Identifier
Created
Classification
Origin
10TIRANA54
2010-01-26 15:43:00
UNCLASSIFIED
Embassy Tirana
Cable title:
INVESTMENT CLIMATE REPORT: PART TWO
how-toVZCZCXRO0985 PP RUEHIK DE RUEHTI #0054/01 0261543 ZNR UUUUU ZZH P 261543Z JAN 10 FM AMEMBASSY TIRANA TO RUEHC/SECSTATE WASHDC PRIORITY 8764 INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE RUCPDOC/USDOC WASHDC RUCPCIM/CIM NTDB WASHDC
UNCLAS SECTION 01 OF 11 TIRANA 000054
SIPDIS
STATE FOR EEB/IFD/OMA
STATE FOR EUR/SCE
E.O. 12958: N/A
TAGS: EINV EFIN ETRD ELAB KTDB PGOV USTR OPIC
SUBJECT: INVESTMENT CLIMATE REPORT: PART TWO
TIRANA 00000054 001.4 OF 011
G. PROTECTION OF PROPERTY RIGHTS
Intellectual Property Rights
--------------
The principal law that covers intellectual property rights and
protects copyrights, patents, trademarks, stamps, marks of origin,
and industrial designs is Law No. 9380 which is dated April 2005.
In July 2003, GOA passed Anti-piracy law No 9124 which required
television stations to broadcast only those shows and movies that
they had legally licensed for broadcast. The law was successful in
forbidding the broadcasting of pirated movies and programs, but it
did not cover satellite or cable television programming. In order
to close the loophole in the legislation and regulate adequately
digital broadcasting, in May 2007 the Parliament approved the Law
No. 9742 "On Digital Broadcasting". Albania is a signatory of
different international agreements on Intellectual Property Rights
Patents and Trademarks.
A new industrial property law was approved in July 2008. The new law
brings Albanian legislation for the protection of industrial
property into harmony with EU legislation, directives of the
European Commission, the European Convention on patents, the TRIPS
agreement (commercial aspects of industrial property rights) as well
as other international agreements ratified by Albania in the field
of industrial property.
In addition, amendments to the provisions implementing the Customs
Code relating to intellectual property rights and brand controls
were adopted in order to allow products to be classified as "fake",
"pirated" or "liable to infringe the rights of patent or certificate
owners".
Implementation of Copyright Law
--------------
There has been limited progress on the proper implementation of
intellectual property rights. In 2006, the Albanian Copyright Office
was established. It operates under the Ministry of Culture, Sport
and Youth and has signed agreements with different stakeholders
including the Competition Authority, the National Council of Radio
and Television, the National Cinematography Centre, the Forum for
the Protection of Producers and Screenwriters and the tax and
customs administrations, with the aim of fighting piracy and
enforcing the copyright law. However, the most successful
institution in combating broadcast piracy remains NCRT which has
tried to ensure that only licensed programming is allowed to be
broadcast on television and penalized those stations in
noncompliance. Nonetheless, law enforcement remains incomplete and
violations of copyright and other intellectual property rights are
common. The most frequently pirated products are western movies and
sport events broadcasted by TV channels. Also pirated copies of DVDs
and CDs, imported from other countries, are easily purchased in
shops all over the country. The number of cases of violation of
copyright law brought to court remains low.
The Directorate General for Patents and Trademarks (GDPT) was
restructured, and registration and administration of patents,
trademarks and industrial designs has been computerized. This has
improved the processing of applications and the supply of
information. A Board of Appeal was established in the Directorate
for Patents and Trademarks and the Directorate completed the
reorganization of its computer system. A bulletin of industrial
property rights containing records of registrations and changes of
intellectual property rights titles is published and an on-line
version is available on the GDPT website. The Administrative Council
of the EPO approved Albania's request for accession to the European
Patent Convention and its ratification is underway.
Further capacity strengthening and additional human resources for
both the Copyright Office and the GDPT are still required. The
general level of knowledge about IPR and infringements remains poor
and the main factors that hamper the enforcement of IPR laws are the
lack of appropriate experience and qualifications of judges,
prosecutors, customs administration and staff and low level of fines
under the current law. Further efforts are needed to improve
inter-institutional cooperation and the ability of customs
authorities to detect counterfeit products.
Immovable Property Rights
--------------
Enforcement of immovable property rights in Albania remains an
evolving issue. Overall there has been some progress on
strengthening property rights, but proper coordination and further
acceleration of restitution and compensation plans are needed.
Unresolved property issues have undermined efforts to develop a
TIRANA 00000054 002.4 OF 011
functional land market and keep FDI well below its potential.
Immovable property rights (land rights) are still far from well
defined, especially in the coastal areas where there is potential
for tourism development. Large-scale property confiscation during
communist rule and the subsequent nationalization of the economy
completely altered Albania's economic landscape. Property
restitution, corruption, illegal buildings and enforcement of court
decisions are among the most serious challenges facing Albania in
its economic development.
Currently, enforcement of property rights is pursued civil court
system. Almost 70 percent of all civil cases in the Albanian courts
involve property disputes; many of these cases linger for years
before reaching a final ruling. To date, 216 Albanian citizens have
filed suit with the European Court for Human Rights in Strasbourg
against the GOA over property claims. To address this issue, and
relieve an increasingly burdened court system, the GOA, with USG and
other donor assistance, is finalizing an immovable properties
registration system to establish proper title to private claims to
land ownership.
The property registration process has begun in approximately 95% of
the country but has only been finalized or completed in 25% of urban
areas and 85% of rural areas. More lucrative land in high value
coastal areas has not yet been fully registered due to existing
disputes over property title. The main institutions dealing with
property restitution and registration are the Agency for Restitution
and Compensation and the Office for the Registration of Immovable
Properties.
The presence of a large number of informal (unlicensed or
unregistered) buildings spread all over the country has been another
major impediment to secure property titles. In 2006, Parliament
approved the law on the legalization of the informal buildings. The
Agency for the Legalization, Urbanization and Integration of
Informal Areas (ALUIZNI) is in charge of implementing the
legalization process. The number of informal buildings is estimated
to be 350,000 and the surface occupied is estimated to be 320,000
hectares. The first stage of submissions of self-declaration
requests for legalization is completed. To date, the process is
almost half way through since 50% of the informal constructions have
been identified and approved for legalization.
H. TRANSPARENCY OF REGULATORY SYSTEM
Albania's regulatory system is not fully transparent but the
situation is improving. Businesses have difficulty obtaining copies
of laws and regulations especially in their draft form. Laws and
regulations are sometimes inconsistent, leading to unreliability in
their interpretation. Proposed laws and regulations are sometimes
not published in draft form for public comment. There has been
modest improvement in this area recently as several state agencies
operate well-organized websites which are updated regularly. Some
agencies have undertaken steps to consult with business, civil
society and affected groups about issues in proposed laws and
regulations. Although Albania has taken some steps forward to
improve business advocacy by reforming the legislation on Chambers
of Commerce and by establishing the Business Advisory Council,
business participation in the legislative processes remains limited.
I. EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT
The financial sector in Albania has in general been spared from the
global financial turmoil, primarily due to the low amount of loans
in relation to total deposits. Also the lack of a
housing/construction bubble has minimized pressure on the banks.
However, a significant reduction in bank deposits took place in the
fall of September 2008 as individuals withdraw their money due to
fear from losing their savings. Since October 2008 deposits dropped
by about 15% and during 2009 they were below their top level. After
summer 2009 there has been a stable increase in bank deposits and by
the end of 2009 they reached their pre-crisis level. Lower deposits
created some liquidity issues but banks were well equipped to face
the situation. Banks have increased their equity capital to better
face the situation and also BOA has an active monitoring program to
ensure enough liquidity in the banking sector.
The financial sector is totally dominated by commercial banks funded
with private capital. Currently, 16 banks are operating in the
country - two domestically owned banks and 14 foreign or joint
ventures. The degree of market concentration remains fairly high as
the five largest banks dominate the market with about 75 percent of
total assets. The performance of the financial sector in channeling
savings towards productive investment has substantially improved,
but still remains weak in comparison to Western standards. Banks in
Albania offer standard banking services such as deposit accounts,
TIRANA 00000054 003.4 OF 011
foreign transfers, trade finance and, increasingly, mortgages.
Market competition has greatly strengthened and the quality of
banking services provided to the public have significantly improved.
Major Western banks, such as the Italian Intesa SanPaolo Group and
Societe Generale, entered the market through the purchase of
domestic banks. Raiffeisen (Austrian) and several Greek Banks are
also very active in the banking sector. The banking network has
extended to most parts of Albania and developments in this respect
are promising. In November 2009, there were 517 branches, up from
392 at the end of 2007 and 127 in 2005. Several banks offer ATM and
Point-of-Sales terminals and their number is growing rapidly. In
November 2009 there were 725 ATMs up from 335 at the end of 2006 and
3,936 Point-of-Sale terminals up from 1,183 at the end of 2006.
Since 2005, most state employees receive their salaries through
electronic transfers and have been offered debit cards for all their
transactions. In 2008 the private sector also switched to paying
salaries through electronic transfer. By September 2009 banks had
issued 557,000 electronic payments cards (97 percent debit cards and
3 percent credit cards) up from 353,465 or 36.6% at the end of 2006.
However, due to the negative effect of the financial crisis, there
has been a reduction in the number of cash/credit cards that
individuals use. The banking system has been a profitable investment
sector and has companies have had significant profits over the past
several years.
