Marketing Analysis – Italy Albania business opportunity
ITALY ALBANIA – INVESTMENTS – PARTNERSHIP – BUSINESS OPPORTUNITIES
update: June 2019
NOTES ON ITALIAN INVESTMENTS IN ALBANIA
At the beginning it was the only destination of the great Italian entrepreneurs who, looking for cheap labor, delocalized their business without too many scruples. Now Albania is the destination for workers and small entrepreneurs in crisis, looking for luck beyond the Adriatic.
The main advantage that Albania offers is its geographical proximity, but above all the knowledge of the language. In addition, there is a streamlined bureaucracy and a tax burden of around 15%. In Albania with 250 euros you can find good accommodation, it costs less to shop and the services are cheaper. This is why more and more Italians choose it as a destination to start over. Various professionals have found a small revival often after failing at home.
16 thousand, of the 19 thousand Italians present in Albania, would be workers with a contract of employees, joined by other types of professionals, who with a favorable tax system and a cost of living at least five times lower than in Italy, manage to live even with less than 900 euros per month.
They are mainly men, aged between 25 and 50, come mainly from northern Italy, many are lawyers, doctors and architects.
As Repubblica reports, many Italians choose to move to Albania also to work in a call center. And in this sector there is really no lack of work, given the many companies that have decided to bring their services right there.
According to the latest data of the Italian-Albanian Chamber of Commerce, for many Albania remains a greedy landing: in 2016 alone, 2-3 companies per month settled in the country, where a worker costs € 300 per month including contributions and where new sectors of the economy are opening up, such as tourism.
In the face of a still weak domestic market, the IMF has forecast an increase in the PIl in the coming months of more than 2%. There is no doubt that this parameter is not enough on its own to assess the health of a country; but it can still indicate a profound change of course. The most striking thing is the lean bureaucracy that, surprisingly, is found in Albania: here a company can be opened in a day and without too many laces and laces.
Italy is the main trading partner of Albania, which destined 51% of its exports to the country between 2012 and 2016. The data emerges from a report by the National Statistics Institute, according to which after Italy Tirana it exported mainly to Kosovo (7.5 percent), Spain (6.8 percent) and Greece (3.9 percent). Italy, the report continues, is also the main country of origin of imports to Albania. 30.8 percent of imported goods come from Italy. Followed by Greece (8.7 percent), China (7.5 percent), Turkey (7 percent). Furthermore, in the five years under study, Albania has destined 76.6% of its exports to the European Union, while to the countries included in the Central European Free Trade Agreement (Fyrom, Serbia, Kosovo, Bosnia, Montenegro, Albania and Moldova) only 12.4 percent of exported goods went.
Albania’s trade with Italy experienced growth of over 8 percent year-on-year in May. The volume of the interchange amounted to 29.8 billion lek (equal to 221.8 million euros), or 17.1 million euros more than in the same period of 2016. Both exports and imports are growing. Made in Albania finished on the Italian market amounted to 12.9 billion lek (about 96 million euros), with a growth of 9.7 percent. The volume of imports increased by 7.3 percent, amounting to 16.9 billion lek (125.8 million euros). Interchange with Italy represents 37.7 percent of Albania’s entire volume of commercial affairs with foreign countries. In second place is Greece, with 6.8 percent, followed by Turkey with 6.7 percent and China with 6.3 percent.
Over the past decade, Albania has launched a series of political and economic reforms aimed at transforming a planned and centralized economy into an open and market economy.
These reforms mainly aimed at the privatization of the various economic sectors, the approval of social reforms and the promotion of foreign investments.
The geographical proximity, the cultural affinities and the vast knowledge of the Italian language, as well as the intense political relationships, made Italy become the first commercial partner of Albania.
Furthermore, Italy ranks at the top of the ranking by number of companies with share capital (over 1400 Italian companies and Italo-Albanian joint ventures so far surveyed).
Until a few years ago, Italian investments were concentrated mainly in the western part of the country, along the Adriatic coast. These were interventions of small-medium enterprises which operate for 35% in the construction sector, for 21% in the textile and footwear sector (façon production), for 16% in trade and services, for 8 % in the agro-food industry.
Alongside these traditional investment sectors, small and medium-sized industrial groups are currently appearing on this market, small Italian companies already present in the country, attracted by the prospects that open up in the energy and infrastructure sectors and by natural Albania’s vocation as a production platform for goods and services offered by our companies, located here, to the vast Balkan and Eastern European market.
At present, there are numerous projects already in progress, or soon to be launched, in the strategic energy sector (primarily hydroelectric and wind power, but also in the field of renewable energy and gas) which involve important business realities Italian and whose total value is around 5 billion Euros.
Furthermore, the presence in the country of two large Italian banking groups (Intesa San Paolo and the Veneto Banca Group) is significant, as they act as a financial lung for Italian operators entering this market.
Furthermore, the delocalization of services is having an interesting development through, for example, the presence of some Italian groups that have created call centers on site.
SECTOR ANALYSIS
Building
The construction and industrial sectors will be the driving force for economic growth in Albania in 2017: an analysis of the economic situation carried out by the Albanian Ministry of Finance reveals it. According to estimates, the construction sector should grow at a rate of 9.6 In fact, according to the assessment of the Tirana Ministry of Finance, it should grow by 8.4 percent, “while consumption should continue its positive trend reflecting the improved consumer confidence, “reads the document.
