Steady Economic Development, Albania's Future Higher Ambition
By By Genc Mlloja
Albanian Daily News
Published August 23, 2017
Albania’s economy is surrounded by an optimistic atmosphere of development, which is shown even by the data of the IMF and the World Bank that have picked this country as one which is doing not only a very high progress but a very steady one in the point of view of economic development, has said the Minister of Economic Development, Tourism, Trade and Entrepreneurship, Milva Ekonomi.
In a recent exclusive interview with Albanian Daily News, Mrs. Ekonomi provided facts and figures evidencing the economic growth, but she did not fail to admit that “we have still to do more because the share of the GDP per capita should be increased so that the households should have the capacity to run a better life for their families and children.”
Speaking of the Trieste Summit and the adoption of the creation of the Regional Economic Cooperation in the Western Balkans, Mrs. Ekonomi said in the following interview that one thing should not be forgotten that all the countries partaking in that initiative aim at joining the European Union:
- Mrs. Minister, in the first place, Albanian Daily News thanks you very much for sharing your opinions on the economic situation of Albania, its achievements, weak points and challenges which are the main things its readers would want to learn from you as the major issue of interest. In a nutshell, what could you say on the above matters?
- What I can say in general if we see all the data, figures and comments made by different domestic and international institutions, there is an optimistic view of the progress of the economy. I can definitely say that the Albanian economy is surrounded by an optimistic atmosphere of development. It is the case to mention the data of IMF and the World Bank that have picked up Albania as a country which is doing not only a very high progress but a very steady one in the point of view of economic development.
This economic development of the country is mainly related with two main factors: First, it is the investments done locally by private businesses and secondly, it is the consumption of the households. If you see the data coming from the internal private businesses they show that there is an increase of investments. That can be seen in the export of machinery and equipment. So the foreign trade in Albania is getting higher meaning that the companies are investing. And if you see the balance of payments we can found out that the consumption of households has increased. Some data reveal that the household indicators show Albanians are consuming more if we consider the number of vehicles and cars that the households bought during 2016 as compared to 2015. There is a growing trend in this aspect, which means that in general the things are going in the right direction. In addition there are data showing that the economy in the country is doing better and for example the data on foreign investments are impressive for the Albanian economy. Likewise, the figures on unemployment have lately decreased. To be precise the unemployment rate has dropped to 14.3 percent.
But, nevertheless, we have still to do more because the share of the GDP per capita should be increased so that the households should have the capacity to run a better life for their families and children. So the economic growth of Albania, that is about 3.7 percent, should be higher. We need to go to 5.4 or 6 percent in order that the situation for the households can be improved. The other thing is that we have to be very flexible in doing business. Albania has been improving in doing business and as a matter of fact we jumped up with 32 positions last year. But this course has to be maintained. This means it should be kept at the same level or get better. Some reforms in the market regulations need to be improved. We have done a lot of progress, but it necessary to facilitate the business activity. This is in general the view of Albania's economy at the current moment. We are also focused on the intervention in some areas which are very important for the economy like, for example, development of energy, agriculture, tourism and manufacturing. We are a country with a lot of water, solar, wind resources and as far as energy is concerned we need to combine with innovative technologies in such circumstances. Without doubt they can create facilities for all the lines of economy.
- It was held in July 12 but the echo of the Trieste Summit continues given its key achievement - the creation of the Regional Economic Cooperation in the Western Balkans. Two questions on this: Firstly, how important is this step for Albania and the region, and secondly, how would you comment opinions according to which this is an 'impossible mission' as it, in a way, is an alternative blurring the EU enlargement process of the region, including Albania, and turns Serbia as the main center of the region?
- The regional economic area is one of the initiatives that has not appeared in a summit and has not been created overnight. This is a long process because it has started from the Summit of Berlin when the countries decided to work together and then step by step they have arrived at the point where we are. In the Summit of Paris we discussed connectivity which is related with more trade, more cooperation in infrastructure, and more cooperation in energy sector. In this Summit we discussed the regional economic area, which means that the four types of free trade, which is of goods, capital, professions and services, can be traded easily from country to country. This is the message of the regional economic area in order that the countries can facilitate their cooperation in this point of view. This is an experience to get prepared to enter the EU because the regional economic area means that, for example, foreign direct investment could come to Macedonia and they could find good ways to cooperate with Albania. Why not! Countries have to cooperate together. Professionals, as for example a doctor, a nurse, an architect have a license issued in Albania; they can do the same work in Bosnia, Serbia for example. This is the meaning of the regional economic cooperation in the area. We have to use the possibilities that CEFTA countries offer to go further in the services sector. As a matter of fact countries are preparing themselves to trade more services between them on the basis of all relevant regulations. But one thing should not be forgotten that all the countries partaking in this regional cooperation aim at joining the EU.
