TIRANA, April 28 – Albanian and foreign businesses operating in Albania say the business climate in Albania slightly improved in 2014 when the economy grew by around 2 percent and is expected to further recover this year when the GDP is projected to accelerate to 3 percent, a survey conducted by the American Chamber of Commerce has found.
The AmCham Business Index, an annual index measuring the business climate perception of AmCham members, slightly rose to 42.77 out of 100 in 2014, with a rising trend for 2015, registering the highest level since the first AmCham Business Index in 2012.
Informal economy, government bureaucracy and monopoly or unfair competition were the top three concerns for 2014 reported by some 112 out of 220 AmCham business members, which include some of the country’s biggest foreign and domestic investors.
Results show that a majority of the respondents think that the informal economy (74%), government bureaucracy (68%), monopoly and unfair competition (63%) and corruption (53%) have been at high or very high level in 2014.
The internal political climate showed an improvement from 2013, nonetheless 49 percent of respondents continue to think that it was bad or very bad during 2014. The order and safety indicator decreased in 2014, where 40 percent of respondents viewed it as bad or very bad. The respondents reported that their perception regarding infrastructure improved in 2014, whereas their perception of energy supply declined.
Businesses had a positive perception on the relation with customs authorities, local government, ministries, tax authorities and courts of justice, but the perception for the “overall tax level” significantly decreased in 2014 when the corporate income tax was raised by 5 percent to 15 percent.
Approximately 56 percent of respondents consider the overall tax level applied in 2014 as unfavorable or very unfavorable, whereas 36 percent of them consider it as neutral. Some 32 percent of businesses perceive economic reforms and government policy for 2015 when new tax hikes are being applied on rents, interests, dividends and capital gains as unfavorable, the survey showed.
The majority of AmCham members continued to invest in 2014 and they intend to continue that trend in 2015. Despite continued investment, more than 35 percent of AmCham members declared that it was still difficult for them to finance their activity even though they believe that the banking policy and services had a favorable tendency in 2014.
The employment change index has slightly increased in 2014 and is expected to remain stable in 2015. Finding qualified local staff in 2014 remains difficult or very difficult for most of the responding companies. The trend is expected to improve somewhat in 2015.
More than 44 percent of the respondents considered the business climate in Albania during 2014 unfavorable or very unfavorable, while 13.1 percent consider the climate favorable. For 2015, the percentage of respondents that expect the business climate in Albania to be favorable or very favorable increases to 31 percent.
“I was happy to see that this year the ABI’s assessment of the ease of doing business in Albania increased from 40.21 to 42.77 with improvements in 16 of 27 categories. I was even more encouraged to learn that AmCham members believe that the business climate will continue to improve in 2015,” said U.S. Ambassador to Albania Donald Lu.
The performance of the Albanian economy has decreased or highly decreased during 2014 for 50 percent of the AmCham members who took the survey. On the other hand 17 percent reported that it increased. Expectations about 2015 show that 33 percent of AmCham members think that the performance of the Albanian economy will increase, whereas 30 percent think that it will continue to decrease.
Consistency, predictability and transparency are the three measures AmCham members suggest the Albanian government to improve the business climate in Albania.
“Fix the property rights issue, further reduce informality, cut taxes on businesses. Increase public investments, further reduce bureaucracy and increase efficiency in the public administration in order to develop its capacities so that they respond to the market and invest much more in the education and especially in vocational training education, increase foreign direct investment by incentivizing new businesses and foreign investment in strategic sectors,” said a business representative in a comment published on the survey report.
“There should be a higher spirit of cooperation between the business community and the government, so that businesses are not always under the pressure of tax or customs authorities,” suggests another respondent.
The 2014-2015 AmCham Business Index survey, measuring important elements like government policy, level of taxes, corruption, informality, application of law, and also elements related to the performance of businesses and Albanian economy, was conducted online in February-March 2015. The majority of the surveyed Albanian and foreign-owned companies had between 10 and 50 employees and mainly generate up to $1 million in revenue.
Lorenc Gjoni has recently taken over as the new executive director of the American Chamber of Commerce in Albania, one of the most active business associations operating in the country, replacing Floreta Luli-Faber who led the Chamber for more than a decade since its establishment in 2000 before taking over as Albania’s new ambassador to the U.S.
In the latest Doing Business report published by the World Bank, Albania achieved its best ever result ranking 68th among 189 global economies, considerably improving its image among foreign investors.
