TIRANA, July 13 – The US Department of State published a report on the business climate in the world for 2019 on Thursday, saying for Albania that foreign investors cite corruption, especially in the judiciary, lack of transparency in public procurement and poor implementation of contracts as problems that continue in Albania.
In 2016, the Albanian government adopted comprehensive constitutional amendments to reform the country’s judicial system and improve rule of law. According to the report, the implementation of judicial reform is ongoing, including the verification of judges and prosecutors for unjustifiable wealth.
While many judges and prosecutors have been dismissed by an unexplained property verification committee or due to alleged relations to organized crime, foreign investors still perceive the investment climate as a problem and say that Albania remains a difficult place to do business.
Investors report ongoing concerns over the fact that regulators use laws and regulations that are difficult to interpret or inconsistent as tools to divert foreign investors and favor politically-tied companies, the report says.
The regulations and laws regulating business activity, the report follows, change frequently and without consultation with the business community; business owners and business associations often point out they have not received enough notice, time or opportunity to engage in changes to regulations and laws.
Large foreign investors claim there is pressure to hire subcontractors associated with specific policies and express concern about compliance with the Foreign Corrupt Practices Act during operation in Albania.
Corruption reports on government procurements are also common, says the DASH report. The increased use of public private partnership contracts (PPPs) has narrowed competition opportunities, including foreign investors, infrastructure and other sectors. Poor cost-benefit analysis and lack of technical expertise in drafting and monitoring PPP contracts are ongoing concerns. By the end of 2018, the government had signed more than 200 PPP contracts.
Property rights, the DASH report continues, remain another challenge in Albania, as it is difficult to obtain a clear title of ownership. There have been cases of individuals manipulating the judicial system to obtain illegal land titles. Compensation for land confiscated by the former communist regime is difficult to achieve and not enough, for the most part.
The agency in charge of demolishing illegally constructed buildings often operates without full consultations and does not follow the right procedures.
To attract foreign direct investment and promote domestic investment, the Socialist government adopted a law on strategic investment in 2015. The law sets investment incentives and provides quick administrative procedures for domestic and foreign strategic investors, depending on the size of the investments and the number of jobs created.
The government also adopted the legislation that creates areas of economic economic development (TEDA), as free trade areas. The development of the first TEDA in Durrà«s was awarded to a consortium of local companies in August 2017, but only after the tender failed three times. TEDA’s development has not yet started, as one of the bidders has rejected the decision in court.
The Transparency International Indicator of Corruption Perception in 2018 ranked Albania at 99th place among 180 countries, a drop of eight points since 2017. Consequently, Albania is now perceived as the most corrupt country in the Western Balkans. While Albania has improved with two countries, bringing it to 63 in the World Bank Doing Business 2019 survey, it continued to be weak in the areas of enforcement of contracts, property registration, construction permits and electricity security.
The Albanian legal system does not seem to discriminate against foreign investors, the report says. The US-Albania Bilateral Investment Agreement, which came into force in 1998, ensures that US investors are treated under the most favored nation clause. The Law on Foreign Investments describes specific protection for foreign investors and allows 100 percent foreign ownership in most sectors.
Based on the IMF estimates, the DA report says that gross domestic product in real GDP grew by 4.2 percent in 2018 and growth is expected to fall in 2019 but remains at about 4 percent in the medium term.
The report states that the country received the European Union candidate status in June 2014 and has since asked to open accession negotiations. The EU has encouraged Albania to continue its progress in reforms related to the five main priorities: public administration reform, justice reform, the fight against corruption, the fight against organized crime and the protection of human rights, including persons belonging to minorities as well as property rights.
