Ø  Why investing in Albania?

• Excellent strategic location;

• Free market access - FTA giving access to a bigger market – CEFTA, EFTA, Turkey, EU;

• IMF since 1991, WTO since 2000, NATO since 2009;

• In 2006, Albania signed the Stabilization and Association    Agreement (SAA) with the European Union.

Trade Developments in 2012

•Trade volume in 2012 equal to EUR 5,330 millioncompared to EUR 5,333 million in 2011;

•Imports decreased by 2.87% and exports increased by 8,18%;

•Total imports amounted to EUR 3,801 million;

•EU provides for 64% of imports and receives 72.4 % of exports;

•Albania imports mainly from Italy, Greece, China, Germany and Turkey;

•Albania exports to Italy, Kosovo, Turkey, Greece, Spain and Germany;

•Italy and Greece represent respectively 30.5% and 10.6 % of imports, and 50.9% and 5.1% of exports;

Albania has a liberalizedeconomicframeworkandconditionsfordoingbusinessandattracting FDI are improvingconstantly.

The Government is engaged in finding and identifying new sources that will secure a sustainable development of the Albanian economy.The ongoing reforms aim to increase the efficiency of tax administration and reduce corruption. A permanent dialogue will be established between the business community and a new structure, National Economic Council, which will operate under the aegis of the Prime Minister.

Increasing FDI is a top priority.In recent years the inflow of FDI has been stable. The average of during the last four years has been above 700 million Euros with a peak of 793 million Euros in 2010.

FDI inflow in millions of EUR

Some of the incentives for foreign investments include:

Ø  Fair taxes and incentives;

• Fair taxation will be the fulcrum of the Albanian fiscal policy – Who earns more, will contribute more. (Actually a flat corporate tax rate of 10% is in use);

•Albania’s tax system makes no distinction between foreign and domestic investors;

•Treaties for the Avoidance of Double Taxation with many countries.

Ø  Dynamic, educated and cost competitive work force;

•Over 1,071,948 young, well-educated professionals;

•More than 57% of the population is under the age of 35;

•116,292 number of students in the High Education;

•English and Italian widely spoken. French and German included in the education system. Other regional languages are widely used;

•The minimum wage in Albania is ALL 21,000 (approx. EUR 140);

•Social insurance is 27.9% of the gross salary, with the employer paying 16.7% and the employee 11.2%;

•The average wage (public and private sector) is ALL 36,075 (approx. EUR 260).

Ø  Business friendly regulatory environment;

•Registration of a business through the National Registration Center;

•Licensing through the “One stop shop” model by the National Licensing Center;

•Online system for tax filing and payments;

•Business legal framework is in compliance with the EU legislation.

Ø  Liberal legal framework for foreign investments;

•Law No. 7764, Nov. 2, 1994 “On Foreign investment”;

ü  No prior government authorization is needed and no sector is closed to foreign investment;

ü  No limitation on the percentage share of foreign participation in companies - 100 percent foreign ownership is possible;

ü  Foreign investment may not be expropriated or nationalized directly or indirectly.

ü  Foreign investors have the right to expatriate all funds and contribution in kind of investments;

ü  No distinction is made between foreign and domestic investors;

ü  State protection on legal disputes for investments over 10 million EUR.

•Law No. 9901, April 14, 2008 “On Entrepreneurs and Commercial Companies”;

•Law No. 9663, Dec. 18, 2006 “On Concessions”;

•Bilateral Investment Treaties with 44 countries.

Ø  High investment potential in priority sectors;

PRIORITY SECTORS

The focus for the future development of the Albanian economy will remain on attracting FDIs with a focus on sectors where the Albanian economy has unexploited potential.The energy sector, tourism, agribusiness, mining industry, garment and services are the priority sectors for investments in Albania.  

Ø  Energy Sector

The Government is engaged in the development of a long term strategy aiming the creation of an Electro-energetic System, operationally, technically and financially sustainable, in order to satisfy the domestic demand and to export in an integrated market.

In Albania, building new power generation capacities and transmission lines to support its future energy needs and to export is a government priority. According to Renewable Energy and Energy Efficiency Partnership (REEEP) the country has only exploited 35% of the total potential. Total hydropower reserves are estimated at around 3,000 MW. Potential annual generation may reach up to 16.000 GWh.

Facilitation of required investments in the energy sector, diversification of energy sources and supplies and enhancement of energy efficiency are in the focus of such strategy and harmonized with the acquis.

Current incentives for the energy sector include VAT exemption on imported machineries and equipment on all investments over ALL 50 million (EUR 400,000); VAT exemption on cement and iron imported for the construction of HPPs; Approved feed in tariffs for small HPPs (up to 15 MW – to be approved by the Council of Ministers) and obligation of the Albania Power Corporation (KESH) to purchase for 15 years.

TAP project, and the projects related to it, open up new opportunities regarding the economic development of the country and the whole region.

Ø  Tourism

The tourism sector in Albania is undeveloped and the government is making concerted efforts to stimulate this sector.

Albania has a stunning coastline that extends down from Montenegro to Greece and also has a diversity of inland mountainous areas for ski-resorts and lake tourism. Albania also has a myriad of Roman, Byzantine, Hellenistic and Ottoman cultural and heritage sites, including the UNESCO World Heritage site of Butrint (in south-west Albania in the straits of Corfu). All of which mean that Albania is a prime destination for exploring by archaeological, independent and organized tour companies and groups.

Ø  Agriculture and food processing

Agriculture is one of the largest and most important sectors of the Albanian economy. The economic activity “agriculture, hunting and forestry” is the largest employer (44 per cent of the workforce) and the second largest economic sector by value added (19 per cent). The sector is one of the most significant sectors in the Albanian economy, contributing annually about 20 percent to the GDP.

The sector is in need of investments and faces tough competition from imported goods. Key challenges are the size of farms, improved cooperation between producers and business sectors, improved marketing of products for export and facilities to store, process, and pack products, development of irrigation and drainage systems and processing technology.

Fertile soil, mild climate and abundant water supplies, the high potential for export, the well-educated and motivated workers are some of the advantages that Albania offers.

Ø  Mining Sector

Albania is a country with rich mineral resources. Mineral exploration, exploitation and processing constitutes a key component of the Albanian economy, due to a traditional mining industry that has been a solid foundation to the country’s economic sector generating substantial revenues. The minerals mined and treated in the past which still remain in Albania include Chrome, Iron, Copper, Coal, etc. Mining industry in Albania, is privatized and the government is promoting theforeign cooperation in this sector.

Ø  ICT

The ICT sector is growing rapidly, making it one of the country’s most dynamic industries. In recent years government measures have been introduced through the Crosscutting Strategy of Information Society that aims to bring Albania up to speed in the digital age.

Government legislation has liberalized the telecoms industry, bringing it into line with the EU regulatory framework for communications, which encourages competition. In 2007, the National Agency for Information Society (NAIS) was set up, aiming at accelerating the development of information society and e-government services. Almost 80% of the basic services at the central government level are currently accessible as e-services at first or second level of sophistication, while more than 50% of G2B services are provided in interactive levels of sophistication.