Investing in Albania

Nordic Association for Trade and Business Development in Albania and Kosovo

Albania has a range of opportunities in stable and growing sectors such as: Manufacturing, Energy, Agriculture, Oil and Gas, Mechanic Industry and Tourism.

Albania has a dynamic export sector. Albania’s exports have a 24% annual growth rate for the past five years and its trade with many EU countries has been growing rapidly. Exports have grown from 1 billion USD to 2.5 billion in the same period.

According to EBRD, Albania was the top reformer country in the region in 2014.
The Heritage Foundation’s 2015 Index of Economic Freedom ranks Albania as very favorable compared to other countries in the Western Balkans. Albania scored highest points in trade, fiscal and investment freedom indicators.

Albania has double taxation agreements with 40 countries, including two Nordic countries, Sweden and Norway. According to the European Commission report the private sector remains dominant and continues to account for about 80% of GDP

INDUSTRIES

Oil & Gas

Albania has significant reserves of oil and gas, both on shore and offshore, producing more than 1.4 million tons/year. Hydrocarbon reserves are unique underground natural resources, through which Albania has consistently generated significant income.

In 2013 and 2014, oil and gas sector counted five companies producing oil and gas in the southern part of Albania and six companies engaged in exploration activities.

Production of crude oil has more than doubled since 2003, when private oil companies started operating in the sector. The oil and gas sector contribution to the National budget accounted at minimum with 3% in 2013 and 2.7% in 2014.

The Albanian oil, gas and by products market is a free, open, and liberalized where the Government of Albania plays only a regulatory role.

Legal Framework

The legal framework on petroleum exploration and production offers considerable flexibility to the Government in negotiating acceptable terms with oil companies. All petroleum reserves under the jurisdiction of Albania are the exclusive property of the Albanian State. The Petroleum Law (Exploration and Production) expressly permits the ministry in charge of petroleum activity to enter into a Petroleum Agreement through its representatives i.e.

Albpetrol SH.A, the state owned hydrocarbons company or the National Agency of Natural Resources (AKBN) under which an oil company may be granted exclusive rights to explore and produce hydrocarbons.

The law on processing and marketing oil and gas places is done by the Albanian oil refineries and wholesale companies should hold 90 days stock of petroleum products, in line with the EU Oil Stocks Directive. Albania’s legislation on oil exploration is harmonized with the EU Hydrocarbons Directive. Local production of crude oil has increased significantly. Exploration and production are carried out with the involvement of foreign investors.

Profit tax on oil & gas industry amounts to 50%, however the Government have granted fiscal incentives during the exploration phase such as expense recovery, exemption of supplies from VAT and so on.

Useful Links

http://www.energjia.gov.al/
http://www.ekonomia.gov.al/
http://www.albeiti.org/

Mining Industry

Albania is a country rich in mineral resources. Exploration, exploitation and processing of mineral ores constitute a significant activity of the Albanian economy due to a traditional mining industry, which has been a solid foundation to the country economic sector, generating substantial revenues. The mining sector is growing every year. Albania’s mineral deposits include chrome, copper, iron-nickel, limestone, sandstone, asphalt and natural bitumen, decorative limestone, decorative massive sandstone. The latest mainly focuses on the production of chromium, copper, iron, nickel, bitumen and inert minerals that serve as raw materials in the construction industry.

The extractive sector represents a growing contributor to the Albanian economy. GDP from Mining in Albania was 45,276.20 ALL Million in the third quarter of 2015. For 2014, the mining and quarrying industry reported a number of 619 enterprises, with 11,169 employed and invested 38,237 ALL Million, representing 21% of the total economic activity.

The mining industry has traditionally been the backbone of the Albanian economy and it has enjoyed rapid growth in the past five years. This sector includes an increasing number of small and medium size companies and only few large-scale industrial companies. The total number of active licenses, published in the Register of active mining permits, according to the Ministry of Energy and Industry in February 2016, was 643.

Legal Framework

Within the implementation and harmonization procedures of the Albanian legislation with the acquis communautaire, the Albanian parliament has adopted the Mining Sector Law (No. 10304, dated 15 July 2010) which abrogated the old Mining Law (No. 7796, dated 17 February 1994). The new law, which entered into force on 27 August 2010, reflects the provisions of EU Directive 2006/21 dated 16 March 2006 “On Management of Waste from Extractive Industries”.