While in the whole of Albania the number of building permits in the first quarter of 2017 recorded a 4.3% decrease on an annual basis, in Tirana instead there was a strong growth, with 43 permits alone 18 issued in the same period of last year: the data of the Albanian Institute of Statistics reveal it. Their sales value would amount to 120 million euros, calculating the fact that when obtaining the permit, companies would have to pay the municipality a tax equal to 8 percent of the sale value. In fact, according to the Ministry of Finance, the municipality of Tirana has collected about 10 million euros only from this tax. Across Albania, 75 percent of the buildings are homes while the rest are industrial buildings and offices.
The sale prices of houses in Albania recorded a strong increase in 2016, rising on average by 12.8 percent, the strongest increase in the last 5 years: a study carried out by the Central Bank of Albania reveals it. Prices rose 4.6 percent compared to 2015. Currently one square meter in Tirana ranges from 400 euros in the suburbs, up to 2,500-3,000 euros in the central area. The demand for house purchase had dropped significantly after 2009, when the effects of the global financial crisis were felt in the country. According to the Central Bank, demand has currently recovered following the strengthening of economic activity and the increase in family incomes.
The strongest increase would have occurred in the central areas of the capital, while instead in the seaside areas there was a drop not only in prices but also in the volume of sales. According to the central bank, 68 percent of sales were made through bank loans. Meanwhile, for the first time since 2013, there has also been a drop in the number of homes left unsold.
Renewable energy
In general, Albania has a huge potential for hydroelectricity, solar energy and wind energy.
In particular, Albania has important water resources, such as eight large rivers, fed by hundreds of small rivers and streams, which cross the country from east to west. Furthermore, Albania has very favorable conditions for the development of solar energy thanks to its Mediterranean climate and significant potential also in the wind energy sector.
The construction of hydroelectric power plants is mainly governed by the legislation on concessions. Other sources of energy (for example wind, photovoltaic, biomass and thermal) are regulated by the decision of the Council of Ministers.
Albania is one of the sunniest countries in Europe, for example in Durres, there is an average amount of sunlight of 2700 hours per year, that is 225 days of 12 hours characterized by full sun. The use of solar panels to heat water is a phenomenon that has been growing in Albania for some time. Until a few years ago it was rather rare to see solar panels above the roofs of Albanian houses, but now they are considerably more frequent, so much so that they are also used in public service buildings, such as hotels and even schools. Albania consumes about 7.3 TWh every year, but given that insufficient hydroelectric production is focusing on other energy sources.
The Albanian Ministry of Energy is preparing a plan to avoid drought problems in the future. This plan is based on the diversification of energy production, to arrive at a net reduction in dependence on the hydro-electric sector. Thanks to the favorable climate of Albania, it is estimated that solar energy can represent a guarantee for the country if exploited properly and the first easy procedures for the installation of solar systems have been started. “The ministry recorded ten points to be addressed to speed up authorizations. If the process continues normally, we may have installed them later this year,” said Tirana Energy Minister Entela Cipa. For these investments – the minister explains – the government of Tirana ensures that it will purchase energy at a price which will subsequently be determined by the national body for energy regulation. And for larger investments, there will be additional funding offered by the European Bank of Reconstruction and Development (EBRD). “EBRD will support 60 percent of the investment,” said Cipa. In addition, by 2020, i.e. when the Trans-Adriatic pipeline (Tap) will start to work, the government will seek funding to feed the Valona heating system with natural gas.
There are 5 requests submitted to the Albanian Ministry of Energy for the construction of small photovoltaic parks with an installed power of 2 megawat. According to the ministry, a park should be built in Shkodra, northern Albania, three in Fier in the northern area, and another in Elbasan in central Albania. The total investment proposed for all five photovoltaic parks would amount to € 10.7 million. For energy plants with a power of up to 2 megawatts, the procedures are much simpler and approval can be granted directly by the Ministry of Energy.
Mining – Oil and Gas
The mineral deposits of Albania include chromium, copper, iron-nickel, limestone, sandstone, asphalt and natural bitumen, decorative limestone, massive decorative sandstone.
During the transition period, there was a decline in mining activity, due to several negative factors, including the lack of investments, the use of obsolete technologies and the crisis of the entire sector at an international level. Currently the mining activities are entirely carried out by Albanian and foreign private companies through concessions issued by the government itself.
The country has good oil resources. The extraction activities, concentrated in the districts of Berat and Fier, where a large refinery (Ballsh) is active, guarantee approximately 500,000 tons of oil each year.
The first oil extraction in Albania dates back to 1918. Until 1992 the country has extracted sufficient quantities of oil to meet internal needs. Immediately afterwards the reserves began to decline.
Despite the numerous oil companies operating in Albania, the mining activity is very limited.
The absence of studies on the real consistency of Albanian subsoil oil reserves attracts the attention of foreign companies interested in carrying out research to verify the quality and quantity of hydrocarbons present off the Ionian coast in Albanian territorial waters and on the territory Albania.
As regards the gas sector, the TAP project (Trans Adriatic Pipeline, a 520 km methane pipeline intended to connect Greece to Italy via Albania, transporting natural gas from Azerbaijan), considered by Tirana to be fundamental for to ensure the country the availability of gas necessary for the local market.
