The top four sectors in Albania’s services are led by trade including hotels and restaurants, followed by construction, transport and post and telecommunications
TIRANA, August 1 – Albania is one of the three Central European Free Trade Agreement (CEFTA) countries where the services sectors stagnated during the past few years. The findings are revealed in a recently released World Bank report called “Barriers to trade in services in the CEFTA region” covering the 2007-2009 period.
“In most countries, the service sectors have been growing above the average economic growth rate. Exceptions are Albania, Kosovo, and Montenegro, where the share of services, though high, has been flat,” says the report.
While the shares of services in the Albanian economy represent around 74 percent of the gross value added (GVA), the top four sectors are led by trade including hotels and restaurants, followed by construction, transport and post and telecommunications. Their share in the Albanian economy from 2007 to 2009 remained unchanged only for trade at 22.2 percent and slightly improved by 0.1 percent to 4.6 percent for the post and telecommunications sector.
The rates for the construction and transport sectors decelerated to 14.8 percent of the GDP and 5.6 percent of the GDP respectively, down from 15.5 percent and 5.7 percent in 2007.
The study shows that in 2009 when the global economic crisis broke out exports of goods dropped by 18.1 percent while services exports slightly rose by 1.8 percent.
Albania’s service exports during 2007-2009 are estimated at an average of 1.6 billion euros, with tourism accounting for more than 70 percent. Transportation and communications services rank second and third with 146 million euros and 81 million euros, respectively.
“Travel (tourism receipts) is the major source of inflows for countries on the Adriatic coast, accounting for about 70 percent of total service exports for Albania, Croatia, and Montenegro, and 50 percent for BiH.”
As far as arbitration of commercial disputes is concerned, the strength of laws index in Albania is at 84, worse only compared to Serbia (95), Croatia (93) and Macedonia (93).
In the ease of obtaining construction permits, Albania has the most complicated procedures among the seven countries covered in the report. In Albania, the number of procedures needed to obtain a construction permit is 24, while time needed 331 days. However, the cost of income per capita to obtain a permit is the lowest in the CEFTA region at 381 percent.
Albania’s trade exchanges with CEFTA countries account for only a minor share of the total as around 70 percent of the country’s exports and imports are carried out with European Union countries with Italy and Greece as the top trade partners.
According to Albania’s national statistical institute, INSTAT, the “trade, hotel and restaurant” group continued its positive performance growing by 4.4 percent compared to the first quarter of 2010 and 2.2 percent compared to the previous quarter.
The services sector, which in the final quarter of 2010 was one of the key drivers of the economic growth, registered negative growth shrinking by 0.6 percent year-on-year but was up 1.1 percent compared to the final quarter of 2010.
As of 1 May 2007, the parties of the CEFTA agreement are: Albania, Bosnia and Herzegovina, Croatia, FYROM, Moldova, Montenegro, Serbia and UNMIK on behalf of Kosovo.
Albania also has free trade agreements with Turkey (signed in 2006 and entered into force on May 2008) and the European Free Trade Association (EFTA member states are Iceland, Liechtenstein, Norway, and Switzerland).
Albania 82nd in Doing Business 2011
Albania lost one place in the latest Doing Business 2011 report published by the World Bank ranking 82nd, down from 81st last year. “Albania made it easier and less costly for companies to pay taxes by amending several laws, reducing social security contributions and introducing electronic filing and payment,” said the report.
Albania’s best performance was reported in the “getting credit” category ranking 15th because of an almost top score in the strength of legal rights index. The country also ranked 15th in protecting investors. Albania’s third best indicator in the report was starting a business in which the country ranked 45th especially because of the short time it takes, five days and few procedures which are carried out at the National Registration Center, a one-stop-shop facility.
Albania ranked the world’s 72nd in “Registering property” with 42 days, 6 procedures and a 3.4 percent cost of the property value needed to complete the process.
Trading across border ranked 75th mainly because of the long time needed at customs points, 19 days for exports and 18 to import.
Enforcing contracts remains problematic especially because of the big number of procedures, days needed, more than one year, and high costs of claims which place Albania 89th.
The country’s poorest performance was in paying taxes, the world’s 149th, dealing with construction permits 170th and closing a business at the bottom of the 183-country table because of no practice in this service. Albania’s total tax rate is at 40.6 percent of the profit.
