Doing business in Albania
Table of Contents
- 1 Location and Climate
- 2 Administrative division of Albania
- 3 Political system and international membership
- 4 Infrastructure
- 5 Telecommunication
- 6 Exports Overview
- 7 Challenges
- 8 Growth Potential
- 9 Tourism and leisure
- 10 Education
- 11 Energy
- 12 Startups consideration
- 13 Entry requirements
- 14 Travel advice
- 15 Doing Business in Albania compared to the region
In 2015, Albania ranked the 62nd out of 189 countries regarding the ease of doing business, in Doing Business 2015 report by the World Bank.
World Bank quotation about Doing Business 2015 (in Albania):
“Albania made progress in business regulatory reform, moving up 40 slots, from 108 a year ago to 68. Albania has improved in three areas of business regulatory reform: Starting a business, Dealing with construction permits, and Registering Property. Starting a business has become easier in Albania by lowering registration fees.
It made dealing with construction permits easier by resuming the issuance of construction permits and by consolidating the land permit and construction permit into a single construction development permit. In addition, Albania made transferring property easier by establishing effective time limits and computerizing the records on immovable property.
However, Albania weakened its secured transactions system through an amendment to the Securing Charges Law that does not allow intangible assets to be secured with a non-possessory pledge. And it made paying taxes more costly for companies by increasing the corporate income tax rate. According to the report Albania’s distance to frontier score is 66.1 or improved by 6.3, compared to Doing Business 2014 back-calculated distance to frontier score of 59.8.”
In September 1st, 2015 the government started an intense action against the informality in the markets. Since then, the number of registered companies and employers has increased significantly. The government started the fight of informality in order to reduce the misbehavior of marketers and as a mean to improve the business climate in the country. Another incentive undertaken by the government in 2015 was the elimination of taxes for startups, whose annual turnover is no more than 5 million ALL.
Population 2.876 million
Official language: Albanian
Length of the coastline: 427km
Calling Code: +355
Internet TLD: .al
Gini Coefficient 29.0
Life expectancy at birth, years: 78
Unemployment rate: 13.9%
Inflation Rate September 2017: 1.6%
Location and Climate
Albania is a European country located in the Balkan Peninsula, Southern Europe Region and it borders with Montenegro to the northwest, Kosovo on the northeast, Macedonia to the east, and Greece to the south and it borders with Italy on the sea. The climate in the country varies from hot Mediterranean on the coastal areas and lowlands to continental and even subarctic climate in the mountainous areas.
The geo-strategic position of Albania plays an essential role in the country’s economic, political and social approach to the Western model. Albania has always been on the crossroad between east and west, while the access to the Adriatic and Ionian seas means more opportunities for economic cooperation with the countries of the Mediterranean Region and beyond. The coastline has a great potential for the development of tourism, fishing, shipbuilding, and ports and harbors for transport and commercial purposes. The coastline begins in the north in the border with Montenegro and continues in the south to the Greek border. The coast is divided into two parts, the Adriatic with wetlands, lagoons, shallow waters and sandy beaches, and the Ionian rocky coast with pebble beaches and deep azure waters.
Population and territorial organization
According to the data provided by the Institute of Statistics, the population of Albania on January 1st, 2017 was 2,876,591. Population decline during the last decade was affected by the net migration and a decline in birth rate. The ethnic and cultural minorities in Albania according to the 2011 census are Greek, Macedonian, Montenegrin, Vlach, Roma, and Egyptian. There are also members of other communities.
Tirana is the capital city and also the political, economic, and cultural center of Albania.
Administrative division of Albania
Administrative division, Historical overview
Starting from 1912 when Albania was proclaimed an independent country several forms of administrative division based on Western Europe models were implemented. During 1912-1939 the country was organized in prefectures and sub-prefectures. In 1928 Albania had ten prefectures: Berat, Dibra, Durres, Elbasan, Gjirokastra, Korca, Kosova, Shkodra, Vlora, and Tirana. There were 39 sub-prefectures that were divided in the first and second category.
Around 1930 the term district was also used for prefectures.
