Business Asks For Support To Cope With Crisis

TIRANA, March 24 – Albanian businesses have appealed for help from the central government in an effort to reduce as much of the negative effects as possible of the global financial crisis in the tiny Balkan country, still considered one of the poorest in Europe.
Last week head of the Chamber of Trade and Industry Gjoke Uldedaj called on the central government to set lower taxes to the country’s construction and agricultural sectors in order to help them overcome the negative impact of the global economic downturn.
The Tirana executive insists that the country has had no direct impact or consequences from the global crisis due to its relatively low exposure to global finance and also its policy of low taxes, claims that are harshly opposed by the political opposition.
But the country is feeling some effects with fewer remittances from Albanians living abroad, a drop in exports, tighter credit and the depreciation of the leke currency.
Businesses ask that the process of reforms go ahead faster. That is a clear call to the country’s politics just ahead of the June 28th parliamentary election. The companies want the central government to lift VAT for imports of production machineries and agricultural tools and also have it reduced for equipment used in the construction industry.
Albania’s VAT is 20 percent.
Tirana insists the country’s GDP in 2009 will grow 6 percent. That figure is different from the IMF’s initial forecast of 3.7 percent.
Prime Minister Sali Berisha said that reducing taxes to promote local production, what the world governments are currently doing is something his government has been doing for more than two years. He has acknowledged however that the first effects are being noticed now, referring to the fall of the country’s remittances. In 2007 remittances were 13-14 percent of the GDP nearly one billion euro, a figure that has had its first signs of falling last year.
Two deputy ministers of economy and finance reported last week that the country was doing well during the first two months this year. Deputy Finance Minister Florian Mima and Deputy Economy Minister Eno Bozdo said they were optimistic after following results of the first to months, insisting that the government policies on tax reduction have resulted in fewer effects from the world crisis in the country’s economy.
They said exports had only a slight drop compared to last year. But they also said that a soft crediting of 25 million Euros was also giving its results.
Other signs of the effects of the global crisis are real estate agents in Albania who are seeing a drop in demand for property, forcing a decline in prices as banks tighten their rules on mortgage loans and as demand weakens.
It is now the time when there are offers to sell luxury apartments and commercial property as their owners seem to be eager for cash at this moment. Prices have declined by 20-30 per cent.
In capital Tirana alone, real estate agents say they already have 4,000 apartments to sell and thousands of office space and retail areas to rent.
Last month construction companies asked for help from the government, claiming that some companies will likely not be able to survive the crisis.
The government responded by saying they should lower their price.
Some well-established businesses in the country now refer to long-term investment plans that they hope can help them overcome the fallout from the global financial crisis.