The Mining Sector Law allows the stipulation of ‘incentive agreements’ if the mining activity consists of exploitation of minerals of the group of metallic and non-metallic minerals, cobbles and bitumen, group of construction minerals or group of radioactive minerals in a certain area. This agreement is signed between the holders of the exploitation permit and the respective ministry, given that the mining activity is considered as having a particular public interest for the area in which this activity is carried out. This agreement is subject to approval by the Council of Ministers and the Albanian parliament.

The rights to exploit mineral resources can be granted to private domestic or foreign persons upon mining permits, which are awarded in compliance with the procedures provided from the Mining Sector Law. The mining right is a distinct and independent right from the ownership right over the land surface. The holder of the mining permit has the legal right of mining servitude (mandatory) over the property in the area approved upon the mining permit.

Useful Links

http://www.energjia.gov.al/
http://www.ekonomia.gov.al/
http://www.albeiti.org/

Manufacturing

Albania has a strong manufacturing sector which is primarily driven by highly successful enterprises particularly in the garment and footwear industries. This success has been achieved through the development and continued strengthening of extraordinarily close relationships with leading brands over the past 20 years. The manufacturing sector represents about 15% of GDP while accounting for about 11.4% total employment.

Key advantages of the textiles and footwear industries in Albania

  • Highly skilled and cost-competitive workforce (57% of Albania’s population is under age of 35)
  • High quality products, experience and tradition
  • Short-time deliveries to EU countries
  • Comparatively low transport costs to Europe according to Eurostat
  • Competitive labour cost due to lower salaries than other countries in the region (the min. wage in Albania is 22,000 ALL/approx. 157 Euro)
  • Excellent language skills – English, Italian, French, German, Spanish, etc
  • Full cycle production – design, sourcing, pattern making, cutting, finishing

Legal Framework

The legal framework governing manufacturing industry aims to incentives and stimulates the industry by attracting foreign investors, as well as retaining the actual ones. Tax incentives and other facilities are listed below:

  • Symbolic lease cost of € 1.00 per contract, when renting government property
  • Instant reimbursement of VAT, in case of taxpayers with zero risk, and within 30 days in case of exporter taxpayers
  • Exemption from VAT on imported machineries and equipment
  • Different financing incentives for professional on-the-job training
  • Facilitation of customs procedures – Reduction of the administrative costs and time for economic operators
  • Opportunity to declare and control after official hours in customs offices
  • Simplification of procedures regarding employment and social security insurances
  • A representative of the Textile and Footwear Association in the National Economic Council, for an open dialogue, direct and active with the government.

Useful Links

http://www.ekonomia.gov.al/
http://albania-textile.com/

Agriculture

Twenty per cent of Albania’s land fertile and arable. Utilized Agricultural Area (UAA) is 1.12 million hectares, which covers 39% of the total land of the country. About half of the UAA is arable land, 38% is permanent grassland and 11% is land under permanent crops. Agriculture is one of the most determinative sectors of the national economy. Its contribution has been decreasing over years and it is estimated at 17% of the GDP, while about 60% of the labour force works in agriculture and related fields.

Agriculture has traditionally been the backbone of Albania’s economy and remains one of the largest and most important sectors in Albania.

Legal Framework

Under the Law on agricultural cooperative entities, new cooperatives have been registered for the production of oil, cereals and vegetables. The work on creating a functioning electronic agricultural information system (farm register, animal register, etc.) must be intensified. Within the sector, the food processing industry is a better than average performer. In some niche market products, such as frog meat, the sector is an important player at the European level. Double digits growth has been seen in the sub-sectors of herbs and spices, vegetable oils and fish products. Again, the food processing sector is diverse, but dominated by small-scale, often artisan producers, most of them producing for the local market. Small-sized investment opportunities have been identified in many sub-sectors.

The best can be found in segments where exports already exist, namely medicinal plants and herbs, early and late season vegetables, preserved products such as olives, olive oil, canned tomatoes, fresh and processed fish, and cheese.

As the country progresses towards EU accession, Albania is implementing the strategy with national and international donor funds and support from the EU’s “Instrument for Pre-Accession Assistance on Rural Development 2014 – 2020” (IPARD). Technical guidance will assist the implementation of policies to improve productivity and integrate Albania’s agro-food sector with the EU one. The government aims to transform the “Made in Albania”-brand into a certified and reliable food trade mark in the international markets. Albania offers a set of enablers for potential agriculture investors: Albanian government support measures include regulations, tax structure, competitive and low-cost labour force and investment incentives.