Following World War Second the previous administrative division was kept until 1958 when the country was divided into 27 districts, 48 cities, 188 localities, and 1,897 villages.
After the fall of the communist regime, Albania was divided into communes and municipalities.
Since 2014, the administrative organization of Albania includes 12 regions that are divided into 61 municipalities.
Based on the political, economic, social and cultural role, Tirana is the most important city. The capital has the highest average income earned per person in the country. The second city with a high level of income and welfare is Fier. It is followed by Gjirokastra, Durres, Vlora, Berat, Korca, etc.
Political system and international membership
The Republic of Albania is a Parliamentary Democracy. The Constitution is the highest law and the separation of powers is the main principle on the organization of the government.
Albania is a member of the:
United Nations since December 14, 1955.
NATO since April 1, 2009
OSCE since June 19, 1991
Council of Europe (CoE) since 13 July 1995
UNESCO since 1958
Find other International Organizations HERE
Albania has developed a network of highways that connect the capital Tirana to other important cities like Durres, Fier, Berat, Vlora, Gjirokastra, Shkodra, and Elbasan. The Nation’s Road (Rruga e Kombit) is one of the most important infrastructural projects as it cut the distance between Albania and Kosovo and made rural areas in the northeastern part of the country more accessible. However, there is much to be done in order to improve the current situation, which is not satisfactory. Mother Teresa International Airport (IATA Code: TIA, ICAO Code: LATI)) is the only functional airport in the country. It was built in 1957 and one runaway with a length of 2,750 meters and a width of 45 meters.
Kukes Airport in the northern area was built in 2006, but it was never been put to work. Projects for the construction of two other airports in southern Albania were mentioned by the government. One of the projects foresees the construction of an airport in Vlora.
Highways and roads
There are over 20,000 km of roads. New tourism-related investments are planned for the upcoming years, meanwhile, the Pan-European Corridor VIII remains a major project for the future plans. It will connect the Albanian port of Durres in the coast of the Adriatic to the Bulgarian port of Varna in the coast of the Black Sea.
Rail transport was first used in Albania for military and industry transportation in short sections built during 1917 and 1930. The construction of the Albanian railway was concluded in 1987 and it consisted of 677km of the rail system. The Albanian rail networks start from Durres Port in the coast of the Adriatic and consist of three main routes. The first run towards the Montenegrin border via Hani i Hotit Cross Border Point, the second runs to Ballshi, an important on-shore oil field area, and further south to the city of Vlora, the second largest seaport in the country.
Future projects focus on the revitalization of the Albanian railway system, which during the last two decades suffered major losses both in the number of passengers and freight transport.
Currently, Albania has no connection to any European country rail network. The rail connection to Montenegro is only for freight transport.
Albania has four seaports located in Durres, Vlora, Saranda, and Shengjin. Durres port is the largest and most important in the country. It operates both passenger and freight services. It is the gate to Corridor VIII and has an annual capacity of 4 million tons. According to the World Bank, traffic in this port is estimated to reach 8.5 million tons by 2023.
Vlora Port is the second largest port and it mostly serves as passenger transport.
Saranda Port is the only port in the south that offers passenger transport service mostly for daily tourist transport from Corfu Island.
Shengjin Port is a freight port in northwestern Albania, and it is a gate to Milot-Kukes highway.
Porto Romano, located in Durres Area, is a liquid port with tank storage for refined petroleum products, oil, and gas.
Petrolifera Port, located in Vlora Bay, is also a liquid port.
The telecommunication sector in Albania is growing and it is regulated by the law on Electronic Communications
The institutions responsible for issuing licenses and authorizations is the Agency of Postal and Electronic Communications.
Telecommunication includes the mobile sector, and fixed the line, as wells as mobile and fixed broadband.
Broadband services are expanding throughout Albania, meanwhile, sub-sectors are also gaining ground.
Although Albania’s traditional trading partners are Italy, Greece, Kosovo, Turkey there are opportunities for other European and international companies. International companies operating in Albania are from Italy, Greece, Canada, the Netherlands, Austria, etc (link to outsourcing page). What does Albania export (Link to Albanian products page)
Albanian state Authorities are taking measures and significant reforms to improve the business climate in the country and encourage Foreign Direct Investment (FDI) influx, yet challenges remain.
