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flag Albania Albania: Investing

In this page: FDI in Figures | Why You Should Choose to Invest in Albania | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.

FDI stock has reached more than 20% of the country's GDP. These investments are essentially in the oil, metal ore, infrastructures and construction sectors, and more recently, in the telephony sector. Albania has set up reforms to boost FDI. The State has adopted a tax reform that is advantageous to foreign investors and aims to reduce corruption and administrative difficulties which can be discouraging to investors. The long-winded procedures to obtain operating licenses in the trade, construction and tourism sectors have slowed down investment progress. In addition, investments continue to suffer from the lack of infrastructures and a poorly defined property law. In the context of the global economic crisis, foreign direct investments in Albania strongly decreased since 2009, mainly due to the decline of remittances from Albanians living abroad (-27%) which represents 15% of the country's GDP. This trend continued since then and should remain unchanged in 2014, due to the general European context and the difficulties faced in particular by the Greek economy. In 2013 FDI reached USD 1.35 billion.

Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).

 

Country Comparison For the Protection of Investors

  Albania Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 8.0 7.0 7.0 5.0
Index of Manager’s Responsibility** 9.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 6.0 9.0 5.0
Index of Investor Protection**** 7.3 5.9 8.3 5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

 
Foreign Direct Investment 201120122013
FDI Inward Flow (million USD) 8768551,225
FDI Stock (million USD) 4,3994,6226,104
Performance Index*, Ranking on 181 Economies 40--
Potential Index**, Ranking on 177 Economies 123--
Number of Greenfield Investments*** 8114
FDI Inwards (in % of GFCF****) 20.221.829.3
FDI Stock (in % of GDP) 34.638.447.5

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in Albania

Strong Points
Albania's strong points are:
- A strategic geographical position (with ports on both the Adriatic and the Ionian Sea);
- Significant natural resources;
- Cheap manpower;
- Prospects of joining the European Union.

Additionally, Albania is still a developing country which needs foreign investors to develop entire sections of its economy, a fact which provides interesting opportunities.

Weak Points
Albania remains one of the least developed countries in Europe. 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 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.

Government Measures to Motivate or Restrict FDI
Tax and legislative reforms have been put in place, as well as new laws on public and private partnerships, public spending, free-trade zones, company registration and electronic signature. On the 1st January 2008, the Albanian government decided to include companies in a single tax rate of 10%, which was being applied to households since 1st July. A single counter will simplify administrative procedures for companies. The country also ratified the "Investment Charter": an initiative of the Stability Pact aimed at reforming the legal environment in order to facilitate FDI in the Balkans. Measures are also taken to reduce by half, non-tariff barriers and to shorten the length of time required to register a company (from the current 40 days to only 8 days).

In addition, on 16 August 2006, the Prime Minister, Sali Berisha, presented the "Albania for 1 euro" solution: this measure aims to offer investors public land at 1 euro, staff training at 1 euro, technological water at 1 euro, the cost of registering a company at 1 euro, and entry into Albania at 1 euro.

Therefore for a number of years, Albania has established measures aimed at attracting foreign capital. Guarantees such as equal treatment of national and foreign investors and tax measures like the absence of VAT in certain sectors will allow for the development of FDI in the country.

Bilateral Investment Conventions Signed By Albania
Albania has signed conventions for the protection of investment with: Greece, Germany, Italy, France, Austria, the Netherlands, the United Kingdom, Denmark, Sweden, Portugal, Belgium, Spain, Finland, Poland, Hungary, Slovenia, the Czech Republic, Switzerland, the United States, Turkey, Romania, Bulgaria, Macedonia, Croatia, Russia, Israel, Tunisia, Egypt, China, Malaysia, Serbia-Montenegro, South Korea and Kosovo.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Guaranteed.
Acquisition of Holdings
Possible.
Obligation to Declare
The Albanian Investment Development Agency (AIDA) in the country provides information about the authorizations required to set up business.
Competent Organization For the Declaration
Agency for the Promotion of Investment
Requests For Specific Authorizations
No sector is closed to investment and no prior authorization from the government is necessary to be able to invest. There is no restriction on holdings; a company may be 100% foreign.

Learn more about Foreign Investment in Albania on Globaltrade.net, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
The Albanian Investment Development Agency (AIDA)
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Albania
Globaltenders, Tenders & Projects from Albania
DgMarket, Tenders Worldwide
 
 

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Learn more about Investing in Albania on Globaltrade.net, the Directory for International Trade Service Providers.

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Last Updates: January 2015