In the absence of a stock market, banking sector remains the main
channel for business financing. Credit to the economy has
experienced an impressive growth since 2005, in part due to the low
starting point. The credit growth rate was 74 % in 2005, 56 % in
2006 and 50% in 2007 and even in 2008, loans grew by almost 30%. The
growth has slowed down considerably during the first nine months of
2009 to about 16%. In November 2009 loans constituted 50.3% of total
banking assets compared to 25% at the end of 2005. Credit to
businesses made up 67% of banks' credit portfolios. The fast growth
of credit has increased non-performing loans as well. Their share to
total credit increased to almost 10% by November 2009 compared to
4.3% in July 2008 and just 2.3% at the end of 2005.
In order to keep credit growth at sustainable levels, supervision
was strengthened during the last two years. The Law on Regulation of
Credit Risk Management was amended, establishing higher capital
requirements for banks that record credit growth exceeding set
benchmarks. The credit information bureau opened in January 2008 and
is contributing to an increase in the information and transparency
in the banking sector. Its main responsibility is to track
consumers' credit histories. The regulatory framework for banking
supervision is, following its recent comprehensive overhaul,
well-developed and continuing the process of adapting standard
international practices. In addition to banks, lending through micro
finance institutions and savings and credit associations is
effective in serving those segments of the population that do not
have easy access to bank financing.
The service of e-banking transactions as a banking product appeared
after 2004 and has slowly expanded but still remains underutilized
by the public. Multiple banks offer this service for certain
clients (mainly businesses for carrying out transfers and other
specialized payments). The rest of the sector is likely to follow
as e-banking transactions gain popularity.
The low level of financial intermediation remains an impediment to
the development of the private sector, particularly to small and
medium enterprises (SMEs). Business report that the following
issues affect access to credit in Albania; high interest rates,
distrust of the banking system, high operating costs of banks and
poor business/project proposals.
Credit lines can be obtained on the local market, but interest rates
can be high; under some circumstances, between 10 and 15 percent.
To obtain credit, applicants usually need to fulfill the following
criteria which, varies from bank to bank: satisfactory business
plan, credit security (usually by mortgage),applicant's own
contribution in the investment project (about 40 percent of the
value) and the entity requesting credit needs to be at least 51
percent privatized.
The insurance industry has also experienced Qh rates of growth
over recent years but, relative to neighboring countries, the market
for insurance in Albania remains largely untapped, especially for
life insurance. The insurance market experienced an increase of 9.43
% for the period January - November 2009 compared with the same
period of the previous year. Gross insurance premiums amounted to
$75.2 million for the same period. Non-life insurance represents 91%
of the total premiums while the rest is life insurance.
The sector is expanding and has attracted foreign investors as two
Austrian companies and one Greek have entered the market through the
TIRANA 00000054 004.4 OF 011
acquisition of controlling shares of domestic companies. American
Reserve Life Insurance became the most recent company to enter the
domestic market through its privatization of INSIG. There are ten
companies present in the insurance market, eight in the general
non-life insurance and two offering only life insurance. GOA has
launched the privatization process of the state owned company INSIG
but the process has been unsuccessful mainly due to the lack of
interest by international companies.
J. POLITICAL VIOLENCE
Albania held parliamentary elections on June 28, 2009. The new
government was formed with a coalition between the ruling Democratic
Party (DP) and the Movement for Socialist Integration (LSI). The
Socialist Party (SP) has boycotted parliament since it convened in
September 2009 and has called for investigations into alleged
electoral fraud in the June 28 elections. Despite a highly
polarized political atmosphere, the elections and the ensuing
boycott have been peaceful and political violence has been avoided.
Small crime, specifically incidents of extortion, theft and robbery,
continue to be of some concern to the business community.
Nonetheless, the domestic climate has been steadily improving and
the violent crime rate has substantially decreased. Albania is a
steady source of stability in the region and relations with
neighboring countries are friendly. The U.S. enjoys a particularly
amicable bilateral relationship with Albania, which is a staunch
American ally in the fight against international terrorism and has
contributed troops to the war efforts in Iraq and Afghanistan.
Albania joined NATO in April 2009 and has begun the process for
European Union accession.
K. CORRUPTION
Corruption, including bribery, raises the costs and risks of doing
business and remains an area of concern in Albania. Corruption has
a corrosive impact on both market opportunities overseas for U.S.
companies and the broader business climate. It also deters
international investment, stifles economic growth and development,
distorts prices, and undermines the rule of law. The government has
made progress in reducing corruption through strengthening judiciary
and police capabilities and introducing new technologies that
automate government processes and increase transparency. Corruption
is still believed to be endemic in Albania and a major challenge to
economic development.
Legal Background
--------------
Albania has ratified several international treaties and conventions
relating to corruption and is member of some of the major
international organizations and programs dealing with corruption
and/or organized crime. Albanian legislation has been amended and
changed frequently in recent years to strengthen the framework
dealing with anti-corruption and organized crime in order to bring
the Albanian legislation in line with civil and criminal conventions
of the European Union.
Albania has ratified The Civil Law Convention on Corruption (Council
of Europe); The Criminal Law Convention on Corruption (Council of
Europe); The Additional Protocol to Criminal Law Convention on
Corruption (Council of Europe); the United Nations Convention
Against Corruption (UNCAC). Albania has also ratified a number of
key conventions in the broader field of economic crime, including
the Convention on Laundering, Search, Seizure and Confiscation of
the Proceeds from Crime (2001) and Convention on Cybercrime (2002).
Albania has been a member of the Group of States Against Corruption
(GRECO) since the ratification of the Criminal Law Convention on
Corruption in 2001 and has been following the recommendation of
GRECO related to incrimination and transparency of political party
funding. Albania is also a member of the Stability Pact
Anti-Corruption Network (SPAI).
Bribery is illegal in Albania. Under the Albanian penal code both
active and passive bribing, abuse of office and undue influence are
considered criminal offences. In addition to basic corruption
offenses, there are specific criminal provisions addressing
corruption by persons exercising public functions, high State
officials and locally elected persons, judges, prosecutors and
employees of the judicial bodies, private sector, foreign public
officials, etc. According to the EU progress report 2009, out of
thirteen recommendations from the Council of Europe Group of States
against corruption (GRECO) report on Albania, two recommendations
regarding the rules on political parties financing remain to be
addressed.
The implementation of the Intersectoral Strategy on the Prevention
and Combating of Corruption 2008-2013 adopted in October 2008 has
TIRANA 00000054 005.4 OF 011
started. However, realistic implementation mechanisms and timeframes
are missing, together with monitoring indicators and adequate
resources. The government has also embarked on reforms that aim at
tackling corruption by minimizing direct contact between the private
sector and the administration. E-government reforms like
e-procurement, e-taxation, one-stop-shop for registration and
licensing of businesses have had a positive impact in reducing
corruption as a result of direct contacts.
Main institutions involved in combating corruption include the
Inter-Ministerial Anti-Corruption Task Force headed by the Prime
Minister. This structure replaced the former Anti-Corruption
Monitoring Group and according to the law serves as a coordinating
body for anti-corruption initiatives. The Anti-Corruption Task Force
is supported by the Departmentof Internal Admiistrative Control
and Anti-Corruption (DIAC) whih has relatively wide-ranging powers
to investigte allegations of irregularities by public officias.
DIAC serves as an Inspectorate oop all centralexecutive public
institutions and is mandated toinvestigate allegations of
proceduaa rreeuuaaiiies and irregularities in h( a d i(g"o*+Q
ppblicf"inances. It reports to the Prime Mins"e .*Te HQghh
Inspectorate for the eellrrttoo nn uuii of Assets (HIDAA)
establishd i( 0 3"coll&ccssaaddaadi(ts the annual declaratio f"Qa s"t s and properties of mid-high level public officials in central
and local executive agence s as well as politicians, and supervises
the prevention of conflicts of interest situations. PolicQ
authorities and the Prosecutor General's Officeaare in charge of
criminal investigations and law enforcement while the State Audit
Commission and internal auditing units within different state
institutions inspect, assess and report alleged cases of corruption.
The Joint Investigative Unit against corruption and economic crime
was established in 2007 in the Tirana District Prosecution Office.
The unit is a multi-agency taskforce composed of prosecutors and
judicial police officers working together on specific
investigations. Based on the success of the unit, six more units
have been established in regions throughout Albania to prosecute
corruption and economic crimes outside Tirana. The High State
Control is the highest institution of economic and financial
control. It supervises the economic activity of state institutions
and other state juridical persons as well as the use and
preservation of state funds by the organs of central and local
government. It is subject only to the Constitution and laws, and the
Head of the High State Control is appointed and dismissed by the
Assembly upon proposal of the President. In the Judiciary, the High
Council of Justice is in charge of appointment and removal of judges
and prosecutors in the first and second instances. Specialized
inspectors investigate allegations of misconduct of judges and the
High Council of Justice then takes the relevant disciplinary
measures, including removal. However, corruption remains a major
problem. Conviction rates in corruption cases remain low.
U.S. Companies
--------------
It is important for U.S. companies, irrespective of their size, to
assess the business climate in the relevant market in which they
will be operating or investing, and to have an effective compliance
program or measures to prevent and detect corruption, including
foreign bribery. U.S. individuals and firms operating or investing
in foreign markets should take the time to become familiar with the
relevant anticorruption laws of both the foreign country and the
United States in order to properly comply with them, and where
appropriate, they should seek the advice of legal counsel.
The U.S. Government seeks to level the global playing field for U.S.
businesses by encouraging other countries to take steps to
criminalize their own companies' acts of corruption, including
bribery of foreign public officials, by requiring them to uphold
their obligations under relevant international conventions. A U. S.
firm that believes a competitor is seeking to use bribery of a
foreign public official to secure a contract should bring this to
the attention of appropriate U.S. agencies, as noted below.