The cost of the project is estimated at around € 1.5 billion, with a transport capacity of around 10 billion cubic meters per year and with the possibility of subsequently expanding to 20 billion cubic meters.
The gas pipeline, fueled by gas from Iran, which would travel to Thessaloniki through Turkey, will also benefit from EU support under the Trans-European Energy Networks (TENE) initiative.
Possible synergies could be implemented between the TAP project and the project for the construction of a regasification terminal in the Fier area and a submarine pipeline for Italy, soon to be built, by
part of the Italian Falcione Group.
Pursuant to Law No. 7746 of 1993, every person who intends to engage in research, development and production of hydrocarbons in Albania is required to enter into an agreement with the Ministry of Energy and Industry.
All legal entities, public or private, local or foreign, whose activities are those of processing, transportation and marketing of oil or gas are subject to Law 8450 of 1999.
The natural gas law allows the creation of a competitive market in this sector and its integration into regional and European markets. This law constitutes the legal basis necessary for the implementation of policies, rules and procedures for the organization and regulation of the natural gas market.
Albania has one of the largest onshore oil fields in continental Europe and opportunities for oil and gas explorations have attracted dozens of foreign companies. Consequently, since 1992, dozens of new onshore wells have been drilled and thousands of new 2D and some 3D seismic profiles have been completed, both onshore and offshore.
Existing oil production operations and both current and new oil and gas exploration licenses, both onshore and offshore, can present excellent opportunities for foreign oil and gas companies, as well as affiliated suppliers of oil and gas services.
The arrival of the Trans-Adriatic Pipeline will contribute to creating opportunities for the construction and subsequent maintenance of the gas pipeline and the compressor station, as well as the improvement of infrastructure, salt-dome gas storage and the production of thermal energy.
Tourism
Tourism is a constantly growing sector, even if the scarce energy infrastructures,
water and sanitation as well as the problem of property rights are a major impediment to the development of projects on the Adriatic and Ionian coast of the country.
The revenue of the tourism sector in Albania exceeded one billion euros in 2016. In the period between July and September, the sector experienced a 25 percent increase compared to the same period last year. The figure is among the best recorded in the countries of the region. The development of the tourism sector is one of the priorities of the Tirana government. On 13 December, the executive signed an agreement with the World Bank to grant a $ 71 million loan to support the program for Integrated Urban Management and Tourism in Albania. The project, according to the World Bank, “will lead to the opening of new jobs, the increase in revenues and will support the development of the local economy, especially in the southern regions of the country, which, given the high level of tourism, they have extraordinary economic growth potential. ”
The project involves the improvement of urban infrastructure, the modernization of tourism assets and the strengthening of the skills of institutions, in support of local tourism. This sector, also in the face of its numerous connections with other sectors of the economy, contributes 5.9% to the Gross Domestic Product (GDP) (as of 2014). Furthermore, it currently guarantees employment for about 50 thousand people, and the World Bank has declared that it intends to increase the figure to 200 thousand by 2025.
With over 400 km of coasts, Albania is a country rich in natural and cultural beauties including the sites of Butrint, Apollonia, Berat and Gjirokaster.
Italian tourists have grown by 30 percent in recent times and are third after Macedonians and Kosovars in order of numerical presence in Albania. Tourism in Albania is in fact a surprise only for those who have never had the good fortune to visit the country, whose future is full of investments and development. The numbers in fact support a development of the tourism sector in Albania, which owes much to the action of the government of Edi Rama, committed in the first three years of its legislature to “work on the image that we project abroad: and the results also and above all thanks to this.
The quality of hospitality has greatly increased and strategic investments have been made for tourism, also focusing heavily on sustainability. All this also thanks to the close collaborations with Italy at institutional level and to a process of cooperation consolidated for years, which ranges from law enforcement agencies to embassies to Italian cultural institutes.
Tourist revenue has increased significantly over the past few years, thanks to the greater influx of foreign visitors. As for the origin of tourist flows, Italy is preceded only by Greece. Kosovar and Macedonian tourists are also on the rise.
Foreign investors in the sector look with interest at the potential offered by the country, even if the difficulties in ascertaining properties slows down any investments.
In recent years, the Albanian authorities have launched a program to support the tourism sector, which aims to create infrastructures connected to cultural tourism, without neglecting the country’s environment and rural tradition.
The initiatives include:
– the establishment of the National Tourism Agency, which carries out promotional initiatives and processes sector data;
– the opening of the first Albanian Tourist Office in Italy;
– the establishment of an Association for Albanian Tourism (ATA) in order to attract capital and develop the potential of tourism in Albania; the Association is also interested in organizing fairs, workshops and other activities that can contribute to the development of both Albanian and foreign tourism entrepreneurship.
The tourism sector is regulated in Albania by the new law n.93 / 2015 “For tourism”, which is partially conformed to article 2, article 3 and the Annex of the Council Directive n. 90/314 / EEC of June 13, 1990; it is also partially standardized in article 2 and 3 of the Regulation of the European Parliament and of the Council n. 692/2011 / EU of 6 July 2011.
The Albanian Government has attached particular importance to the development of tourism and the Ministry of Economic Development and Tourism has given priority to the development of the industrial sector of tourism: the completion of secondary legislation for the tourism law (mainly dealing with the standardization of accommodation facilities and guides operating in Albania) and the Tourism Development Plan. The new tourism law, together with its support package, offers various incentives to investors in the tourism sector, in order to improve the quality and raising standards based on the value of the investment, thus making our country more competitive in the region in terms of investment.
