TIRANA, Apr. 10- The German Association of Industry and Trade in Albania (DIHA) recently released the results of a survey conducted with German businesses in our country during February-March 2019 regarding the business and investments climate here. The results showed most of the companies pessimistic, demanding a better business climate.
All DIHA member companies, 89 in total, participated in this survey. The majority of the companies have evaluated the business climate in Albania to have worsened compared to the previous year. If companies showed themselves enthusiastic for the previous year, for 2019, 51 percent of the surveyed have evaluated the current economic situation in Albania as “bad” . Only 13 percent of the surveyed have expressed positive notes, however.
Regarding the future projections of the economic situation, 43 percent of the participating businesses admitted to a negative trend. Comparing to the previous year this indicator has dropped by 26 percent. On the other hand, over the last three years the number businesses which predicted an improvement or decline on the business climate in Albania has dropped, which indicates that 60 percent of the surveyed enterprises expect an unchanged situation.
Another topic of discussion in this survey was how would the enterprises evaluate investments in Albania. This topic is rather crucial for the economy of our country as it has been struggling to find new sources of Foreign Direct Investments for 2019 and the upcoming years, as major projects which brought the economy a lot of money have either finished or are expected to be finalized soon. The two greatest investments came from the Devoll hydropower plant which has finished, and the Trans-Adriatic Pipeline (TAP) which is expected to be finished by 2020.
The surveyed German enterprises in Albania were questioned on the investments climate in this country by considering 21 various factors linked to it, for which they responded negatively by giving lower marks to these factors when comparing to the previous year. That would accordingly make Albania as slightly unfavorable for future investments.
As DIHA reports, the factors which are linked to the labor force considered as positive, are labor costs, the productivity and motivation of workers, the workers qualifications, academic education, and available qualified labor force. What remains to be very attractive for foreign investors from Albania is the low labor costs of qualified workers, which makes the country competitive when compared to other regional economies.
DIHA board members and its executive director Bledar Mankollari while evaluating the results from the surveyed companies, have come to the conclusion that Albania has become a bit economically unattractive due to the political situation prevailing in the country.
“The businesses perceive a great decline in the political and social stability, thus this is the greatest difference between 2018 and 2019. The legal security, the public administration, predictability of economic policies, transparency with public tenders, and also the war against criminality and corruption, are the five most negatively evaluated factors regarding conducting business in Albania for 2018 and 2019,” the survey report writes.
The public tenders transparency is a factor that German Ambassador to Albania Susanne Schà¼tz talked about last week on April 1. Ambassador Schà¼tz said that potential and existing German enterprises often complain of the country’s weak information policy and transparency, especially related to public tenders and shady property relations for possible investment objects. She added that Albania has a great development potential for many sectors, such as tourism, the green energy sector, agriculture and the service sector. But it is important to create the right basic conditions for both potential Albanian and foreign investors. However, a security, transparency and a well-functioning, effective and non-corrupt administration should be firstly applied.
Schà¼tz also said shortcomings in paying public tenders also negatively affect Albania’s image as a possible investment destination and the common goal of politicians and international representatives alike should be to oppose the conceived perception by offering positive examples of how Albania welcomes foreign investors. Furthermore, she added that the internal political situation portrayal in media does give an hand to the economic situation, likewise what the Albanian Exporters Association said at the beginning of May, which was that the country’s deadlock will directly negatively affect the economy, foreign and local investments, exports and the general development of the country.
“Potential German investors see images of flying stones, molotov cocktails and tear gas. In order not to harm Albania as an investment destination, I think the opposition also has a responsibility to direct the political discourse peacefully and through the institutions provided for in the Constitution, namely, first of all, the parliament,” Schà¼tz told Monitor.
Emigration is said to be an additional factor to impact the current business and economic situation through its effects on the labor force, as the DIHA report claims based on survey results. Half of the surveyed admitted that emigration is indeed affecting the labor force, whereas 40 percent see it affects it relatively. Half of the surveyed businesses have responded that emigration has also affected their businesses “on average” or “a lot.” 43 percent of the experienced businesses have admitted that this emigration phenomenon in Albania has a distinction that well-qualified workers are leaving, however they have said that this is only a temporary issue. Meanwhile a 43 percent have also admitted that the emigration phenomenon is a pretty critical and alarming situation for the business.
Regarding reasons why this phenomenon is happening, 70 percent of the surveyed businesses named the negative economic situation, the healthcare and/or education system, as the main reasons to have impacted this phenomenon. On a last note regarding the emigration effect, 11 percent showed optimism to a betterment of the situation and expect the majority of those who left to return within two-to-three years; 45 percent said that the situation will be stabilized over time, and 45 percent said that the situation will continue to worsen.
On a more positive note from last week, Schà¼tz said that the country’s ongoing justice reform and its vetting process are successful and have contributed positively in improving Albania’s image in the eyes of foreign investors.
“The justice reform is a success story for which Albania can take pride. Especially the vetting process, which apparently is unique all over the world, strengthens trust in the rule of law and can substantially contribute to Albania’s attractiveness as an investment destination. It has also been praised by German entrepreneurs. From the German economy’s point of view, these reforms must necessarily continue,” Schà¼tz said.
Regarding this survey the Albanian government was represented by the Deputy Minister of Finance Belinda Ikonomi, who said that the situation will improve as measures to diminish corruption and bureaucracy have been taken. She stressed the importance of regulating reforms to keep their continual implementation, the good governance in each sector coupled with clear indicators of performance, and the realization of objectives in every low or high administration chain. The improvement of service delivery to citizens as well as businesses, with an aim of eliminating bureaucracy, is also what the government is working on.
