The European Bank for Reconstruction and Development and the Ministry of Economic Development, Tourism, Trade and Entrepreneurship of Albania officially helped launch Albania’s Investment Council this week.
The head of the EBRD office in Tirana, Christoph Denk, says the Investment Council is a platform set up by the Albanian government with support from the EBRD to intensify the dialogue between the authorities and the private sector, to improve the business climate and promote good governance.
In an interview, he answered several questions on the new council as well as the business climate in Albania in general.
What is the purpose of the Investment Council? What are the main objectives of this new body?
The Investment Council is a platform set up by the Albanian government with support from the EBRD to intensify the dialogue between the authorities and the private sector, to improve the business climate and promote good governance.
It will bring together businesses and policymakers to tackle obstacles frequently faced by both domestic and foreign investors in Albania. It will be chaired by the Minister of Economic Development, Ahmetaj.
EBRD supports the Investment Council by setting up a professional secretariat – with the help of a generous contribution from Italy. The secretariat is a go-to body for businesses to raise issues and to propose solutions to improve the investment climate. Its staff, led by Diana Leka, will analyse these issues, propose options and bring them to the attention of the Investment Council and the National Economic Council. It will also follow-up their implementation.
For the government, the Investment Council is thus an opportunity to generate practical suggestions and to receive feedback on improving existing or planned legislation and regulation.
How does the creation of the Council tie in with the overall EBRD strategy in the country?
Supporting the competitiveness of the private sector and unlocking access to finance are key priorities for EBRD in Albania. We finance both foreign and local companies with debt and equity and also support SMEs through consultancy services. But this can only succeed if the business climate is conducive to investment.
In February 2014, Prime Minister Rama and EBRD President Chakrabarti signed a Memorandum of Understanding aimed at strengthening the investment climate and promoting good governance. As a first step, the EBRD is now helping to establish the Investment Council that is being launched this week.
How do you assess the investment climate challenges in the country and what the government should do to tackle them?
Albania has made progress in improving the business environment but the remaining challenges are big. A lot remains to be done. It requires coordinated action between the government, the businesses and the country’s international partners. This is where the Investment Council can help.
But the most important piece of advice is the perhaps the simplest: To attract new investment you need to treat existing investors in a fair, consistent and predictable manner. As a government, If you have happy investors they will be your best ambassadors.
What are the legal mechanisms that need to be implemented?
Over the last decade, Albania has adopted a number of significant reforms aiming to support investment. The legislative frameworks in many areas are relatively advanced. But sometimes there are problems of inconsistencies between different pieces of legislation and conflicting titles. Consistent and rigorous implementation of legislation is a further challenge . Serious concerns also remain in connection with law enforcement through the courts, which do not enjoy a high level of public confidence. Finally, it will be very important to create legal security on land ownership rights. This is essential for future investment.
What are the key obstacles listed by the business or the concerns you hear from the business community? Can you give us some examples?
Just recently, we presented the results of the EBRD/ World Bank survey on business environment. Over 15,000 managers from 29 countries in transition region, including Albania, listed their primary concerns. Top obstacles for businesses in Albania were identified as the unfair competition from the informal sector and corruption. It’s difficult to compete as a law abiding business that pays its taxes and electricity bills if the competition does not. It is therefore very encouraging that the government is tackling these issues.
What kind of projects has EBRD already done to help the investment climate?
The EBRD has helped boost confidence of depositors by providing the Albanian Deposit Insurance Agency with a credit line of EUR 100 million as well as technical assistance. A well-functioning deposit insurance scheme is an important part of the financial infrastructure that helps build public confidence in a country’s banking system.
In December 2014, alongside OSCE and government of Italy, we helped launch the new Anti-Corruption Initiative. This new partnership aims to strengthen the investment climate and economic governance in Albania by enhancing the capacity of civil society organisations, business associations and the Albanian School of Public Administration to foster transparency and accountability.
How do you assess the overall progress of Albania over the last 2-3 years? What impresses you most in this country?
There is a strong drive and a high level commitment to purse far reaching reforms to fulfill Albania’s economic potential. I find this impressive, particularly when taking into account Albania’s still limited administrative capacity. At the EBRD we applaud the government’s reform drive and this is why we support it through the Investment Council.
On a personal note, I was deeply touched by friendly reception I received in Albania and by the Albanians’ extraordinary hospitality.