According to the new law on the development of the sector, the competent Minister guarantees the financing of projects in the field of education, promotion and learning, or models of tourism products presented by every institution including foreigners.
The main activities envisaged are: (i) the construction, reconstruction, improvement and extension of existing structures, (ii) management of hotels, motels and tourist villages and structures (iii) which complete tourist resorts such as restaurants, shops, spas and sports facilities.
The Albanian government plans to allocate 1.2 million euros to promote the tourism sector. A program of the Ministry of Economy and Tourism provides interventions aimed at improving the quality of products and services, increasing competitiveness, offering tourists and travel agencies more information. Already from this year the authorities plan to start the licenses of the tourist agencies, the ranking of the structures that offer accommodation and the certification of the tourist guides. While during 2018 the Tourism Inspectorate will be established, charged with monitoring compliance with the established standards.
Manufacturing
The textile and manufacturing sector employs the largest number of workers. Being a traditional sector of the country, many foreign companies have delocalized their business. Manufacturing industries that choose to invest in Albania benefit from low labor costs.
The export of ‘made in Albania’ footwear registered a strong increase during 2016. Data from the Albanian Institute of Statistics reveal that up to the end of November 2016, the amount of sales abroad has increased by approximately 20 percent, for a total of 48 billion lek (about 357 million euros). Exports of footwear in 2016 represented 20 percent of the overall structure of Made in Albania, somehow compensating for the drastic drop in foreign sales of oil and minerals, which suffered from low prices on international markets.
Many foreign companies have been operating in the sector for a decade and many are expanding their business by increasing the number of their employees. The import of semi-finished products and their re-export play a fundamental role in the Albanian trade balance. Italy occupies the first place and Albanian exports to Italy in the manufacturing sector represent about 65% of all Albanian exports to Italy. Further advantages for companies investing in this sector are the exemption from VAT on re-exported manufactured products and the low cost of transport given the proximity to Italy. Also in the footwear and leather sector, many investments were made for the production of semi-finished products. Albanian exports in the last period are
increase with an annual trend of 20-30%. The machinery used for production is increasingly advanced and many companies now have the ISO9001 certification.
The main advantages of investing in the clothing sector are: workforce available throughout the country with experience in the sector, direct and total labor costs lower than those in force in most comparable countries, easy access to / from the Italy, Greece and the Balkan markets, exemption from VAT or customs duties for 100% of producers in the clothing sector according to the re-export scheme.
Albania is one of the main producers of footwear and leather. Exports of Albanian footwear have doubled in recent years. Albanian shoes and leather exports are growing every year. Albania is the second largest exporter of footwear in Italy and is also the ideal country for subsequent export to the Italian, European and Balkan markets. Foreign investors in Albania are increasing exports to non-European markets.
With free trade agreements signed with the Balkan countries and the EU, Albania offers unrestricted export opportunities within the region. The quality of Albanian leather shoes is high.
agribusiness
Albania offers important opportunities in the agricultural sector, thanks to its favorable climate and the low cost of the rural workforce.
The good performance of exports of Albanian fruit and vegetables continues. According to data from the Institute of Statistics in 2016, their amount was 7.9 billion lek (about 58 million euros). Note the exponential growth of vegetables. In 2007, their sale abroad amounted to about 900 thousand euros, while 10 years later it rose to 5.3 billion lek (about 38.6 million euros). The increase in fruit exports was also significant , with a growth of 31 percent in 2016, but their import is 2.5 times higher.
Thanks to the use of traditional methods, Albanian fruit, vegetables, meat and dairy products are grown and produced with very few artificial additives, chemicals or pesticides. Albania is thus able to become one of the world’s leading producers and exporters of quality organic food destined for regional, European and North American markets.
The agro-food sector is a significant part of the Albanian economy, representing around 20% of GDP and employing 46% of the national workforce. Significant investments have been made in recent years and the added value of the sector has increased continuously. In particular, significant investments are planned by the Albanian government in the irrigation and drainage system which not only include the rehabilitation of the canals, but also the modernization of the entire system.
As a consequence of the ratification of the Stabilization and Association Agreement and the subsequent granting of the EU candidate country status on 24 June 2014, Albania is currently applying European rules and standards in the agricultural field.
The Albanian government has extended support for agriculture through a new program. The guarantee fund of € 300 million has been active since the beginning of 2016, valid for the next 3 years, available to farmers and entrepreneurs in the sector.
The fund is in a single program with the European Bank for Reconstruction and Development (EBRD) which will support farmers in financing from second-tier banks with loans but subsidized and as guarantor the Agency for Agricultural and Rural Development.