- As a follow up, are you satisfied with the inflow of foreign investments in Albania so far, and could you give some details which are some of the main investors, and which are the major fields of their attraction?
- In fact during the last four years, the foreign direct investments (FDI) in Albania has been quite good because we are the best country in the Balkans in this regard, and the FDI occupies 9 percent of GDP, which is a good figure. The FDI's flow in 2016 was 1.12 billion dollars. The current situation is not of the same type considering activities during the past. Certainly sectors of transports, telecommunication, energy, mining and banking are in the center of the FDI. But there are some more investments coming from countries like Italy, Greece and also Turkey that are going to other activities related to services and manufacturing, too. This is the good news. I can say that there are more than 1,600 enterprises and they are also interested in other types of services and other types of manufacturing. This is good for Albania. But still Standard & Poor's and Moody's have seen in Albania that the figures show that for each 3 leks that we invest in economy one is coming from abroad. This is a very good figure. But we have to work hard to maintain the same pace. So we have to be very attractive in the point of view of how FDI might come to the country and to which areas. We have considered that tourism and agriculture are the most important sectors and we are going to see for new investors. Energy and transport, of course, will continue to be an attraction.
- According to an IMF report, Albania is ranked the 75th among 190 countries with regard to the economic growth. It was published last April. Are you satisfied with this growing economic rate?
- In a way we are satisfied because this is a demonstration of the good efforts done by us. But from the point of view of ambitions we are not yet satisfied because we want to have a higher growth. Even in the program of the Socialist Party the objective is to have an economic increase of up to 6 percent. And this growth might be achieved due to better development of agriculture, tourism and infrastructure. We should help these sectors. For example, in agriculture we should have all the territory underwater, which means more productivity. On the other hand, as far as agriculture is concerned, we are working to have a better link with the market, and this would be done through second roads which are part of investments. In the meantime the plan of investments include some professional schools that need to be created in some territories of the country aiming at giving more education for sectors which are linked with tourism. The other aspect is the one- billion dollar for reconstruction.
- Mrs. Ekonomi, of course, it is too soon to get a final say but could you unveil some of the main objectives of the platform of the new government in the field of economy? In a nutshell, which will be some of its priorities?
- There are two types of priorities of the program that are linked with what we have done and need to be finalized to give a boost to economy. The first thing is that we aim to increase the economic growth of Albania to 5.5 up to 6 percent. We like to have 200, 000 more job places. And we would like to increase the income of the population by 25 percent. Also we want to increase the minimum salary of workers up to 30,000 leks. Meanwhile we aim at having a package of solidarity that has to do with retired people and persons in need. We are considering improving the way of payment for the retired people by giving a bonus amounting to 10,000 leks in the end of the year starting from the second mandate of the government. In the meantime, we consider that the young couples that are creating their families need a support and for this support we think that we have to consider as a deductable expenditure, the interest that they will pay. Regarding the personal income we plan some arrangements. In Albania we have the progressive tax for personal income and the highest level is up to 23 percent. The obligation is that the leverage to go to 18 percent, which means that it will be from 0 to 18 rather than from 0 to 23. We also aim at arranging the cooperative tax at the same level but to have the tax of dividend also at the same level. In that tax we are not going to have many changes. But what is new is that we are going to help those enterprises which are making innovations in technology and the cooperative tax for them is going to be 5 percent, which is very important.
Agriculture will remain one of the priority sectors and the main thing is that the land under water will be finalized during this mandate and VAT for the agricultural input will be 0. We also will work on linking agriculture with the market. Then another aspect will be the educational system which will be focused on 'education for knowledge' so that people can be able to have skills for the labor market. And this is what is aimed at being achieved in the education. It will be very important for the young generation to be educated, focused, mentored by people that are able to do that and 61 career centers will be created for each municipality.
Another important thing is how we are going to support health care. There will be more focus on organizing emergency responsive for health cases all over the country. We have already started but this will go on. In addition attention will be paid to the situation of the hospitals so that they can be more rational.
