowest quarterly levels since the second quarter of 2007 when FDI was at 56 million Euros. The ongoing political crisis and its escalation during an anti-government protest in January 21, have also influenced the FDI retraction. However, the privatization wave launched by the government is expected to considerably improve FDI inflows throughout the remainder of this year.
Government has identified 1,280 public assets including strategic enterprises it intends to privatize by the end of this year. The privatization list includes remaining state owned shares in strategic oil, and phone companies, small hydropower plants, military facilities and small and medium-sized enterprises, except for big hydropower plants and dams, schools, hospitals and public buildings and offices which will remain under state ownership.
Privatization in key sectors such as banking, telecommunications and energy has been the main source of FDI. So far the government has retained no special rights or ‘golden shares’ when privatizing strategic companies, but the existing legislation allows it to.
