Foreign investment in Albania
Prior to 1990, no foreign capital was invested in postwar Albania, but various communist states aided the Albanian industrialization program, supplying credit, machinery and equipment, and technicians. Prior to 1961, assistance by Soviet bloc technicians in geologic surveys, construction, and operation of factories was vital to Albanian economic growth. Following the Soviet suspension of credits, withdrawal of technicians, and elimination of trade, China increased its activity in all these areas. In 1978, China terminated all its economic and military cooperation with Albania and the following year Albania was for the first time without any foreign assistance. In the 1980s, some economic assistance was provided by the FRG.
After the fall of communism, foreign investment was encouraged and 149 joint ventures were agreed upon. A $10 million Coca-Cola bottling plant set up in 1994 outside of Tirana (directly employing about 100 people), the European Bank for Reconstruction and Development, and a local Albanian company was early ventures. In 1995, Albania concluded a bilateral investment treaty with the United States. At the end of 1995, foreign investment was projected to rise to about $600 million, with about one-half of that coming from Italy. However, the prospects for foreign investment dropped sharply in 1997 in the wake of the violence and property destruction that followed the collapse of the pyramid schemes in which many Albanians had sunk their savings. The violent removal of the Prime Minister in 1998 and the influx of Kosovo refugees in 1999 were added deterrents to foreign investment. From 1997 to 1999, foreign direct investment in Albania averaged only $44.57 million, but in 2000 the rate of inflow tripled to $143 million and then in 2001 to $181 million.
In 2003, the UN Development Program assisted the Albanian government in setting up the Investment Promotion Agency (ANIH) that replaces the Economic Development Agency. Previously, the government had put few restrictions on foreign investment, but had offered no tax or financial incentives beyond national treatment. An improved investment regime is a priority for the current government.
Investment Property in Albania
Albania steps outside the emerging market mould in that several regions in the country are emerging and simultaneously becoming some of the hottest news on the overseas property investment scene. Generally a market’s emergence begins only in the capital; Albania’s capital Tirana has not broken that rule other than it is not the only area expanding rapidly.
We can only hope that what seems to be triggering the boom in Eastern Europe will spread around the globe. Some Eastern European countries’ economic growth was first triggered by the break-down of the soviet union and the fall of the Berlin wall, countries like Ukraine and Bulgaria were able to capitalize on the current boom in tourism brought about by the budget airlines, which in turn brought about a boom in overseas property investment.
Meanwhile, countries like Albania, long marred by violence and tensions, both regional and internal troubles with the Albanians from Kosovo, all preventing it from capitalizing on the potential for growth. It seems that having watched Bulgaria and Ukraine and other countries in the region experience a boom in foreign investment, the government set upon doing everything in its power to quell the tensions to make things better in the country as a whole.
It succeeded, real GDP growth is strong around the 6% mark, and the country is becoming very popular with tourists. The low property prices and potential for great growth in tourism is attracting overseas property investor.
10 reasons why you should invest in Albania
Albania find that they benefit from ‘the Albanian advantage’ which
comes from investing in a politically stable, fast-growing, low cost,
European economy that is today’s gateway for European manufacturers
into southern Europe.
1. Our domestic economy & exports are expanding
is building a consistent track record of economic expansion built on
export growth, a low and stable inflation rate, and increasing per
capita income. Our GDP and export growth rates were the fastest
growing in South East Europe from 1997 to 2004.
2. Low inflation rate
a predictable environment in which to operate. Consistent low annual
inflation rates in recent years have shown that Albania provides the economic stability that gives investors the confidence to invest.
3. Established trading with the EU
Almost 90% of Albania’s exports are designated for EU markets, and this export pattern is an important predictor of future growth.
4. Gateway to the Balkans Free Trade Area
Albania benefits from many Free Trade Area agreements with Balkan nations to the east of Albania. Investors can manufacture in Albania for export to the 50 million-strong Balkan market as well as throughout the European Union.
5. Site availability from production facilities to high quality office space
sites are currently available under the Albania One Euro initiative.
These range from basic production facilities throughout the country to
high quality serviced office space in all of our main cities.
Industrial sites are better priced in Albania
than in Eastern European or other Balkan countries. Electricity and
water costs are also at or below those of other countries. Factory
units are available for refurbishment, which, in many cases, are
government owned and are offered along with attractive
leasing arrangements based upon the number of jobs created.
6. Total labor costs are lower than comparable countries
wage costs are a fraction of our competitors’ levels within the region,
including Romania and Bulgaria, while social security ‘on costs’ in
Albania amount to just 30.7% of gross wages.
7. Adaptable and flexible skilled labor force
working population of slightly fewer than two million has a median age
that is young by European standards, just 29 years compared to 40 years
A high proportion of under-40s speak two languages, many of them after
returning from studying and/or working abroad. The current unemployment
rate of approximately 15% shows that there is no complacency in the job
market while the number of students in social sciences, business, and
law accounts for more than one-third of all those in higher education.
8. Extensive language skills
Albanians learn either Italian or Greek from childhood, and are well
able to perform customer-relation positions in these near-mother
tongues. The younger generations learn English, which is rapidly
becoming the primary foreign language taught in schools and
9. Administrative & business regulations are being simplified
is working hard to improve its administrative procedures. According to
the World Bank, starting a business in Albania requires only a few more
procedures than the average EU country while the flexibility to release
workers is rated far better in Albania than in the EU or other Balkan
or Eastern European countries. With a pro-business government in place,
simplifying the administration remains a priority that will benefit all
10. Investment opportunities through privatization
government is reviewing its privatization strategy and anticipates that
privatization will represent an important source of investment as well
as an opportunity to transform some key strategic sectors of the
Albanian economy. A new law on concessions has recently been passed
with support from the World Bank and is designed to stimulate the
development of key sections of the country’s infrastructure and public