Albania Being 'Explored' by Foreign Businesses
By Genc Mlloja
Albanian Daily News
Published March 2, 2018
In its efforts to revitalize the economy, Albania has welcomed a great number of foreign businessmen from Italy, Austria, the Czech Republic and Slovenia who have participated in business forums together with Albanian partners being supported in such a cooperation drive by the relevant high ranking politicians over the last months.
Albania is seen as a profitable destination for investment as the country has vast natural resources that it can rely on to give a boost to its economy. Its topography, soils and climate are conducive to producing a very wide range of agricultural commodities. Similarly, a large variety of commercially exploitable mineral deposits exist in this Balkan country whose energy resources are also huge. As a tourist destination Albania is increasingly becoming attractive worldwide. This country has great growth potential and offers ample investment opportunities in its energy, oil, mining, agriculture, agro-food and food-processing industries.
But weak points for Albania, which remains one of the least developed countries in Europe, are that a fifth of its population lives under the national poverty line and the country still suffers from very inadequate infrastructures. In addition, the Albanian economy remains fragile and is heavily dependent on foreign organizational aid. Up to now, the main hindrance to Foreign Direct Investment (FDI) development has been the dominance of personal relations over the law and legal procedures: competition is rarely fair and in reality far removed from the legal decisions, corruption exists and despite efforts to fight it, it remains one of Albania's major problems. The taxation and customs systems also need to be improved. "Albania must continue its reforms and, above all, ensure they are effectively enforced, especially in the area of the fight against organized crime and corruption, the reinforcement of the Rule of Law, the freedom of the judiciary system and media freedom," said export.gov, which provides trusted market intelligence, practical advice and business tools to help U.S. companies expand in global markets.
However it should be noted that Albania is expecting to receive signals from Brussels with regards to its major objective of opening the accession negotiations with the European Union this year, and at such a juncture the interest of foreign investors has apparently increased to see opportunities in the new circumstances.
Albania an Attraction for Italian Investors
"The government is determined to make Albania attractive to foreign investors by offering a favorable business climate with low taxes and less red tape," Prime Minister Edi Rama said in a business forum with Italian investors, which was held in Tirana on February 20 this year bringing together over 350 participants including 200 companies from Italy, 14 industrial associations and three banks. The forum was preceded by the launch of the first Italy-Albania trade mission that aimed at increasing the already well-established economic cooperation between the two countries and to expand business and investment opportunities for Italian businesses with a focus on three sectors in particular agro-business, energy and infrastructure, according to a finance ministry statement.
Mr. Rama invited Italian companies to invest in tourism sector which is considered a priority sector of Albania. "Tourism is a major sector offering tremendous investment opportunities. A lot remains to be done in this area, while demand keeps growing and it is unattainable in terms of the supply. Tour operators turn down five percent of the demand," Rama said. He addressed the investors saying that they should feel safe about investing here, because, according to Rama, Albania has a favorable legislation for tourism. PM also announced that government was drafting an incentives package for investments in agro-tourism based on the Italian model.
Speaking on this occasion Italy's Deputy Minister of Economic Development Ivan Scalfarotto, who led the Italian business delegation, underscored that Italy remained Albania's primary trade partner, with exchanges significantly increasing over the past years. "The trade exchanges between the two countries have increased by 80 percent over the past ten years," Scalfarotto said.
According to the Albanian National Institute of Statistics, INSTAT, trade between the two countries totaled two billion euros in the first 10 months of 2017.
Austria's FDI at 401m Euros
The Minister of Finance and Economy, Arben Ahmetaj, has invited Austrian investors to explore numerous investment opportunities in various sectors of Albania, saying the country provides most conducive environment for doing business. Albania's business environment is becoming more favorable and attractive than ever, Mr. Ahmetaj told Austrian business representatives who took part in a business forum held on February 20 this year. Ahmetaj explained that 2018 will be a crucial year for Albania, as the country expects to take the next step in its European integration process and start the accession talks with the European Union.
"This is a crucial year for the country also in political terms and its European perspective. Over the past years, the government has implemented a series of reforms designed to create a favorable business climate for investors," he said. "This is a very important season. We expect to start the EU accession negotiations and we are ready for the future challenges. We need more support and assistance," said the Albanian Minister.
"Yesterday (February 20, 2018) we received a very big Italian delegation, 220 companies having a turnover of 17bn euros. Please bring to Albania 221 Austrian companies and 17bn euros plus 1 in order to defeat Italians," Mr. Ahmetaj told the Austrians with a touch of humor.
Austria is showing an increasing economic interest in Albania, noted Finance and Economy Minister revealing that FDI from Austria had increased from 365m euros to 401m euros over the past two years. It is a modest figure but it is definitely an organic growth year after year, said Mr. Ahmetaj, who expressed his confidence that the presence of new Austrian companies in Tirana on February 20 would certainly bring new FDI from Austria.
Albanian, Czech Businesses Trying to Win 'Time Lost'
"It is an honor for me to take part in this Business Forum of representatives of Czech and Albanian businesses being held in Tirana. Of course, our visit here has both political and economic targets. Our links are extensive in all fields," said President of the Senate of the Czech Republic Milan Stech in the Albanian-Czech Business Forum held in Tirana on February 21.
