TIRANA, April 11 – More than half of Austrian businesses operating in the country consider Albania as an unattractive investment destination with corruption, lack of rule of law and bureaucracy as the top concerns, according to a survey conducted by the Albanian unit of Advantage Austria, the official trade promotion organization of Austria.
Austrian officials say it is exactly corruption and the inefficient judiciary which have been holding back Austrian investments in the past few years, making Albania lag behind regional countries.
“The changes in the past few years are minimal. On the one hand, if you look at the trade volume you can see that it has been dropping while investment has almost remained unchanged,” Peter Hasslacher, the head of Advantage Austria for Albania, Kosovo and Slovenia told reporters on Wednesday.
“Compared to Austrian investments in other regional countries, Albania is a lot behind. There are still old issues such as corruption, the inefficient judiciary and poor public administration services,” he said.
Austrian business are also pessimistic about the country’s economic situation with about half of them saying it deteriorated in 2016 and about three-quarters expecting the situation to remain unchanged for 2017.
The Albanian economy recovered to 3.4 percent in 2016, mainly thanks to some major energy-related investments, a boost in tourism and a pickup in domestic consumption, according to state statistical institute, INSTAT.
The implementation of long-awaited justice reform is perceived as key to restoring investor confident and boost Austrian FDI in the country.
Some fifty Austrian companies operate in Albania employing about 2,800 people with leading investments in the banking, insurance and hydro-electricity sectors.
The stock of Austrian foreign direct investment in Albania has almost remained unchanged in the past few of years, climbing to €424 mln in 2016, up from €380 mln in 2014 and a peak level of about €432 million in 2013, with Austria dropping from the fourth to the sixth largest investor in the country, according to the central bank.
Albania attracted a record high of about Euro 1 billion in foreign direct investment in 2016 but that was mainly to some old major energy-related projects such as the Trans Adriatic Pipeline and the Devoll hydropower plant by Norway’s Statkraft.
With international oil and mineral prices, only slightly picking up, delaying scheduled investment and strongly affecting the country’s poorly diversified exports, Albania’s FDI is expected to continue relying on the major TAP project until 2020 when first gas flows are expected. Experts have warned the country could suffer headwinds over the medium term unless it offers new incentives in other key sectors and makes the economy more competitive regionally in terms of reducing its high tax burden, guaranteeing clear property rights and putting in place an independent judiciary following a long-awaited justice reform approved in consensus in mid-2016.
Trade exchanges between the Albania and Austria remain low and are dominated by Albanian imports of “food and beverages” as well as “machinery, equipment and spare parts.”
The 2016 volume of trade exchanges dropped by a sharp 25 percent to 7.6 billion lek (€55.5 mln), accounting for only about 1 percent of the country’s trade exchanges, according to INSTAT.
Austria has been one of Albania’s main supporters of Albania’s since the country’s independence in the early 20th century to present day Euro-Atlantic integration efforts, also providing key development support.