U.S. Foreign Corrupt Practices Act: In 1977, the United States
enacted the Foreign Corrupt Practices Act (FCPA),which makes it
unlawful for a U.S. person, and certain foreign issuers of
securities, to make a corrupt payment to foreign public officials
for the purpose of obtaining or retaining business for or with, or
directing business to, any person. The FCPA also applies to foreign
firms and persons who take any act in furtherance of such a corrupt
payment while in the United States. For more detailed information on
the FCPA, see the FCPA Lay-Person's Guide at: http://
www.justice.gov/ criminal/fraud/docs/dojdocb.html.
Other Instruments: It is U.S. Government policy to promote good
TIRANA 00000054 006.4 OF 011
governance, including host country implementation and enforcement of
anti-corruption laws and policies pursuant to their obligations
under international agreements. Since enactment of the FCPA, the
United States has been instrumental to the expansion of the
international framework to fight corruption. Several significant
components of this framework are the OECD Convention on Combating
Bribery of Foreign Public Officials in International Business
Transactions (OECD Antibribery Convention),the United Nations
Convention against Corruption (UN Convention),the Inter-American
Convention against Corruption (OAS Convention),the Council of
Europe Criminal and Civil Law Conventions, and a growing list of
U.S. free trade agreements.
OECD Antibribery Convention: The OECD Antibribery Convention entered
into force in February 1999. As of December 2009, there are 38
parties to the Convention including the United States (see http://
www.oecd.org/). Major exporters China, India, and Russia are not
parties, although the U.S. Government strongly endorses their
eventual accession to the Convention. The Convention obligates the
Parties to criminalize bribery of foreign public officials in the
conduct of international business. The United States meets its
international obligations under the OECD Antibribery Convention
through the U.S. FCPA. Albania is not a signatory country of the
OECD Convention on Corruption.
UN Convention: The UN Anticorruption Convention entered into force
on December 14, 2005, and there are 143 parties to it as of December
2009 (Please go to see http://www.unodc.org/unodc/en
/treaties/CAC/signatories.html). The UN Convention is the first
global comprehensive international anticorruption agreement. The UN
Convention requires countries to establish criminal and other
offences to cover a wide range of acts of corruption. The UN
Convention goes beyond previous anticorruption instruments, covering
a broad range of issues ranging from basic forms of corruption such
as bribery and solicitation, embezzlement, trading in influence to
the concealment and laundering of the proceeds of corruption. The
Convention contains transnational business bribery provisions that
are functionally similar to those in the OECD Antibribery Convention
and contains provisions on private sector auditing and books and
records requirements. Other provisions address matters such as
prevention, international cooperation, and asset recovery. Albania
signed the UN Anti-Corruption Convention on December 2003 and
ratified it in 2006.
OAS Convention: In 1996, the Member States of the Organization of
American States (OAS) adopted the first international anticorruption
legal instrument, the Inter-American Convention against Corruption
(OAS Convention),which entered into force in March 1997. The OAS
Convention, among other things, establishes a set of preventive
measures against corruption, provides for the criminalization of
certain acts of corruption, including transnational bribery and
illicit enrichment, and contains a series of provisions to
strengthen the cooperation between its States Parties in areas such
as mutual legal assistance and technical cooperation. As of
December 2009, the OAS Convention has 33 parties (see http://
www.oas.org/ juridico/english/Sigs/b-58.html)
Council of Europe Criminal Law and Civil Law Conventions: Many
European countries are parties to either the Council of Europe (CoE)
Criminal Law Convention on Corruption, the Civil Law Convention, or
both. The Criminal Law Convention requires criminalization of a
wide range of national and transnational conduct, including bribery,
money-laundering, and account offenses. It also incorporates
provisions on liability of legal persons and witness protection.
The Civil Law Convention includes provisions on compensation for
damage relating to corrupt acts, whistleblower protection, and
validity of contracts, inter alia. The Group of States against
Corruption (GRECO) was established in 1999 by the CoE to monitor
compliance with these and related anti-corruption standards.
Currently, GRECO comprises 46 member States (45 European countries
and the United States). As of December 2009, the Criminal Law
Convention has 42 parties and the Civil Law Convention has 34 (see
www.coe.int/greco.)
Free Trade Agreements: While it is U.S. Government policy to include
anticorruption provisions in free trade agreements (FTAs) that it
negotiates with its trading partners, the anticorruption provisions
have evolved over time. The most recent FTAs negotiated now require
trading partners to criminalize "active bribery" of public officials
(offering bribes to any public official must be made a criminal
offense, both domestically and trans-nationally) as well as domestic
"passive bribery" (solicitation of a bribe by a domestic official).
All U.S. FTAs may be found at the U.S. Trade Representative Website:
http:// www.ustr.gov/trade-agreements/free-trade-agre ements.
Local Laws: U.S. firms should familiarize themselves with local
anticorruption laws, and, where appropriate, seek legal counsel.
TIRANA 00000054 007.4 OF 011
While the U.S. Department of Commerce cannot provide legal advice on
local laws, the Department's U.S. and Foreign Commercial Service can
provide assistance with navigating the host country's legal system
and obtaining a list of local legal counsel.
Assistance for U.S. Businesses: The U.S. Department of Commerce
offers several services to aid U.S. businesses seeking to address
business-related corruption issues. For example, the U.S. and
Foreign Commercial Service can provide services that may assist U.S.
companies in conducting their due diligence as part of the company's
overarching compliance program when choosing business partners or
agents overseas. The U.S. Foreign and Commercial Service can be
reached directly through its offices in every major U.S. and foreign
city, or through its Website at www.trade.gov/cs.
The Departments of Commerce and State provide worldwide support for
qualified U.S. companies bidding on foreign government contracts
through the Commerce Department's Advocacy Center and State's Office
of Commercial and Business Affairs. Problems, including alleged
corruption by foreign governments or competitors, encountered by
U.S. companies in seeking such foreign business opportunities can be
brought to the attention of appropriate U.S. government officials,
including local embassy personnel and through the Department of
Commerce Trade Compliance Center "Report A Trade Barrier" Website at
tcc.export.gov.
Guidance on the U.S. FCPA: The Department of Justice's (DOJ) FCPA
Opinion Procedure enables U.S. firms and individuals to request a
statement of the Justice Department's present enforcement intentions
under the antibribery provisions of the FCPA regarding any proposed
business conduct. The details of the opinion procedure are
available on DOJ's Fraud Section Website at http://www.justice.gov/
criminal/fraud/fcpa. Although the Department of Commerce has no
enforcement role with respect to the FCPA, it supplies general
guidance to U.S. exporters who have questions about the FCPA and
about international developments concerning the FCPA. For further
information, see the Office of the Chief Counsel for International
Counsel, U.S. Department of Commerce, Website, at http://
www.ogc.doc.gov/trans_anti_bribery.html. More general information
on the FCPA is available at the Websites listed below.
Exporters and investors should be aware that generally all countries
prohibit the bribery of their public officials, and prohibit their
officials from soliciting bribes under domestic laws. Most
countries are required to criminalize such bribery and other acts of
corruption by virtue of being parties to various international
conventions discussed above.
Anti-Corruption Resources
--------------
Some useful resources for individuals and companies regarding
combating corruption in global markets include the following:
Information about the U.S. Foreign Corrupt Practices Act (FCPA),
including a "Lay-Person's Guide to the FCPA" is available at the
U.S. Department of Justice's Website at: http:// www.justice.gov/
criminal/fraud/fcpa.
Information about the OECD Antibribery Convention including links to
national implementing legislation and country monitoring reports is
available at: http:// www.oecd.org. See also new Antibribery
Recommendation and Good Practice Guidance Annex for companies:
http:// www.oecd.org/dataoecd/11/40/44176910.pdf
General information about anticorruption initiatives, such as the
OECD Convention and the FCPA, including translations of the statute
into several languages, is available at the Department of Commerce
Office of the Chief Counsel for International Commerce Website:
http:// www.ogc.doc.gov/
Transparency International (TI) publishes an annual Corruption
Perceptions Index (CPI). The CPI measures the perceived level of
public-sector corruption in 180 countries and territories around the
world. The CPI is available at: http://www.transparency.org/. TI
also publishes an annual Global Corruption Report which provides a
systematic evaluation of the state of corruption around the world.
It includes an in-depth analysis of a focal theme, a series of
country reports that document major corruption related events and
developments from all continents and an overview of the latest
research findings on anti-corruption diagnostics and tools. See
http:// www.transparency. org/publications/gcr.
The World Bank Institute publishes Worldwide Governance Indicators
(WGI). These indicators assess six dimensions of governance in 212
TIRANA 00000054 008.4 OF 011
countries, including Voice and Accountability, Political Stability
and Absence of Violence, Government Effectiveness, Regulatory
Quality, Rule of Law and Control of Corruption. See
http://info.worldbank.org/ governance/wgi/sc_country.asp. The
World Bank Business Environment and Enterprise Performance Surveys
may also be of interest and are available at: http://
go.worldbank.org/RQQXYJ6210.
The World Economic Forum publishes the Global Enabling Trade Report,
which presents the rankings of the Enabling Trade Index, and
includes an assessment of the transparency of border administration
(focused on bribe payments and corruption) and a separate segment on
corruption and the regulatory environment. See
http://www.weforum.org
Additional country information related to corruption can be found in
the U.S. State Department's annual Human Rights Report available at
http://www.state.gov/g/drl/rls/hrrpt/.
Global Integrity, a nonprofit organization, publishes its annual
Global Integrity Report, which provides indicators for 92 countries
with respect to governance and anti-corruption. The report
highlights the strengths and weaknesses of national level
anti-corruption systems. The report is available at:
http://report.globalintegrity.org/.
L. BILATERAL INVESTMENT AGREEMENTS
A bilateral investment treaty between the United States and Albania
was signed in 1995 and entered into force on January 3, 1998. This
treaty, inter alia, ensures that U.S. investors receive national or
most-favored-nation treatment and provides for dispute settlement.
