Finance Ministry data shows privatization revenue in 2014 hit a record low for the past decade at only 35 million lek (Euro 250,000) compared to 16.7 billion lek (Euro 117 million) in 2013 when four small and medium-sized hydropower plants were acquired by Turkey’s Kurum for Euro 111 million, affecting FDI inflows
By Ervin Lisaku
TIRANA, March 31 – Lack of privatization revenue and the increase of the corporate income tax by 5 percent to 15 percent are estimated to have had a negative impact on foreign direct investment which suffered a slight decline in 2014.
FDI dropped to 878 million euros in 2014, down from a historic high of 945 million euros in 2013 registering a 7 percent decrease, according to revised data published by the country’s central bank in its balance of payments for the final quarter of the 2014. Lack of privatization revenue and government’s freeze of its stimulating policy on investments in hydropower plants by revising electricity prices downward played a major role in the lower FDI inflow.
Finance Ministry data shows privatization revenue in 2014 hit a record low for the past decade at only 35 million lek (Euro 250,000) compared to 16.7 billion lek (Euro 117 million) in 2013 when four small and medium-sized hydropower plants were acquired by Turkey’s Kurum for euro 111 million.
Prospects for 2015 seem more optimistic as the major Trans Adriatic Pipeline bringing Caspian gas to Europe is scheduled to start construction in its Albania section and Norway’s Statkraft continues the construction of Devoll hydropower plant, the biggest investment in renewably energy in the past three decades in Albania.
Albania’s FDI stock climbed by 7.5 percent to around 4.2 billion euros in 2013, according to Bank of Albania data.
The telecommunication, manufacturing and extractive industries have attracted around half of the FDI stock in Albania during the country’s past two decades of transition into a market economy after the collapse of communist regime and its planned economy.
“Transport, storage and communication” has attracted the largest share of FDI inflow with a stock of 1.1 billion euros at the end of 2013, up from Euro 789 million in 2012, mainly due to investment in telecommunication sector.
Monetary and financial intermediation ranks second with a FDI stock of 816 million euros, followed by the extractive industries with 742 million euros and the processing industry with 329 million euros.
The agriculture sector, which employs around half of the population and accounts for 20 percent of the GDP, is one of the least attractive sectors with FDI stock of only 1 million euros.
Greece, Canada, Switzerland, Austria, and Italy are the biggest foreign investors in Albania.
FDI rose to a historic high of 945 million euros in 2013, up from 666 million euros in 2012 and a previous record of 793 million euros in 2010, says the central bank.
Fuelled by privatization revenue, foreign direct investments reached a record high in 2013, ranking Albania the most attractive economy among five South-East Europe candidate and potential candidate countries, according to a 2014 World Investment report published by the United Nations Conference on Trade and Development (UNCTAD). The report says that in Albania, the Trans-Adriatic pipeline bringing Caspian gas to Europe will generate one of the country’s largest FDI projects, with important benefits for a number of industries, including manufacturing, utilities and transport. TAP is scheduled to start construction in mid-2015 and carry the first gas by 2019. The pipeline will transport natural gas from the giant Shah Deniz II development in Azerbaijan through Greece and Albania to Italy, from which it can be transported farther into Western and Central Europe.
