TIRANA, Aug. 1 – The opposition, government and independent economic experts have followed the State Department’s 2018 Investment Climate report rating Albania as a difficult place to do business according to foreign investors with opposing comments and sentiments.
“Albania is not a hospitable country for foreign investments. There have been no serious foreign investments in the past five years. There is a lot of political clientelism and kleptocracy, as well as pressure. Five years ago, when a new road was built, foreign companies competed for its construction, while for the last five years there is almost no foreign company interested in winning a public procurement in Albania,” said BIRN analyst Gjergj Erebara.
The State Department report says that in Albania, foreign investors and businessmen cite corruption as a major problem, particularly evident in the judicial system, lack of transparency in public procurement and poor implementation of contracts.
“This report is essentially a reconfirmation of a sordid economic reality that Albania is going through: slow economic growth with an economy that grows under its capacity, with a frequently changing legal framework, with abusive governmental decision-making favoring lobbies and large oligarch and kleptocratic accompanying it,” said the Head of the Centre for Economic Research Zef Preci.
The report assesses the implementation of the justice reform is verifying judges and prosecutors for unexplained wealth, but foreign investors perceive the investment climate as problematic and say Albania remains a difficult place to do business.
Erebera added that public-private partnership (PPP) projects are in huge proportions compared to the economy, where four road projects are 711 million euros, or 6 percent of Albania’s GDP. Large amounts of money are thrown into few projects and procurement procedures allow suspicion for political clientelism, corruption and pre-selected winners.
“This system is pure political clientelism. It is like a medieval economy, where the king determines who will use the forest, who will collect the taxes, who will use the coal, who will use the coast. So everything is in the hands of an all-powerful person who is called prime minister and he does not provide what the US calls checks and balances, there are no constitutional balances,” Erebara said.
The report stresses that big foreign investors are pressured to hire subcontractors associated with politicians, while reports on corruption in the government’s public procurement practices are commonplace.
The report also says that PPP projects have narrowed competition opportunities, including competition among foreign investors in infrastructure and other sectors.
“PPP projects are deep distortions of competition, as the winners are known in advance and the competition is entirely formal. The government should make sure to use the parliament as a guard that protects contracts of this nature, so it avoids punishment in the future, hiding behind collegial decision-making. Most of them are unsolicited bids, meaning the government ignores or does not have plans to develop sectors and different branches of the economy,” Preci said.
In addition, according to the report, investors complain that unstable laws and officials’ difficult regulations are tools to remove foreign investors and favor politically-tied companies.
The opposition’s head of the Democratic Party Lulzim Basha said Albania is lacking foreign investments because it is pressured to cooperate with its clientele businesses.
“Albania is not a suitable place for American businesses because of widespread corruption, especially in PPP projects and procurement, lack of rule of law and lack of competition,” Basha said.
Meanwhile, Minister for Finance Arben Ahmetaj said the axis of the report is the justice reform, which the opposition should stop trying to block.
“The report clearly states that corruption is grounded and stems from the judicial system and this has ruined the terms of doing business. The report states that if the reform is fully implemented, the business climate will improve rapidly,” Ahmetaj said.
Transparency International’s Perception of Corruption Index for 2017 ranked Albania 91 out of 180 countries, a downturn of eight percent a year earlier. As such, Albania is now perceived as the second most corrupt country in the Western Balkans.