As of June 1, 2009, Albania has concluded bilateral investment
protection agreements with the following countries:
Agreements in force:
Greece, Germany, Italy, France, Austria, Netherlands, United
Kingdom, Denmark, Sweden, Portugal, Belgium and Luxembourg, Spain,
Finland, Hungary, Slovenia, Switzerland, USA, Turkey, Romania,
Bulgaria, Macedonia, Russia, Israel, , China, Malaysia, Republic of
Korea, Serbia, Montenegro, Moldavia, Kosovo and OPEC Fund for
International Development.
Signed Agreements:
Ukraine, Tunisia, Syrian Arab Republic, Poland, Lithuania, Bosnia
&Herzegovina, Islamic Republic of Iran, Kuwait, Libyan Arab
Jamahiriya, Egypt, Czech Republic and Croatia.
Albania has also signed agreements for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes
on income and on capital with many countries, which have priority
over Albanian domestic laws.
Tax treaties are in force with the following countries:
Poland, Hungary, Czech Republic, Italy, Sweden, Greece, Malta,
Belgium, Netherlands, France, Norway, Switzerland, Rumania,
Bulgaria, Macedonia, Croatia, Moldova, Kosovo , Turkey, Russian
Federation, Malaysia, China, Egypt, Serbia, Montenegro, South Korea,
Austria and Latvia. Agreements are signed with Luxembourg, Spain,
Singapore and Ireland and are awaiting ratification by parliaments.
M. OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS
The Overseas Private Investment Corporation (OPIC),a USG sponsored
entity, can make insurance and project finance resources available
to U.S. investors in Albania. OPIC's three main activities are risk
insurance, project finance and investment funds. Albania has also
signed the MIGA Convention, which established the Multilateral
Investment Guarantees Agency (MIGA). MIGA provides investment
guarantees against certain non-commercial risks (i.e., political
risk insurance) to eligible foreign investors for qualified
investments in developing member countries. MIGA's coverage is
against the following risks: currency transfer restriction,
expropriation, breach of contract, and war and civil disturbance.
It provides insurance against risks similar to that offered by OPIC;
MIGA and OPIC can work together on projects. MIGA offers long-term
(up to 20 years) political risk insurance coverage to eligible
investors for qualified investments.
In 1998, OPIC-supported the $200 million Southeast Europe Equity
Investment Fund, which invested heavily in Southeastern Europe. OPIC
supported its successor, SEEF II managed by Bedminster Capital. SEEF
II has invested in the Albanian health sector by purchasing a
TIRANA 00000054 009.4 OF 011
private hospital now known as the American Hospital as well one of
the largest Internet Providers in Albania, ABCOM. For more
information on OPIC please visit http://www.opic.gov
Overseas Private Investment Corporation
1100 New York Ave., NW Washington, DC 20527
Tel: 202-336-8400
Email for general business inquiries to: info@opic.gov
N. LABOR
Labor relations between employee and employer are regulated by
individual employment contracts pursuant to Law 8549, dated January
11, 1999 ("On The Status Of The Civil Employee And The Labor Code")
updated in 2003. The GOA has established the National Council of
Labor, composed of government officials, trade unions and employers
associations. Its major goal is to improve social dialogue between
the government, management and employees. The institutions that deal
with the labor market are: Ministry of Labor and Social Affairs,
National Employment Service, State Labor Inspectorate and other
private actors like Private Employment Agencies, and Private
Vocational Training Centers.
Employers and employees have the right to form trade unions (Labor
Code, article 176). Trade unions are organized at the national level
(according to industrial sector) and at the company level. The right
to strike is sanctioned by Law no. 7458 (January 12, 1991) and by
the Labor Code. Trade unions have the right to negotiate wages,
working conditions, etc., and the employment contracts are
applicable both to union and to non-union workers. Two main
national-level trade unions, both affiliated with the ITUC
(International Trade Union Confederation) are the Confederation of
Trade Unions (KSSH) and The Union of the Independent Trade Unions of
Albania (BSPSH). Employment contracts can be for a limited or an
unlimited period, but as a general rule employment contracts are
signed for an unlimited period if the duration is not specified
properly in the contract.
The labor force in Albania is about two million people, of which
almost 1.2 million workers live abroad, mostly in Greece and Italy.
During the third quarter of 2009, the official unemployment rate
reached 12.76%. A high proportion of Albanians under-40 speaks two
languages. Albanian youth generally speak Italian and Greek and
English are common among the younger generation. While some members
of the labor force are highly skilled, many work in low-skill
industries or have out-of-date technological skills. However,
Albanians are rapidly learning modern market practices and often
display impressive entrepreneurship.
Albania has a tradition of strong secondary education that prepare
students to enter the labor market. Elementary education is
compulsory and a large percentage of those who finish elementary
school continue to high school. 62 percent of high school graduates
go on to college. The GOA has opened new public universities in
Albania which along with the new private universities represent
impressive growth in this sector. In addition, the number of
students who receive graduate degrees abroad has increased
significantly, establishing a generation of skilled professionals
which the government is trying to lure back to Albania through the
Brain Gain Project (a UNDP program offering financial incentives to
Albanians educated abroad to return to Albania to work). In 2007,
the GOA established the Excellency Fund which aims to promote and
financially reward youngsters and students during their studies.
The average salary in public administration during the third quarter
of 2009 amounted to 42,000 leke (about $450) monthly. In May 2009,
the GOA increased the minimum monthly wage applicable for both the
public administration and the private sector to 18,000 leke (about
$200),which is still among the lowest in the region. However,
since 2008, to counter informality in the labor sector due to under
reporting of revenue by businesses, the government is using minimum
reference salaries (MRS) for the private sector. The MRS
establishes a standard wage depending on job code for all employees
and is used to calculate both the personal income tax and the rate
of contributions for social and health insurance. It is not
necessarily the actual salary an employee receives.
O. CORPORATE SOCIAL RESPONSIBILITY
In general, there is little awareness of corporate social
responsibility among producers and consumers with the exceptions of
large companies, mostly foreign companies, which try to employee
social corporate responsibility principles. The laws and
legislation related to CSR exist in Albania and if implemented fully
could constitute a strong base for further development of CSR
practices in Albania. Even academic instruction on CSR in Albania
is in a very early stage of development. Corporate Governance
TIRANA 00000054 010.4 OF 011
course, Environmental Engineering and Business Ethics curricula have
only been introduced in the past several years at some
universities.
P. COMPETITION FROM STATE-OWNED ENTERPRISES
In general, there is little discrimination between public and
private companies operating in the same sector but there have been
allegations by businesses that believe state-owned companies were
granted preferential treatment in government contracts.
Privatization process of SOEs in Albania is nearing completion and
SOEs are active only in few sectors like extraction and sale of oil
and gas (Albpetrol),energy generation (KESH),insurance (INSIG) and
ports.
Q. FOREIGN-TRADE ZONES/FREE PORTS
The GOA approved Law 9789, dated July 19. 2007 "On the Establishment
and Functioning of Economic Zones," abolishing Law 8636, dated July
6, 2000, "On Free Zones." The current legislation regulates the
establishment of economic zones and related matters and makes the
establishment and the functioning of such zones more efficient. It
anticipates the establishment of free trade zones and industrial
parks near ports, airports or at the crossroads of international
transport. Economic zones are proposed by the Ministry of Economy
and approved by the Council of Ministers on a case-by-case basis.
The latter has the power to define the status of the zone (either a
free zone or an industrial park),areas and boundaries, the economic
activities to be performed within the zones, the period of the zone
functioning, the method of granting the permission (lease,
concession, etc.) and the procedures for the selection of the
"developer." The selection of the "developer" of the economic zones
is based on the criteria defined in the law 9663, dated December 18,
2006 "On Concessions."
During 2007-2009, the GOA approved the construction of several
industrial parks: Shengjin, Koplik, Vlore, Elbasan, Lezhe, and
Shkoder and one industrial and energy park in Spitalle, Durres (the
largest, with 850 hectares). Four of these parks are located near
the main ports of Albania - Durres, Vlore, Shengjin. The developers
for the Shengjin, Vlora and Koplik/Shkoder have been selected while
selection of other developers is still in process as of January
2009.
Industrial zones may be used for production, manufacturing,
agro-processing, trade, export-import and supporting activities.
Albinvest will serve as a "one- stop-shop" for the licensing of
tenants. The development of economic zones will promote economic
growth and increase employment and the competitiveness of the
Albanian economy.
In 2009, Albanian government approved the first free zone adjacent
to the approved container port in Vlore. The Ministry of Economy and
Energy, initiated a process of open international tender for the
execution and completion of a Concession Agreement (with a duration
of 35 years),for a 478 hectares area. The tender deadline was
December 18 and the Ministry is expected to announce the winner.
R. FOREIGN DIRECT INVESTMENT STATISTICS
The FDI has increased although it still remains among the lowest in
the region. The cumulative FDI is also the lowest in the region. The
Bank of Albania reported the following figures for foreign direct
investment in Albania. Regardless of numerous contracts, only a few
projects materialized in 2009.
FDI in million Euro per Year (2004)279, (2005)212, (2006)259,
(2007)481, (2008)653, (2009)580*
Source: Bank of Albania
*BoA estimate for the first three quarters of 2009
FDI during the first nine months of 2009 is estimated to have
reached 580 million euro despite optimistic GOA projections for 2009
fueled mainly by strong investor interest witnessed during
2007-2008. A large part of FDI is due to privatizations. The
Albanian government collected 103 million Euro from the
privatization of 76 percent of the shares of the distribution arm of
Albanian Power Corporation; 48 million Euro from the privatization
of 12.6 percent of AMC state controlled shares; 5 million euro from
the privatization of 40% of GOA controlled shares of the United Bank
of Albania. INSIG (insurance company) privatization failed during
the negotiation process with the winer and it might take place
during 2010.