Useful Links

http://www.bujqesia.gov.al/
http://www.kash.org.al

Travel and Tourism

Travel and Tourism is an important sector with great relevance to the Albanian economy and to employment, as well as for its positive growth forecasts. The direct contribution of Travel & Tourism to GDP in 2014 was ALL 82.3 billion (5.9 % of GDP). The total contribution of Travel & Tourism to GDP was ALL291.6 billion (21.0% of GDP) in 2014. This primarily reflects the economic activity generated by industries such as hotels, travel agents, airlines and other passenger transportation services (excluding commuter services). But it also includes, for example, the activities of the restaurant and leisure industries directly supported. The direct contribution of Travel & Tourism to GDP is expected to grow by 4.1% to ALL 120.4 billion (6.2% of GDP) by 2025.

Travel & Tourism have attracted capital investments of ALL 19.6 billion in 2014. It increased with 1.6% in 2015, and it is expected to rise by 3.6% over the next ten years to ALL 28.5 bn in 2025.

Archaeology

Albania has a very rich ancient history, and it has several ancient sites that few outsiders have visited. Apolonia, an ancient city in Illyria, located on the Aous River, was founded in 588 BC by Greek colonists from Corfu and Corinth. Excavations conducted by Albanian archaeologists in the 1960s near the modern village of Saraqinishte led to the identification of the fortified city of Antigonea, believed to have been founded by Pyrrhus, the Molossian king, in 296 BC for his wife Antigone. The crown jewel is undoubtedly Butrint Ancient site. Originally ancient Greek, this remarkable site was built upon and extended by Romans, Byzantines and Venetians, each leaving their unique fingerprints on this exceptionally preserved site.

Hiking, Walking & Cycling

More than two thirds of Albania is mountainous landscape making it ideal for exploring on foot. Southern Albania walking routes run along the crystal waters of the Ionian Sea, up high ridges and panoramic peaks, through pine forests, olive and citrus groves, visiting monuments that narrate the rich history of the country. In Northern Albania discover the fairy-tale landscapes of the Albanian Alps (or Accursed Mountains).

Adventure Sports

Several river rafting are organized in Osumi, Vjosa and Devolli rivers canyons. Skiing, snowboarding and snowshoeing are also possible in the winter, and cannoning and river hiking are available through the warmer months.

Birdwatching

The fresh water marshes around Butrint are particularly attractive to wintering water birds, such as the little egret, spoonbill, grey heron, little-ringed plover and lapwing. During the migration season, terns, sandpipers, and curlews use the area as a feeding and resting ground. In 1993, the critically endangered slender-billed curlew was spotted here. Typical flora found in the ditches are celery leafed buttercup, watercress. The reed beds are home to frogs, snakes, terrapins, kingfishers and warblers.

Legal Framework

Law No. 93/2015 on Tourism provides a very competitive offer to foreign and domestic investors. The new law on tourism provides a range of changes for the tourism sector in Albania, aiming to transform it into one of the most important economy sectors in the upcoming years. The Ministry responsible for the tourism sector is the link between the Government of Albania, local authorities and the strategic investors and plays the monitoring role in the implementation of the signed agreements for different investments in this sector.

The new law encourages big investors which seek to implement in tourist resorts by giving in use state owned land through the “Albania 1 Euro scheme”. Every real estate owned by the state or the local authority becomes a property under the administration of the Ministry of Tourism within two months after the area has been declared as “a priority area for the development of tourism”. The Ministry has the right to give this area to a private investor for investments purposes, by applying “Albanian 1 Euro” lease scheme for a period of 99 years.

Useful Links

http://www.ekonomia.gov.al/
http://www.akt.gov.al/al/

Power and Utilities Industry

The energy market in Albania is partially open. As of 2009, all non-household consumers have the right to choose their supplier. The eligible customer has the right to sign electricity supply contracts with any local or foreign qualified supplier.

Power Market participants in Albania consist of Transmission System Operator (TSO), Distribution System Operator (DSO), generators, the Wholesale and Retail public supplier and qualified suppliers.

