TIRANA, April 11 – Foreign direct investments almost tripled in 2009 in Albania, marking a completely different trend from what was going on around in the rest of the world, as it struggled with the financial crisis. According to a report by the Albanian Council of Ministers and UNDP, privatization of enterprises in telecommunications and utilities are behind this sharp increase in FDI at the height of the global financial crisis.
The report on FDI in Albania is the first publication in a series of reports the Albanian government plans to publish regularly in accordance to a decision of the Council of Ministers.
The report is published in cooperation with the UN Conference for Trade and Development and the UN Development Program in Albania. This cooperation will continue in the future. Although economic growth in Albania for 2009 was moderate, the country was unique in Europe for not suffering the decline in flows of foreign direct investment seen elsewhere due to the financial crisis. Although foreign investment in Albania is modest in scale, compared with the level of development of the country it is nevertheless substantial. Albania had relative success in attracting foreign direct investment during the 2007-2009 period if placed in the context of declining investment outflows originating from major countries of foreign direct investment, suggests that many investors were attracted by special, one-time opportunities. The reasons that attracted those types of investments were mainly the privatizations of utility companies. These opportunities usually make up the height of foreign direct investment flows and usually the trend falls in the coming years unless new opportunities arise. The trend of relatively high foreign direct investment to Albania seen in the 2007-2009 period was not likely to continue in 2010 due to international conditions being less favorable. Foreign direct investment by major countries investing in Albania, Italy and Greece, decreased last year.
Global flows of FDI doubled during the 2005-2007 period, but in 2009 they fell to their 2005 level of 802 billion euros. The flow of foreign direct investment in Eastern Europe followed the global trend, marking a peak in 2007. However the flow of FDI during the period in question took place almost independently of the global and regional trends indicating a continuous growth that lasted well beyond 2009. Expressed in dollars FDI flows declined for reasons related to exchange rates and the fall of the dollar value during this period.
However the percentage of FDI into Albania compared to world total remained at 0.1 percent, so it’s insignificant in 2009 even though this year marked ten times the FDI in Albania compared to 2000. However, it’s important to note the share of FDI in 2007 saw a significant growth while the rest of Southeast Europe saw a decline.
Major agreements that included foreign direct investments in Albania during 2009 included: the sale of the 12.6 percent share of mobile phone company AMC to Greek telecommunications group COSMOTE for 48.2 million euros; the sale of 76 percent of the shares of the Distribution System Operator OSSH to electricity company CEZ for 102 million euros; investments in the cement industry by Aneta Cement, Colacem Albania and Cementos, Aguila and issuing the fourth mobile phone license to Kosovo Post Telecom for 7.5 million euros.
FDI grows to 837 mln euros
Foreign direct investment, one of the main sources of Albania’s economic growth representing around 8 percent of the GDP, registered a record 837 million euros in 2010, the highest level during the past seven years. Central bank data reveal FDI during the whole of 2010 rose by 19 percent or 157 million euros compared to 2009. Data show FDI more than doubled to 250 million euros in the final quarter of 2010 compared to the same period in 2009
FDI rose to 837 million euros in 2010, up from a mere 209 million euros in 2005 and 680 million euros in 2009.
Privatization in key sectors (banking, telecommunications and energy) has been the main source of FDI. So far the government has retained no special rights or ‘golden shares’ when privatizing strategic companies, but the existing legislation allows it to.
The launch of a new privatization wave under which government has identified 1,280 public assets including strategic enterprises it intends to privatize by the end of this year is expected to give another boost to FDI, increasing government revenues.
The privatization list includes remaining state owned shares in strategic oil, and phone companies, small hydropower plants, military facilities and small and medium-sized enterprises, except for big hydropower plants and dams, schools, hospitals and public buildings and offices which will remain under state ownership.
FDI inflows increased significantly by 17% in 2010 mainly due to investment in exploration and drilling of oil and gas as well as new concessions especially in the energy sector. Portfolio investment registered a significant increase, owing to the issuance of the EUR 300 million Eurobond by the government in the last quarter of 2010. The improvement in FDI and portfolio investment was, however, more than compensated by a sharp swing in other investment from a net inflow to an outflow primarily due to the repayment of a syndicated loan by government.
