By Ervin Lisaku
TIRANA, Nov. 1 – The Netherlands has emerged as the second largest foreign direct investor in Albania and is on track to further increase its presence in the Balkan country thanks to increased investment in the oil industry and most recently retail trade.
The stock of Dutch foreign direct investment to Albania increased to €753 million in the second quarter of 2016, up 9.5 percent compared to the end of 2015 as Dutch giant Shell completed the acquisition of a minority stake in Canada-based Petromanas Energy for US$45 million in early 2016, according to the latest central bank data.
The Dutch FDI also marks a significant increase compared to 2012 just before the Royal Dutch Shell entered Albania when The Netherlands’ FDI in Albania was estimated at €300 million.
Shell Upstream Albania, a wholly-owned subsidiary of the giant Royal Dutch Shell, bought a 25 percent stake from Canada-based Petromans Energy for US$45 million earlier this year, becoming the sole shareholder in the Albanian oil exploration and production operations that the joint venture had been engaged in southern Albania since 2012.
Shell is planning to invest $72 million in the Shpirag 3 oil well, an appraisal well to the Shpirag-2 discovery in Berat, in the next one and a half years, the government says. Back in 2015, the Dutch-Canadian joint venture was announced the winner of Block 4, an oil exploration block onshore Albania in an international tender. Block 4, which spans approximately 560,000 gross acres (874 sq miles), is located southeast of the current production sharing contract comprising Blocks 2-3.
Shell’s Albania investment are on track to increase as oil prices recover following their slump since mid-2014.
Dutch companies in Albania also operate in the banking, mail delivery, agriculture and are exploring opportunities in Albania’s key garment and footwear sector relying on cheap labour costs.
Netherlands-based Spar International, one of the world’s largest retailers, has also recently opened its first two stores in Albania and is planning to expand its chain with ten hypermarkets and 100 supermarkets under a €50 million investment in the next 15 months.
Tackling frequent legal changes, corruption and reforming the justice system are the three challenges Albania should address in order to attract more foreign direct investment, Dutch Ambassador to Albania Dewi van de Weerd has said.
“Once rule of law is strengthened and corruption is being combated in an effective way, investments will hopefully increase, more jobs will be created and the incentives for people, especially youth, to look for a job outside Albania will decrease” ambassador Dewi van de Weerd told Albanian language Europa magazine in an interview earlier this year.
Agriculture, a key sector employing about half of the country’s population and providing 20 percent of the GDP, is also attracting interest from Dutch investors.
After introducing modern berry cultivation techniques, a Dutch-Albanian joint venture launched last year a new packaging facility in the city of Fier, southwestern Albania, which has made it certified to export to the EU. Superberry is now certified to export to the EU and will soon be selling their produce in – amongst other countries – the Netherlands.
Dutch cooperative bank Rabobank is also assisting farmers to draft business plans while several Dutch companies are also considering investing in the Albanian textile sector.
However, trade exchanges between the two countries remain modest.
Albania’s imports from the Netherlands which mainly include chemicals, machinery and equipment rose to €31 mln in 2014 while exports also rose to €16.5 mln, according to state statistical institute, INSTAT.
The Netherlands overtakes Canada as the country’s second largest investor in Albania. Canada’s presence as a foreign direct investor in Albania is set to sharply decrease following the sale of its Canada-based Bankers Petroleum company which became the country’s largest oil producer and exporter during a decade of operations in Albania. Canada, whose Albania investments are mainly focused on oil and mining, was the third largest investor with €645 million at the first half of 2016, down from a peak level of €797 million at the end of 2013 just before the mid-2014 slump in oil prices which slowed down investment.
Meanwhile, China is about to emerge as key investor in Albania following two major acquisitions this year.
A Chinese consortium led by China Everbright Limited has recently acquired Albania’s sole international airport while Geo-Jade Petroleum Corporation has taken over Canada-based Bankers Petroleum, the country’s biggest oil producer for C$575 million (€392 mln).
The new deals are on track to increase China’s presence as a foreign investor in Albania from almost zero to almost half a billion euros making China among the country’s top foreign investors at a time when the economic superpower is already emerging as the country’s second largest trading partner.
Neighboring Greece, the country’s traditional second largest trading partner, continues remaining the top foreign investor in Albania despite its six-year recession which came to an end only in 2014 and ongoing problems with its debt crisis.
Data published by the country’s central bank shows the stock of Greek foreign direct investment slightly rose to €1.25 billion in the first half of 2016, accounting for a about quarter of total FDI stock in Albania.
Meanwhile, Italian FDI stock only slightly rose to €555 million, ranking Italy the fifth largest investor in Albania.
Turkey and Austria close the top seven list with €479 million and €421 million at the first half of 2016.
The stock of FDI in Albania rose to a historic high of about €5.2 billion at the end of the first half of 2016, up from €5billion at the end of 2015.
Albania registered a slight decline in foreign direct investment in 2015 but continued remaining the second largest FDI recipient among five EU aspirant SEE economies for the sixth year in a row, according to a report by UNCTAD, the United Nations body responsible for international trade.