- Property issues
- Weak and slow judicial system and poor enforcement of contracts
- Tax Burden
- Lack of infrastructure
The structure of the Albanian economy depends on these main sectors: energy, mining, agriculture, metallurgy, and tourism. The public debt, September 2017 is equivalent to 69.11 percent of the Gross Domestic Product (GDP).
Albania applies a liberal trade regime since 1990 following the standards set by the European Union and the World Trade Organization (WTO). Albania joined WTO in 2000 and applies the rules set by this organization regarding import licensing. The customs rules have been harmonized conforming to the EU system. Exceptions apply based on bilateral agreements signed between Albania and other countries. List of bilateral agreements.
Find here list of signed agreements for avoidance of double taxation
Albania is member of WTO, CEFTA,
Albania receives financial assistance from the EU under IPA II. The funding allocation for 2014-2020 is Euro 649.4 million. The priority sectors for funding during the above mentioned period are Democracy and governance, rule of law and fundamental rights, environment and climate action, transport, education, employment and social policies, agricultural and rural development, regional and territorial cooperation.
Albania has a rich cultural and historic heritage that remains valuable not only to Albanians but also to the entire Mediterranean region. Numerous tourists come every year to visit archeological sites and parks in Albania and other important sites and cities that carry precious values. Find here more details on Albania’s cultural and historic heritage.
Tourism and leisure
Albania has not a long touristic tradition given that the country was closed to foreigners until the fall of the Communist regime. However, the country has huge tourism potential and high development possibilities both in the coastal and inland areas. Currently, Albania is creating a tourism product that consists of historic and cultural heritage, nature and environment, adventure tourism, Mediterranean climate, a long coastline and physical closeness to the European market.
Tourism development is also related to nature preservation. There are 384 protected areas in Albania. They are divided into six categories depending on their importance. There are four strictly protected areas that include Karavasta Lagoon, Lumi i Gashit, Rrajca, and Kardhiq. Moreover, there are 11 national parks, 300 monuments of nature, 26 managed areas, four land or marine protected landscapes and one marine national park. Butrint, Gjirokastra, and Berat are under UNESCO protection along with Rrajca and Lumi i Gashit.
Albania’s tourism offer provides choices for marine tourism, diving, caving, hiking, lake tourism, skiing, rafting, paragliding, etc.
During the recent years, an increased number of tourists that come for medical purposes was noticed.
The most important regions in Tourism are the Southern Riviera, the Northern Alps, the Adriatic coastline, etc.
Opportunities for investments in Albanian tourism include the development of:
Luxury hotels and resorts
New hotels and resorts
Renewal and reconstruction of existing hotels
Albanians pay more attention to university education compared to vocational education.
Opportunities for international companies in Albania:
– Vocational training
– Life-long learning
– Specialized courses
– Skills and management training in the public sector
Albania is a country that depends on 100 percent in renewable energy obtained by hydropower. In the near future, it is expected to benefit from the Trans Adriatic Pipeline (TAP). Opportunities for international businesses and companies interested in the energy sector in Albania will range from investments in photovoltaic plants, the supply of new technologies and expertise.
According to the Global Entrepreneurship Development Institute (GEDI) index 2018, startups are the strongest area in Albania. According to doingbusiness.org, starting a business in Albania improved during 2017. Find more details in this report.
Find here more information on visa requirements for entering Albania.
Most visits to Albania are trouble-free. Take out comprehensive travel and medical insurance before you travel.
Doing Business in Albania compared to the region
Even though Albania made significant improvements in Doing Business 2017 report elaborated by the World Bank (WB) for 190 countries by jumping 32 places and reaching the 58 place, it still ranks below the other countries of the region. According to WB’s data, Macedonia has the best performance for the region as it ranks tenth in the world in terms of doing business indicators, fourth for starting a business and 11th for construction permits. As it seems, it is not a coincidence that the neighboring country is attracting a considerable number of investors in various sectors.