The Italian bank Intesa Sanpaolo in Albania joined the Program in support of the Albanian agro-industrial sector, promoted by the government of Tirana and by the European Bank for Reconstruction and Development (EBRD). The program plans to offer banks operating in Albania funds to finance credit lines and also to share the risk of loans with them. The Albanian government has allocated € 36 million to the project for the next three years, while the EBRD guarantees up to € 100 million in financing and risk-sharing tools. Based on the agreement signed between Intesa Sanpaolo and EBRD, the latter will offer € 25 million for risk sharing, a sum that should allow the Italian bank to grant a total of up to € 50 million in loans to favor of local agro-industry customers. The agreement also provides funds for technical cooperation to offer Intesa Sanpaolo the opportunity to develop new financial products to support the needs of the agro-industrial sector. “This agreement represents an important step for the development of our program and also for the agro-industry sector. The credit institutions that have joined this program are very committed to increasing credit activity in this sector and we know great expectations for an increase in investments in the coming months “, underlined the director of the EBRD in Albania Matteo Colangeli. “The agreement will allow to stimulate sustainable financing for agro-industry by offering permanent credit lines. We have committed our resources to the development, presentation and implementation of this program together with the EBRD, to offer products and services. dedicated to this specific sector “, explained the Executive Director of Intesa Sanpaolo Silvio Pedrazzi. Up to now, 4 banks operating in Albania have joined the initiative of the Albanian government and the EBRD, the Austrian Raiffeisen Bank, the Italian Intesa San Paolo, the French Societe Generale Albania and the German ProCredit, as well as two microcredit financial institutions , Fondo Besa and Noa. All six plan to allocate around 180 million euros of loans in the form of loans, thus bringing the entire fund available to the agro-industrial sector to over 300 million euros. EBRD expects other banks to join the project in the future. The agro-industrial sector is a key sector of the Albanian economy, which offers employment to 50% of the rural population and represents around 20% of Albania’s national GDP. However, the agro-industry is the sector that has the least access to finance from banks and the loans granted in its favor represent only 2% of the entire loan portfolio, or a total of only 40 million euros.
More information can be found on the website of the agency for agricultural and rural development:
Fishing
Fishing in Albania represents an important sector for socio-economic development. According to data from the National Fleet Register, there are 592 licensed fishing vessels in the country, employing 4215 full-time people.
With the aim of increasing the contribution of the fishing sector in the Albanian economy, the European Union
opened the third call for funding for institutions, departments and public authorities and
state. The sum made available for this call is 3.4 million euros, of which 1.9
million euros are earmarked for technical assistance, 100,000 euros for supplies for the public administration and 1.4 million euros for the implementation of the subsidy scheme. Funding for investments in the fleet will play a key role in increasing efficiency, giving fishermen the opportunity to improve various elements such as the navigation system, the storage of food (refrigerators), fishing equipment and decrease the pollution. Grants will be granted to private individuals through a third party , for a maximum of 60 thousand euros per project and in any case the loan granted cannot exceed 50% of the value of the investment.
Transportation and Logistics
The geographical position of Albania puts the country in a very favored position for investments in infrastructure and the development of the transport sector.
Albanian Prime Minister Edi Rama presented “One billion project financing”. The initiative aims to make about one billion dollars a year available for the next three years, to finance public investments that will concern the construction or improvement of existing infrastructure. The interventions will focus on three infrastructure sectors: road, school and health.
The list of projects that will be part of this initiative will be based on the national priorities identified by Rama, ie the significant improvement of the road network especially in the tourist areas of the country; the construction and modernization of the school infrastructure with the renovation program of 150 schools and the construction of 6 new school buildings; for the health infrastructure, the renovation of the Fier hospital and the construction of new excellent clinics.
The Prime Minister has invited private entrepreneurship and banks to collaborate for the realization of projects in public-private partnership which, formally guaranteed by the government, will have a preferential way that will speed up the bureaucratic time for issuing bank guarantees. Private investors will be able to rely on the possibility of resorting to international arbitration in the event of disputes.
All projects will be coordinated by the Prime Minister’s Office and for the most significant investments, which will exceed a certain amount, there must be formal approval from Parliament which will guarantee the transparency of the process.
Roads
Albania has some national corridors and is also connected to a number of regional logistics corridors. One of the main ones is the Pan-European Corridor VIII.
Most of the funds available to Albania are directed towards the road sector. The country’s road network is approximately 18,000 km long and is particularly obsolete, due to the lack of maintenance and the considerable increase in car traffic recorded in recent years.
Only 32% of the Albanian road network is paved. With this in mind, the Government has launched, and partially completed, the National Highway Corridors program, focusing mainly on numerous projects including the Durres-Kukes road connection (on the border with Kosovo) and the north-south connections (with possible connection to the infrastructures of the Pan-European Corridor V).
Of particular importance is the completion of Intermodal Corridor VIII, a project for which the Albanian government has requested Italian support at European level for the activation of the necessary funds.
There are numerous initiatives planned or under construction in the road sector.
A joint project between the government of Tirana and the World Bank, with a financing of 150 million dollars, will entrust the maintenance of 1300 kilometers of roads in four parts of the territory of Albania to four companies. They will have to ensure maintenance and invest in the roads entrusted to them for a period of five years; in particular they will have to intervene in the sections that present the most critical points. The World Bank will finance half the total value of the project, and believes that through the implementation of this program, road signs in Albania will be reduced by 15 percent.