Leading investor nations in Albania include: Italy, Greece, Turkey,
TIRANA 00000054 011.4 OF 011
Austria, Germany, Canada, Spain and the U.S. Foreign investment
focuses on financial sector, oil and gas production,
telecommunications, mining, metallurgy, energy, manufacturing and
cement production.
SIPDIS
STATE FOR EEB/IFD/OMA
STATE FOR EUR/SCE
E.O. 12958: N/A
TAGS: EINV EFIN ETRD ELAB KTDB PGOV USTR OPIC
SUBJECT: INVESTMENT CLIMATE REPORT: PART TWO
TIRANA 00000054 001.4 OF 011
G. PROTECTION OF PROPERTY RIGHTS
Intellectual Property Rights
--------------
The principal law that covers intellectual property rights and
protects copyrights, patents, trademarks, stamps, marks of origin,
and industrial designs is Law No. 9380 which is dated April 2005.
In July 2003, GOA passed Anti-piracy law No 9124 which required
television stations to broadcast only those shows and movies that
they had legally licensed for broadcast. The law was successful in
forbidding the broadcasting of pirated movies and programs, but it
did not cover satellite or cable television programming. In order
to close the loophole in the legislation and regulate adequately
digital broadcasting, in May 2007 the Parliament approved the Law
No. 9742 "On Digital Broadcasting". Albania is a signatory of
different international agreements on Intellectual Property Rights
Patents and Trademarks.
A new industrial property law was approved in July 2008. The new law
brings Albanian legislation for the protection of industrial
property into harmony with EU legislation, directives of the
European Commission, the European Convention on patents, the TRIPS
agreement (commercial aspects of industrial property rights) as well
as other international agreements ratified by Albania in the field
of industrial property.
In addition, amendments to the provisions implementing the Customs
Code relating to intellectual property rights and brand controls
were adopted in order to allow products to be classified as "fake",
"pirated" or "liable to infringe the rights of patent or certificate
owners".
Implementation of Copyright Law
--------------
There has been limited progress on the proper implementation of
intellectual property rights. In 2006, the Albanian Copyright Office
was established. It operates under the Ministry of Culture, Sport
and Youth and has signed agreements with different stakeholders
including the Competition Authority, the National Council of Radio
and Television, the National Cinematography Centre, the Forum for
the Protection of Producers and Screenwriters and the tax and
customs administrations, with the aim of fighting piracy and
enforcing the copyright law. However, the most successful
institution in combating broadcast piracy remains NCRT which has
tried to ensure that only licensed programming is allowed to be
broadcast on television and penalized those stations in
noncompliance. Nonetheless, law enforcement remains incomplete and
violations of copyright and other intellectual property rights are
common. The most frequently pirated products are western movies and
sport events broadcasted by TV channels. Also pirated copies of DVDs
and CDs, imported from other countries, are easily purchased in
shops all over the country. The number of cases of violation of
copyright law brought to court remains low.
The Directorate General for Patents and Trademarks (GDPT) was
restructured, and registration and administration of patents,
trademarks and industrial designs has been computerized. This has
improved the processing of applications and the supply of
information. A Board of Appeal was established in the Directorate
for Patents and Trademarks and the Directorate completed the
reorganization of its computer system. A bulletin of industrial
property rights containing records of registrations and changes of
intellectual property rights titles is published and an on-line
version is available on the GDPT website. The Administrative Council
of the EPO approved Albania's request for accession to the European
Patent Convention and its ratification is underway.
Further capacity strengthening and additional human resources for
both the Copyright Office and the GDPT are still required. The
general level of knowledge about IPR and infringements remains poor
and the main factors that hamper the enforcement of IPR laws are the
lack of appropriate experience and qualifications of judges,
prosecutors, customs administration and staff and low level of fines
under the current law. Further efforts are needed to improve
inter-institutional cooperation and the ability of customs
authorities to detect counterfeit products.
Immovable Property Rights
--------------
Enforcement of immovable property rights in Albania remains an
evolving issue. Overall there has been some progress on
strengthening property rights, but proper coordination and further
acceleration of restitution and compensation plans are needed.
Unresolved property issues have undermined efforts to develop a
TIRANA 00000054 002.4 OF 011
functional land market and keep FDI well below its potential.
Immovable property rights (land rights) are still far from well
defined, especially in the coastal areas where there is potential
for tourism development. Large-scale property confiscation during
communist rule and the subsequent nationalization of the economy
completely altered Albania's economic landscape. Property
restitution, corruption, illegal buildings and enforcement of court
decisions are among the most serious challenges facing Albania in
its economic development.
Currently, enforcement of property rights is pursued civil court
system. Almost 70 percent of all civil cases in the Albanian courts
involve property disputes; many of these cases linger for years
before reaching a final ruling. To date, 216 Albanian citizens have
filed suit with the European Court for Human Rights in Strasbourg
against the GOA over property claims. To address this issue, and
relieve an increasingly burdened court system, the GOA, with USG and
other donor assistance, is finalizing an immovable properties
registration system to establish proper title to private claims to
land ownership.
The property registration process has begun in approximately 95% of
the country but has only been finalized or completed in 25% of urban
areas and 85% of rural areas. More lucrative land in high value
coastal areas has not yet been fully registered due to existing
disputes over property title. The main institutions dealing with
property restitution and registration are the Agency for Restitution
and Compensation and the Office for the Registration of Immovable
Properties.
The presence of a large number of informal (unlicensed or
unregistered) buildings spread all over the country has been another
major impediment to secure property titles. In 2006, Parliament
approved the law on the legalization of the informal buildings. The
Agency for the Legalization, Urbanization and Integration of
Informal Areas (ALUIZNI) is in charge of implementing the
legalization process. The number of informal buildings is estimated
to be 350,000 and the surface occupied is estimated to be 320,000
hectares. The first stage of submissions of self-declaration
requests for legalization is completed. To date, the process is
almost half way through since 50% of the informal constructions have
been identified and approved for legalization.
H. TRANSPARENCY OF REGULATORY SYSTEM
Albania's regulatory system is not fully transparent but the
situation is improving. Businesses have difficulty obtaining copies
of laws and regulations especially in their draft form. Laws and
regulations are sometimes inconsistent, leading to unreliability in
their interpretation. Proposed laws and regulations are sometimes
not published in draft form for public comment. There has been
modest improvement in this area recently as several state agencies
operate well-organized websites which are updated regularly. Some
agencies have undertaken steps to consult with business, civil
society and affected groups about issues in proposed laws and
regulations. Although Albania has taken some steps forward to
improve business advocacy by reforming the legislation on Chambers
of Commerce and by establishing the Business Advisory Council,
business participation in the legislative processes remains limited.
I. EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT
The financial sector in Albania has in general been spared from the
global financial turmoil, primarily due to the low amount of loans
in relation to total deposits. Also the lack of a
housing/construction bubble has minimized pressure on the banks.
However, a significant reduction in bank deposits took place in the
fall of September 2008 as individuals withdraw their money due to
fear from losing their savings. Since October 2008 deposits dropped
by about 15% and during 2009 they were below their top level. After
summer 2009 there has been a stable increase in bank deposits and by
the end of 2009 they reached their pre-crisis level. Lower deposits
created some liquidity issues but banks were well equipped to face
the situation. Banks have increased their equity capital to better
face the situation and also BOA has an active monitoring program to
ensure enough liquidity in the banking sector.
The financial sector is totally dominated by commercial banks funded
with private capital. Currently, 16 banks are operating in the
country - two domestically owned banks and 14 foreign or joint
ventures. The degree of market concentration remains fairly high as
the five largest banks dominate the market with about 75 percent of
total assets. The performance of the financial sector in channeling
savings towards productive investment has substantially improved,
but still remains weak in comparison to Western standards. Banks in
Albania offer standard banking services such as deposit accounts,
TIRANA 00000054 003.4 OF 011
foreign transfers, trade finance and, increasingly, mortgages.
Market competition has greatly strengthened and the quality of
banking services provided to the public have significantly improved.
Major Western banks, such as the Italian Intesa SanPaolo Group and
Societe Generale, entered the market through the purchase of
domestic banks. Raiffeisen (Austrian) and several Greek Banks are
also very active in the banking sector. The banking network has
extended to most parts of Albania and developments in this respect
are promising. In November 2009, there were 517 branches, up from
392 at the end of 2007 and 127 in 2005. Several banks offer ATM and
Point-of-Sales terminals and their number is growing rapidly. In
November 2009 there were 725 ATMs up from 335 at the end of 2006 and
3,936 Point-of-Sale terminals up from 1,183 at the end of 2006.
Since 2005, most state employees receive their salaries through
electronic transfers and have been offered debit cards for all their
transactions. In 2008 the private sector also switched to paying
salaries through electronic transfer. By September 2009 banks had
issued 557,000 electronic payments cards (97 percent debit cards and
3 percent credit cards) up from 353,465 or 36.6% at the end of 2006.
However, due to the negative effect of the financial crisis, there
has been a reduction in the number of cash/credit cards that
individuals use. The banking system has been a profitable investment
sector and has companies have had significant profits over the past
several years.
In the absence of a stock market, banking sector remains the main
channel for business financing. Credit to the economy has
experienced an impressive growth since 2005, in part due to the low
starting point. The credit growth rate was 74 % in 2005, 56 % in
2006 and 50% in 2007 and even in 2008, loans grew by almost 30%. The
growth has slowed down considerably during the first nine months of
2009 to about 16%. In November 2009 loans constituted 50.3% of total
banking assets compared to 25% at the end of 2005. Credit to
businesses made up 67% of banks' credit portfolios. The fast growth
of credit has increased non-performing loans as well. Their share to
total credit increased to almost 10% by November 2009 compared to
4.3% in July 2008 and just 2.3% at the end of 2005.
