TIRANA, Feb. 7 – The World Bank will assist Albania set the best ‘doing business’ standards in the newly established Albanian Investment Development Agency (AIDA), a one stop shop. The initiative was recently confirmed by Prime Minister Sali Berisha who said his government was willing to sign a commercial contract with the World Bank’s Doing Business section to bring expertise and facilitate procedures to promote more domestic and foreign investments.
“The contract with the World Bank’s Doing Business will be signed soon. Its experts have an excellent tradition of assistance to the Albanian government to improve the business climate,” said Berisha in the AIDA meeting last weekend, when its structure and status were approved.
Government says the contract will be commercial considering Albania’s new status of an upper middle income country.
Speaking of AIDA which will soon start recruiting its staff, Premier Berisha said “with this agency we aim at completely transforming the bureaucracy which the business faces, and also promote the big potentials Albania offers to businesses.”
Last January, the newly established Albanian Investment Development Agency held its first board meeting appointing Eneida Guria, an experienced former director of the National Licensing Center, as its executive director. “Our major duty is to turn this institution we are establishing today under a law approved by Parliament into a one stop shop for investors in the figurative meaning,” said Prime Minister Sali Berisha who chaired the agency’s first meeting. Confident that the investment promotion agency will play an important role in the country’s development, the PM called on its representatives to examine bureaucratic aspects in order to further improve the legal framework on investments.
Under a special law approved last September, foreign companies who want to invest in Albania were granted full legal protection even in case of property disputes, a key obstacle which has often blocked investments and kept big investors away from Albania. This bill sparked reaction by domestic investors who claimed they were being discriminated against foreign investors.
“The main goal of the government and society is to make Albania a developed country,” said Berisha, describing the target as difficult but achievable considering the country’s potentials and the good economic and financial performance in the crisis year of 2010.
Set up under a reform aimed at improving private, domestic and foreign investments, AIDA will replace Albinvest, the former Albanian foreign investment promotion agency, becoming a one-stop shop.
The Albanian government has assigned the new agency three strategic goals including assisting and accelerating the inflow of foreign investment into the Albanian economy, improving the competitiveness of Albanian exporters, and providing professional services to assist the growth of Albanian SMEs.
Former AlbInvest agency provided investors with up-to-date information on the investment climate, investment incentives, and the legal framework relating to the investment process in Albania. It also assisted investors to obtain the permits and licenses required by national and local authorities, speeding and facilitating their investment projects.
The Investment agency whose board of directors will have representatives of foreign investors in Albania, representatives of ministries and main investment promotion agencies will focus on the efficiency of granting foreign investors all permits to start implementing their projects as soon as possible,” said former Economy Minister Ilir Meta. AIDA will have one representative from the garment and footwear manufacturing industry, the country’s main exporting industry, in its board along with three other business representatives.
Foreign direct investment, one of the main sources of the economy’s growth representing a record 8.2 percent of the GDP in 2009, grew to 213 million euros during the third quarter of 2010, 39 million euros more compared to the second quarter data and 48 million euros more year-on-year.
In total, FDI during the first nine months of this year registered 563 million euros, down from 578 million euros during the same period last year.
Albania 82nd in Doing Business 2011
Albania lost one place in the Doing Business 2011 report published by the World Bank last November ranking 82nd, down from 81st in the previous report. The report comparing business regulations in 183 economies sandwiched Albania between Jamaica and Pakistan.
Albania’s neighbours Macedonia ranked 38th, Montenegro 66th while main trade partners Italy and Greece 80th and 109th respectively. Likewise Albania, Kosovo also lost place ranking 119th in the 183 country-list. Bosnia and Herzegovina which has recently been granted visa-free travel in the Schengen area along with Albania ranked 110th.
“Albania made it easier and less costly for companies to pay taxes by amending several laws, reducing social security contributions and introducing electronic filing and payment,” said the report.
Albania’s best performance was reported in the “getting credit” category ranking 15th because of an almost top score in the strength of legal rights index. The country also ranked 15th in protecting investors.
Albania’s third best indicator in the report was starting a business in which the country ranked 45th especially because of the short time it takes, five days and few procedures which are carried out at the National Registration Center, a one-stop-shop facility.
Albania ranked the world’s 72nd in “Registering property” with 42 days, 6 procedures and a 3.4 percent cost of the property value needed to complete the process.
Trading across border ranked 75th mainly because of the long time needed at customs points, 19 days for exports and 18 to import.
Enforcing contracts remains problematic especially because of the big number of procedures, days needed, more than one year, and high costs of claims which place Albania 89th.
The country’s poorest performance was in paying taxes, the world’s 149th, dealing with construction permits 170th and closing a business at the bottom of the 183-country table because of no practice in this service. Albania’s total tax rate was at 40.6 percent of the profit. The poor performance in the “construction permits” category was a result of the 24 procedures and almost one year, 331 needed to get a permit. This has also been identified as a problem by construction companies whose activity during the first half of this year has considerably shrunk, affecting the country’s economic recovery.
Doing Business 2011 was the eighth in a series of annual reports investigating the regulations that enhance business activity and those that constrain it. The report presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies.
Regulations affecting 11 areas of the life of a business are covered such as starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, closing a business, getting electricity and employing workers. The getting electricity and employing workers data are not included in the ranking on the ease of doing business in Doing Business 2011.
Data in Doing Business 2011 are current as of June 1, 2010. The indicators are used to analyze economic outcomes and identify what reforms have worked, where and why.