The Albanian government has launched the tender for the construction of the “Rruga e Arbrit” highway in the north-east of the country, which should link Albania with the northern part of the former Yugoslav Republic of Macedonia (Fyrom), in the locality of Dibra. According to an official statement from the Albanian Ministry of Transport, the offers from the companies concerned will be open on October 2nd. The value of the entire work is estimated at around 254 million euros. Its construction will be carried out according to the public-private partnership model. The company that will be proclaimed winner will assume the realization of the work with its own funding, in addition to also assume its maintenance for a period of 13 years. Meanwhile, the government will repay the entire investment in installments for a period of 13 years. In the race, the Albanian company “Gjoka Konstruksion”, which offered to build the highway last April, got a bonus of 10 points from the government. The works are expected to last 46 six months. About 20 kilometers of the section have already been built, while another 15 only partially. The difficult part of the project is the construction of the 60 kilometer long section in mountainous terrain, including a long tunnel. For over two years, the Albanian government has negotiated with a Chinese company for the construction of the highway, without being able to conclude “because of the high costs proposed”, the authorities said at the time “.
The 70 km long Arbri road will improve connections between Tirana and Skopje. Construction work has recently started on the first two sections of the highway, including the 7.7km section from Ura and Vashes to Bulqiza.
The Albanian government has planned promotional and study actions in favor of the Albanian port sector, according to the large-scale distribution which, in Albania, is now making great strides; the port of Durres and the whole surrounding area, in fact, have always been considered the area of access, according to the provisions of Corridor 8, to the rest of the Balkan countries, in particular to the Kukes / Morine / Pristina (Kosovo) route and towards Skopje (Macedonia).
The undoubted role of this port area, compared to trade with European countries
Western and with Italy in particular, it offers opportunities for the development of a customs area (free trade zone) and logistical and intermodal infrastructures, connected to the development of large-scale distribution and services in Albania.
Italy has committed itself with a loan of € 15 million from the Italian Cooperation for the rehabilitation of the Port of Valona.
Corridor VIII was approved in Crete in 1994 and confirmed in Helsinki in 1997. Although its cost was considered low, Corridor VIII was characterized by a very slow evolution, due to the lack of investment. A memorandum of understanding signed in Bari, which added the gateway to Bari, Brindisi (Italy) and Valona (Albania) to this artery, increased the interest of the Italian government which therefore decided to finance an important part of the project.
Corridor VIII connects the Adriatic-Ionian regions with the Balkan regions and the Black Sea countries. From an economic point of view, with the development of the trans-European networks, the European Commission aims to achieve better territorial access to the countries of the European Union and, therefore, to develop greater mobility of people and goods according to the objectives of the single market and the principles of sustainable mobility. From a transport point of view, Corridor VIII is an intermodal multi-transport system along the east-west axis which includes sea and river ports, airports, ports, roads and railways, for a total extension of approx. 1270 kilometers of railways and 960 kilometers of roads. In the meantime, the multinational Working Group is developing a study focused on defining the current situation of the corridor and identifying the works and initiatives necessary for its rapid activation as a European itinerary and for the definition of a future development plan.
Ports
The latest data from the Albanian Ministry of Transport confirm a positive trend in port traffic: three million tons of goods and over one and a half million passengers. In order to facilitate the promotion of Albanian ports, the Ministry of Transport has launched a tender for the award of a five-year concession contract for services to ships in the country’s ports.
The call for tenders for the project was published in the weekly bulletin of the Public Procurement Agency. This project has an indicative value of 191.8 million lek (1.5 million dollars / 1.4 million euros). On the other hand, the concessionaire will be required to offer technical nautical services to ships, including piloting and towing, in the ports of Durres, Vlora, Saranda, Shengjin, including the oil terminals of Durres and Vlora.
The Albanian port system wastes no time and is preparing to be the eastern gateway to the commodity and especially tourist incoming traffic, as confirmed by the 2016 ministerial report.
Albania currently has ports in four main cities: Durres, Vlora, Saranda and Shengjini, with plans for continuous expansion especially in the field of marinas.
The Albanian Maritime Code regulates the fundamental principles of maritime law.
The development of maritime transport is part of the National Transport strategy and of the 2016-2020 Action Plan through development investments in accordance with the regulatory plans and with an orientation towards the market economy by 2020, in order to achieve the increase the volume of goods and the number of passengers carried by ferries; rehabilitation of the infrastructures and superstructures of the four main ports and the tourist ports; development of marinas, including the construction of infrastructures and superstructures, in order to increase the number of tourist ships and tourists with an increase in armatures.
Railways
The Albanian authorities have decided to seek the assistance of an international consultant before proceeding with the tender for the construction of the railway between Tirana, Durres and Mother Teresa airport, the only international airport in the country. The consultant should have experience in carrying out similar projects in the railway sector but also have the ability to supervise the execution of the works. The project concerns the rehabilitation of the current Tirana-Durres railway line, and the construction of a new one towards the Mother Teresa international airport. The total investment requested is 81 million euros, of which 35 million euros will be allocated by the WBIF (Western Balkans Investment Framework), while 36.8 million euros by the European Bank for Reconstruction and Development (EBRD). According to the feasibility study, the realization of the entire project should last up to three years, while the number of passengers should amount to around 1.4 million per year.
In the entire transport infrastructure, the railway sector is undoubtedly the one most affected by the lack of adequate financial resources in the country.
The Albanian railways are in fact in a general situation of degradation determined for the most part by an absolute, persistent absence of maintenance and development policies from the fall of the communist regime (early nineties) to today.