Another area is the energy sector as we want to use all the possibilities that the nature has blessed Albania. On the other hand our aim is to create a more vital and operative market. Another ongoing important thing is the question of property, which is linked with the legalization process. Business climate is also another matter of high importance for us. We still think that should be one of the most important priorities.
- How would you describe the economic ties between Albania and Kosovo?
- Economic ties between Albania and Kosovo are good in general. Even when we discuss the ties we have to see the data of import and export. But both countries are working very hard to open their economies. So even that import and export between Albania and Kosovo have some fluctuations, some years up and some years down. But both countries are looking to find markets not only in that region, but in some other zones and in my view the association of producers and association of exporters between Albania and Kosovo is a demonstration of how good these relations in the aspect of market and economic development are. I think that even when we have to go and present ourselves in sessions at regional level Kosovo and Albania have a common understanding to support each other. And this is due to the good communication between the two governments, the political level between them, allowing agreements to go on.
-How do economic problems in neighboring countries, in Greece for example, influence on Albania's economy?
- We cannot say that the economic developments in the neighboring countries do not have their influence on Albania because we have an open economy. Import and export are connected with Greece and Italy. So when the consumption of Greek families is decreasing means that there are problems on our side with regard to export. And when there is less consuming in their country that means that imports from Greece are not so high in our case. We have made some research and it is a fact that when there is a growth of GDP in their countries, there is a growth in our country, too.
But in the meantime we work on finding other markets for Albania, to create free trade agreements. In short we are trying to search other markets for our businesses in other territories like in North Africa, Middle East, Eastern European countries.
- Lastly, Mrs. Minister, do you think that an efficient implementation of the reform in the judicial system would contribute to a better performance of the economy, restraint of corruption and more efficient usage of local and foreign investments in various economic fields?
- I think yes! When we follow all the process of the judiciary reform we have seen that the population is very eager that it takes place. And, on the hand, it is the business so much interested in the judiciary reform to take place. Because if we have a judiciary reform processing well then we have support for protecting contracts, respecting them between businesses and decreasing corruption and bribery.
This is very important because it can be seen that international businesses have agreed in the code ethics that the contract between the business to business or business to government to have a special chapter regarding the decrease of corruption, and this is now becoming a must. Internationally it is a must and it is being pressed that it should be made as such even in Albania. I think having a very functional judiciary is so much important because business cannot work without that. In this sense if we do well, more foreign investors will come to Albania as they want to have their interests protected.
#Rama 2 Cabinet Getting Ready
Prime Minister Edi Rama is preparing the changes warned by him regarding the reduction of ministries as well as deciding on the names that will be part a second government led by him, this time alone
TIRANA - Sources from the Prime Minister’s Office say that they have finished preparing the structure of the new government, which, apparently, will have several current ministries merged into fewer.
The Ministry of Agriculture will be merged with the Environment Ministry; the Ministry of Tourism with that of Culture and Sports; the Ministry of Economy with the Ministry of Energy; the Ministry of Urban Development with that of Local Government. There are discussions undergoing for a Treasure Ministry and a Ministry of Youth and Women, as reported by Top Channel on Tuesday.
It is still unknown if the new government will include a high number of women, but this may be the easiest element to be predicted, since Rama has always been a vivid supporter of gender equality.
Fatmir Xhafaj also might return to government as Minister of Interior, and Damian Gjiknuri as Minister of Energy. Xhafaj has created a special profile for himself in the party, while Gjiknuri has also led the party’s campaign in Dibra and Vlora, where they both won, Top Channel said.
Lindita Nikolla may also be in Rama’s second cabinet, after she led electoral campaign in Lezha, a stronghold of the Democratic Party, and also won.
According to Top Channel, it is certain that Gramoz Ruci will be Parliament Speaker for the next four years. It is unknown if Rama will continue the decision to not allow Parliament Members be Ministers at the same time.
Government sources said for Top Channel that Rama has not decided yet when he will declare his new government. This media said there are two options: one is on August 27, on Sunday, at the meeting of the National Assembly of the Socialist Party, or one day later.
#Western Balkan PMs Informal Meeting in Durres
TIRANA - The prime ministers of Western Balkan countries are expected to hold an informal meeting in Durres on August 26.
Besides the prime ministers of regional countries, present at the meeting will also be the Commissioner for European Neighborhood Policy and Enlargement Negotiations, Johannes Hahn and head of the World Bank for Europe and Central Asia, Cyril Muller. The conference will be attended even by Albanian Prime Minister Edi Rama. Balkanweb reported that the meeting will focus on cooperation and European Union integration of regional countries.