In order to keep credit growth at sustainable levels, supervision
was strengthened during the last two years. The Law on Regulation of
Credit Risk Management was amended, establishing higher capital
requirements for banks that record credit growth exceeding set
benchmarks. The credit information bureau opened in January 2008 and
is contributing to an increase in the information and transparency
in the banking sector. Its main responsibility is to track
consumers' credit histories. The regulatory framework for banking
supervision is, following its recent comprehensive overhaul,
well-developed and continuing the process of adapting standard
international practices. In addition to banks, lending through micro
finance institutions and savings and credit associations is
effective in serving those segments of the population that do not
have easy access to bank financing.
The service of e-banking transactions as a banking product appeared
after 2004 and has slowly expanded but still remains underutilized
by the public. Multiple banks offer this service for certain
clients (mainly businesses for carrying out transfers and other
specialized payments). The rest of the sector is likely to follow
as e-banking transactions gain popularity.
The low level of financial intermediation remains an impediment to
the development of the private sector, particularly to small and
medium enterprises (SMEs). Business report that the following
issues affect access to credit in Albania; high interest rates,
distrust of the banking system, high operating costs of banks and
poor business/project proposals.
Credit lines can be obtained on the local market, but interest rates
can be high; under some circumstances, between 10 and 15 percent.
To obtain credit, applicants usually need to fulfill the following
criteria which, varies from bank to bank: satisfactory business
plan, credit security (usually by mortgage),applicant's own
contribution in the investment project (about 40 percent of the
value) and the entity requesting credit needs to be at least 51
percent privatized.
The insurance industry has also experienced Qh rates of growth
over recent years but, relative to neighboring countries, the market
for insurance in Albania remains largely untapped, especially for
life insurance. The insurance market experienced an increase of 9.43
% for the period January - November 2009 compared with the same
period of the previous year. Gross insurance premiums amounted to
$75.2 million for the same period. Non-life insurance represents 91%
of the total premiums while the rest is life insurance.
The sector is expanding and has attracted foreign investors as two
Austrian companies and one Greek have entered the market through the
TIRANA 00000054 004.4 OF 011
acquisition of controlling shares of domestic companies. American
Reserve Life Insurance became the most recent company to enter the
domestic market through its privatization of INSIG. There are ten
companies present in the insurance market, eight in the general
non-life insurance and two offering only life insurance. GOA has
launched the privatization process of the state owned company INSIG
but the process has been unsuccessful mainly due to the lack of
interest by international companies.
J. POLITICAL VIOLENCE
Albania held parliamentary elections on June 28, 2009. The new
government was formed with a coalition between the ruling Democratic
Party (DP) and the Movement for Socialist Integration (LSI). The
Socialist Party (SP) has boycotted parliament since it convened in
September 2009 and has called for investigations into alleged
electoral fraud in the June 28 elections. Despite a highly
polarized political atmosphere, the elections and the ensuing
boycott have been peaceful and political violence has been avoided.
Small crime, specifically incidents of extortion, theft and robbery,
continue to be of some concern to the business community.
Nonetheless, the domestic climate has been steadily improving and
the violent crime rate has substantially decreased. Albania is a
steady source of stability in the region and relations with
neighboring countries are friendly. The U.S. enjoys a particularly
amicable bilateral relationship with Albania, which is a staunch
American ally in the fight against international terrorism and has
contributed troops to the war efforts in Iraq and Afghanistan.
Albania joined NATO in April 2009 and has begun the process for
European Union accession.
K. CORRUPTION
Corruption, including bribery, raises the costs and risks of doing
business and remains an area of concern in Albania. Corruption has
a corrosive impact on both market opportunities overseas for U.S.
companies and the broader business climate. It also deters
international investment, stifles economic growth and development,
distorts prices, and undermines the rule of law. The government has
made progress in reducing corruption through strengthening judiciary
and police capabilities and introducing new technologies that
automate government processes and increase transparency. Corruption
is still believed to be endemic in Albania and a major challenge to
economic development.
Legal Background
--------------
Albania has ratified several international treaties and conventions
relating to corruption and is member of some of the major
international organizations and programs dealing with corruption
and/or organized crime. Albanian legislation has been amended and
changed frequently in recent years to strengthen the framework
dealing with anti-corruption and organized crime in order to bring
the Albanian legislation in line with civil and criminal conventions
of the European Union.
Albania has ratified The Civil Law Convention on Corruption (Council
of Europe); The Criminal Law Convention on Corruption (Council of
Europe); The Additional Protocol to Criminal Law Convention on
Corruption (Council of Europe); the United Nations Convention
Against Corruption (UNCAC). Albania has also ratified a number of
key conventions in the broader field of economic crime, including
the Convention on Laundering, Search, Seizure and Confiscation of
the Proceeds from Crime (2001) and Convention on Cybercrime (2002).
Albania has been a member of the Group of States Against Corruption
(GRECO) since the ratification of the Criminal Law Convention on
Corruption in 2001 and has been following the recommendation of
GRECO related to incrimination and transparency of political party
funding. Albania is also a member of the Stability Pact
Anti-Corruption Network (SPAI).
Bribery is illegal in Albania. Under the Albanian penal code both
active and passive bribing, abuse of office and undue influence are
considered criminal offences. In addition to basic corruption
offenses, there are specific criminal provisions addressing
corruption by persons exercising public functions, high State
officials and locally elected persons, judges, prosecutors and
employees of the judicial bodies, private sector, foreign public
officials, etc. According to the EU progress report 2009, out of
thirteen recommendations from the Council of Europe Group of States
against corruption (GRECO) report on Albania, two recommendations
regarding the rules on political parties financing remain to be
addressed.
The implementation of the Intersectoral Strategy on the Prevention
and Combating of Corruption 2008-2013 adopted in October 2008 has
TIRANA 00000054 005.4 OF 011
started. However, realistic implementation mechanisms and timeframes
are missing, together with monitoring indicators and adequate
resources. The government has also embarked on reforms that aim at
tackling corruption by minimizing direct contact between the private
sector and the administration. E-government reforms like
e-procurement, e-taxation, one-stop-shop for registration and
licensing of businesses have had a positive impact in reducing
corruption as a result of direct contacts.
Main institutions involved in combating corruption include the
Inter-Ministerial Anti-Corruption Task Force headed by the Prime
Minister. This structure replaced the former Anti-Corruption
Monitoring Group and according to the law serves as a coordinating
body for anti-corruption initiatives. The Anti-Corruption Task Force
is supported by the Departmentof Internal Admiistrative Control
and Anti-Corruption (DIAC) whih has relatively wide-ranging powers
to investigte allegations of irregularities by public officias.
DIAC serves as an Inspectorate oop all centralexecutive public
institutions and is mandated toinvestigate allegations of
proceduaa rreeuuaaiiies and irregularities in h( a d i(g"o*+Q
ppblicf"inances. It reports to the Prime Mins"e .*Te HQghh
Inspectorate for the eellrrttoo nn uuii of Assets (HIDAA)
establishd i( 0 3"coll&ccssaaddaadi(ts the annual declaratio f"Qa s"t s and properties of mid-high level public officials in central
and local executive agence s as well as politicians, and supervises
the prevention of conflicts of interest situations. PolicQ
authorities and the Prosecutor General's Officeaare in charge of
criminal investigations and law enforcement while the State Audit
Commission and internal auditing units within different state
institutions inspect, assess and report alleged cases of corruption.
The Joint Investigative Unit against corruption and economic crime
was established in 2007 in the Tirana District Prosecution Office.
The unit is a multi-agency taskforce composed of prosecutors and
judicial police officers working together on specific
investigations. Based on the success of the unit, six more units
have been established in regions throughout Albania to prosecute
corruption and economic crimes outside Tirana. The High State
Control is the highest institution of economic and financial
control. It supervises the economic activity of state institutions
and other state juridical persons as well as the use and
preservation of state funds by the organs of central and local
government. It is subject only to the Constitution and laws, and the
Head of the High State Control is appointed and dismissed by the
Assembly upon proposal of the President. In the Judiciary, the High
Council of Justice is in charge of appointment and removal of judges
and prosecutors in the first and second instances. Specialized
inspectors investigate allegations of misconduct of judges and the
High Council of Justice then takes the relevant disciplinary
measures, including removal. However, corruption remains a major
problem. Conviction rates in corruption cases remain low.
U.S. Companies
--------------
It is important for U.S. companies, irrespective of their size, to
assess the business climate in the relevant market in which they
will be operating or investing, and to have an effective compliance
program or measures to prevent and detect corruption, including
foreign bribery. U.S. individuals and firms operating or investing
in foreign markets should take the time to become familiar with the
relevant anticorruption laws of both the foreign country and the
United States in order to properly comply with them, and where
appropriate, they should seek the advice of legal counsel.
The U.S. Government seeks to level the global playing field for U.S.
businesses by encouraging other countries to take steps to
criminalize their own companies' acts of corruption, including
bribery of foreign public officials, by requiring them to uphold
their obligations under relevant international conventions. A U. S.
firm that believes a competitor is seeking to use bribery of a
foreign public official to secure a contract should bring this to
the attention of appropriate U.S. agencies, as noted below.
U.S. Foreign Corrupt Practices Act: In 1977, the United States
enacted the Foreign Corrupt Practices Act (FCPA),which makes it
unlawful for a U.S. person, and certain foreign issuers of
securities, to make a corrupt payment to foreign public officials
for the purpose of obtaining or retaining business for or with, or
directing business to, any person. The FCPA also applies to foreign
firms and persons who take any act in furtherance of such a corrupt
payment while in the United States. For more detailed information on
the FCPA, see the FCPA Lay-Person's Guide at: http://
www.justice.gov/ criminal/fraud/docs/dojdocb.html.
