Low corporate and personal income flat tax (10%), relatively low labour costs and proximity to major European economies as well as active regional market are some of the advantages to invest in Albania
TIRANA, March 19 – Strengthening the rule of law, the enforcement of contract, property rights, the fight against corruption and the informal economy are key challenges faced by both business and government, according to a “Doing Business in Albania: Reforms & Opportunities” report sponsored by the British Embassy in Tirana. It is the rule of law and political stability that must evolve further to a level that would give confidence to foreign and domestic investors, stimulating them to invest. Only with political stability and macro-economic prudence can the country develop at a vigorous pace and in the near to medium term to fully integrate with the EU, says the report.
“We see progress on business and economic reform as an important element of EU integration and a way to boost UK and international investment confidence in the Albanian market. Potential investors need to see Albania as part of a larger European market, when devising their investment strategies,” said former UK Ambassador to Albania Fiona Mcllwham at a UK-Albanian Business and Reform Forum last January.
Albania offers a high level of investment potential in infra-structure, telecommunications, information technology, energy/power generation and tourism. Although many of the strategic sectors have already been privatised, a new wave of state property privatisation has been declared by the government.
Foreign investors can find rewarding investment opportunities in the various sectors of the economy. Low corporate and personal income flat tax (10%), relatively low labour costs and proximity to major European economies as well as active regional market are some of the advantages to invest in Albania.
Additionally, Albania is very keen in embracing Public Private Partnerships (PPPs) in an array of sectors including highway maintenance, transport infra-structure in Tirana, waste management, and hydroelectric dam concessions. However, this desire has not been translated into many partnerships on the ground, which makes PPPs therefore an enormous opportunity. We believe that PPPs are one option to attract FDI in the country, and we are pleased to observe this model being steadily adopted by the government, notes the report.
The report includes a number of recommendations designed to enhance the business and Foreign Direct Investment environment so as to maintain Albania’s growth momentum, strengthen the rule of law and move forward with the needed reforms.
One of the key issues identified in this report is the difficulties in accessing credit, as a very determinant factor in limiting business development in the country.
Abundant natural resources, geographical location, extensive coastline and sea ports, availability of inexpensive labour with good language skills (English is widely spoken), continuously improving infrastructure and membership of CEFTA all contribute to the strengths of Albania as a potentially good country to conduct business with. This is how an earlier 2011 Commercial Insights, prepared by the Council of British Chambers of Commerce in Europe, described Albania. The booklet also highlights investment, export and trade opportunities in the markets of Kosovo and Macedonia. “In Albania, Kosovo and Macedonia there is a strong entrepreneurial spirit and appetite for trade, enabling opportunities for British business looking for new markets and trade possibilities,” says the report highlighting opportunities in different sectors such as tourism, energy, infrastructure etc.
Recommendations:
Improve macroeconomic conditions by decreasing the public debt as percentage of GDP (58.3% although just below EU ceiling), to benefit from cheaper credit in the future.
Devise a comprehensive strategy in order to successfully attract equity firms to enter Albanian market.
Support with funding and policymaking a feasibility project to encourage listings and secondary trading on the Tirana Stock Exchange (TSE).
Take a swift action in finding other growth avenues to compensate for the eventual decrease of remittances during the Eurozone crisis.
Set up, in cooperation with relevant stakeholders, an expert group/commission to debate and provide a contingency/action plan to deal with the continuing Eurozone crisis and its immediate impact on the Albanian economy and its banking sector in particular.