In terms of its domestic energy, the electricity system depends on more than 98% hydro power, with 90% coming from the Drin River Cascades. Vlora Thermo Power Plant with a capacity of 97 MW has become operational in 2010. The Albanian Power Corporation (KESH) imports the rest of the country’s electricity needs.

The Albanian Market Model is characterized by bilateral contracts for electricity between and among market participants. There is no retail market at present.

Legal Framework

Within the electricity sector, Albania has a regulatory framework in place that is compliant with Energy Community requirements, with partial market opening. The Law no. 43/2015 “On Power Sector” and Law no.9946 “On Natural Gas Sector” are the main laws governing the power and utilities sector in Albania aiming to:

  • Open, organize and operate a competitive electricity market;
  • Regulate the issuance of the authorizations and licenses in the power sector;
  • Regulate the activities in the power sector, customers protection, security of supply, and
    establishing competitive structures of the electricity market;
  • Integrate the Albanian market with the regional and European electricity market.

Useful Links

http://www.ere.gov.al/
http://oshee.al/
http://www.ost.al/en/

Telecommunication Industry

The market’s growth potential has attracted international investments into both the incumbent and alternative operators. Future network development is expected in order to support the growing popularity of broadband services. Albania’s Internet market offers much growth potential due to currently low penetration levels. Internet access is available through a variety of means including dial-up, leased line, microwave radio, ADSL, WiFi and fibre. Broadband uptake is raising in response to increased availability and drastic tariff reductions.

Recognizing the potential of applying information and communication technology (ICT) to improve both social and economic development, Albania has taken good steps to develop a knowledge-based society, principally by improving ICT literacy. Albania’s mobile market has undergone rapid growth due to competition, initially with the entrance of Albanian Mobile Telecommunication, Vodafone and later through the entrance of Eagle Mobile, Plus network and recently with T-Mobile. The majority of mobile users utilize prepaid services. With the mobile voice market maturing, mobile network operators are turning their attention to increase average revenue per user levels.

Legal Framework

The market’s growth potential has attracted international investment into both the incumbent and alternative operators. Future network development is expected in order to support the growing popularity of broadband services. Albania’s Internet market offers much growth potential due to currently low penetration levels. Internet access is available through a variety of means including dial-up, leased line, microwave radio, ADSL, WiFi and fibre. Broadband uptake is rising in response to increased availability and drastic tariff reductions.

Recognizing the potential of applying information and communication technology (ICT) to improve both social and economic development, Albania has taken steps to develop a knowledge-based society, principally by improving ICT literacy. Albania’s mobile market has undergone rapid growth due to competition, initially with the entrance of Albanian Mobile Telecommunication, Vodafone and later through the entrance of Eagle Mobile, PLUS network and recently with T-Mobile. The majority of mobile users utilize prepaid services. With the mobile voice market maturing, mobile network operators are turning their attention to increase average revenue per user levels.

Useful Links

http://www.akep.al/

ICT services

The Albanian ICT sector has improved significantly in the last years. The ICT sector is composed of four sub-sectors: IT Software Development, IT Hardware, BPO – Business Process Outsourcing and Telecommunication. Albania is strongly developing BOP-Business Process Outsourcing and Telecommunication. Albania has relatively a small share in the software development but it is a potential market for growth. It is a new market for software development and it is in the initial phase of development. Informational Technology Outsourcing, ITO involves outsourcing of services related to IT functions. They consist of, among others, infrastructure management services, software related services, software research and development, and IT consulting services. The level of skills required for employment in the sector varies, accordingly, from low to very highly skilled IT expertise.

The top 5 IT/ITO and training service provider in Albania are InfoSoft Group, composed of eleven companies that, with their unique products and services, are successfully serving in the Albanian and the regional market. Iklub.al is one of the most successful initiatives in the market regarding information portal. CCS-Computer and Copier Systems/Tetra represents one of the oldest IT Companies in the Albanian market. DM Consulting Services that provide clients with top-quality, innovative, reliable, cost effective, and time-saving business and IT solutions.

The BPO subsector in Albania is developing and turning out to be a real employment generator, especially for young people. As of June 2015, there are around 300 call-centres in Albania with over 20,000 employees. The BPO sector is mostly working with Italian market but it has potential to grow in other European markets.

Useful Links

http://outsourcing.com.al/

Login Status

You are not logged in.