State Department on 2019 Investment Climate in Albania

State Department on 2019 Investment Climate in Albania

TIRANA, July 12

Energy and power, tourism, water supply and sewerage, road and rail, mining, and information communication technology represent the best prospects for foreign direct investment in Albania over the next several years according to 2019 Investment Climate Statement released on Thursday by the US Department of State. Yet, there are various factors that affect the investment climate in the country.

Corruption, particularly in the judiciary, a lack of transparency in public procurement, and poor enforcement of contracts are cited by foreign investors as continuing. The annual report aims at helping US companies to make informed decisions by offering an assessment of the investment climate in over 170 foreign markets.

The statement mentions that even though the reform in the judicial system, the vetting process, is underway and numerous judges and prosecutors have been dismissed by a vetting commission for unexplained wealth or organized crime ties, foreign investors perceive the investment climate as problematic and say Albania remains a difficult place to do business.

Moreover, the statement highlight that investors report continuing concerns that regulators use difficult-to-interpret or inconsistent legislation and regulations as tools to dissuade foreign investors and favor politically connected companies. In the meantime, the fact that laws on business activity are frequently changed without meaningful consultation with stakeholders and the business community is a key concern.

“Major foreign investors report pressure to hire specific, politically connected subcontractors and express concern about compliance with the Foreign Corrupt Practices Act while operating in Albania,” the statement points out.

Another concern raised by investors is the increasing use of public-private-partnership (PPP) contracts (the report mentions that the Albanian govt signed more than 300 PPP contracts by the end of 2018), which has narrowed the opportunities for competition, including by foreign investors, in infrastructure and other sectors.

Property rights remain an ongoing concern in Albania. The report stresses that:

  • A clear title is difficult to obtain;
  • There have been cases of individuals manipulating the court system to obtain illegal land titles;
  • Compensation for land confiscated by the former communist regime is difficult to obtain and inadequate;
  • The agency charged with removing illegally constructed buildings often acts without full consultation and fails to follow procedures.

The failure to develop free trade zones (TEDA) is ranked as an issue that impacts the investment climate.

On the bright side, the statement mentions that the legal system in Albania does not discriminate against foreign investors.
“The Law on Foreign Investment outlines specific protections for foreign investors and allows 100 percent foreign ownership of companies in all but a few sectors,” the statement says.

Read also: Albania’s New Draft-law to Facilitate Investments

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