TIRANA, Oct.31- The business climate in Albania still faces many problems and challenges while most of the government’s initiatives have been only recently introduced and not fully implemented. “Doing Business 2008” is the World Bank report that classifies countries according to their business climate and is an important indicator to investors considering their options. From June 2006 till June 2007 only one considerable improvement in Albania has been identified in the report, which is the lowering of tax obligations. Profit are now taxed at 46.8 percent instead of 57.3 percent. All other indicators have been stagnant and some have been very problematic during a downturn trend.
Bankruptcy procedure unfavorable to businesses
Albanian entrepreneurs are given no opportunities to follow regular procedures in case of filing for bankruptcy, according to a World Bank report which has reviewed statistics of 2007. The WB report says that this indicator reveals the difficult conditions in which business operates, compared to the region as a whole, presents Albanian practices as bleak. The time required for bankruptcy procedures in regional countries varies between two to three years and the revenue parts returned from the process vary from 15 percent in the case of Macedonia to 47 percent in that of Slovenia. Montenegro, the northern neighbor of Albania, shows improved records in this aspect with firms recuperating around 42.8 percent of the liabilities towards creditors.
World Bank experts argue that the lack of a proper bankruptcy process causes a negative orientation of capital and is an impediment to the business climate. A better framework would bring more secure practices of business and investment which would encourage economic growth. The “Doing Business In 2008” report identifies Albania as one of the most problematic cases regarding bankruptcy procedures and has caused the country to fall in the general list, as compared to the previous year. It seems these procedures have also caused five other countries in being classified lower in the list.
Registration procedures- costly and time consuming
All Albanian new businesses that have begun their activity this year have had no facilitated procedures says the report, the number of days necessary to launch an activity has been 36 days and the cost has been around 20.9% of revenues per capita. In all other countries of the region the cost remains much lower, such as in Croatia, 11%, Montenegro 6.2% and Macedonia 6.6%. Considering the opportunities offered to business this year, Albania ranks in the 123rd place out of 178 countries that the report is based upon.
The WB points out that the New Registration Center for Business, opened in September, did not make it into the analysis but may improve Albania’s position next year.
Construction permits
Construction permits have been singled out as another obstacle for business, being one of the indicators that have shown a downward trend. In this particular category, Albania has fallen six places, given that a construction business need 331 days to secure a building permit, a situation that has shown no change in the last there years. The number of procedures to pass before this permit is secured is also very high, with a total of 24 steps, while the general cost of acquiring such a permit is 4.5 times more than revenues per capita in the country.
