Implementation of laws, biggest obstacle for German investors

TIRANA, March 21 – Despite significant progress made in legislation in recent years and the favourable business climate, German investors in Albania see a huge gap between the adopted good laws and their implementation. This is admitted by the secretary general of the German-Albanian Chamber of Commerce and Industry in Albania (DIHA), Annette Kasten, who told Deutsche Welle in the local Albanian service that land ownership, bureaucratic procedures, and the need to improve legislation on SMEs are some of the main obstacles for German investors.
“Although Albania has a real estate registration office, there are many disputes on land ownership, which is bad signal for foreign investors. The Albanian government has recently approved a law to advocate foreign businesses on land ownership disputes only in case of big investments up to 10 million euros,” said Kasten, adding that bureaucracy with confirmation of employees and VAT receipts also remained an obstacle.
“There is also urgent need to improve the legal framework on small and medium-sized enterprises because they create opportunities for production and massive employment and are related to the development of agriculture and tourism, two vital sectors to attract investors and develop the country’s economy,” added the DIHA official.
Since the early 90s when the country’s communist regime collapsed and relations between the Germany and Albania were reestablished the Federal Republic’s financial assistance and German private investments have been on the rise.
The Tirana International Airport, run by The Hochtief Airport GmbH, is the chief partner in a consortium that rehabilitated and now operates the country’s only international airport at Rinas, is Germany’s biggest investment in Albania.
DIHA, which represents the interests of German companies in Albania and promotes German-Albanian economic cooperation, says that German interests in Albania’s logistics and infrastructure also include maritime transport and energy.
A German-Albanian consortium, the Albanian Stevedoring Company (ASC), currently handles the cargo in the country’s biggest port of Durres using modern technology. The KfW Entwicklungsbank is also engaged in the funding of big infrastructural projects, mainly water supply and sewerage ones, as well as energy, financing regional interconnection lines linking Albania to Montenegro, Macedonia and Kosovo.
German-owned ProCredit bank also plays an important role, offering loans to SMEs and most recently to renewable energy projects.
German companies in Albania are also actively engaged in other important sectors such as construction, production and retail sales.
Praktiker Group, one of the leading Do It Yourself chain operators in Europe, has also been operating in Tirana since the end 2009. Rofix, which produces construction materials and Profarma pharmaceutical companies which has been acquired by a German consortium, are some other successful German-run companies in Albania.
However, DIHA says that a series of laws of European standards have favoured the attraction of foreign investors including German companies. “Almost all sectors of the economy are open to foreign investment, there is a 10 percent flat tax on profits and there is no limitation to buy private property,” the DIHA official tells Deutsche Welle.
Germany is currently Albania’s second most important destination for the exports of textiles and one of the country’s main trade partners. According to the German Federal Foreign Office, bilateral trade relations suffer from the small size of the Albanian market, legal uncertainty and the lack of Albanian supplies. Nevertheless, the Albanian market for German consumer and investment goods is larger than in the past thanks to an increase in purchasing power.
Since 1988, Germany has made available to Albania a total of more than 387 million euros in bilateral development cooperation. Areas of development cooperation agreed between the two governments in 2001 are electricity supply, water and waste management as well as the promotion of private businesses.
Albania’s principal exports to Germany are finished textiles, raw materials for chemical products and, in smaller quantities, food, beverages and tobacco. Albania’s main imports from Germany are vehicles and electrical goods as well as food, beverages and tobacco. A number of German companies are active in Albania.