TIRANA, Sep. 10 – Foreign investors continue to perceive Albania as a difficult place to do business, according to the latest report by the U.S. Department of State.
The report titled “2020 Investment Climate Statements” states that U.S. investors consider corruption, particularly in the judiciary, a lack of transparency in public procurement, and poor enforcement of contracts as the main obstacles which impede them from doing business in the country. Government procurements seem to be one of their biggest concerns, due to frequent reports of corruption. During the last few years in Albania, public private partnerships have increased significantly, thus reducing competition opportunities for foreign investors.
Several U.S. investors have faced contentious commercial disputes with both public and private entities, including some that went to international arbitration. The report notes the 2019 -2020 dispute In 2019 and 2020, a U.S. company’s attempted investment was allegedly thwarted by several judicial decisions and questionable actions of stakeholders involved in a dispute over the investment.
The conflict between the companies drew media attention as the ADFD is owned by Elona Caushi, the wife of Judge Gjin Gjoni, a controversial name in the Albanian justice system.
US company ICDF signed a contract with Tirana International Airport in July last year to invest 3 million dollars in the duty-free space of the airport, but due to the conflict with the previous company, it was been unable to launch its activities and lost its
Property rights continue to be a challenge in Albania because clear title is difficult to obtain. There have been instances of individuals allegedly manipulating the court system to obtain illegal land titles. Overlapping property titles is a serious and common issue. The compensation process for land confiscated by the former communist regime continues to be cumbersome, inefficient, and inadequate. Nevertheless, parliament passed a law on registering property claims on April 16, which will provide some relief for title holders.
Transparency International’s 2019 Corruption Perceptions Index ranked Albania 106th of 180 countries, a drop of seven places from 2018. Consequently, Albania and North Macedonia are now perceived as the most corrupt countries in the Western Balkans. Albania also fell 19 spots in the World Bank’s 2020 Doing Business survey, ranking 82nd from 63rd in 2019. Although this change can be partially attributed to the implementation of a new methodology, the country continues to score poorly in the areas of granting construction permits, paying taxes, enforcing contracts, registering property, obtaining electricity, and protecting minority investors.
To address endemic corruption, the Government of Albania (GoA) passed sweeping constitutional amendments to reform the country’s judicial system and improve the rule of law in 2016. The implementation of judicial reform is underway, including the vetting of judges and prosecutors for unexplained wealth. More than half the judges and prosecutors who have undergone vetting have been dismissed for unexplained wealth or organized crime ties. The EU expects Albania to show progress on prosecuting judges and prosecutors whose vetting revealed possible criminal conduct. The implementation of judicial reform is ongoing, and its completion is expected to improve the investment climate in the country.