Other Instruments: It is U.S. Government policy to promote good
TIRANA 00000054 006.4 OF 011
governance, including host country implementation and enforcement of
anti-corruption laws and policies pursuant to their obligations
under international agreements. Since enactment of the FCPA, the
United States has been instrumental to the expansion of the
international framework to fight corruption. Several significant
components of this framework are the OECD Convention on Combating
Bribery of Foreign Public Officials in International Business
Transactions (OECD Antibribery Convention),the United Nations
Convention against Corruption (UN Convention),the Inter-American
Convention against Corruption (OAS Convention),the Council of
Europe Criminal and Civil Law Conventions, and a growing list of
U.S. free trade agreements.
OECD Antibribery Convention: The OECD Antibribery Convention entered
into force in February 1999. As of December 2009, there are 38
parties to the Convention including the United States (see http://
www.oecd.org/). Major exporters China, India, and Russia are not
parties, although the U.S. Government strongly endorses their
eventual accession to the Convention. The Convention obligates the
Parties to criminalize bribery of foreign public officials in the
conduct of international business. The United States meets its
international obligations under the OECD Antibribery Convention
through the U.S. FCPA. Albania is not a signatory country of the
OECD Convention on Corruption.
UN Convention: The UN Anticorruption Convention entered into force
on December 14, 2005, and there are 143 parties to it as of December
2009 (Please go to see http://www.unodc.org/unodc/en
/treaties/CAC/signatories.html). The UN Convention is the first
global comprehensive international anticorruption agreement. The UN
Convention requires countries to establish criminal and other
offences to cover a wide range of acts of corruption. The UN
Convention goes beyond previous anticorruption instruments, covering
a broad range of issues ranging from basic forms of corruption such
as bribery and solicitation, embezzlement, trading in influence to
the concealment and laundering of the proceeds of corruption. The
Convention contains transnational business bribery provisions that
are functionally similar to those in the OECD Antibribery Convention
and contains provisions on private sector auditing and books and
records requirements. Other provisions address matters such as
prevention, international cooperation, and asset recovery. Albania
signed the UN Anti-Corruption Convention on December 2003 and
ratified it in 2006.
OAS Convention: In 1996, the Member States of the Organization of
American States (OAS) adopted the first international anticorruption
legal instrument, the Inter-American Convention against Corruption
(OAS Convention),which entered into force in March 1997. The OAS
Convention, among other things, establishes a set of preventive
measures against corruption, provides for the criminalization of
certain acts of corruption, including transnational bribery and
illicit enrichment, and contains a series of provisions to
strengthen the cooperation between its States Parties in areas such
as mutual legal assistance and technical cooperation. As of
December 2009, the OAS Convention has 33 parties (see http://
www.oas.org/ juridico/english/Sigs/b-58.html)
Council of Europe Criminal Law and Civil Law Conventions: Many
European countries are parties to either the Council of Europe (CoE)
Criminal Law Convention on Corruption, the Civil Law Convention, or
both. The Criminal Law Convention requires criminalization of a
wide range of national and transnational conduct, including bribery,
money-laundering, and account offenses. It also incorporates
provisions on liability of legal persons and witness protection.
The Civil Law Convention includes provisions on compensation for
damage relating to corrupt acts, whistleblower protection, and
validity of contracts, inter alia. The Group of States against
Corruption (GRECO) was established in 1999 by the CoE to monitor
compliance with these and related anti-corruption standards.
Currently, GRECO comprises 46 member States (45 European countries
and the United States). As of December 2009, the Criminal Law
Convention has 42 parties and the Civil Law Convention has 34 (see
www.coe.int/greco.)
Free Trade Agreements: While it is U.S. Government policy to include
anticorruption provisions in free trade agreements (FTAs) that it
negotiates with its trading partners, the anticorruption provisions
have evolved over time. The most recent FTAs negotiated now require
trading partners to criminalize "active bribery" of public officials
(offering bribes to any public official must be made a criminal
offense, both domestically and trans-nationally) as well as domestic
"passive bribery" (solicitation of a bribe by a domestic official).
All U.S. FTAs may be found at the U.S. Trade Representative Website:
http:// www.ustr.gov/trade-agreements/free-trade-agre ements.
Local Laws: U.S. firms should familiarize themselves with local
anticorruption laws, and, where appropriate, seek legal counsel.
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While the U.S. Department of Commerce cannot provide legal advice on
local laws, the Department's U.S. and Foreign Commercial Service can
provide assistance with navigating the host country's legal system
and obtaining a list of local legal counsel.
Assistance for U.S. Businesses: The U.S. Department of Commerce
offers several services to aid U.S. businesses seeking to address
business-related corruption issues. For example, the U.S. and
Foreign Commercial Service can provide services that may assist U.S.
companies in conducting their due diligence as part of the company's
overarching compliance program when choosing business partners or
agents overseas. The U.S. Foreign and Commercial Service can be
reached directly through its offices in every major U.S. and foreign
city, or through its Website at www.trade.gov/cs.
The Departments of Commerce and State provide worldwide support for
qualified U.S. companies bidding on foreign government contracts
through the Commerce Department's Advocacy Center and State's Office
of Commercial and Business Affairs. Problems, including alleged
corruption by foreign governments or competitors, encountered by
U.S. companies in seeking such foreign business opportunities can be
brought to the attention of appropriate U.S. government officials,
including local embassy personnel and through the Department of
Commerce Trade Compliance Center "Report A Trade Barrier" Website at
tcc.export.gov.
Guidance on the U.S. FCPA: The Department of Justice's (DOJ) FCPA
Opinion Procedure enables U.S. firms and individuals to request a
statement of the Justice Department's present enforcement intentions
under the antibribery provisions of the FCPA regarding any proposed
business conduct. The details of the opinion procedure are
available on DOJ's Fraud Section Website at http://www.justice.gov/
criminal/fraud/fcpa. Although the Department of Commerce has no
enforcement role with respect to the FCPA, it supplies general
guidance to U.S. exporters who have questions about the FCPA and
about international developments concerning the FCPA. For further
information, see the Office of the Chief Counsel for International
Counsel, U.S. Department of Commerce, Website, at http://
www.ogc.doc.gov/trans_anti_bribery.html. More general information
on the FCPA is available at the Websites listed below.
Exporters and investors should be aware that generally all countries
prohibit the bribery of their public officials, and prohibit their
officials from soliciting bribes under domestic laws. Most
countries are required to criminalize such bribery and other acts of
corruption by virtue of being parties to various international
conventions discussed above.
Anti-Corruption Resources
--------------
Some useful resources for individuals and companies regarding
combating corruption in global markets include the following:
Information about the U.S. Foreign Corrupt Practices Act (FCPA),
including a "Lay-Person's Guide to the FCPA" is available at the
U.S. Department of Justice's Website at: http:// www.justice.gov/
criminal/fraud/fcpa.
Information about the OECD Antibribery Convention including links to
national implementing legislation and country monitoring reports is
available at: http:// www.oecd.org. See also new Antibribery
Recommendation and Good Practice Guidance Annex for companies:
http:// www.oecd.org/dataoecd/11/40/44176910.pdf
General information about anticorruption initiatives, such as the
OECD Convention and the FCPA, including translations of the statute
into several languages, is available at the Department of Commerce
Office of the Chief Counsel for International Commerce Website:
http:// www.ogc.doc.gov/
Transparency International (TI) publishes an annual Corruption
Perceptions Index (CPI). The CPI measures the perceived level of
public-sector corruption in 180 countries and territories around the
world. The CPI is available at: http://www.transparency.org/. TI
also publishes an annual Global Corruption Report which provides a
systematic evaluation of the state of corruption around the world.
It includes an in-depth analysis of a focal theme, a series of
country reports that document major corruption related events and
developments from all continents and an overview of the latest
research findings on anti-corruption diagnostics and tools. See
http:// www.transparency. org/publications/gcr.
The World Bank Institute publishes Worldwide Governance Indicators
(WGI). These indicators assess six dimensions of governance in 212
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countries, including Voice and Accountability, Political Stability
and Absence of Violence, Government Effectiveness, Regulatory
Quality, Rule of Law and Control of Corruption. See
http://info.worldbank.org/ governance/wgi/sc_country.asp. The
World Bank Business Environment and Enterprise Performance Surveys
may also be of interest and are available at: http://
go.worldbank.org/RQQXYJ6210.
The World Economic Forum publishes the Global Enabling Trade Report,
which presents the rankings of the Enabling Trade Index, and
includes an assessment of the transparency of border administration
(focused on bribe payments and corruption) and a separate segment on
corruption and the regulatory environment. See
http://www.weforum.org
Additional country information related to corruption can be found in
the U.S. State Department's annual Human Rights Report available at
http://www.state.gov/g/drl/rls/hrrpt/.
Global Integrity, a nonprofit organization, publishes its annual
Global Integrity Report, which provides indicators for 92 countries
with respect to governance and anti-corruption. The report
highlights the strengths and weaknesses of national level
anti-corruption systems. The report is available at:
http://report.globalintegrity.org/.
L. BILATERAL INVESTMENT AGREEMENTS
A bilateral investment treaty between the United States and Albania
was signed in 1995 and entered into force on January 3, 1998. This
treaty, inter alia, ensures that U.S. investors receive national or
most-favored-nation treatment and provides for dispute settlement.
As of June 1, 2009, Albania has concluded bilateral investment
protection agreements with the following countries:
Agreements in force:
Greece, Germany, Italy, France, Austria, Netherlands, United
Kingdom, Denmark, Sweden, Portugal, Belgium and Luxembourg, Spain,
Finland, Hungary, Slovenia, Switzerland, USA, Turkey, Romania,
Bulgaria, Macedonia, Russia, Israel, , China, Malaysia, Republic of
Korea, Serbia, Montenegro, Moldavia, Kosovo and OPEC Fund for
International Development.
