TIRANA, Dec. 19 – Foreign-owned enterprises and their joint ventures with Albanian partners represent a mere 4 percent of the total number of active enterprises in Albania, but their contribution to employment, exports and investment is huge for the country’s small economy.
Albania has more than 6,000 foreign-owned enterprises operating in the country, accounting for nearly a fifth of total employment, a third of investment and half of the country’s exports, according to a report published by INSTAT, the state-run statistical institute.
After a slight decline in 2016, the number of foreign-owned enterprises hit a record high of 6,295 in 2017, up 11.6 percent compared to a year ago, with half of companies originating from neighboring Italy and Greece, Albania’s traditional top trading partners during the past quarter of a century of the country’s transition to democracy and a market economy. The two neighboring countries are also the hosts of 1 million Albanian migrants with a key contribution on bringing investment and know-how at home and remittances, that still play a key role for thousands of households.
Companies originating from EU countries dominate two-thirds of foreign-owned enterprises compared to only around 12 percent with owners from regional Western Balkan countries, mainly ethnic Albanians from Kosovo and Macedonia.
Wholly-foreign-owned enterprises accounted for around 59 percent of the total number of foreign owned companies in Albania during 2017. Another 17.7 percent includes joint ventures with Albanian partners but dominated by foreign-owned capital, says INSTAT.
An earlier INSTAT report has shown there were 2,661 Italian or joint Italian-Albanian ventures operating in the country at the end of 2016, mainly involved in the services sector and dominated by micro-enterprises employing up to 4 people while 174 companies employ more than 50 people.
Italy is Albania’s top trading partner, accounting for more than a third of the country’s total trade exchanges and the host of some 500,000 Albanians who live and work there.
The number of Greek-run enterprises is smaller at more than 500, but their operation in key sectors of the Albanian economy, makes Greece’s Albania’s traditional largest foreign investor.
Foreign-owned enterprises in Albania dominate the banking, telecommunication, transportation, oil, steel, cement industries and several key services awarded under concession contracts, making them key contributors to Albania’s economic development and much-needed employment.
The largest employers include the key garment and footwear industry mainly exporting to Italy and the call center industry engaged in marketing and customer care services, but relying on cheap labor costs.
Albania’s foreign direct investment inflows slightly dropped to around €900 million in 2017 with FDI largely reliant on the Trans Adriatic Pipeline and the Devoll Hydropower project, the two major energy-related projects that drove FDI growth in the past four years, but are already in their final investment stage.
Albania’s FDI stock at the end of 2017 rose to €6.45 billion, representing a tenth of the total FDI stock in the Western Balkan region, according to INSTAT and IMF data.
Albania had some 162,000 active enterprises in 2017 with the overwhelming majority 91 percent being family-run micro-enterprises with 1 to 4 employees.
Only about 1.1 percent of the total enterprises, some 1,690 employ more than 50 people, but contributing to about half of total employment.
Women run only about a quarter of total enterprises in the country most of which operate in the services sector.
Albania had some 1.1 million employees in 2017 with the state-run sector accounting for 15 percent, the private non-agricultural sector for 45 percent and the remaining 40 percent is counted mostly self-employed in the private agricultural sector suffering large scale informality.