In particular:
– the entire Albanian railway transport system does not have general regulations to regulate the various competences and responsibilities;
– the railway network does not have control and safety systems and the few signals (already originally insufficient) have been out of use for about 20 years; this lack is the cause of a large number of accidents along the route as there are no level crossings and
crossings are free;
– the entire line is not electrified and the tractors are all diesel with a maximum speed of approximately 50 km / h;
– the fleet of cars, all used, of different origins (FS, DB, etc.) is in total abandonment condition, with maintenance-free wagons, broken glass, missing parts, etc.
– the buildings designed to accommodate travelers are old and in conditions of potential danger for users of the service due to numerous infiltrations, structural cracks and lack of maintenance; the lighting systems are now unusable, while the technological ones (sound diffusion, video surveillance and information to the public) are totally missing;
– the number of trips between Tirana and Durres (the main hub of goods and people) is limited to just 6 round trips per day and the ticket price is 70 Leke (about 0.50 Euro cents);
– the latest, dated statistical findings indicate that the number of travelers is around 2,000,000 / year;
– the majority of passengers between Tirana and Durres prefer to travel by bus at a cost of approximately 140 Leke (1 Euro) per ticket; the number of road trips is greater than that on rails and travel times, in the absence of excessive road traffic, are lower.
The need to provide for a complete redevelopment of the railway network and in particular of the railway traffic between Tirana and Durres is therefore evident. The latter is of particular importance for the construction of Corridor VIII, which is known as the intermodal transport direction which intends to develop from Bari to Bulgarian ports on the Black Sea, passing through Albania, Macedonia and Bulgaria for a total length of approximately 1270 km of railway lines and 960 km of roads.
In fact, the costs deriving from the complete rehabilitation of the Tirana-Durres-Lin line (near the Macedonian border) are significant, estimated by the Secretariat of Corridor VIII at around 250 million euros, to which 6 million euros must be added for the construction of the section which connects Lin station itself to the Macedonian border.
Interventions will also be needed to improve the conditions of the infrastructure on the Tirana-Durres-Elbasan line and investments (quantified in an EU-funded study of over 80 million euros) for the installation of the signs and communication systems of the entire national rail network.
The European Commission, as part of the IPA pre-accession funds, has already foreseen a first loan of 8 million euros for the Tirana-Durres section, whose works will be contracted during this year, and a further 20 million loan euros that will be formalized by the IPA Committee during this year always in the same segment.
The EIB has also expressed its willingness to strengthen the railway section between Kosovo and Durres.
The Albanian Parliament has approved law no. 142/2016 “Railway Code” – which will come into force in January 2018 – which establishes the principles and procedures relating to railway activity in Albania. The intent is the division of the Albanian Railway’s activities, separating railway operations from infrastructure management, in line with the EU acquis, and with the creation of an independent sector safety and regulation authority.
The level of investments in railway infrastructure remains negligible, with consequent deterioration of transport services.
In the coming years, Albania will have to promulgate regulations in the sector (with particular reference to safety issues, accident investigations, interoperability, network load), invest in improving the existing railway network (maintenance and preventive) and integration into the networks national and international logistics.
EBRD has granted the Republic of Albania a loan, for the benefit of the Albanian Railways. The project is part of Route 2 of the Western Balkans Main Network linking the cities of Podgorica, Montenegro and Vlora in Albania and was established as an indicative extension for the trans European transport networks (TEN-T) for the core of the Network railway in the Western Balkans.
The project will support Albania’s national economic development and contribute to Albania’s regional integration by improving the connectivity of its main cities to the port of Durres and TIA.
Airports
As regards the air transport sector, in 2004 the Albanian government signed the concession agreement for twenty years with the German-American Consortium (TIA), for the management of Rinas international airport.
Tirana international Airport, (Tia) the company that manages the “Mother Teresa” airport, the only Albanian international airport, recorded a significant increase in the number of passengers in 2016. The number of passengers rose by 11 percent, reaching a total of about 2.2 million travelers. Tirana airport ranks fourth among those in the Western Balkans by number of passengers, behind Belgrade (4.9 million) and Croatian Zagreb (2.76 million passengers) and Split (2.29 million ). Since October 2016, TIA has been managed by the Chinese company China Everbright Limited, based in Hong Kong, which has acquired 100 percent of the shares of the consortium made up of the German group AviAlliance GmbH, the other German company Deg Deutsche Investitions-und Entwicklungsgesellschaft Mbh , and by the Albanian-US Corporate Fund.
The new airport was inaugurated in 2007 and the consortium has since built two new terminals (freight and passengers). More recently, a new terminal has been inaugurated.
Thanks to the new facilities, the airport registered an increase in the number of passengers and goods. Italian cities are among the main destinations for passengers departing from “Mother Teresa” airport.
Currently there are about thirteen airlines operating in Albania. There is no progress on the construction of other smaller airports in the countries (Saranda, especially in the north of the country).
Tirana – Rinas “Mother Teresa” international airport is the only international airport in Albania.
The Albanian Ministry of Transport and Infrastructure and the concessionaires of the international airport signed an agreement in 2016 under which the exclusivity of the airport is reduced. This agreement has de facto given the go-ahead to other airports and aerodromes, such as those of Kukes and Vlora and the reduction of operating expenses for the airlines whose aircraft pass through Albania.