Signed Agreements:
Ukraine, Tunisia, Syrian Arab Republic, Poland, Lithuania, Bosnia
&Herzegovina, Islamic Republic of Iran, Kuwait, Libyan Arab
Jamahiriya, Egypt, Czech Republic and Croatia.
Albania has also signed agreements for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes
on income and on capital with many countries, which have priority
over Albanian domestic laws.
Tax treaties are in force with the following countries:
Poland, Hungary, Czech Republic, Italy, Sweden, Greece, Malta,
Belgium, Netherlands, France, Norway, Switzerland, Rumania,
Bulgaria, Macedonia, Croatia, Moldova, Kosovo , Turkey, Russian
Federation, Malaysia, China, Egypt, Serbia, Montenegro, South Korea,
Austria and Latvia. Agreements are signed with Luxembourg, Spain,
Singapore and Ireland and are awaiting ratification by parliaments.
M. OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS
The Overseas Private Investment Corporation (OPIC),a USG sponsored
entity, can make insurance and project finance resources available
to U.S. investors in Albania. OPIC's three main activities are risk
insurance, project finance and investment funds. Albania has also
signed the MIGA Convention, which established the Multilateral
Investment Guarantees Agency (MIGA). MIGA provides investment
guarantees against certain non-commercial risks (i.e., political
risk insurance) to eligible foreign investors for qualified
investments in developing member countries. MIGA's coverage is
against the following risks: currency transfer restriction,
expropriation, breach of contract, and war and civil disturbance.
It provides insurance against risks similar to that offered by OPIC;
MIGA and OPIC can work together on projects. MIGA offers long-term
(up to 20 years) political risk insurance coverage to eligible
investors for qualified investments.
In 1998, OPIC-supported the $200 million Southeast Europe Equity
Investment Fund, which invested heavily in Southeastern Europe. OPIC
supported its successor, SEEF II managed by Bedminster Capital. SEEF
II has invested in the Albanian health sector by purchasing a
TIRANA 00000054 009.4 OF 011
private hospital now known as the American Hospital as well one of
the largest Internet Providers in Albania, ABCOM. For more
information on OPIC please visit http://www.opic.gov
Overseas Private Investment Corporation
1100 New York Ave., NW Washington, DC 20527
Tel: 202-336-8400
Email for general business inquiries to: info@opic.gov
N. LABOR
Labor relations between employee and employer are regulated by
individual employment contracts pursuant to Law 8549, dated January
11, 1999 ("On The Status Of The Civil Employee And The Labor Code")
updated in 2003. The GOA has established the National Council of
Labor, composed of government officials, trade unions and employers
associations. Its major goal is to improve social dialogue between
the government, management and employees. The institutions that deal
with the labor market are: Ministry of Labor and Social Affairs,
National Employment Service, State Labor Inspectorate and other
private actors like Private Employment Agencies, and Private
Vocational Training Centers.
Employers and employees have the right to form trade unions (Labor
Code, article 176). Trade unions are organized at the national level
(according to industrial sector) and at the company level. The right
to strike is sanctioned by Law no. 7458 (January 12, 1991) and by
the Labor Code. Trade unions have the right to negotiate wages,
working conditions, etc., and the employment contracts are
applicable both to union and to non-union workers. Two main
national-level trade unions, both affiliated with the ITUC
(International Trade Union Confederation) are the Confederation of
Trade Unions (KSSH) and The Union of the Independent Trade Unions of
Albania (BSPSH). Employment contracts can be for a limited or an
unlimited period, but as a general rule employment contracts are
signed for an unlimited period if the duration is not specified
properly in the contract.
The labor force in Albania is about two million people, of which
almost 1.2 million workers live abroad, mostly in Greece and Italy.
During the third quarter of 2009, the official unemployment rate
reached 12.76%. A high proportion of Albanians under-40 speaks two
languages. Albanian youth generally speak Italian and Greek and
English are common among the younger generation. While some members
of the labor force are highly skilled, many work in low-skill
industries or have out-of-date technological skills. However,
Albanians are rapidly learning modern market practices and often
display impressive entrepreneurship.
Albania has a tradition of strong secondary education that prepare
students to enter the labor market. Elementary education is
compulsory and a large percentage of those who finish elementary
school continue to high school. 62 percent of high school graduates
go on to college. The GOA has opened new public universities in
Albania which along with the new private universities represent
impressive growth in this sector. In addition, the number of
students who receive graduate degrees abroad has increased
significantly, establishing a generation of skilled professionals
which the government is trying to lure back to Albania through the
Brain Gain Project (a UNDP program offering financial incentives to
Albanians educated abroad to return to Albania to work). In 2007,
the GOA established the Excellency Fund which aims to promote and
financially reward youngsters and students during their studies.
The average salary in public administration during the third quarter
of 2009 amounted to 42,000 leke (about $450) monthly. In May 2009,
the GOA increased the minimum monthly wage applicable for both the
public administration and the private sector to 18,000 leke (about
$200),which is still among the lowest in the region. However,
since 2008, to counter informality in the labor sector due to under
reporting of revenue by businesses, the government is using minimum
reference salaries (MRS) for the private sector. The MRS
establishes a standard wage depending on job code for all employees
and is used to calculate both the personal income tax and the rate
of contributions for social and health insurance. It is not
necessarily the actual salary an employee receives.
O. CORPORATE SOCIAL RESPONSIBILITY
In general, there is little awareness of corporate social
responsibility among producers and consumers with the exceptions of
large companies, mostly foreign companies, which try to employee
social corporate responsibility principles. The laws and
legislation related to CSR exist in Albania and if implemented fully
could constitute a strong base for further development of CSR
practices in Albania. Even academic instruction on CSR in Albania
is in a very early stage of development. Corporate Governance
TIRANA 00000054 010.4 OF 011
course, Environmental Engineering and Business Ethics curricula have
only been introduced in the past several years at some
universities.
P. COMPETITION FROM STATE-OWNED ENTERPRISES
In general, there is little discrimination between public and
private companies operating in the same sector but there have been
allegations by businesses that believe state-owned companies were
granted preferential treatment in government contracts.
Privatization process of SOEs in Albania is nearing completion and
SOEs are active only in few sectors like extraction and sale of oil
and gas (Albpetrol),energy generation (KESH),insurance (INSIG) and
ports.
Q. FOREIGN-TRADE ZONES/FREE PORTS
The GOA approved Law 9789, dated July 19. 2007 "On the Establishment
and Functioning of Economic Zones," abolishing Law 8636, dated July
6, 2000, "On Free Zones." The current legislation regulates the
establishment of economic zones and related matters and makes the
establishment and the functioning of such zones more efficient. It
anticipates the establishment of free trade zones and industrial
parks near ports, airports or at the crossroads of international
transport. Economic zones are proposed by the Ministry of Economy
and approved by the Council of Ministers on a case-by-case basis.
The latter has the power to define the status of the zone (either a
free zone or an industrial park),areas and boundaries, the economic
activities to be performed within the zones, the period of the zone
functioning, the method of granting the permission (lease,
concession, etc.) and the procedures for the selection of the
"developer." The selection of the "developer" of the economic zones
is based on the criteria defined in the law 9663, dated December 18,
2006 "On Concessions."
During 2007-2009, the GOA approved the construction of several
industrial parks: Shengjin, Koplik, Vlore, Elbasan, Lezhe, and
Shkoder and one industrial and energy park in Spitalle, Durres (the
largest, with 850 hectares). Four of these parks are located near
the main ports of Albania - Durres, Vlore, Shengjin. The developers
for the Shengjin, Vlora and Koplik/Shkoder have been selected while
selection of other developers is still in process as of January
2009.
Industrial zones may be used for production, manufacturing,
agro-processing, trade, export-import and supporting activities.
Albinvest will serve as a "one- stop-shop" for the licensing of
tenants. The development of economic zones will promote economic
growth and increase employment and the competitiveness of the
Albanian economy.
In 2009, Albanian government approved the first free zone adjacent
to the approved container port in Vlore. The Ministry of Economy and
Energy, initiated a process of open international tender for the
execution and completion of a Concession Agreement (with a duration
of 35 years),for a 478 hectares area. The tender deadline was
December 18 and the Ministry is expected to announce the winner.
R. FOREIGN DIRECT INVESTMENT STATISTICS
The FDI has increased although it still remains among the lowest in
the region. The cumulative FDI is also the lowest in the region. The
Bank of Albania reported the following figures for foreign direct
investment in Albania. Regardless of numerous contracts, only a few
projects materialized in 2009.
FDI in million Euro per Year (2004)279, (2005)212, (2006)259,
(2007)481, (2008)653, (2009)580*
Source: Bank of Albania
*BoA estimate for the first three quarters of 2009
FDI during the first nine months of 2009 is estimated to have
reached 580 million euro despite optimistic GOA projections for 2009
fueled mainly by strong investor interest witnessed during
2007-2008. A large part of FDI is due to privatizations. The
Albanian government collected 103 million Euro from the
privatization of 76 percent of the shares of the distribution arm of
Albanian Power Corporation; 48 million Euro from the privatization
of 12.6 percent of AMC state controlled shares; 5 million euro from
the privatization of 40% of GOA controlled shares of the United Bank
of Albania. INSIG (insurance company) privatization failed during
the negotiation process with the winer and it might take place
during 2010.
Leading investor nations in Albania include: Italy, Greece, Turkey,
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Austria, Germany, Canada, Spain and the U.S. Foreign investment
focuses on financial sector, oil and gas production,
telecommunications, mining, metallurgy, energy, manufacturing and
cement production.