Mr. Stech, who visited Albania on February 20-22, 2018 accompanied by a large group of representatives of businesses and of other fields of life, made those comments in his opening remarks at the Business Forum which was held in Tirana on February 21. Besides business representatives of both countries and officials of the Chambers of Commerce and Industry of both countries, the Forum was attended by the Speaker of Albanian Parliament, Gramoz Ruci, the Minister of State for Protection of Entrepreneurship, Sonila Qato, the Czech Deputy of Ministry of Industry and Trade, Vladimir Bartl and other senior officials. A Memorandum of Understanding was signed on that occasion.
"I have the privilege of leading the Senate and business mission to Albania, a country that is writing its own modern history while being closely observed by the other European countries," said Mr. Stech addressing representatives of businesses of both countries.
Speaking of the economic cooperation between Albania and the Czech Republic he saw hope that there were companies in his country which wished to cooperate with Albanian partners. "The Czech companies want to do this, and this Forum will serve to give a new dimension to this aspect of cooperation," he said, noting that there were two fields which, according to him, had great potentials.
"Given the weather conditions in Albania, there are potentials for cooperation in the agriculture field," he said, giving as example citrus fruit production as beneficial. Another potential field was, as he said, tourism. "The Czech people love tourism, particularly mountainous tourism. It is necessary to promote cooperation in this field. The Senate it ready to support this cooperation," said the Senate President.
"The excellent political relations should be reflected even in the economic cooperation, which, as a matter of fact, has a rising trend," said in his remarks in the forum Albanian Speaker Gramoz Ruci, who considered the historical and traditional friendship between the two countries as a valuable asset for the promotion of the overall cooperation.
In her contribution, the Minister of State for Protection of Entrepreneurship, Sonila Qato said that the Forum was evidence of the wish to promote the cooperation between Albania and the Czech Republic. "The Albanian government is ready to encourage this cooperation," she said, and, according to her, efforts should be made to find the fields of cooperation. "With regard to the bilateral relations in the field of economy we have lost some time," Ms. Qato admitted.
Future Albanian-Slovenian Cooperation 'a Success Story'
Albania and Slovenia have very good cooperation relations in the political and economic aspect, Minister of Finance and Economy Arben Ahmetaj told a business forum held in Tirana on November 5, 2017, which was also attended by Slovenian Minister for Economic Development and Technology Zdravko Pocivalsek.
"As far as the economic cooperation, I am convinced that there is space to expand it. There are 30 companies that accompany the Minister. I believe that the companies and the Tirana Chamber of Commerce will find opportunities and common fields of interest," said Mr. Ahmetaj, who told Slovenian businessmen that Albania is an interesting market providing very good opportunities for investments in different fields like tourism, energy, infrastructure, agriculture, mining and banking system.
Albanian-Slovenian trade volume is estimated to be at 38m euros, but, according to Albanian minister, there are possibilities for its growth.
For his part the Slovenian Minister, Pocivalsek said there should be a broad economic cooperation between Slovenia and Albania, which "will be a success story in the future".
A test of Albanian 'terrain'...
However, this rising interest of foreign businesses to see on the spot possibilities of investing in Albania has met a cautious stance of specialized economic and business circles as well as analysts.
Mr. Les Nemethy, Managing Director of Euro-Phoenix Financial Advisors Ltd. and author of "Business Exit Planning", published in the US by John Wiley&Sons told Albanian Daily News that Foreign Direct Investment is not only a source of capital, that has a multiplier effect in the Albanian economy, contributing to employment and GDP, but it can also bring technology, know-how and access to markets, which further reinforce the positive effect. "FDI in Albania, at over $1 billion, is low in absolute terms, high in relative terms (e.g. accounting for one in 3 dollars invested in Albania)," he said.
"FDI has the potential to remain an important engine of growth for the Albanian economy. Investment fora have the potential to catalyze such investment flows, but in my opinion, much more depends on the underlying business climate and specific investment opportunities," said Mr. Nemethy, who has written weekly columns in the op-ed pages of Albanian Daily News.
"There will be new investments but not large ones," Mr. Arben Malaj, a former Minister of Finance and Economy, said in his comment. "There are many hindering factors which are vital preconditions for any private investor. It is exactly the drop of the FDI why the government aims at pumping money into the economy through the PPP," Mr. Malaj told ADN.
In the meantime, Mr. Lisen Bashkurti, President of Albanian Diplomatic Academy, did not see the economic climate in Albania so much favorable. "In general, the economic climate in the country does not seem to me very favorable for the attraction of foreign investments," Mr. Bashkurti told ADN.
"It seems that there are incentives leading to the right direction complying with the government's objectives. At least in the formal aspect PM Rama has no reason to lament on the lack or inefficiency of economic diplomacy, which was harshly criticized by him a few months ago," said analyst Armand Plaka. According to him, such activities were organized even before but the result had been poor because of many reasons among which the main one is the high level of corruption. "The rising interest of foreign businesses is apparently a sort of testing the Albanian terrain in its thoroughness, and this is why it cannot be said that this interest will result immediately in investments," he told ADN.
It can be concluded that the objectives of the rising number of business missions visiting Albania over the past few months, having also a political support from the relevant governments, seem to have been more concrete and businesslike in search of opportunities in a country which is both eager and in dire need of foreign investments. Albania has no time to lose and, for their part, foreign businesses do not want to lose the offered opportunities. After all, everything is on the table, but time matters a lot for Albania and prospective investors.