Telecommunications
The reference regulatory framework mainly consists of Law no.9918 of 19 May 2008 “On electronic communications in the Republic of Albania”, as subsequently amended. This law aims to promote competition and efficiency of the infrastructure , to ensure necessary and adequate services in the territory of the Republic of Albania, based on the principle of technological neutrality in the telecommunications sector.
Under the law, natural and legal persons are free to provide services and to build telecommunication networks.
To operate in this sector it is necessary to obtain an authorization from the Postal and Telecommunications Authority which is a regulatory and independent Authority. Other particularly important authorities in the sector may also be considered: the Ministry of Innovation and Public Administration and the National Council of Radio and Television.
The latest changes to Law no.9918 / 2008 were made by Law no. 102 of 24 October 2012 which fully conformed the national legislative framework to the principles and provisions of European directives.
Albtelecom is the operator of the fixed lines in Albania, whose 76% of the shares are privatized in 2005. The mobile telephone service in Albania is currently managed by four operators: Telekom Albania Sh.A. (previously called AMC) belonging to the Deutsche Telekom group; Vodafone; the same Albtelecom and PLUS Communication.
With Decision of the Council of Ministers n.466 of 27 February 2013, the Albanian Government approved the National Frequency Plan thus determining the regulatory framework with reference to the administration and use of frequencies in Albania.
Furthermore, with subsequent Council of Ministers Decision no. 468 of 30 May 2013, as subsequently amended, the national plan for the development of national broadcasts was approved.
Commerce – Large Distribution
It is a booming sector.
On the outskirts of Tirana there is the large Univers Trade Center shopping center, where the Euromax hypermarket occupies 4 thousand square meters of sales space. In the surroundings of Tirana, another large shopping center, Casa Italia, was opened in November 2007, built through the collaboration of Italian and Albanian companies. In June 2008, the first UPIM store was inaugurated at the Krystal shopping center in Tirana. There are also points of sale of Euronics, Trony and Prealpina. In 2009 and ‘ it was also inaugurated the City Park, Tirana-Durres highway, with over 190 stores inside, a skating rink and movie theaters. In 2010, it and ‘ open a large store chain Coin Department Store of the largest ever group made abroad (5000 square meters) and the first of its kind in Albania. In November 2011 and ‘ the largest shopping center was opened in the Balkans, (90,000 square meters) Tirana East Gate (TEG).
Recently inaugurated (March 2017), the Toptani Center, a futuristic multi-storey structure in the center of Tirana.
Banking sector
The banking sector, although still small in size and below European standards, has positive indicators in terms of stability and growth prospects, thanks to the increase in consumer credit and private deposits, favored by government macroeconomic policies and by the liberalization policy of the banking system, with particular regard to the licenses granted to private commercial banks.
There are currently 18 banking institutions operating in Albania (16 of which are foreign or owned by foreign banks).
Pursuant to Law 9662/2006, commercial banks are defined as joint stock companies and can be established and founded with both Albanian and foreign capital. Any person wishing to carry on a banking business must first obtain a license from the Bank of Albania. Authorized banks governed by foreign law are subject to this obligation. They can open branches, branches, agencies and other offices in Albania.
The Bank of Albania establishes the minimum capital requirements, which currently amount to bn / Lek 1. Commercial banks are required to maintain both a checking account and a reserve account with the Bank of Albania.
The minimum amount of the reserve account is determined by the Bank, which examines the balance sheets of commercial banks from time to time to confirm the adequacy of the necessary reserves. The Bank of Albania is also the only competent authority for granting the license to non-bank financial subjects to carry out one or some of the activities defined by the banking regulations, such as: (i) loans of any type (ii) factoring, (iii ) leasing, (iv) all payments and money transfer services, (v) guarantees and commitments, (vi) exchanges, (vii) consulting, brokerage and other financial services of all the activities referred to in points (i) – (vi) of this; licensing of microcredit financial institutions; authorization for agents operating in non-bank financial entities. The Albanian financial market is controlled for over 50% by the Austrian Raiffeisen Bank. For the first six months of 2014, the performance of the Albanian banking system and of the financial system in general was stable. The volume of the business has expanded and the financial performance has improved. The liquidity and capitalization indices of the sector, for the year 2014, recorded an excellent performance, while the quality of the loan portfolio continues to be worrying, regardless of the fact that the values of the problem loans report are stabilized . According to what the Bank of Albania says, the macroeconomic framework was stable during 2014, also supporting the good performance of the financial system. The positive trail of economic growth and the fiscal and monetary policy adopted have led to the smooth functioning of the financial markets and the reduction of financing costs.
Over 50% of the Albanian financial market is controlled by the Austrian Raiffeisen Zentralbank, which at the beginning of 2004 incorporated the “Savings Bank”, the largest Albanian bank in terms of presence on the territory and deposited sums.
Intesa San Paolo Bank followed by spread throughout the territory and financial strength, which in 2007 acquired 80% of the share capital of ABA (American Bank of Albania) and the National Commercial Bank, previously owned by the State but privatized in June 2000.
In April 2007, the Société Générale de France signed an agreement to purchase 75% of the shares of the People’s Bank, one of the three Albanian-owned banks, founded in 2004 by 30 local investors.
There is also a large number of Greek banks.
There are also some private micro-credit financial institutions in the sustainable development sector, dedicated to agricultural services for mountain communities and for small agro-industry enterprises.
